InterGlobe Aviation Limited (INDIGO) Earnings Call Transcript & Summary

[Audio Gap] Now following documents are available for inspection by the members at the website of KFin Technologies Private Limited, upon logging in at emeetings.kfintech.com. Number one, register of directors and key meeting personnel and their shareholding. Two, [indiscernible]contract signifying directors are interested. Three, auditor support. Four, certificate from state auditors, stating that employee stock option scheme of the company has been implemented in accordance with the same regulations. As this AGM is being held through video conferencing, the specificity for appointment of proxies by the members was not applicable. The company has received the first policy members to register them as speakers at the AGM. Accordingly, the floor will be open for Board members who ask questions or express their views. The speakers are requested to take a maximum 3 questions each, so as to allow time for other speakers. Now moderator will present this session once the Chairman opens the floor for questions. Our members can also post their views or questions on the ask-a-question tab on the video conference scheme before 3:00 p.m. Now members must please note that the company has a the right to limit the number of questions depending on the availability of time at the AGM. Now members are requested to refer to the instructions provided in the notice or happening on the video conferencing page for a seamless participation through video conference. If any member faces an issue during the AGM, please do the contact KFin Technologies Private Limited at 23 numbers given in the notice. Over to you, Mr. Chairman.

Thank you, Sanjay. Dear shareholders, on behalf of the Board of Directors and on my own behalf, I have great pleasure in welcoming all of you to the AGM, annual general meeting of your company. All of us have been through trying times on account of the pandemic that continues to cause concern. I hope that you and your family members have remained safe and healthy in the face of this challenge. It is with a deep feeling of distress that I have to inform you of the loss of some of our colleagues, including a few with our subsidiary, Agile, on account of COVID. May I request that we observe a minute of silence to remember them. Thank you. It is always a pleasure to interact with you on the occasion of the Annual General Meeting, which is a celebration of shareholder support to the company. When we met this time last year, many of us had hoped and even expected that a year down the line, we will be back to having physical meetings. That hope has been belied. And for the second year in succession, we have had to make do with the virtual version of the Annual General Meeting. I'm hopeful that the next Annual General Meeting will be an occasion where you will get to personally interact with the directors and the senior management of the company. The financial year gone by has been an eminently unforgettable year with long terms impacting on the economy and also on social interaction. The way in which we think and live has undergone a significant change. The first wave of COVID-19 led to a countrywide lockdown and to several state lockdowns, severely impacting the aviation industry. As the number of cases started reducing, there was some pickup in the number of air travels. February 2021 saw the airline reach a peak load of 44.29 lakh passengers. However, the intensity of the second wave of COVID-19, resulting in an unprecedented health crisis, saw the number of passengers declining rapidly. The strength of institutions and individuals is best tested when the challenge is unanticipated and overwhelming. As you must have noticed, the resilience of your company and the ability of its workforce to stand up and deliver in these trying times, ensured that we kept the operations going. In the process, your company has become leaner, more resilient and more nimble. Recent economic indicators point to the possibility of a sustained upturn in the Indian economy. For aviation, this is a long delayed and welcome sign with a larger number of persons having been vaccinated and more persons are opting for air travel as compared to the position that prevailed in the preceding few months. While there is reason to hope that the future will be better than the immediate past, we cannot lose sight of the fact that COVID-19-induced restrictions as well as the hesitancy on the part of travelers led to our posting our highest ever loss in the history of the company in FY 2021. The first quarter of the current financial year has also been adversely impacted on account of the second wave of COVID-19. With the restrictions imposed on domestic air travel being relaxed in phases, we are seeing an uptick in the number of passengers. So the pandemic has also led to a number of restrictions impacting our international travel, and we hope that this situation will also improve in the coming months. An integrated well planned approach towards environment, social and governance, or ESG as it is known, is becoming increasingly vital for large companies like us as investors are seeking increased information and seeing increased value in the nonfinancial reporting and robust corporate governance practices of a company. As a socially responsible airline, we are deeply concerned about preservation of natural resources, the phenomenon of climate change and the importance of sustainability for future generations. With these objectives in mind, we recently launched our first ESG report to document IndiGo's initiatives in the ESG space. We are acutely aware that as a responsible corporate citizen, we must do more than our bit to protect and preserve the planet. I feel privileged to be the chairperson of the Board of an organization comprising of enthusiastic and highly motivated employees who have stood together in these difficult times, made sacrifices and worked tirelessly to provide reliable and safe air travel across the country and to locations abroad. I'm convinced that IndiGo is a great nationalist, which will continue to contribute significantly to the economic development of the country by providing an extensive airline network accessible to the general public at affordable prices. Before I conclude, let me take this opportunity to thank all our employees who have worked ceaselessly to ensure that we provide our customers courteous hassle-free service. Most importantly, I would like to thank you, dear shareholders, for your overwhelming trust, support and confidence in IndiGo. Our customers are the reason we exist, and our shareholder community is the most important pillar of our existence. I also wish to thank my colleagues on the Board for supporting, encouraging and guiding management in these trying times. Now let me invite our whole-time Director and CEO, Ronojoy Dutta to share with you information regarding our performance and the steps which have been taken and continue to be taken to make our company so safely and successfully to [indiscernible]. Thank you. Over to you, Rono.

