Minority shareholders question IndiGo deals: Report

The crisis at the low-cost carrier Indigo seems to be deepening as the minority shareholders of the company have approached its board alleging operational mismanagement by the board, according to a report.

Business daily Business Standard on Friday reported, quoting sources that the minority shareholders have questioned the deals and the contracts signed by the airline’s management.

The deals struck for A320 Neo aircraft are among the issues red-flagged by the minority shareholders, according to the report. IndiGo, in 2011, had signed an order for 180 A320 Neos. The airline followed it up with an order for 250 of the same aircraft in 2015. The company had opted for this aircraft with the aim of bringing about fuel efficiency.

The report also said that minority shareholders of IndiGo have alleged that they were kept in the dark about the company’s expansion plans and its strategy to keep the finances healthy.

The report said that company is planning to do due diligence on various contracts signed by the airline in order to prove there is no mismanagement, in a bid to appease the shareholders.

This comes close on heels of the turf war between company’s founders – Rahul Bhatia and Rakesh Gangwal – who have seen their differences bulge over the company’s growth path and appointment of the executives. The promoters have hired J Sagar Associates and Khaitan & Co as their legal advisors separately, and the sources in the know say that the company founders may go to the National Company Law Tribunal (NCLT) to address their issues.

Gangwal and his family own 36.69% stake in the IndiGo, while Bhatia and his family own 38.26%.

IndiGo currently has a fleet of 225 and is a market leader with 47% market share. Any impact on the operations will results in a hike in the domestic airfares. The airline operates close to 1,400 flights, across 71 domestic and international destinations.

Even as the company told BSE in clarification that it can’t comment on the issue related to founder, airline’s CEO Ronojoy Dutta tried to calm the nerves of the staff through a letter.

"I want to assure you that the growth strategy of the airline remains unchanged and firmly in place, and the management is fully charged by the board to implement it," the letter said.