One of the co-founders of India’s largest airline IndiGo has alleged violation of corporate governance rules at parent company Interglobe Aviation Ltd and asked the securities regulator to intervene.
The move appears to indicate that a boardroom dispute is escalating after a report in May that the co-founders and two largest shareholders of India’s largest airline were at odds over its expansion.
In a letter to the Securities and Exchange Board of India (SEBI), co-founder Rakesh Gangwal alleged the company’s board decisions were in defiance of governance protocols and laws.
SEBI, in its role as a stock market regulator, is empowered to protect the rights of investors in listed companies.
Co-founders Gangwal and Rahul Bhatia, along with their respective families, each control stakes of slightly less than 40 percent in the airline’s holding company, giving them both a major say in its strategy and plans.
"I have vigorously attempted for almost a year to persuade the company to shore up its governance standards, and all my attempts have been thwarted by the IGE Group," Gangwal said in his letter to SEBI, published on the Bombay Stock Exchange website here
SEBI has sought a reply from Interglobe Aviation by July 19.
Gangwal, an American and an aviation industry veteran who spent years in senior roles at United Airlines and US Airways, has been a big factor in driving IndiGo’s emergence as one of the fastest growing carriers in the world.
Bhatia, in turn, has been running things on the ground in India.
India’s aviation sector has been shaken by the collapse of Jet Airways, which has sent travel prices soaring. Jet, once India’s largest private carrier, was crippled by mounting losses.
IndiGo, SpiceJet and GoAir have been rushing to fill the vacuum left by Jet and gain control of its valuable slots.
IndiGo’s fleet consists of more than 200 Airbus SE A320 and A321 narrowbody aircraft, along with just over a dozen ATR turboprops.
Bhatia’s office did not respond to an e-mail and phone call from Reuters.
Shares slump
Shares of Interglobe Aviation fell as much as 19% on Wednesday after one of the co-founders of India’s largest airline IndiGo alleged violation of corporate governance rules at the parent group.
Interglobe shares hit their lowest since March and were on course for their worst day since January 2016.