Institutional EYE

Commentary on Corporate Governance Issues

Are IndiGo’s security checks in place?

There is no denying that governance levels at Indigo could be strengthened. Even so, there is no taking away from the fact that the promoters have delivered – to run a profitable airline in the current environment is no small feat. The battle between the two sets of promoters will do more damage to shareholder returns than the issues getting raised by this discord. Richard Branson once said, “If you want to be a millionaire, start with a billion dollars and launch a new airline.” This comment turned out to be prophetic for several of the Indian airlines beginning with Air India and ending with the most recent debacle of Jet Airways. The airline industry, by its very nature, is vulnerable to

IndiGo flies into turbulence

With two of the largest airlines in doldrums, IndiGo’s addition to the pack is worrisome. The battle between the two sets of promoters may not have affected operations just yet. But, we have yet to see an instance where governance issues don’t eventually work their way into balance sheet challenges. The recent allegations of the Gangwal faction (RG group) against the Bhatia faction (IGE group), both promoters of Interglobe Aviation Limited (IndiGo) with almost equal shareholding, revolved around three broad issues: (a) the Articles of Association (AoA) give the IGE group superordinate powers, (b) related party transactions between IndiGo and the IGE group were not conducted in a transparent

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