NEW DELHI: InterGlobe Aviation’s management on Tuesday sought to assure shareholders that the issue of related-party transactions at the operator of IndiGo airline wasn’t as serious as it was made out to be by co-promoter Rakesh Gangwal.
At the first annual general meeting (AGM) after the differences between the promoters, Rahul Bhatia and Gangwal, spilled over into the public domain, the management said related-party transactions constituted less than 1% of revenue and the company had maintained an arm’s length on the deals.
Gangwal had alleged that IndiGo was getting into high-value related-party transactions (RPTs) with InterGlobe Enterprises, a company owned by the Bhatia family. He had also talked about the existence of a whistleblower plaint over corporate governance at the airline operator.
The value of such transactions was about Rs 156 crore last fiscal year, against the company’s revenue of Rs 30,000 crore, CEO Ronojoy Dutta told shareholders.
No Whistleblower Complaint: Dutta
Dutta also denied the existence of any whistleblower complaint.
Gangwal didn’t attend the AGM, but said in a statement that he voted in favour of all the resolutions, which included amendments to articles of association that the company moved in Tuesday’s meeting.
Earlier this month, Gangwal had said he would not support the resolution as a loophole in the new structure, which increased the number of board members to 10 from six and assigned them new responsibilities, would end up giving Bhatia more rights than he already had.
Sources reported last week that he had changed his position and would support the company’s proposals.
Companies need board approval when the value of a single RPT is more than Rs 100 crore, or 10% of the turnover. But they don’t need to seek such approval when the deals are carried out at an arm’s length. While none of IndiGo’s contracts was worth more than Rs 100 crore, Dutta said the company had not given any special treatment to such deals.
“There is not a single case where RPT is not at arm’s length. All RPTs have been seen by the audit committee as well,” CEO Dutta said. On the airline’s corporate office in Gurgaon, which was in a building leased from InterGlobe Enterprises, Dutta said the office was close to a metro station and moving it away would mean causing inconvenience to about 2,000 employees.
At the AGM, a large number of shareholders raised questions over the dispute between the two promoters. Many of them complained that the developments had impacted the valuation of the company. Some shareholders termed Gangwal’s actions as “unfortunate”.
One of the shareholders wanted Bhatia and Gangwal go on a holiday together for a couple of days and not discuss business.
While Bhatia said that he liked the idea, he wanted the shareholder to come along with them.
The company management assured shareholders that the issue was over for the company. To conclude, Bhatia said he expected Gangwal to walk the talk. “I hope his actions speak louder than his website.”
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