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IndiGo’s co-promoter Rakesh Gangwal may exit the airline by selling his stake in the low-cost-carrier after the Extraordinary General Meeting (EGM) on December 30, ending the long battle with the other promoter, Rahul Bhatia.
The two promoters of India’s largest carrier called for an EGM two days ago to scrap a clause in the company’s articles of association (AoA), which gives them the right of first refusal (RoFR) over acquisition of each other’s share.
This effectively means that once the shareholders give their approval to drop this clause, either side can sell or transfer shares to a third party without giving each other a notice. Sources close to the development said the EGM has been called to pave the way for Gangwal to sell his stake in the company. It is unclear when he will sell it but he is keeping the permissions ready, they added.
Promoter dispute
Bhatia and Gangwal have been at loggerheads since 2019 over the future direction of the airline. Collectively, the two promoters own 74.44 per cent stake in IndiGo, with Bhatia owning 37.83 per cent and Gangwal 36.61 per cent. The feud dates back to 2019 when Gangwal alleged corporate governance issues and asked the stock markets watchdog Securities and Exchange Board of India (SEBI) to intervene.
Gangwal had earlier moved a resolution to amend the AoA; however, Bhatia voted against it. This time, though, industry watchers are expecting a clear approval from both sides.
In a recent interview to BusinessLine , Ronojoy Dutta, CEO, hinted the same. “I’d say the worst is way behind us. There were all these issues about SEBI...related party transactions. All that has been put to bed. So I think you know this story is history,” he said.
According to the Directorate General of Civil Aviation, IndiGo held 53.5 per cent share of the aviation market. While the dispute between the promoters hasn’t affected the company’s operations so far, competition is getting fierce for the carrier as new airlines are being launched.
Multiple e-mails and messages sent to IndiGo, Interglobe and Bhatia did not elicit any response.
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