IndiGo Promoter Dispute: Bhatia Group Says Gangwal’s Allegations Are Much Ado About Nothing
Terming co-founder Rakesh Gangwal’s allegations of governance lapses at InterGlobe Aviation Ltd. as much ado about nothing, Rahul Bhatia’s group on Friday said the company is well-run, financially sound and managed by a competent set of managers.
Asserting that “pan ki dukaan” (betel shop) has apparently done well, InterGlobe Enterprises Ltd. said there was no abuse of rights and Gangwal’s proposal for convening an Extraordinary General Meeting was rejected on the basis of a legal opinion obtained by the board of InterGlobe Aviation.
In the notice for proposed EGM, Gangwal had said that events go far beyond just “poor governance” and even a “paan ki dukaan would have handled these matters with more grace”.
InterGlobe Aviation is the parent of the country’s largest airline IndiGo, which has a domestic market share of 49 percent.
“Corporate governance is not about levelling baseless charges. It is about ensuring that the company's interests as also those of other stakeholders are protected and not harmed,” InterGlobe Enterprises said in a statement.
This is the second time in three days that Bhatia camp has issued a statement. The spat between Gangwal and Bhatia—co-founders and co-promoters of IndiGo—intensified after it was made public that Gangwal has sought markets regulator Securities and Exchange Board of India’s intervention to address corporate governance issues at the company.
“Paan ki dukaan has apparently done well and continues to do well; it is financially sound; it is well-run and managed by a competent set of managers. Gangwal’s allegations about lack of corporate governance are much ado about nothing,” the statement said.
Gangwal along with his affiliates have about 37 percent shareholding in InterGlobe Aviation while Bhatia and his affiliates (IGE Group) have around 38 percent stake.
Amid Gangwal mentioning that shareholders’ agreement provides unusual rights to InterGlobe Enterprises, Bhatia group noted that he has failed to give even one instance where there has been any misuse of any such right.
According to the statement, Gangwal, though entitled to appoint a director, right from the inception of his investment in 2006, chose not to join the board or to appoint any other nominee.
"It was not until June 2015 (prior to the IPO) that Gangwal finally joined the board. By 2015, IndiGo had established itself as the most successful airline ever in India. It had matured into a great institution with apparently good corporate governance though without the benefit of Gangwal’s presence on the board,” it added.
Prior to the IPO, the statement said the shareholders’ agreement was “re-negotiated, and heavily re-negotiated, and amended twice” to comply with regulatory requirements.
Claiming that Gangwal has raised a much orchestrated controversy around corporate governance, Bhatia group sought to know what facts have been put out by him to support his allegations.
“Has there been any stripping of assets or profits? Has there been any misfeasance or fraud? While he emits volumes of hot air about RPTs (Related Party Transactions), he ends up giving one example of what he believes demonstrates that there may have been something which did not meet arm’s length criteria and that example is factually wrong,” the statement noted.