InterGlobe Aviation slips after promoter files for arbitration

InterGlobe Aviation fell 2.22% to Rs 1829.25 after one of the main promoters Rahul Bhatia moved for arbitration proceedings amid differences with co-promoter Rakesh Gangwal.

InterGlobe Enterprises and Rahul Bhatia, as claimants (the IGE Group), have submitted a Request for Arbitration dated 1 October 2019 to the London Court of International Arbitration under the shareholders agreement dated 23 April 2015 (as amendedon 17 September 2015) (the shareholders agreement) executed between the IGE Group, Rakesh Gangwal, The Chinkerpoo Family Trust, Shobha Gangwal (together with Gangwal and The Chinkerpoo Family Trust, the RG Group) and InterGlobe Aviation (the company). The IGE Group and the RG Group are promoters of the company. The company has been named as a respondent as it is a party to the shareholders agreement.

This dispute relates to claims of the IGE Group against the RG Group regarding compliance with the shareholders agreement and the articles of association of the company and damages. Under the request for arbitration, no relief has been sought against the company.

The company has been named as a necessary and proper party to the arbitration. However, presently, no monetary claim, including any compensation or penalty, has been sought against the company.

As on 30 June 2019, the three members of the Bhatia family collectively held 0.03% stake while Interglobe Enterprises held 37.88% stake in InterGlobe Aviation.

The two members of the Gangwal family held 23.07% stake in while The Chinkerpoo Family Trust held 13.59% stake in InterGlobe Aviation.

In July 2019, Indigo's Co-founder, Rakesh Gangwal, had written letter to Sebi alleging several violations at IndiGo including those pertaining to related-party transactions; appointment of senior management personnel, directors and the chairman, who has always been an independent director by convention.

Gangwal also alleged that Bhatia's IGE had overt influence over the appointment of directors and senior management, thereby controlling the airline's operations.

Following this, the airline's Board amended its policy on related party transactions and also expanded the board, the founders seemed to have made peace with each other. The company's AGM had also amended the Articles of Association.

Meanwhile, the S&P BSE Sensex was down 288 points or 0.75% to 38017.35.

On the BSE, 33532 shares were traded in the counter so far compared with average daily volumes of 12 lakh shares in the past one quarter. The stock hit a high of Rs 1844.6 and a low of Rs 1778.25 so far during the day.

The stock hit a 52-week high of Rs 1911 on 23 Sep 2019. The stock hit a 52-week low of Rs 697 on 09 Oct 2018.

On a consolidated basis, Indigo's net profit surged 4229.4% to Rs 1203.14 crore on a 44.7% increase in net sales to Rs 9420.06 crore in Q1 June 2019 over Q1 June 2018.

InterGlobe Aviation (Indigo) is an Indian low-cost airline. It is the largest airline in India by passengers carried and fleet size, with a 48.1% domestic market share as of June 2019.

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