 "Gangwal's fear over Bhatia's group does no credit to directors: Damodaran")
Amid the ongoing feud between promoters, IndiGo Chairman M Damodaran has said Rakesh Gangwal's apprehension that Rahul Bhatia's group could push through questionable decisions after board expansion does no credit to the fiduciary responsibilities of directors.
In a letter to the board of InterGlobe Aviation on August 5, Gangwal said there are "serious unresolved issues" and that proposed changes to the company's Articles of Association (AoA) are still an open issue.
The differences between the two promoters came into the public view after Gangwal, last month, sought markets regulator Sebi's intervention to address alleged corporate governance issues at the company.
Gangwal, in the latest letter, also said the proposal to have 10 board members came up only at the July 20 board meeting with limited and rushed discussions on its implications.
Currently, InterGlobe Aviation -- parent of the country's largest airline IndiGo -- has six board members, including Damodaran, Gangwal and Bhatia.
The AoA needs to be amended to expand the strength of the board to ten members.
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Against the backdrop of Gangwal's letter, Damodaran in an email dated August 5 said the first vacancy on the board after amendment of the AoA would be filled by a woman independent director (ID).
"The second vacancy to be filled will be by a wholetime/ executive director (This is necessary since we presently have 6 NEDs (non-executive directors), including 2 IDs, and no wholetime/ executive director). The third vacancy will be filled by an ID, and the fourth by an IGE nominee. That is the sequence contemplated," Damodaran said in the email.
The email as well as the letter were disclosed to stock exchanges by the company on Tuesday.
Bhatia and his InterGlobe Enterprises (IGE) group has around 38 per cent stake in the company.
According to the email, in the event of an ID position falling vacant, Anupam Khanna-headed Nomination and Remuneration Committee (NRC) would be required to take steps to fill in the vacancy.
"The fear that, in the interim, the IGE group will push through questionable decisions, does no credit to the IDs that will be on the board, or to the fiduciary responsibilities of the directors including those nominated by the IGE group," he said.
In the letter, Gangwal said there is agreement on all the contractual language for the new Related Party Transaction policy, the board size and composition, and closing the large loophole during the transition period. "The only agreement we do not have is to close the large loophole after the transition period," he said.
Shares of InterGlobe Aviation closed flat at Rs 1,493.30 on the BSE on Wednesday.
"Subsequent to the board meeting and in finalising the language on the Articles, all of us realised that the proposed board structure created a large loophole that gives the IGE Group additional powers that they do not have today."
"Essentially, when there are less than four independent directors, it would allow the IGE Group to pass any company policy that they want just on the basis of their board numbers being larger than all the other board members combined," Gangwal said in the letter.