IGE Group deplores 'misinformation on corporate governance' against Indigo allegations

IGE said the allegations were "baseless and fact-free insidious."

"Much has been said by Gangwal on corporate governance at IndiGo. He labels as “unusual” certain features of the arrangement he entered in to with IGE at the time when IndiGo was founded and he came in as an “Investor”. Here is the context of how the relationship was established. Mr. Rahul Bhatia and Mr. Gangwal – both being seasoned business persons (and certainly one of them with a reputation of being a super negotiator for deals worth billions of dollars) – signed a heavily negotiated Shareholders Agreement between IGE Group and RG Group to “reflect their agreement and understandings in relation to the governance, management and operation of IndiGo and stated their wish that the Agreement would 'govern the relationship between them'," IGE said in a statement.

Gangwal, though entitled to appoint a Director on the Board of IndiGo, right from the inception of his investment in 2006, chose not to join the Board or to appoint any other nominee. It was not until June 2015 (prior to the IPO) that Gangwal finally joined the Board.

"By 2015, IndiGo had established itself as the most successful airline ever in India. It had matured into a great institution with apparently good corporate governance though without the benefit of Mr. Gangwal’s presence on the Board. Disclosures were made in the IPO prospectus that IndiGo would remain a promoter controlled company and the arrangements, as between the two promoters, were made public," the statement noted.

Now that Gangwal has raised a much-orchestrated controversy around corporate governance, one might ask the question: what are facts put out by him to support his allegation of “collapsing” corporate governance standards at IndiGo and his apprehension that IndiGo the pride of the nation, will go down the tubes unless something is done urgently to save it.

"He says that nothing is wrong in a minority shareholder having influence and controlling rights 'provided such influence is used judiciously and with prudence and is in the best interests of the company'. That is the standard he prescribes. In his grievances, he talks about rights of the IGE Group as a shareholder and promoter, but he fails to give even one instance where there has been any misuse or abuse of any such right. Has there been any stripping of assets or profits? Has there been any misfeasance or fraud?"

"While he emits volumes of hot air about RPTs, he ends up giving one example of what he believes demonstrates that there may have been something which did not meet arm’s length criteria – and that example is factually wrong.  And this after he allegedly has been working on information provided by “whistle blowers” who apparently chose not to use the whistleblower mechanisms and procedures established by IndiGo and instead provided information to Mr. Gangwal," it added.

"Corporate governance is not about levelling baseless charges. It is about ensuring that the company’s interests as also those of other stakeholders are protected and not harmed. Mr. Gangwal fails to cite a single concrete example where any act or omission has resulted in any loss or damage to IndiGo. Paan ki dukaan has apparently done well and continues to do well; it is financially sound; it is well run and managed by a competent set of managers. Mr. Gangwal’s allegations about lack of corporate governance are much ado about nothing," the statement concluded.