Serious Turbulence Among Indigo’s Promoters! Indigo’s Promoters are out in the open competing in a strategic cum legal ‘Tug of War’. What’s going on?
Read and find out below.
There’s a weird sport getting popular these days. It’s called ‘Slap Contest’. This is played between two players and the setting is similar to arm wrestling. So, there’s a small table or counter between them and each player gets a chance to slap the other one with a full swing. The one who gets knocked out, loses.
A similar competition is going on between Indigo promoters (not in a literal sense though). Rahul Bhatia and Rakesh Gangwal (Indigo promoters) are out in public (amongst shareholders) trying to prove dominance over each other. But, why are the promoters of a successful airline battling it out? Read on to know the details.
Latest - Call for EGM
We all know about AGM (Annual General Meeting) but, what’s an EGM? If we were to explain this in very simple terms then, AGM is held when everything is normal but, when there’s an issue that needs to be sorted urgently with consent from the shareholders, EGM is called. By the way, EGM stands for Extraordinary General Meeting.
Since last few months, Rakesh Gangwal has been asking for an EGM so as to amend certain clauses in Article of Association that he holds with Rahul Bhatia. It is being expected that Rakesh Gangwal might want to sell his shares, which he currently can not due to the legal compliances. As he’s been continuously alleging Rahul Bhatia for corporate governance issues, upcoming (expected) shareholders meet on January 29 might be the final nail on the coffin.
But, here’s a legal twist. To get his demands approved, Gangwal would require consent from two-thirds of the shareholders, which is highly unlikely. So, if the right to first refusal stays with Bhatia, this feud might get uglier.
The Tussle- Rahul Bhatia vs Rakesh Gangwal
When equally matched rivals fight, one result is guaranteed irrespective of who wins and that’s destruction. Rahul Bhatia and Rakesh Gangwal together hold 75% shares of the company. Statements like “Even a Paan shop is better managed than this company” (a statement issued by Gangwal over his allegations) and “His demands are quite baseless” (statement issued by Bhatia over the issue), prove that things are not going well.
But, it’s not just about the 75% held by the two promoters. It’s also about the remaining 25% which is held by other shareholders. Of course, the shareholders have not invested in the company to witness a cut-throat fight between the promoters. They probably had other plans which the promoters should take care of.
Indian airlines are going through a peculiar phase. Neither of them are making profits. One (Indigo) which was doing fairly well is suffering from leadership issues. It was also in news recently that Indigo is interested to get a stake in Air India. Due to the rise in crude oil prices, Air India’s future is also shaky. Logically, an airline that is going good should be able to turn around a loss-making one. But, with present scenario, aren’t we expecting too much?
This situation for the shareholders is as if they are the children of a nuclear family whose parents are fighting. What would the children do? They can’t control anything but their future is at stake! Also, the family will suffer as a whole no matter what. So, are we witnessing downfall a company that could have touched greater heights? Only the time will tell but, as of now the circumstances seem grim for one of the ‘best performing airline’ in India and world.