One or two months won't impact investor sentiment: Aditya Ghosh

Interview with president, IndiGo Airlines

Profitable operations and fast growth have been the hallmark of IndiGo's story over the past few years. The airline is chasing even bigger growth opportunities with a massive 430 aircraft order with Airbus for A320neo planes. The airline's president Aditya Ghosh spoke to Aneesh Phadnis on the InterGlobe Aviation IPO and the airline's growth plans. Excerpts:

There is a view that IndiGo's valuation is aggressive, given the current market sentiment.

Compare us with any of the best airlines in the world and you will see our valuation is not at all aggressive. If you were to compare us with not-so successful airlines in some parts of world, it will be different. We are building the airline for the next 15-20 years and our objective is to create a large, sustainable and profitable airline. What happens in one or two months does not impact investor sentiment.

Even after the IPO and promoter share sale, the free float will be only 12 per cent. This will result in the stock attracting scarcity premium, and keep the price high. What's your view?

Ours is a growth story. If you look at the sheer growth in numbers and capacity, and it is also a growth story with economies of scale. With the Airbus A320neo planes joining our fleet, our cost structure will come down further. When you have the two fundamentals in place, why will anybody sell (shares) early? After the IPO, the promoters and founders will hold about 85 per cent. So, the interest of our founders, interest of the management team, and interest of new investors is aligned towards the same direction - growth of the stock price.

How will the IPO help IndiGo in debt reduction?

We have debt of Rs 3,912 crore and all of it is aircraft acquisition debt. We do not have working capital debt. About Rs 1,166 crore from the IPO proceeds will be used for retiring the debt and financial obligations related to aircraft acquisition.

How will you grow ancillary revenues? Will you offer in-flight entertainment?

Ancillary revenue contributes 11 per cent of revenue and when you compare this with the larger share in low-cost airlines around the world, you will notice we have a lot of opportunity to grow. But the opportunity will depend on regulations in India and as these regulations change and more things open up, we'll pursue them. We will never add anything which adds to the cost and complexities. We are so focused on keeping our cost structure low, there's no plan for in-flight entertainment.