Bengaluru: Shares of Interglobe Aviation Ltd fell as much as 19% on Wednesday after one of the co-founders of India's largest airline IndiGo alleged violation of corporate governance rules at the parent group.
Interglobe shares hit their lowest since March and were on course for their worst day since January 2016.
Airline co-promoter and former US Airways Chief Executive and Chairman Rakesh Gangwal came on record to lodge his grievances against various issues pertaining to IndiGo. He stated that a 'paan-ki-dukaan' was run better than the company.
Gangwal on Tuesday also asked the country's securities regulator to intervene in the matter, a move that suggests that a previously reported row between Gangwal and fellow co-founder Rahul Bhatia was escalating.
"I have vigorously attempted for almost a year to persuade the company to shore up its governance standards, and all my attempts have been thwarted by the IGE Group," Gangwal said in Tuesday's letter to the Securities and Exchange Board of India, referring to Bhatia's affiliate group.
In his letter to Securities and Exchange Board of India (Sebi) Chairman Ajay Tyagi and other top officials, Gangwal lamented that IndiGo has started veering off from the core principles and values of governance that made IndiGo what it is today.
He raised serious objections to related party transactions in the company, stating that various fundamental governance norms and laws were not being adhered to. He warned that this will lead to unfortunate outcomes if effective measures are not taken.
Gangwal has sought regulatory intervention from market regulator Sebi to resolve the issues. He, along with his affiliates, hold 37 per cent stake in IndiGo while the other co-promoter, Rahul Bhatia, has 38 per cent equity stake.
Sebi has sought a response from IndiGo on the alleged grievances raised by Gangwal.
IndiGo in its BSE regulatory filing said: "... We inform you that the Board of Directors of lnterGlobe Aviation Limited has received a letter dated July 8, 2019 from Rakesh Gangwal, the copy of which is already with the Stock Exchanges, informing the company that he has written a letter to Sebi seeking regulatory intervention on his alleged grievances".
"Sebi has in the meantime asked the company to give its response to this letter by July 19, 2019, with which the company will comply."
(With inputs from Reuters and IANS.)