InterGlobe Aviation Ltd., which has been in eye of a storm following a dispute between its promoters, saw a sharp drop in its related party transactions in the year ended March 2019.
The parent of India’s largest airline IndiGo transacts with several firms owned by or connected to Rahul Bhatia for services ranging from ticketing to crew accommodation to simulation training.
Value of these related-party transactions dropped to Rs 203 crore in 2018-19 from Rs 315 crore a year ago, according to the company’s annual reports. The quantum of these transactions as a percentage of the airline’s revenue dropped to 0.7 percent—to a nine-year low.
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The absence of transactions with the related party InterGlobe Air Transport Limited W.L.L. was the major reason behind this decline. InterGlobe Air Transport, a general sales agent, was paid nearly Rs 119 crore by the low-cost carrier in FY18. However, there were no transactions with this Rahul Bhatia group company in FY19 under the head “Sale of tickets - General sales agent”.
IndiGo’s commission cost declined by over 20 percent—the biggest in the last eight years. The airline’s commission cost has been falling for the last three fiscals.
Promoter Rakesh Gangwal had accused co-promoter Rahul Bhatia of questionable related party transactions, and violations of governance regulations and the company’s code of conduct. Gangwal alleges several irregularities in such transactions, ranging from lack of competitive bidding to lack of audit committee approval in some cases and backdating of contracts in others.
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