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IndiGo slips 2% after shareholders reject Gangwal's special proposal at EGM

The resolution primarily failed after co-founder Rahul Bhatia's Interglobe Enterpise's voted against it. The Bhatia family and Inter-Globe Enterprises (IGE) together own 38.23 per cent.

SI Reporter  |  New Delhi 

IndiGo
IndiGo

Shares of InterGlobe Aviation -- the parent company of airlines -- skid 2 per cent to Rs 1,432 on the BSE on Thursday after the airiline's shareholders rejected the special resolution proposed by co-promoter Rakesh Gangwal at the Extraordinary General Meeting (EGM) held Wednesday. The resolution sought to relax rules on the sale and purchase of shares by its main shareholders making it easier for the promoters to raise or cut stake in the company.

"The special Resolution for Amendments to the Articles of Association of the Company has not been passed as the votes cast in favour of the resolution are less than three times the number of votes cast against the resolution," the company said in a regulatory filing post market hours. The resolution required support from at least 75 per cent shareholders. READ FILING HERE

The resolution primarily failed after co-founder Rahul Bhatia’s Interglobe Enterpise's voted against it. The Bhatia family and Inter-Globe Enterprises (IGE) together own 38.23 per cent, while Gangwal, his wife Sobha Gangwal and a trust hold 36.65 per cent.

Most of the public institutions, too, voted against the resolution. Of the 84 per cent of such large public shareholders who voted, 51.65 per cent rejected the move. Institutions own nearly 21 per cent stake in InterGlobe Aviation.

Among the 16 clauses that Gangwal intended to remove are restrictions that confer the right of first refusal on the partner who’s prepared to stay on in the event of a stake sale by the other partner. The clause prevents either of the co-founders from buying publicly-listed shares of the company, potentially triggering an open offer for the rest of the company and another one that prevents staggered sale by a partner. READ HERE

The two promoter camps washed dirty linen in public in May 2019 after Gangwal wrote to the Securities and Exchange Board of India, alleging lack of corporate governance. Gangwal complained that Bhatia, who holds controlling power, used it to execute questionable related-party transactions between his group company Interglobe Enterprises (IGE) and

Between May 15 and December 31, 2019, the stock tumbled 17.11 per cent on the BSE, as against a 11.5 per cent rise in the benchmark S&P BSE Sensex. In comparison, peer firm SpiceJet was down 14 per cent during the period.

However, so far in January, the stock has outperformed the benchmark by advancing nearly 10 per cent on the BSE till January 29, relative to a fall of 0.1 per cent in the S&P BSE Sensex and 12.2 per cent in SpiceJet.

During the October-December quarter of FY20, budget carrier IndiGo reported a consolidated net profit of Rs 496 crore, up 167.9 per cent rom a profit of Rs 185.2 crore logged in the December quarter of FY19. During the September quarter of FY20, the budget carrier had reported its highest ever quarterly loss of Rs 1,065.6 crore.

It, however, cut its estimates for capacity growth for a second straight quarter to rein in maintenance costs and improve aircraft utilisation amid a spate of groundings.IndiGo has been forced to ground several of its Airbus A320neo planes fitted with Pratt & Whitey engines, which have been linked to in-flight engine shutdowns. The airline is in the process of replacing the engines in its affected fleet of over 100 planes.

At 9:56 am, the stock was trading 1.8 per cent lower at Rs 1,435.5 apiece, as against a 0.4 per cent decline in the S&P BSE Sensex. SpiceJet, meanwhile, too was down by 1.9 per cent at Rs 96.95 on the BSE.

First Published: Thu, January 30 2020. 10:25 IST
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