Asia’s biggest budget airline by market value, has landed itself in deep soup, after one of its co-founders accused the other of dubious governance practices. The allegation has landed the airline in the midst of a big dispute.
Rakesh Gangwal, the billionaire co-founder of budget carrier IndiGo, has sought intervention from the country’s securities regulator to resolve alleged corporate governance issues at the airline.
He has informed IndiGo’s operator, InterGlobe Aviation Ltd., about governance concerns that he had with the other co-founder Rahul Bhatia and has flagged it to the Securities and Exchange Board of India. This has prompted queries from the regulator that InterGlobe has to respond to by July 19.
One of the issues mentioned in the complaint was “unusual controlling rights” held by Bhatia. According to Gangwal, this led him to push through related-party transactions and major decisions without proper safeguards or protocols.
This entire dispute has resulted in the InterGlobe shares crashing down by a whopping 19% amid concerns that the power struggle will be prolonged and can cause collateral damage to the company.
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In his letter to the regulator, Gangwal said the company is at a “watershed moment” and that it’s started “veering off from the core principles and values of governance that made IndiGo what it is today.”
Gangwal also criticised Bhatia for enforcing undue control over the board that allowed him to push through decisions “without basic governance protocols and laws being followed.”
Gangwal and Bhatia created the airline entity in 2005. The airline grew to become one of the most sought-after low-cost carriers in India. But right now, the feud is not helping the cause of the airline, as is evident from the fall in share prices.