Logistics

Fresh war of words breaks out between IndiGo promoters

Ashwini Phadnis New Delhi | Updated on August 06, 2019 Published on August 06, 2019

File Photo of IndiGo promoters Rahul Bhatia and Rakesh Gangwal.   -  The Hindu

Rakesh Gangwal writes to Directors of IndiGo on special resolution for Alteration in Articles of Association of the Company

After a few days of silence, Rakesh Gangwal, one of the two promoters of IndiGo has again raised questions about the issue of governance and the role that the other promoter Rahul Bhatia and his group Inter Globe Enterprises (IGE) are playing. In response, the Chairman of the Board, M Damodaran has countered the allegations made by Gangwal.

In a letter to the Directors of IndiGo, which he has also sent to the Securities and Exchange Board of India (SEBI), Ministry of Corporate Affairs and Bombay and National Stock Exchanges and posted on his new website, Gangwal reiterates that that he is no longer in a position to vote affirmatively on the special resolution for "Alteration in Articles of Association of the Company", unless, as discussed in numerous emails, “a complementary Board resolution is passed to prevent IGE Group from getting even more rights and abilities than they have today and the new Related Party Transactions (RPT) policy is adopted, language for which has already been agreed.”

Interestingly, IndiGo has also written to SEBI pointing out that this website “has not been approved or authorised by the company and no reliance should be placed on the contents of this website as it may contain incomplete and therefore misleading information.”

Gangwal’s letter comes just three weeks before IndiGo’s Annual General Meeting on August 27. The company is expected to seek shareholders approvals on a variety of issues including enhancing the size of the Board.

Gangwal suggests that the shareholders can choose from one of the two options with respect to changes to the Articles -- either a Board with 10 Directors or a Board with 7 Directors. According to him, a 10-Director Board will mean that the large loophole of poor corporate governance which he has been alleging all along will remain. “We should also immediately put in place the agreed upon new RPT policy. All this can be done very quickly, if we are interested in resolving the impasse,” he adds.

Gangwal also alleges that the IGE Group may be hoping to can get the Articles changed and get five nominee Directors at the upcoming AGM. He further suggests that to break this impasse, the Chairman should have a Board resolution passed to raise the Board’s size to seven and allow for the addition of an independent woman director.  ``Due to how the math and SEBI rules work, a seven Director Board will close the large loophole automatically,” the letter adds.

M Damodaran, Chairman of the Board, in his communication says that he is separately initiating a proposal for scheduling of the Audit Committee, the NRC and the board immediately after the AGM. At that meeting of the AC, followed by the meeting of the board, the RPT policy will be cleared. “At the meeting of the Nomination Remuneration and Compensation, the selection of the woman independent director will be addressed. May I add that I personally have no inclination to get into a continuing exchange of emails,” the communication says.

Published on August 06, 2019
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