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The Crushing importance of Corporate Governance and Ethics: Indigo promoters divided over Compliance

  • Co-Founder of Indigo, Rakesh Gangwal, in his letter to SEBI has levelled allegations of serious Corporate Governance lapses regarding related-party transactions between Indigo and its parent company InterGlobe Aviations.
  • Rakesh Gangwal has also claimed that though Indigo has a good business model, it cannot survive in the long run without adhering to the good corporate governance and a strong Board.
  • He further added that, “Beyond just questionable Related Party Transactions [between IndiGo’s parent and IGE Group], various fundamental governance norms and laws are not being   adhered to and this is inevitably going to lead to unfortunate outcomes unless effective measures are taken today”
  • SEBI has sought details from the Indigo Board pursuant to Gangwar’s complaint by 19th July 2019
  • Indigo Co-founder Rahul Bhatia and parent company InterGlobe Aviations have refuted the allegations raised by Rakesh Gangwal and have claimed that related party transactions stand at a miniscule 0.53% of the 2018-19 turnover of InterGlobe Aviation.

Compliance Takeaway: Recently India has been witnessing the downfall of major companies and corporate houses. The reason behind their failure is majorly non-adherence to good corporate governance. A company’s source of oxygen is its framework aligned to good corporate governance without which no company can run a long race.

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