IndiGo promoter feud out in the open

IndiGo promoter feud out in the open”

An IndiGo Airlines Airbus A320 aircraft takes off in Colomiers near Toulouse, France, October 19, 2017.

InterGlobe shares closed down 10.74% at 1398.05 rupees, while those of low-priced rival SpiceJet climbed as much as 9% at one point, closing 2% up on the day. "This is likely to drag on and that is the problem for minority investors".

IndiGo Chief Executive Officer Ronojoy Dutta on Wednesday assured the company's staff about the airline's viability, a day after a public altercation between the company's promoters, PTI reported.

Locked in a bitter battle with fellow co-founder Rahul Bhatia, IndiGo promoter Rakesh Gangwal has alleged serious governance lapses in the company, saying even a "paan ki dukaan" (betel shop) would have managed matters with more grace. Our mission, direction and growth strategy remains unchanged, and firmly in place.

Analysts at Mumbai-based ICICI Securities maintained their "buy" rating on InterGlobe's stock, noting its strong business fundamentals.

Experts also question the 2005 shareholder agreement between Gangwal and Bhatia and say such agreements don't work in favour of all the shareholders of a company.

Asia's most valuable budget airline by market capitalisation has also accelerated worldwide expansion plans since Jet collapsed in April.

Rakesh Gangwal has written a letter to markets regulator Sebi, flagging governance issues at the company and has accused Mr Bhatia and his firms of indulging in questionable related-party transactions.

Gangwal and his affiliates have around 37 per cent stake in IGAL while Bhatia and his affiliates (IGE Group) have about 38 per cent.

InterGlobe Enterprises, which has interests in aviation, hospitality and travel-related services and is controlled by Bhatia, has two group entities namely, The IGE Group and InterGlobe Aviation Limited (IGAL).

"SEBI has in the meantime asked the company to give its response to this letter by July 19, 2019, with which the company will comply", the regulatory filing made to the BSE said.

The IGE Group's rights include those to appoint three out of six directors, nominate and appoint Chairman, CEO, President as well as a voting arrangement that requires Gangwal and his affiliates to vote alongside the Group on appointment of directors, as per the letter.

In a detailed statement, Bhatia's InterGlobe Enterprises (IGE) said it has nurtured and supported IGAL through its formative and expansion years by making available certain services through related party transactions.

Bhatia's office did not respond to an e-mail and phone call from Reuters.

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