The extraordinary general meeting (EGM) of InterGlobe Aviation (the parent of IndiGo), the country's largest low-cost airline, concluded Thursday. The promoters of IndiGo Rakesh Gangwal and Rahul Bhatia had called the EGM to propose amendments to the carrier's Articles of Association (AoA) that would resolve the issues between the two. The shareholders in the EGM were required to vote on it. The result of the EGM voting that took place via video conferencing would be uploaded within two working days.

Meanwhile, IndiGo CEO Rono Dutta has said while the Omicron variant has softened future bookings, the company is on its way to recovery. He added the company will emerge stronger after the two turbulent years due to the coronavirus pandemic.

The EGM had proposed to remove some clauses like the right of first refusal and tag-along from the AoA. These clauses are a key point of friction between the company's founders Rakesh Gangwal and Rahul Bhatia. The removal of the right of refusal will allow either promoter to sell or transfer their shares to a third entity without giving notice to each other. Some experts consider this EGM may signal a truce between Bhatia and Gangwal. Both the promoters collectively own 74.44 percent of the paid-up equity share capital in the company. Earlier in 2019, Gangwal alone had called an EGM to amend the AoA.

The conflict

Bhatia and Gangwal had founded IndiGo in 2006 and held nearly 99 percent of the stake before its listing in 2013. As of March 31, 2021, Gangwal owned a 37 percent stake in the company, while Bhatia owned about 38 percent.

The dispute began in May 2019 when Gangwal accused Bhatia of making unfair deals between InterGlobe Aviation and Bhatia Group entities. He flagged unusual rights that gave Bhatia more control over the board and allegedly led to governance failures. He also flagged instances of lack of approval of audit committee in some cases, lack of competitive bidding, and backdating contracts. When board Chairman M Damodaran reviewed the InterGlobe's related party transactions, he found some were not approved by an audit committee. These related party transactions had increased to Rs 315 crore in FY18 from Rs 30 crore between 2010-11 and 2017-18.

Further, the two founders also diverge on IndiGo's strategy for growth. While Gangwal is said to favour an aggressive growth route, Bhatia favours a slow approach.

The feud between the co-founders had turned legal and reached the Delhi High Court in October. Before that, both of them had battled against each others' claims at the London Court of International Arbitration (LCIA).

IndiGo shares that were earlier down over 1 percent at Rs 1,984, recovered a bit. At the last count, shares were up to Rs 1,991. Meanwhile, Sensex was up over 0.3 percent to 57,994.

(Edited by : Yashi Gupta)

First Published:Dec 30, 2021 12:22 PM IST