In a surprise move, low-cost carrier IndiGo’s co-promoter Rakesh Gangwal on Friday resigned with immediate effect from the board of directors of the parent firm, InterGlobe Aviation, where he served as a non-executive, non-independent director.
While Gangwal in his letter to the board said that he would sell his entire holding in the airline over a period of five years, he also added that he may consider joining the board again as a member at a later stage. Industry analysts said that this shows that the fight between Gangwal and the other promoter Rahul Bhatia is far from over.
Interestingly, Gangwal’s resignation comes around two weeks after Bhatia took charge as the company’s managing director. At the end of December 2021, shareholders of IndiGo had approved the changes in the articles of association (AoA), which allowed either of the partner to exit without the other exercising the right of first refusal (RoFR). The company’s shareholders had rejected a similar proposal from Gangwal to amend the AoA in January 2020.
Gangwal and his family entities own a 36.61% stake in the company and going by the market capitalisation on Friday, his stake is worth around Rs 29,900 crore. Bhatia and his related entities own around 38% in InterGlobe Aviation.
“I have been a long-term shareholder in the company for more than 15 years and it’s only natural to some day think about diversifying one’s holdings. Accordingly, my current intention is to slowly reduce my equity stake in the company over the next five plus years,” Gangwal said in his letter. “However, I am concerned about the optics of reducing my holdings even though such transactions would only be undertaken when I do not have any unpublished price sensitive information,” he added.
Gangwal also said that he continues to be a big believer in the long-term prospects of IndiGo and more so now with the industry consolidation underway.
The differences between Gangwal and Bhatia came out in the open in July 2019 after the former sought Securities and Exchange Board of India’s intervention to address alleged corporate governance lapses at the company. Later, an arbitration award was also passed relating to the dispute between the two, the details of which were not disclosed.
Gangwal had levelled allegations of corporate governance lapses against Bhatia and the IGE Group, stating that Bhatia had carried out related-party transactions without the approval of the audit committee. In his complaint, Gangwal had sought intervention of the ministry of corporate affairs and Sebi. The allegations were, however, rejected by Bhatia, who insisted his IGE Group followed all the stipulated norms.