New Delhi: Shares of IndiGo fell 17 percent during early trade on Wednesday after the dispute between its promoters came out in the open.
Locked in a bitter battle with fellow co-founder Rahul Bhatia, IndiGo promoter Rakesh Gangwal has alleged serious governance lapses at the company, saying even a “paan ki dukaan” (betel shop) would have managed matters with more grace.
Gangwal, who along with his affiliates holds around 37 percent stake in InterGlobe Aviation, said that the company has “started veering off” from the core principles and values of governance that made the company what it is today.
The power struggle comes at a bad time as Indian carriers struggle to stay in business amid higher oil prices and cut-throat competition. InterGlobe shares tumbled as much as 19% amid concerns that the power struggle will become prolonged and cause collateral damage to the company.
“With the battle between the two promoters coming out in the public in great detail, we do not see an agreement anytime soon,” Citigroup analyst Arvind Sharma said in a note to clients, repeating his advice to sell InterGlobe Aviation shares. “The doubt regarding the final resolution could cause weakness in the stock price.”
‘Bhatia pushing through decisions without following basic governance protocols’
Gangwal, who has said he had no desire to take control of the airline, also wrote in a letter to SEBI that Bhatia is “building an ecosystem” of companies for related-party transactions. He also criticized how Bhatia’s control over the board allowed him to push through decisions “without basic governance protocols and laws being followed.”
“These unusual controlling rights seem to be the basis for the various violations of law and governance at IndiGo,” Gangwal said in his letter. “The nation can ill afford IndiGo to ever falter.”
Although Gangwal and Bhatia are board members at InterGlobe, neither holds executive positions at the company. Still, Bhatia’s holding company is the top shareholder.