NEW DELHI: After a public spat, the co-promoters of India’s largest airline, IndiGo, are trying to smoke the peace pipe. The InterGlobe Aviation (IGE), which operates IndiGo, has already agreed to increase the size of its Board from six members to 10, and approved a new policy on Related Party Transactions (RPTs).
RPTs involving Rahul Bhatia-led IGE and small size of the Board were a few of the issues flagged by the other promoter, Rakesh Gangwal, in his letter to Securities and Exchange Board of India (SEBI), where he alleged lack of corporate governance in the airline’s operations.
Sources said the policy on RPTs was approved unanimously by the Board, when it met for two days on July 19 and 20. Under the new policy, external advice would be sought for RPTs that are worth over `2 crore and bidding process would be mandatory for any such contracts, news agency PTI said, quoting sources. Further, any changes in RPTs would have to be unanimously approved by the company’s independent directors, it said.
Speculations of Bhatia and Gangwal coming on to a common ground to resolve their differences gained momentum when the company, in its Board meeting, announced appointing four new independent directors, including a female representative. According to reports, Gangwal will have just one nominee on the Board, Bhatia will be able to nominate five board members.
An analyst tracking the development said that the partners may have realised that the feud would impact the confidence of investors and attract unwanted attention from regulators and government. He, however, said that more clarity is needed on the allegations made by Bhatia on Gangwal: that the latter wants to change control clause and dilute IGE’s power in the airline.
The airline is already under the scanner of the Ministry of Corporate Affairs as well as markets regulator SEBI, and is expected to respond to them soon on the queries related to misgovernance.Sources claimed that the issues between the co-promoters stand resolved and the company is on growth path.
All hunky-dory again?
Following the reports, shares of InterGlobe Enterprises surged more than 6 per cent and closed 4.69 per cent higher at I1,594.45 on the BSE.