NEW DELHI: Contrary to speculations that IndiGo co-founders have smoked the peace pipe, Rakesh Gangwal, one of the two promoters, has refuted that reports of truce are “false and malicious”.
Gangwal, in a letter to IndiGo Board on August 5, said there were still disagreements between him and co-founder Rahul Bhatia’s InterGlobe Enterprises (IGE) on the composition of the Board and related-party transactions (RPT) policy.
Gangwal had, last month, alleged corporate governance lapses in the airline’s operations and called for intervention of markets regulator SEBI and the Central government.
READ HERE | IndiGo promoter feud | 'Paan ki dukaan doing well': Bhatia group replies to Gangwal's claims
In the recent letter, Gangwal said raising the number of directors to 10 would help IGE rework and dilute an agreed-upon policy on RTPs. “All of us realised that the proposed Board structure created a large loophole that gives the IGE Group additional powers that they do not have today,” he said.
In the July 20 meeting, it was agreed that the Board will be expanded from six to 10 directors, one of them a woman independent director and that any RTPs of over Rs 2 crore will need the Board’s approval.
“As for the agreed upon RPT policy ... there is only silence on when or if it gets adopted by the company. This was not our agreement at the Board meeting or after it,” Gangwal said.
Against this backdrop, Gangwal said that based on “serious unresolved issues,” he was not in a position to vote affirmatively on the special resolution for ‘Alteration in Articles of Association of the Company’ unless certain issues are addressed. The AoA enables IGE to nominate senior leadership of IndiGo. IGE also has more representations on the Board.
The proposal is part of the notice for AGM scheduled to be held on August 27.
Gangwal feels having seven directors on the Board will close the large loophole automatically as “the math and SEBI rule works”. He concluded that regrettably, IGE Group is holding the process hostage.
While it was known that tension was brewing for some time between the two promoters who founded India’s largest carrier, it came out in the open only last month when the two put up serious allegations against each other. Gangwal had alleged that governance standards in IndiGo were akin to that of a ‘paan ki dukaan’, while IGE said Gangwal’s ego was hurt because of a $20 billion engine deal.
Responding to Gangwal, InterGlobe Aviation chairman M Damodaran said that “the only agreement we do not have is to close the large loophole after the transition period.”
On how vacancy in the Board will be filled, he said, “The fear that, in the interim, the IGE Group will push through questionable decisions, does no credit to the independent directors that will be on the Board, or to the fiduciary responsibilities of the directors including those nominated by IGE Group.” He said the RPT policy will be cleared after the Board discusses it after the AGM.