A preliminary probe by the Securities and Exchange Board of India (Sebi) has suggested prima facie violations of corporate governance and listing disclosure norms in certain related-party transactions involving budget carrier IndiGo’s parent firm, InterGlobe Aviation, sources said.
While the company said it had not received any communication from Sebi on this, its shares plunged sharply in afternoon trade on Tuesday.
IndiGo has been facing a probe by Sebi ever since a public spat came to light between the two founders of the airline, Rahul Bhatia and Rakesh Gangwal, including over certain related-party transactions involving one of the warring promoters.
Sources said that a preliminary probe had now suggested violations of listing disclosure norms and fair corporate governance practices at the company. InterGlobe shares closed 4.68 per cent lower at Rs 1,376.70 on the BSE, after hitting an intra-day low of Rs 1,334 in afternoon trade following a sudden plunge after media reports about the Sebi probe came.
“We would like to state that the news item published in some media is factually incorrect and the company has not received any communication from Sebi in this regard,” the company said in a filing to the BSE. This came after the exchange sought a clarification from the company on the reports. There was no official word on the probe from Sebi. All agreements between the two warring founders as well as those between the company and its various investors and associates, including related parties, were being looked into by the watchdog.
The probe had suggested that some of the related party transactions could have been significant and required detailed disclosures and greater vetting by board committees comprising of independent directors, the sources said. The differences between co-founders and co-promoters came to the fore in July 2019 after Gangwal sought Sebi’s intervention to address alleged corporate governance lapses at the company.