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IndiGo gives handsome payback to promoters

Rahul Bhatia & Rakesh Gangwal earn Rs 548-cr dividend in FY13; payback accounts for 70% of profit

Aneesh Phadnis  |  Mumbai 

If you thought operating a domestic airline was like putting money in a black hole, think again. At a time when the country’s aviation sector was in the red, the promoters and shareholders of the country’s largest low-cost carrier, IndiGo, raked in Rs 548 crore in dividend income in 2012-13, according to a filing with the Registrar of (RoC).

IndiGo’s Rs 548-crore dividend payout accounts for almost 70 per cent of its net profit for the year. It paid a tax of Rs 89 crore on dividend distribution.

The key shareholders of the company include the Rahul Bhatia-controlled InterGlobe Enterprises and US-based Caelum Investment LLC, owned by a former chief executive of US Airways, Rakesh Gangwal. These together hold 99 per cent of the equity capital, which comprises 307,000 shares of a face value of Rs 1,000, in the airline.

The airline’s board had approved payment of interim dividend of Rs 12,612 a share, amounting to Rs 387 crore, last August. In December 2012, interim dividend of Rs 5,259 a share, amounting to Rs 161.5 crore, was issued. This amounted to a dividend of Rs 17,871 a share, totalling about Rs 548 crore.

Over the last three years, the airline has given Rs 1,000 crore in dividends to its promoters.

IndiGo, the most profitable domestic airline, had announced a net profit of Rs 787 crore for 2012-13, on the back of a 65 per cent increase in revenue. Barring GoAir, which reported Rs 104-crore profit for the same period, all airlines made a loss. Jet Airways previously declared a dividend in 2007. SpiceJet and Kingfisher have not paid any dividend till date.

According to the FY 2012 balance sheet, IndiGo did not recommend any dividend for the year “to conserve resources”; net profit for the year was Rs 127 crore. For FY2011, the dividend was Rs 490 crore, while net profit was Rs 650 crore. The dividend payout amounted to 75 per cent of the net profit for FY2011.

Section 205 of the Act requires to transfer up to 10 per cent of the profit to general reserve before declaring and paying dividends. This was done and has been disclosed in the airline’s balance sheet.

The Gurgaon-based airline, launched in 2006, is the largest domestic airline, with a market share of 30 per cent. The Bhatias have had a long association with travel and airline businesses and have been running a general sales agency for international airlines since 1989. The group had diversified into hotels (a joint venture with the Accor group) and retail.

According to the FY2013 balance sheet, IndiGo has a share capital of Rs 34 crore and reserves and surplus of Rs 498 crore. The reserves and surplus was Rs 348 crore at the end of March 2012.

IndiGo did not respond to an email query on the dividend payout and total promoter investment in the airline.

Bhatia’s InterGlobe Enterprises (which is also the holding company of the airline) owns 51.12 per cent of the equity shares and Gangwal’s Caelum Investment LLC, a US-registered company, owns 47.88 per cent of the shares. The equity capital in the company is Rs 30.7 crore.

InterGlobe Enterprise Ltd
Caelum Investment LLC 47.88%
Others 1%
The company has issued 36,716 convertible preference shares to seven entities: Riyaz Peermohamed, Steven Harfst, Bruce Ashby, Kunal Chanana, Anil Chanana, Tariq Taher Carrimjee and US-registered Chesapeake International Investment LLC
Source: IndiGo balance sheet

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First Published: Sat, November 16 2013. 00:58 IST