IndiGo stock tanks on reports of ED summons

The share of InterGlobe Aviation, which operates IndiGo, slumped 7.5 per cent on Wednesday, eroding Rs 3,536 crore from the company’s market valuation, after financial investigating agency Enforcement Directorate (ED) summoned the budget airline’s senior management for Foreign Exchange Management Act (FEMA) violations.

IndiGo, however, has denied that ED had summoned its senior management for FEMA violations.

“We refer to the news being telecast on various news channels stating ‘ED summons top management of IndiGo Airlines for FEMA violation.’ We hereby clarify that we have not received any such summons,” said a company statement.

The report saw panic selling of shares of the top private airline by investors. Its share price settled at Rs 1,136.15, down 7.49 per cent, at close on the BSE on Wednesday. At the NSE, share of the company plunged 7.50 per cent to close at Rs 1,136.45.

Co-founded by travel entrepreneur Rahul Bhatia and former US Airways CEO Rakesh Gangwal, IndiGo has emerged as the key player in India’s aviation growth story. With almost 41 per cent share, it has a virtual monopoly in the Indian aviation market. Growing consistently over the last one decade, the airline is now counted among the top 10 low-cost carriers (LCCs) in the world.
It currently operates a fleet of 153 Airbus A320 and 6 ATR serving 42 domestic and 8 international destinations.

IndiGo was the first carrier which had formally evinced interest to buy a controlling stake in Air India, but it backed out later citing the bidding terms. It had hoped the government would hive off Air India's international and domestic operations and bid them separately, eyeing the public sector carrier’s strong presence on foreign routes.