One of Indigo’s promoters – Rakesh Gangwal – wants more say or a way out

• Indigo co-founder Rakesh Gangwal has called for an exceptional general meeting of the board.
• He’s pushing for a resolution that would allow him to sell his stake in the airline without seeking the permission of his partner and the one who’s feuding against – Rahul Bhatia.
• Shares of Interglobe Aviation jumped 3.08% to ₹1374, as hopeful investors think the feud might finally be coming to an end.

It’s a new year and the saying to keep your problems in the old one - doesn’t seem to suit Rakesh Gangwal.

The US-based billionaire Indigo co-founder has called for an exceptional general meeting of the board. He is pushing for a resolution that would allow him to sell his stake in the airline without seeking the permission of his partner and the one he’s fighting with – Rahul Bhatia.

The war of the founders is another blow to the Indian aviation industry where many carriers are in trouble – from Jet Airways shutting shop to a debt ridden Air India struggling to make ends meet.

But the news of the meeting made Indigo investors happy. Shares of Interglobe Aviation jumped 3.08% to ₹1374, as hopeful investors think the feud might finally be coming to an end.

This could also lead to the possibility of an existing promoter leaving or a strategic investor coming on board.

The call for the meeting could be Gangwal’s indication that he is giving up on a fight that has lasted for at least a year now. Or it could be his last try to have a greater say on the board, says an aviation expert.



“Gangwal probably tried to make it a reasonable bargain in terms of having a say in what is going on. He is talking about improving the governance – an equal number of people representing major shareholders. If that doesn’t happen, he will keep his options open. We have to wait for the meeting to understand more and see what really happens,” Amrit Pandurangi, an aviation expert told Business Insider.

The logic behind the EGM

Experts believe that Gangwal hopes that with this EGM, members of the board will understand his logic or argument. He will insist that special policy decisions or strategy decisions have to be taken when the full board is present. Earlier, Gangawal raised questions on the governance of Indigo and related party transactions.

“Suppose he does not have this, even if he wants to exit he would like to do this from a position of strength rather than as somebody who did not get support and is that’s why moving out. But whether he wants to or not, remains to be seen. We should not look so far yet,” said Pandurangi.

‘Lack of checks and balances’

In June last year, Gangwal wrote to the Securities and Exchange Board of India (SEBI), alleging multiple violations at Indigo. This led to the differences between Gangwal and Bhatia coming out in the open.

Gangwal had then written that he had entered into a shareholder’s agreement with Bhatia, which gave the latter controlling rights over the majority of decisions at Indigo.

“I hadn't contemplated that over the years, Bhatia would start building an ecosystem of other companies that would enter into dozens of related party transactions with IndiGo. We are not against RPTs as long as proper checks and balances exist and such RPTs are in the best interest of the Company,” Gangwal wrote in the letter.

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