IndiGo’s Promoters May Resolve Differences Soon, Stock Bounces Back

Shares of InterGlobe Aviation Ltd, which operates India’s largest airline IndiGo, pared all losses to turn positive in afternoon tradeon Wednesday, i.e. 24 July, after a CNBC TV18 report said that promoters RakeshGangwal and Rahul Bhatia have decided to resolve their differences.

According to the report, the finer details of an agreement between the two promoters are being worked out. The development comes after the board meeting last week that was held to consider the June quarter earnings of the airline as well as to discuss the dispute between Rakesh Gangwal and Rahul Bhatia.

After the news broke out, IndiGo shares hit an intra-day high of Rs 1,579 piece, recovering nearly 9% from its intra-day low of Rs 1,450.20. At 2:39 pm, the stock was trading at Rs 1,576, up 3.5%, on BSE.

Sources told CNBC TV18 that all the outstanding issues were being resolved and both the sides looked keen to put the past behind and move forward.

Meanwhile, RakeshGangwaltold CNBC TV18,“I do not wish to comment on ongoing board discussions. However, I hope that we are able to resolve these issues.”

According to the report, the board of directors at the recent meeting decided to amend the Articles of Association (AoA) for expanding the IndiGoboard to up to a maximum of 10 members, including four independent directors.

The inclusion of more independent directors and an independent woman director were among the key demands made by RakeshGangwal.

The sources also said that Gangwal and Bhatia have agreed on reworking the process for related-party transactions (RPTs), though they added that the RPTs were in compliance with norms. Consultancy firm EY, which had reviewed the RPTs of IndiGo, found only minor procedural lapses, said these sources.

For those unaware, RakeshGangwal had written a letter to capital markets regulator Securities and Exchange Board of India (Sebi) on 8 July seeking regulatory intervention with regard to his disagreements with Rahul Bhatia on corporate governance norms and related party transactions. Bhatia's InterGlobe Enterprises had denied the allegations and called them baseless.

As of March, the two promoters held 74.93% share, with the rest 25.07%being held by the public. Rahul Bhatia and his associates hold the highest stake in the company at 38.26%, followed by RakeshGangwal and his associates at 36.68%.