Shares of IndiGo, India’s biggest airline, dropped by over 17 per cent in early trading today (10 July) as a fallout of a bitter confrontation which erupted between two billionaire co-founders.
At 12.00 PM, the shares of InterGlobe Aviation, the holding company behind low-cost budget carrier was trading at Rs 1,378.50 apiece, down by Rs 186.10. It earlier hit an intra-day low of Rs 1,264.85.
IndiGo, founded in 2006, has over 40 per cent market share in India.
The airline’s co-promoter and former US Airways Chief Executive and Chairman Rakesh Gangwal came on record to lodge his grievances against various issues pertaining to IndiGo.
Gangwal, who owns 37 per cent of IndiGo, had sought intervention from India’s capital markets regulator Securities and Exchange Board of India over allegations of poor governance.
In his letter to SEBI Chairman Ajay Tyagi and other top officials, Gangwal charged that IndiGo has started veering off from the core principles and values of governance that made IndiGo what it is today.
Gangwal also claimed that governance standards at Indigo had “collapsed” and called on regulators to take away the “unusual” controlling rights of co-founder Rahul Bhatia.
Rahul Bhatia’s IGE Group has 38 per cent equity stake and the power to appoint three of IndiGo’s six directors including the managing director, chief executive and president.
Gangwar has raised serious objections related to party transactions in the company, stating that various fundamental governance norms and laws were not being adhered to. He warned that this will lead to unfortunate outcomes if effective measures are not taken.
Gangwal has sought regulatory intervention from market regulator SEBI to resolve the issues. SEBI has sought a response from IndiGo on the alleged grievances raised by Gangwal.
Bhatia rubbished Gangwal’s allegations, describing them as “false, frivolous, and misleading”, arguing that it was an attempt to “dilute and diminish the controlling rights of the IGE Group”.
IndiGo in its BSE regulatory filing said: "... We inform you that the Board of Directors of lnterGlobe Aviation Limited has received a letter dated 8 July 2019 from Rakesh Gangwal, the copy of which is already with the Stock Exchanges, informing the company that he has written a letter to Sebi seeking regulatory intervention on his alleged grievances".