IndiGo’s parent has defended its use of related party transactions (RPTs) following criticism from shareholder Rakesh Gangwal, which has erupted into a public feud.
Airline parent InterGlobe Aviation says that in 2017-18 RPTs totalled Rs1.2 billion ($17.8 million), and accounted for half a percentage point of the company’s annual revenue.
The transactions occurred between InterGlobe Aviation (IGAL), which runs the airline and sister company IGE Group, which is run by chairman Rahul Bhatia and his family.
“For several decades, before IGAL was founded, IGE and its founders have been involved in diverse areas of aviation industry including provision of services to the aviation industry at large,” says InterGlobe. “This connect with, and experience in, the aviation sector was the fundamental reason for IGE to think about setting up an airline.”
The RPTs focus on six areas: real estate, call centre and IT services, simulator facilities, commissions for general sales agents, shared services, and crew accommodation.
InterGlobe stresses that the RPTs’ existence was disclosed during the airline’s initial public offering in 2015, and that many RPTs “have ceased to exist” following the IPO.
Gangwal has alleged governance improprieties at IndiGo, and seeks an extraordinary general meeting (EGM) to be held. The InterGlobe statement makes no mention of the EGM.
Gangwal and his affiliates, the RG Group, control 37% of the company, while Bhatia and his affiliates, the IGE Group, control 38%.