Thank you, Mr. Chairman. Dear valued shareholders, thank you for joining us today. We hope all of you are well and safe. It is unfortunate that this year also, we must conduct our Annual General Meeting digitally instead of in person. I sincerely hope that we return to normalcy soon. 2021 was a turbulent year because of 2 successive waves of the pandemic. In March 2020, we entered a total lockdown. And after June, we experienced some improvement in both COVID cases and traffic, but ended March 2021 with an even more severe second COVID-19 wave. All in all, it was an extraordinarily challenging year for our customers, our employees, our shareholders and the communities we serve. We are disappointed with the financial performance for the financial year 2021 as we posted an annual loss of INR 58.1 billion. Given the lack of profitability, our Board of Directors have not recommended any dividend. Over the last 18 months, we conducted an in-depth analysis of our objectives, our practices and our processes in response to the pandemic. The most important objective we set for ourselves was to emerge stronger out of this crisis. We were determined to improve our customer service at every touch point, introducing a high level of digitization as well as contactless travel. The health and safety of our customers and our employees was foremost in our minds. And we worked with the Ministry of Civil Aviation to establish standard operating procedures for social distancing. On the operational front, I'm pleased to report that our Net Promoter Score remained higher than pre-COVID levels. We were #1 on OTP for the last 4 quarters, and we had a complaint rate of 0.1 per 10,000 passengers, which is the lowest by far in the industry. Even as we were forced to execute painful layoffs and pay cuts, our communications went into hyperdrive, explaining our actions every step of the way in a transparent manner. We believe these actions have been an important driver behind the increased customer loyalty and employee commitment we have witnessed throughout the pandemic. In this context, I'm happy to report that we have been honored as a Great Place to Work. Remaining disciplined with our cost structure is key to our success. And during the year, significant actions were taken to enhance IndiGo's cost leadership, ensure liquidity and reduce cash burn. As a result of our efforts, we reduced our net cash burn by almost 50% at the end of June '20 versus December '20 quarter average, right before the second wave of COVID-19. We generated additional liquidity of INR 66 billion in fiscal 2021 and announced additional INR 55 billion for fiscal year 2022. We continue to work with our lenders and partners to enhance this liquidity even further. One of the most crucial elements of our success is, of course, our fleet and we are rapidly replacing our old CEO aircraft with fuel efficient NEO aircraft. On 30th June '21, NEO engines formed 66% of our Airbus fleet. With regards to our network, we complied with all the regulatory capacity restrictions and yet maximized revenue through network optimization. We were able to capitalize on the emerging traffic opportunities in Tier 2 and Tier 3 cities. Our cargo liner business has really supported us during these times when our passenger services have been severely impacted. Building on the success, we have initiated a freighter program. We're in the process of sourcing aircraft, which will be converted to full freight air configuration starting in 2022. After the first wave of COVID-19, we experienced a V-shaped recovery and reached around 80% of our pre-COVID domestic capacity levels in February 2021. Now after the second wave, we are again seeing a gradual recovery in demand and in August, we have reached a peak of around 1050 flights per day as against a low of 320 daily flights in the first quarter of 2022. This is quite encouraging for us, and we are eager to add even more capacity back into the market. Though the past year has been difficult, our vision is firmly rooted on the long term, and we are not willing to be distracted by the trials and vicissitudes, all by the pandemic. The fundamentals of our business model, low cost, on-time performance, healthy culture of service, coupled with rapid expansion, remain intact and as robust as ever. We have flexed with the enormous prospects of the increasing income levels in the country and with many first-time clients continuously expanding our customer base. I'm very thankful to our customers and to our shareholders for their continued support and confidence in us through these difficult times. Now let me hand it back to our Chairman to further proceed with the AGM. Thank you.

