At EGM, IndiGo shareholders back resolution to scrap RoFR clause

Shareholders of InterGlobe Aviation have on Thursday given their nod to scrap a clause in the articles of association (AoA), which gives the airline's two promoters a right of first refusal (RoFR) over acquisition of each other’s shares.

InterGlobe Aviation operates India’s largest airline IndiGo and is promoted by Rahul Bhatia and Rakesh Gangwal. Together they own 74.4 per cent stake in the airline.

The removal of clause will now allow either side to sell or transfer shares to a third party without giving each other notice.

Over 99.9 per cent of the airline’s shareholders voted in favour to remove the clause at the company’s extra ordinary general meeting on Thursday. While the resolution received 100 per cent votes from promoters and institutional shareholders, there were a few negative votes from public shareholders.

The EGM was called following a joint requisition from promoters who had earlier fought a bitter battle over corporate governance issues at the airline.

The call for the EGM followed a London Court of International Arbitration’s September order directing an amendment to the AoA to scrap the clause regarding RoFR. The London court had granted the parties 90 days to implement the order.

In October, Gangwal had moved the Delhi High Court, seeking directions for calling the EGM. The petition, however, was dismissed by the court.

The agreement between the promoters provides for a RoFR and tag-along rights over the acquisition of each other’s shares. This clause was to be valid for four years from the listing of the airline in 2015. However, the clause was not scrapped in 2019 since the two promoters were locked in a bitter dispute over corporate governance issues in the airline.

The differences between the promoters became public in July 2019 after Gangwal wrote to the Securities and Exchange Board of India, seeking its intervention to address corporate governance lapses at the company. Bhatia’s IGE Group had rejected the allegations. In 2019, both sides had initiated arbitration to resolve the dispute.

Omicron clouds growth outlook : CEO

The fast-spreading Omicron variant of Covid-19 has cast a shadow of uncertainty over IndiGo's revenue forecast, Ronojoy Dutta, the airline’s chief executive officer, said at the EGM.

“Domestic traffic rebounded strongly in November and December. Omicron has caused future bookings to soften, but these are still above the September levels. While international capacity is restricted, bubble flights to international destinations are performing well,” Dutta said at EGM.

Dutta listed various steps IndiGo took since the pandemic broke out and said the airline was structurally stronger now than it was in March 2020. He said IndiGo was on the recovery path if there was no third wave.

According to the IndiGo CEO, the airline went through turbulent times, incurred significant losses, and took debt to shore up its balance sheet. “Repairing the balance sheet is an urgent task,” he said.

“During the past two years, the focus has been building the domestic network, returning inefficient planes at a rate of 45 per year and replacing them with efficient Airbus A320neo aircraft, improving levels of customer service, and growing our charter and cargo businesses. Despite the low level of revenue generation over the past two years, we can confidently state that we are emerging from the Covid-19 crisis structurally stronger as an airline,” he said.