InterGlobe Aviation, the parent of low-cost airline IndiGo Airlines (6E, Delhi International), has paid INR21 million rupees (USD289,701) to the Securities and Exchange Board of India (SEBI) to settle adjudication proceedings relating to complaints of breach of corporate governance.
The SEBI is owned by the Government of India and regulates the securities and commodity market in the country.
A notice issued by the SEBI on February 9, 2021, said InterGlobe Aviation had applied to settle after the SEBI on November 10, 2020, had issued a Show Cause Notice against it. “The settlement order records that the company’s offer to settle was on the basis that the company neither admits nor denies the violations alleged in the Show Cause Notice. These adjudication proceedings have now concluded. Further, there is no material financial impact on the company due to the settlement order,” the SEBI stated.
The SEBI order gave no indication as to the nature of the alleged violations.
However, CNBC TV reported it related to several complaints of breach of governance filed in July 2019 with the SEBI by IndiGo Airlines co-founder Rakesh Gangwal. The complaints pertained to, amongst other things, related party transactions between InterGlobe and IndoGo; and the parent company’s failure to timeously pass on important information to the subsidiary’s board.
Gangwal, together with co-founder Rahul Bhatia, and their respective families, are the majority shareholders of InterGlobe Aviation, together holding a 74.85% share. The remaining 25.15% is held as follows: foreign institutions 17.34%; mutual funds 3.88%; financial institutions 1.17%, the general public 1.25%; and others 0.98%.
According to its latest quarterly results, the airline made a loss of INR6.2 billion rupee (USD86.2 million) in December 2020, compared to an operating profit of INR4.9 billion (USD67.5 million) in December 2019.