Thank you, Rono. As there are no qualifications or adverse remarks in the auditor's report, I shall take the report as read. Since the notice of AGM has been circulated to all the members, along with the annual report for FY '20, 2021, the same may be taken as read. Your company has proposed the following items as set out in the notice for your approval. Item 1, to consider and adopt the audited standalone financial statements of the company for the financial year ended March 31, 2021 along with the reports of the Board of Directors and the auditors thereon and the audited consolidated financial statements of the company for the financial year ended March 31, 2021, along with the report of the auditors thereon. Item 2, to reappoint Mr. Rakesh Gangwal as a Director, who retires by rotation, and being eligible offers himself for reappointment. Item 3, to appoint Mr. Gregg Albert Saretsky as a Non-Executive Director of the company. Dear members, the moderator will announce one by one the names of the members who registered themselves as speakers. The members are requested to keep their questions brief and specific and limit their queries to a maximum of 3 minutes. The answers to all the questions will be provided at the end. Any queries that have not been addressed will be responded to by the company by e-mail. With that, I hand you over to the moderator to invite the speakers to ask the questions and to make the points. Over to you, moderator.

Thank you, Mr. Chairman. Good afternoon, members. I will be calling all the speakers one by one. [Operator Instructions] I request our first speaker, Mr. [ Mustafa Kidwana ] to [Operator Instructions].

Good afternoon, everybody. Can you hear me?

Sir, you are kindly proceed with your question.

Firstly, my compliments and heartfelt gratitude to the entire 25,000 strong IndiGo family for keeping India's air travel on the go, even in these most troubled times. I have 2 questions. What percentage of our total revenue flows through our own app or website. Can it ever reach Ryanair levels? The second question is, if these rigid government pricing caps and floors were to stay, how much longer will it take air travel in India to reach pre-pandemic levels in that assessment?

Thank you, Mr. Mustafa. We will proceed to our next speaker. I request Mr. Yashpal Chopra to kindly unmute your audios, to join your webcast and speak.

Hello.

Sir, you're audible. Kindly proceed with your question. Thank you.

[indiscernible] My I just tell you, my name is [indiscernible] calling from Delhi. Actually, I have been associated with this company since the investors conference at the time of IPO when a big very extensive presentation was made. Before that, the impression in the mind of most of the investors, that the aviation industry is a junk industry that will never produce any positive results. And -- but after your presentation and all that, even then we were doubtful, but any of the [indiscernible] and we buy the performance direction. Finally, we just came to the conclusion that the meeting -- the company is very much in the hands of professional people and the company was in a position to deliver the results. So also the aviation market is the barometer of the strength of the company and the project. And since the day of allotment and the listing of the company and all that over here has been up and up and up only. And -- but last year, because of the COVID, the performance of the company was actually nil because there was no movement, the total global economy was at a standstill. So as we are all on a standstill, there are no commuter no -- on a standstill. So that is why for those results for that performance, I cannot blame the company because that was -- because of the natural calamity and all that. But now the government has given us some relaxation and then the relaxation even in the COVID. And now that we will have learned that how to live with the COVID and that they know that the economy has to go along with the COVID. And so people are made to -- they are made to understand the importance of protocol. So I think the coming times, they are really very, very bright. And our performance for the current year, definitely should be very good. But sir, at the same time, I see that there are so many hurdles. Sometimes there is an increase in the fuel cost, some time, there is a restriction from the government that now you cannot take your planes to the foreign countries and all that. So I do not understand that how long we will have to go for that. So my query is that is my observation, how would you agree with my observation and what are the positive performance in your mind? That I would just like to understand. Sir, the next thing is that the company is in the need of the blessing. Nothing's wrong with the evaluation. Nothing from the shareholder, nothing wrong from the investors. And so a company must consider on that account also because the blessings have launched the atomic power. So I think only with those powers [indiscernible] your company can be out of the rut. So but plane market is very much positive. And we are also positive because of Europe potential, your practical handling of the show. So best of luck to you. And best of luck to all, everybody from top to bottom, and I will compliment the companies actually for getting me a chance to speak.

