InterGlobe Aviation Ltd (IGAL) is the parent of the country's largest airline IndiGo

A day after promoter feud at InterGlobe Aviation intensified over governance issues, Rahul Bhatia's group on Wednesday said all related party deals were done at arm's length and that more favourable treatment was extended to the company than other customers. InterGlobe Aviation Ltd (IGAL), the parent of the country's largest airline IndiGo, is witnessing a spat between co-founders and promoters -- Rakesh Gangwal and Rahul Bhatia -- which also took its toll on the company's stock price.

In a detailed statement, Mr Bhatia's InterGlobe Enterprises (IGE) Group said it has nurtured and supported IGAL through its formative and expansion years by making available certain services through related party transactions. The group emphasised that it has ensured that none of its entities should take any advantage under related party transactions.

"... without exception, IGAL has received more favourable treatment from the IGE Group entities as compared to their other customers," it noted.

Mr Gangwal, who along with his affiliates own around 37 per cent stake in IGAL, has flagged concerns over governance issues, mainly about various related party transactions between the company and IGE Group.

The detailed statement from the group of Mr Bhatia, who has around 38 per cent stake in IGAL, also comes at a time when markets regulator Sebi has sought response from the company by July 19 regarding allegations by Mr Gangwal.

Mr Gangwal has written to Sebi seeking the capital market regulator's intervention to address the issues.

Currently, there are related party transactions in four areas -- real estate leased to IGAL, simulator training facilities, General Sales Agreements (GSAs) for limited foreign markets and crew accommodation at Accor Hotels, the IGE statement said.

Citing unaudited numbers for 2018-19, the statement said the related party transactions in the four areas accounted for Rs 150.12 crore or 0.53 per cent of IGAL's consolidated turnover.

"The materiality of the transactions for IGAL is not significant", the group said, adding that all related party transactions have been executed on an arm's length basis and in the ordinary course of business. In the real estate segment, IGE Group has renewed the lease with IGAL for Global Business Park in Gurugram, Haryana.

"... the rental was actually revised downwards for bonafide reasons, including benchmarking with prevailing market rentals and IGAL provided for security deposit and IGAL has also agreed to a longer termination period and a lock-in of three years," the statement said.

There is also a 15-year agreement between CAE Simulation Training Pvt Ltd (CSTPL) and IGAL that came into effect from July 1, 2013.

CSTPL is an equal joint venture between Canada's CAE and IGE. IGE has a joint venture with Accor hotels, which provides about 8 per cent of the overall accommodation cost of IGAL worldwide, the statement said.

According to the statement, most related party transactions ceased to exist after IGAL's initial public offer. IGAL hit the markets in 2015.

Flagging concerns about certain questionable related party transactions, Mr Gangwal, in his letter to Sebi, had said shareholders' agreement provides his long-time friend Mr Bhatia unusual controlling rights over IndiGo.

"Beyond just questionable related party transactions, various fundamental governance norms and laws are not being adhered to and this is inevitably going to lead to unfortunate outcomes, unless effective measures are taken today," the letter said.

On Wednesday, IndiGo CEO Ronojoy Dutta told employees that the issues between the promoters have nothing to do with the airline's functioning. Amid the spat, IGAL shares tumbled over 11 per cent wiping out Rs 6,423 crore from its market valuation.

IndiGo is the country's largest carrier with a market share of 49 per cent at the end of May.