3 min read.Updated: 29 Jan 2020, 11:37 PM ISTLeroy Leo
Had the AoA been amended, it would have given Rakesh Gangwal a clean exit, if he so desired, amid a feud with Rahul Bhatia
The EGM was filled with drama due to the absence of Rakesh Gangwal, who had called the meeting
NEW DELHI :
Shareholders of InterGlobe Aviation Ltd, which runs India’s largest airline IndiGo, rejected co-promoter Rakesh Gangwal’s proposal to amend the company’s articles of association (AoA), which could have provided him a clean exit if he so desired amid an escalating feud with partner Rahul Bhatia.
If the amendment was approved, it would have done away with the Bhatia-led group’s right of first refusal to buy Gangwal’s stake in case the latter decided to sell his shares.
“The rejection of Gangwal’s proposal by shareholders indicates that the dispute between the co-promoters is likely to linger," an analyst with a domestic brokerage said on condition of anonymity.
While Bhatia, his family members and IGE together own 38.22% stake in InterGlobe Aviation, Gangwal, his family and the Chinkerpoo Family Trust collectively hold 36.64%.
Shobha Gangwal and JP Morgan Trust Company of Delaware are the trustees of the Chinkerpoo Family Trust.
The tussle between the two promoters came to the fore when Gangwal approached the Securities and Exchange Board of India on 8 July for intervention to address alleged corporate governance lapses at the company.
The two promoters are also locked in an arbitration battle, filed by Bhatia in October, over alleged breach of shareholder agreement.
Therefore, Gangwal’s proposal to amend the company’s articles of association led to concern among minority shareholders that he might offload his stake in the company, which, considering the large volume of shares, would adversely impact the share price of InterGlobe Aviation.
“The resolution does not provide clarity on whether Gangwal wants to sell his stake or not," said Jasmeet Singh, a shareholder present at the meeting. “Also, he called the EGM but was himself absent."
The EGM on Wednesday was filled with drama due to the absence of Gangwal, who had called the meeting.
Minority shareholders expressed concern about the erosion of share price of the company due to the continuing public spat between the two promoters.
Gangwal’s absence at the meeting upset shareholders, who created a ruckus near the stage where the InterGlobe Aviation board was present. This prompted chairman M. Damodaran to call security guards to control the situation, according to several eyewitnesses.
“The fight between the promoters has led to a fall in share prices, which is affecting our returns, and Bhatia did not even say anything to calm nerves," one of the minority shareholders said on condition of anonymity.
InterGlobe Aviation and Gangwal did not respond to emailed queries until the time of going to press. Gangwal did not respond to calls on his mobile phone.
A spokesperson for Bhatia’s IGE said the company was not aware of the reasons behind Gangwal’s absence at the EGM.
Over the last six months, shares of InterGlobe Aviation have declined around 8%. During this period, it hit its lowest level last month at 1,277.10 on the National Stock Exchange. On Wednesday, the stock closed 0.47% higher at ₹1,460.60.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!