Shares of InterGlobe Aviation Limited, which runs IndiGo airline, fell 19% on Wednesday morning after markets regulator Securities and Exchange Board of India sought a response from the company on the allegations made by two promoters against each other. Rahul Bhatia and Rakesh Gangwal, both co-founders, together hold more than 70% stake in the company.
The company’s shares hit their lowest value since March and were on course for their worst day since January 2016, Reuters reported. At 11.20 am, the stock was down 11.2% at Rs 1,390.80 on the BSE. The company is not a constituent of either the Sensex or the Nifty 50.
In a letter dated July 8, Gangwal told SEBI chief Ajay Tyagi that corporate governance norms and laws and the company’s code of conduct for directors had been violated at the company, Business Standard reported. The 23-page letter was also addressed to Prime Minister Narendra Modi and Union Minister for Corporate Affairs Nirmala Sitharaman. The company released the letter to the stock exchanges on Tuesday.
Gangwal sought permission to hold an extraordinary general meeting. He claimed InterGlobe Enterprises, owned by Rahul Bhatia, had misused its powers to enter into related-party transactions with IndiGo. Bhatia denied the allegation, saying the Companies Act gave the powers to a company’s board to decide how it is run.
“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 [InterGlobe Enterprises] Group,” Gangwal said in his letter.
The SEBI has asked InterGlobe Aviation for details by July 19.