IndiGo CEO admits to differences between airline’s promoters

By: |
Updated: June 26, 2019 7:05:05 AM

A related-party transaction is a deal or arrangement between two parties, who are joined by a pre-existing business relationship

indigo, indigo airlines, aviation sector, aviation industryLast month, media reports pointed out differences cropping up between the two promoters over the strategies and ambitions for the airline.

The differences between promoters of IndiGo pertain to related party transactions (RPTs), the airline chief executive officer Ronojoy Dutta told a business news channel on Tuesday.

According to Dutta, Rakesh Gangwal is seeking changes to the RPT process that allow Rahul Bhatia-controlled firms to charge the airline for its services.

“Its an agreement issue between the two promoters. It has got to do with the RPTs. For instance, Interglobe (Enterprises) sells certain services to Indigo, the airline. The headquarter we are in, the landlord is Interglobe. So, we pay a certain rent. The hotels our crews stay at different places like Chandigarh and Jaipur are Holiday Inn or Novotel. So, Interglobe has a share in Novotel,” Dutta explained in an interview to CNBC TV 18.

Also read: We are learning from Jet Airways’ mistakes: IndiGo CEO’s take on Jet’s fatal move

A related-party transaction is a deal or arrangement between two parties, who are joined by a pre-existing business relationship. Dutta said the value of RPTs was around $30 million or Rs 210 crore during 2017-18. “The value of RPTs have come down to around $20 million in FY19. It is an administrative issue, and has nothing to do with the shareholders’ agreement or the Article of Association,” Dutta added.

Last month, media reports pointed out differences cropping up between the two promoters over the strategies and ambitions for the airline. Both of them were taking legal help to iron out their differences.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.