Under the cloud of sparring promoters, InterGlobe Aviation board is scheduled to meet on Friday to consider quarterly financial results and is also likely to discuss differences between the promoters over corporate governance matters.
Under the cloud of sparring promoters, InterGlobe Aviation board is scheduled to meet on Friday to consider quarterly financial results and is also likely to discuss differences between the promoters over corporate governance matters. Bringing the differences between him and Rahul Bhatia that have been simmering for nearly a year into the open, co-founder and promoter Rakesh Gangwal has alleged corporate governance lapses — a development that brought InterGlobe Aviation under regulatory scanner.
The company, parent of the country’s largest airline IndiGo, has told the stock exchanges that its board would meet on July 19 to consider and approve unaudited standalone and consolidated financial results for the quarter ended June 30, subject to a limited review by the statutory auditors. Gangwal, who holds around 37 per cent stake in InterGlobe Aviation, has flagged concerns about related-party transactions involving co-founder Rahul Bhatia’s InterGlobe Enterprises (IGE) Group and the allegations have been refuted by the Bhatia camp. Shares of the company have taken a beating since the promoters’ spat became public on July 9, when it was disclose that Gangwal has sought markets regulator Sebi’s intervention to address the governance issues.
The scrip, which has declined 7 per cent since July 9, closed nearly one per cent lower at Rs 1,458.65 on the BSE on Thursday. While Gangwal had even said that ‘paan ki dukaan’ (betel shop) would have managed things with more grace, Bhatia camp had said the company is well run, financially sound and managed by a competent set of managers. It had also termed Gangwal’s allegations of governance lapses as much ado about nothing. InterGlobe Aviation, which was listed on the exchanges in 2015, is under the regulatory lens.
Sebi is already probing the issues raised by Gangwal, and the corporate affairs ministry is also looking at whether there have been violations of companies law. Officials had said the role of each and every entity associated with all board members and entities linked to the promoters are being probed by Sebi, amid signs of lapses in complying with governance requirements, fair market trade and insider trading norms. The ministry would examine whether memorandum, articles, agreements and resolutions are in consonance with provisions of the Companies Act.
The company could face strict action in case there are violations of the Act. Among the issues flagged by Gangwal are that various related-party transactions with the IGE Group were executed without seeking the audit committee’s approval and without seeking competitive bids from third parties, and non-appointment of an independent woman director. Bhatia and his IGE Group have about 38 per cent shareholding in InterGlobe Aviation.