More turbulence is headed IndiGo's way after founder Rahul Bhatia rejected the allegations of co-founder Rakesh Gangwal claiming that the related party transactions (RPT) of the airline with his IGE Group were in order. Gangwal has alleged that the RPTs that India's largest airline signed with IGE Group were against the company's interests.
The IGE Group said an internal committee set up by the IndiGo board in March reviewed the RPTs, a media report said. The committee had been set up at the behest of IndiGo chairman M Damodaran after auditors EY gave an internal report on the transactions, according to the report in The Economic Times. The committee that included chief executive Ronojoy Dutta and chief financial officer Rohit Philip submitted its report to the board on April 4. But the board could not discuss the report because of differences between Bhatia and Gangwal.
Bhatia had said in a letter that the new process for RPTs that Gangwal proposed and was included in the committee's report impinged on "the rights of the board of directors".
Gangwal has sought changes in the RPT procedure and the shareholder agreement as part of "package proposal". This has stalled the action on the committee's report, the IGE statement said. The IGE Group has refuted Gangwal's allegations about lapses in corporate governance in the airline company. Gangwal has written to capital markets regulator Securities and Exchange Board of India (Sebi) that the shareholders' agreement, skewed heavily in favour of Bhatia, has been misused while making key nominations and appointments. He has alleged that the company irregularly signed RPTs that were sometimes done with a bidding process and at other times without the audit committee's nod. The IGE statement had denied it in a previous statement.
The IGE statement said the shareholders' agreement was amended twice ahead of IndiGo's public listing in 2015. It said Gangwal has failed to cite any instance where IGE Group misused its rights and that he has based his information on whistleblowers who didn't follow appropriate mechanisms established by IndiGo, according to the report.
The IGE Group also said Gangwal failed "to cite a single concrete example where any act or omission has resulted in any loss or damage to IndiGo". The group's reply also refers to the derogatory remark "paan ki dukaan" (betel shop) in Gangwal's letter to Sebi saying the shop has apparently done well and continues to do well as "... it is financially sound, it is well run and managed by a competent set of managers," said the statement. Apart from Sebi, Gangwal had sent letters to Prime Minister Narendra Modi's office, Finance Minister Nirmala Sitharaman, the aviation ministry.