The two major complaints highlighted were that AirAsia India was being “run” by Malaysian parent AirAsia Bhd, in contravention of Foreign Direct Investment rules, and that the Indian venture was being “overcharged” by the Malaysian company.
An internal investigation is being conducted by the board following a claim by axed Tata Sons chairman Cyrus Mistry that an audit found “fraudulent transactions”.
According to India’s rules, foreign airlines can own up to 49 per cent in domestic airlines but effective management control must remain with the Indian partner, said the ET report.
Tata Sons, the holding company of the Tata group, and AirAsia Bhd of Malaysia own 49 per cent each in AirAsia India. AirAsia India chairman S Ramadorai and director R Venkataramanan own the remaining 2 per cent.
AirAsia India executives had warned Ramadorai and director Bharat Vasani about potential losses, and the way the airline was being run, said the ET report.
For instance, the report said, ex-CFO of AirAsia India Vijay Gopalan had warned about the breach of FDI law in an email to Ramadorai, copying former AirAsia India CEO Mittu Chandilya, on February 14, 2015.
Among other complaints, he had said was that “revenue management has to be real time and handled by persons familiar with the Indian marketplace and its behaviour”, but the entire process is in Kuala Lumpur (the headquarters of AirAsia Bhd).
ET said it had reviewed nearly 100 pages of company records and email correspondence between executives and directors and that five people familiar with the matter had spoken to it.
It said some executives had questioned AirAsia group chief Tony Fernandes, who sits of the AirAsia India Board, about entering into what they termed as costly financial deals with associate companies of AirAsia Bhd.
The ET report said Fernandes, Tata Sons, Ramadorai, Venkatramanan, Vasani, Chandilya and Gopalan did not respond to emailed questions seeking comment.