IndiGo today told its shareholders at its 16th annual general meeting that all related-party transactions (RPTs) between the airline and promoter Rahul Bhatia’s InterGlobe Enterprises (IGE) are at arm’s length and in the best interest of the company.
In 2018-19, the related-party transactions between IndiGo and InterGlobe stood at Rs 150.12 crore or 0.53 percent of IndiGo’s consolidated turnover as compared to 0.50 percent or Rs 118.96 crore during 2017-18.
“In terms of size, it is very small. Corporate headquarters landlord is IGE so we pay them rent, we have gone through this a number of times…. this corporate headquarters is positioned close to metro. I don't want to inconvenience 2,000 employees and move somewhere else and pay higher rent. It doesn't make sense to get out of RPTs and why should we?” Ronojoy Dutta, Chief Executive Officer, told the shareholders at the AGM.
InterGlobe Enterprises owns Global Business Park in Gurugram, which houses the headquarters of IndiGo and hence the airline pays rent for this real estate to InterGlobe. InterGlobe, in partnership with Accor hotels, also owns Ibis and Novotel hotels so it takes part in bidding process for crew accommodation. RPTs between IndiGo and InterGlobe also take place in general sales agents for limited foreign markets and in the area of simulator training facility.
Dutta reiterated that every single RPT has been approved by the audit committee and over the period he has been at IndiGo, he has not found a single case where a transaction was not at arm's length and not in the best interest of the company.
“…so hopefully that puts to bed the RPT issue,” Dutta said.
On the matter of whistleblower complaint, Dutta told the shareholders that the company continues to have a robust whistleblower mechanism and added that the Chairman of the board, M. Damodaran, has not received any whistleblower complaint till now.
“We are grateful to all the whistle blowers who had the courage and wisdom to send information that allowed the requisitioners to pursue this quest for almost a year. Without that information and their support, it may not have been possible to uncover some of the specifics and facts that allowed us to pursue this requisition,” Gangwal had told Sebi in his letter dated July 8.
The airline has witnessed a bitter dispute between the two promoters, Rakesh Gangwal and Rahul Bhatia, since nearly a year over disagreements on corporate governance and related-party transactions.
The dispute came to light when Gangwal wrote a letter on July 8 to market regulator Sebi, Ministry of Corporate Affairs and the BSE, where he alleged that there is lack of corporate governance at the airline and there are some questionable related-party transactions taking place between IndiGo and InterGlobe. However, on Friday, Gangwal issued a statement and sent signals of truce.
“The Board has now approved a new related-party transaction policy and to also close an open issue if the Articles of Association are amended at the upcoming August 27 AGM to increase the board size to 10 directors. While much work lies ahead, including mending some fences and the regulators completing their investigations on the governance issues raised with them, it is gratifying to see progress towards better governance,” Gangwal said on Friday.