The negotiations are being steered by board chairman M Damordaran and independent director on the board Anupam Khanna
The feuding co-promoters of IndiGo — Rakesh Gangwal and Rahul Bhatia — could announce resolution of their differences as early as this week, possibly bringing an end to their public infighting. According to sources, the two sides are discussing mechanisms for executing related party transactions (RPTs) which was a flashpoint for the dispute. Other issues also seem to have been resolved between Gangwal and Bhatia. The negotiations are being steered by board chairman M Damordaran and former World Bank executive Anupam Khanna — an independent director on the board.
“Issues around RPTs are only left to be resolved. Negotiations are currently on. There has been a significant progress in the last few days. We hope to resolve them soon,” a person aware about the development said. One of the options on the RPTs being discussed is vetting each such transaction by the independent directors. Gangwal, on the other hand, had suggested that every RPT for more than Rs 50 lakh each year must be approved by the audit committee.
Gangwal, who was supposed to fly to the US immediately after the board meeting last week, has stayed back to iron out the remaining issues. “He will stay on till the discussions are over,” a person close to Gangwal said.
On July 21, InterGlobe Aviation, which operates IndiGo, said the board has decided to expand its strength from 6 to 10 directors, including 4 independent members. The composition of board was amongst several key issues raised by Gangwal, who alleged violations of corporate governance and appointment of senior management by Bhatia and his InterGlobe Enterprises (IGE).
The allegations were refuted by Bhatia who called it an attempt to dilute the controlling rights of IGE group.
The amendments to the Article of Association of IndiGo will take place at the annual general meeting expected to be held around last week of August. IndiGo didn’t respond to email queries till the time of going to press.
On July 8, Gangwal had written a letter to Securities and Exchange Board of India (Sebi) which sought a response from the airline on the allegations. Even the ministry of corporate affairs has sought an explanation on the matter.
Experts believe investor concerns are unlikely to be addressed until all the issues raised by Gangwal are not dealt with by the airline.
“The deal between the promoters doesn’t really solve the concerns of shareholders. The dynamics of the board are not going to change with promoters holding 60% seats. The real concern for investor is improvement in board structure and efficacy,” Hetal Dalal, chief operating officer at Institutional Investor Advisory Services, said.