InterGlobe Enterprises says Gangwal’s charges ‘baseless’

New Delhi, July 12 (IANS) InterGlobe Enterprises (IGE), a promoter of IndiGo, on Friday said that Rakesh Gangwal's allegations of "collapsing" corporate governance in the airline are baseless.

"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," IGE said in a statement.

IGE said that Gangwal fails to cite a single concrete example where any act or omission has resulted in any loss or damage to IndiGo.

The company specifically, mentioned that Gangwal, though entitled to appoint a Director on the Board of IndiGo, 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, the company said.

"It had matured into a great institution with apparently good corporate governance though without the benefit of Gangwal's presence on the Board. As a precursor to the IPO, the shareholders agreement was re-negotiated, and heavily re-negotiated, and amended twice to comply with regulatory requirements. Disclosures were made in the IPO prospectus that IndiGo would remain a promoter controlled company and the arrangements, as between the two promoters, were made public," the IGE statement said.

Gangwal's allegations about lack of corporate governance are "much ado about nothing".

Recently, the crisis at the country's largest private carrier IndiGo deepened with the dispute between the promoters of the airline turning ugly.

The differences had been earlier been presumed to be a minor one by many industry experts, but it now transpires that it has snowballed into a full-blown war.

Airline co-promoter and former US Airways Chief Executive and Chairman Rakesh Gangwal, who has so far remained behind the scenes, has gone on record to lodge his grievances against various issues pertaining to IndiGo. So much so that he has sought regulatory intervention from market regulator Sebi to resolve the issues.

The developments have left investors wary. The airline stock fell 0.29 per cent to Rs 1,565.75 a piece on Tuesday on the BSE.

Gangwal, along with his affiliates, hold 37 per cent stake in IndiGo while the other co-promoter Rahul Bhatia has 38 per cent equity stake.

In his letter to Securities and Exchange Board of India (Sebi) Chairman Ajay Tyagi and other top officials, Gangwal has said that IndiGo was built on the foundation of uncompromising values and principles but it has started veering off from the core principles and values of governance that made IndiGo what it is today.

He has raised serious objections to related party transactions in the company, stating that various fundamental governance norms and laws are not being adhered to. He has warned that this will lead to unfortunate outcomes, if effective measures are not taken.

Sebi has sought a response from budget passenger carrier IndiGo on the alleged grievances raised by Gangwal.

According to IndiGo's regulatory filing: "... we inform you that the Board of Directors of lnterGlobe Aviation Limited has received a letter dated July 8, 2019 from Rakesh Gangwal, the copy of which is already with the Stock Exchanges, informing the company that he has written a letter to SEBI seeking regulatory intervention on his alleged grievances".

"SEBI has in the meantime asked the company to give its response to this letter by July 19, 2019, with which the company will comply," the regulatory filing made to the BSE said.