CORPORATE>INDIGOGangwal makes innocent fig leaf statements of standing by and honour-
ing the SHA and being a crusader of corporate governance,” Bhatia said
to the board in June this year. Bhatia added that “the hurt ego of Gang-
wal on realising that upon his refusal to lend his hand in the company’s
ongoing negotiations with original equipment manufacturers (OEMs),
the company had proceeded to make alternative arrangements for the
purpose... the company will remain eternally grateful to Gangwal for
having attempted to hold the business to ransom by purposely delaying
the ongoing negotiations with OEMs,” reportedly referring to IndiGo’s
discussion with CFM International for new engines.
Despite strong speculations, Gangwal has so far denied reports of ex-
iting the airline or intending to take control. Since the current SHA and
AoA don’t allow Bhatia or Gangwal to sell stakes to a third party – either
privately or through stock exchanges – it effectively means that they can
sell their stake only to each other.
With his enormous rights, Bhatia seems to be on a good wicket com-
pared to Gangwal even as both hold roughly similar stakes – the Bhatia
camp 37.9 per cent and the Gangwal camp 36.99 per cent. Just two years
before the IPO, the difference was bigger – the Bhatia camp owned 51.15
per cent and the Gangwal camp 48.84 per cent. Bhatia claims they have
equal ownership despite the IGE Group taking on financial exposure of
over 1,100 crore in the initial years as against Gangwal’s15 crore fi-
nancial risk. “Gangwal was aware of what it would take to run an airline
and based on global empirical evidence the real risk of failure... Gangwal
says that he made a mistake in agreeing to the rights of the IGE Group
and that ‘times, circumstances and behaviour of promoters’ has changed
since 2015... Is there sanctit y in ag reements entered into by business peo-
ple freely and at their own will?” says an IGE Group statement.
“Whether Bhatia made money through related party transactions is a
different question. He took financial risk and they both agreed on some
terms. Gangwal didn’t share financial risk, his was sweat equity. If you
look at it, Gangwal’s 37 per cent stake is almost powerless. The matter
largely revolves around his ownership and whether this is a precursor to
his exit from the airline,” says Devesh Agarwal, an aviation analyst.
The Bhatia camp has been fending off the RG Group demand for an
extraordinary general meeting (EGM) to sort out these issues for over six
months. On June 7, it consulted a former Supreme Court judge for legal
opinion whether there’s a need for an EGM. The judge advised against it.
Much to Gangwal’s annoyance, the details of the opinion were dis-
closed six minutes prior to the proposed EGM on June 12. This worked
64 IBUSINESS TODAYIAugust 25 I 2019The list of high-level exits and
inductions since last yearTHE INDIGO
CHURNJanuary 20 18
IndiGo appoints
Wolfgang Prock-Schauer
as chief operating officerApril 20 18
IndiGo’s President for 10
years, Aditya Ghosh, steps
down; the airline appoints
Gregory Taylor as senior
adviser who will take
over as CEO after
regulatory clearanceslike a match in the powder barrel, and
within four weeks, Gangwal decided
to take his fight public. “All these in-
cidents could be a pressure-building
mechanism from the Bhatia camp to
force Gangwal to sell his stake. Bha-
tia camp has literally closed all the
avenues for him. Gangwal has tried
to bring his brawl to everyone’s notice,
including prime minister, finance
minister and others. He seems to be
unnerved by Bhatia’s next move,”
says an aviation expert. In his letter,
Gangwal has mentioned that there
are powerful people in the airline who
would use their position to inf luence
the outcome of his campaign.Holding the Nozzle
Gangwal has raised concerns over the
EY audit of related party transactions
and asked why it didn’t reach out to
him. He says the report has not been
shared with the audit committee and
the board. IndiGo recently submitted
the report to SEBI. It’s surprising that
parts of the EY report were selectively
leaked to the media recently, an issue
raised by Avinash Vazirani of Jupiter
India Fund, an IndiGo shareholder,
in the recent quarterly earnings call.
“We very much respect what you just
said. We are taking it on the advise-
ment...thank you for this input, it is
very valuable and we will take action,”
IndiGo CEO Ronojoy Dutta replied to
Jupiter India in an assuring voice.
More than a CEO, of late, Dutta’s
job has been that of a firefighter inside
a burning house. Ever since the fight