IndiGo truce on the rocks
IndiGo co-promoter Rakesh Gangwal skipped the airline’s much anticipated AGM in Gurgaon on Tuesday as the carrier got shrouded in greater uncertainty surrounding its governance standards.
In his absence, the crucial amendments to the company’s articles of association could not pass muster even as joint promoter Rahul Bhatia adopted a hard line against Gangwal before the shareholders.
Addressing the AGM, Bhatia said, “It’s important to understand that organisations have to outgrow the parents and, to that extent, I believe that the company is rapidly moving to a point where it can stand on its own two feet and live its own life.”
The changes in the articles of association would have increased the number of independent directors and raised the strength of the board to 10 members, resolving a major difference between the warring promoters.
However, with Gangwal holding around 37 per cent in IndiGo’s parent InterGlobe Aviation, the special resolution to amend the articles could not be achieved as it requires the consent of 75 per cent of the shareholders.
As doubts intensified during the course of the AGM over the truce between the two promoters, the IndiGo scrip fell nearly 3.8 per cent before closing 1.9 per cent lower at Rs 1,648.70 on Tuesday.
Besides Gangwal, independent director Anupam Khanna was absent at the AGM. Khanna had previously supported Gangwal on many of the contentious issues.
Bhatia allayed shareholder fears over Gangwal’s absence. “Main Hoon Na,” he told them. Among others present were IndiGo chairman of board M. Damodaran, non-executive director Rohini Bhatia and CEO Ronojoy Dutta.
Damodaran told the AGM the promoters had been speaking to each other and there would be a solution over time.
CEO Ronojoy Dutta said all the airline’s related party transactions were at arm’s length and did not go against the interest of the company. All of them, he said, were unanimously approved by the board’s audit committee.
Minority shareholders at the AGM were irked by Gangwal’s absence. Some of the shareholders expressed concern over the erosion of the value of shares because of the accusations made by Gangwal. One shareholder raised the question about the durability of the so-called truce.
Some suggested to Bhatia that he should “go out somewhere on a holiday with Rakesh Gangwal and do not discuss business”. Stating that he would consider the suggestion, Bhatia asked the shareholder, “Aap chalenge hamare saath?”
Taking a dig at the Gangwal's description of IndiGo as paan ki dukaan, Bhatia said he wanted to serve paan to those attending AGM but “over the last few days the company seems to have improved miraculously its governance standards so we disbanded the idea”.
He was probably alluding to Gangwal’s statements in his website last week that he was satisfied with the progress made towards better governance at the airline. ”I hope his (Gangwal's) actions will start speaking louder than his website over time,” Bhatia said at the AGM.