Rahul Bhatia and Rakesh Gangwal, the two co-promoters of IndiGo Airlines, have reached a truce of sorts.

The size of the company’s board will be expanded to 10 from the current six and will include an independent woman director, as a measure to address some of the concerns raised by Gangwal.

Sources close to the development said that the Articles of Association of the company will be amended to allow for the expansion of the board.

In a recent letter to the SEBI and the Union government, Gangwal had claimed that the company had failed to address various corporate governance issues and was not fully compliant with the requirements of the Companies Act, 2013 and the SEBI’s Listing Agreements.

Gangwal had also flagged the issue of related party transactions involving InterGlobe Enterprise and IndiGo Airlines. Sources maintain that most of these concerns were unfounded but admitted that there were some procedural lapses in certain transactions.

As for the Shareholders Agreement, which has been amended twice before taking the company public in 2015, it is understood that it would be allowed to lapse in November this year.

The operations and management of the company would be guided by its Articles of Association.

Assurance to shareholders

Sources also maintain that the recent disagreements between the two co-promoters would not affect shareholders’ wealth as the company was doing well. While the share price took a hammering in the recent days, sources maintain markets will respond to the robust performance of the company.

Profits up

The company had declared net profit of over ₹1,200 crore in the first quarter of this fiscal, the highest in any quarter.

Sources also maintain that the spat between promoters will not impact the operations of the airline or its future growth.

Questioned if Gangwal and Bhatia can continue as co-promoters in an amicable manner following the recent rift, sources said that they hoped that Gangwal continues as his inputs are valuable.

Share sale pact

However if Gangwal decides to exit the company, he is required to offer his shares to Bhatia under the agreement between the two co-promoters which stipulates first right of refusal to the promoters.

The co-promoters are also obliged not to trade in their holdings, which can then trigger a requirement to make an open offer.