In a statement on Sunday, the IGE Group said it has from the inception of the airline “played the most significant role in nurturing Indi-Go to what it is today”.
In 2005-06, after the inception of the airline, the IGE Group had invested in fully paid up equity of Rs 30 crore and fully paid up nonconvertible preference shares (NCPS) of Rs 69 crore, while Gangwal “wanted to limit his financial risk to Rs 15 crore”, it said.
Also, when conversations with Airbus were on for its maiden mega order of 100 A320 planes, the founders undertook to invest in IndiGo an amount of “not less than” $50 million (then about Rs 200 crore). They further undertook to maintain that investment until the delivery of the last aircraft.
As “Gangwal was not going to take any further financial risk or obligation, IGE singly, though the undertaking to Airbus was a joint one, took the obligation to further invest up to Rs 110 crore in IndiGo so that taken together with the then existing investment of Rs 99 crore, the conditions placed by Airbus could be met”, said the statement.
The statement implied that IGE shouldered much of the early financial risk as the airline was being built.
“Gangwal was missing in action at that time and there were stages where he wanted to de-risk and pushed for the business to be sold. However, the IGE Group went ahead to continue to support the startup without in any way diluting Gangwal’s potential upside,” it said. “Kapil Bhatia and Rahul Bhatia extended personal loans to IndiGo and personal guarantees to the banks for diverse financing needs of IndiGo such as predelivery payments, aircraft acquisition, and working capital requirements.”
The statement also detailed the financial commitments by Bhatia and his father to the airline.
“Starting from financial year 2005-06 at a level of Rs 143 crore of personal guarantees by financial year 2009-10, the aggregate financial exposure of IGE, Kapil Bhatia and Rahul Bhatia was well over Rs 1,100 crore (consisting of equity, NCPS, and guarantees) while Gangwal was in safe harbour with equity exposure of less than Rs 15 crore; with no personal loans or guarantees or any other financial obligations for IndiGo,” the statement said, adding the risk ratio between the two founders was almost 80:1.