Role of Boards
In the context of Indigo
Fit & proper to be revoked
Indigo is a proprietorial organisation. It is primarily owned and run by one individual who is also the Managing Director. To tick the checklist one lawyer with no aviation experience has been made the mandatory lady director, a couple of retired bureaucrats have been put there for decoration, a few Caucasians for an international look etc. All in all, the board is appointed by and reports to the promoter. As does the management. And this co has a market share of 60%.
There is no separation whatsoever between the shareholders, board and management. The co founder accused the proprietor of all kinds of malafide practices and a retired SEBI chair was hired to handle the regulator – which he did to great financial advantage.
If we look at the sequence of events over the last six years – they are exactly as Rakesh Gangwal had predicted when I met him with Anil Kejriwal and his lawyer. Here is his letter:
Now let’s come to the Regulators. There is contumacious contempt of regulatory orders. The proprietor further tried to use his dominance to brow beat the regulator. And seems to have got away with an extension. At the revised end date the drama will repeat.
What the proprietor here underestimates severely is the competence and expertise of Indian civil servants. He refuses to learn from the fate of his predecessors – Vijay Mallya, Naresh Goyal and Subroto Roy. Whilst he has all the time and money to squander company resources in buying hotels or investing in a good for nothing ai company – he did nothing in terms of pilot training or aircraft maintenance or airport infrastructure strengthening. Gautam Adani was smart enough to do all three.
Rahul Bhatia will now have to go. The question is the sequence of events. First the regulator will go as per the book and lam him and his proprietorship firm with a massive fine. That won’t hurt him much nor will it help passengers recover his losses. Second the old complaints made by his cofounder which are still pending will now be re-opened. This will result in ED and PMLA cases as there is clear diversion of funds. Next he will be declared as not “fit and proper” to be a company director. Thereafter like in the case of Srei or ILFS or Satyam – the board will be superseded and the govt will take over. This is the broad play book of where this can go to.
The proprietor obviously believes he can MANAGE and that his paid retired babus will deliver like they did in the past. He may not be wrong because not one director has resigned. Which means they are well paid or confused. It is usually a chain reaction waiting for the first.
The only thing I know for sure is that the proprietor here is just no intellectual match for our civil servants.
Not everyone is for sale.
And not everything can be bought.