Thank you, Mr. Yashpal Chopra. We'll go with our next speaker. I request Mr. Abhishek Chan to [Operator Instructions] Mr. Abhishek, we request you to [Operator Instructions] We are not receiving any response. We'll move on to our next speaker. I request Mr. Santosh Patani, [Operator Instructions]

Hello.

Hello. Sir, you are audible, proceed with your question.

With respect to Chairman, sir, Board member and management team, thanks for giving me opportunity in this platform. Firstly, I would like to thank the company's committee for sending a report in time and I appreciate their efforts, your team efforts for give me vast information in report and allowed me to speak in this platform. So my question is you have now strategy on the challenging due to the impact of the pandemic situation, of second wave of COVID-19 and also the feeling of third wave. Sir, how have we readied ourself for any similar situation in the future because we know [indiscernible] much impacted our core business. And almost [indiscernible] is almost banned. So what step the company is taking to settle the issues? How they are handling the entire challenges? Sir, I want to know your comments on flying. Number 1, business continuity. Number 2, technology readiness and future steps on the capital improvement and quality. And company's steps towards creating a new age business model. Third, there is a -- we want -- same as it was last year, to set up -- depending the sports indication are there -- that this team has been a good success. I want to know your comments, it is team -- is useful for our company? Sir, I would be appreciative if you could briefly apply. And I wish all the best and hope to see a healthy growth in coming time. Chairman, sir, we know that our Board is very competent to render all these situations and doing best for employee safety as well as the test of the stakeholders. Under your team, [indiscernible] sir, I am from Delhi and I hope that come in time, definitely our company will be in the right path and achieve all the targets, which has been set by your team. Thank you for allowing me in this platform and this capital team and all the employees who devoted -- it is their duty to spend my time. And I hope the situation will be improved. And everything will be on the pre-level of the COVID situation.

Thank you, Mr. Patani. I request our next speaker, Ms. Lina Cheng, may we request you to unmute.

[Foreign Language]

Thank you, Madam. I request our next speaker, Mr. [Morita] [Operator Instructions] So no response received. I request Ms. [ Vasuta Vikas Vantani ] [Operator Instructions] Ms. [ Vasuta Vikas Vantani ] [Operator Instructions]

Hello.

Hello. [Operator Instructions]

Yes. Respective Chairman, our Board of Directors and my fellow shareholders, myself Vasuta Vantani. I would like to congress our companies separately for sending me the soft copy of the report well in advance, which itself is clear and transparent. I would like to ask what is the impact of COVID-19 on our current employees, those who are working from home as well as those are coming in office. What are the steps you have taken for the benefits of them? Secondly, on the Page #1, table 2 and -- table 2. Can you please throw some light on our bad debt? With this, I support all the resolutions.

Thank you, Madam. I request our next speaker, Mr. [ Kiti Shah,] [Operator Instructions]. Mr. [ Kiti Shah, ] we request you to kindly ask your question. So no response received. I request Mr. [ Ankur Chandar ]to [Operator Instructions]. Mr. Ankur, may we request you to kindly proceed with your question? So not receiving any response. I request our next speaker. Ms. [indiscernible] [Operator Instructions]

Hello. Can you hear me, sir?

Yes, madam. You're audible.

Mr. Chairman, Mr. M. Damodaran, CEO Ronojoy Dutta, other audible directors in the virtual meet, hello shareholders. My name is [indiscernible]. I am attending from Mumbai. First of all, I thank the company's [indiscernible], Sanjay Gupta and his team for sending me a notice. I am very much grateful to the KFin Tech platform, which has registered be as a speaker and also given me this platform to speak. Once again, I say a big pending this virtual time, in this COVID times. Thank you so much. Now I go to the annual report, it is good document. Well documented and self explanatory. But the year has been with the loss thanks to the COVID. Nothing can be done when the flights were all stopped. So we cannot expect any thing of this year. Next year, we don't know, Inshallah. I at least -- I congratulate for the awards and the close. Especially, we are the third most punctual airline in the world. I'm very happy with it. Also, I appreciate the CSR work, which was done in the lockdown days and even now by the staff and other members, which is really appreciated by me and word will definitely bless our airline and it will perform well in the day, years to come. What I really -- all very happy is 14.1% are leading pilots, highest percent of the women pilots in -- I being a lady, I'm very, very happy with this. This is an airline, which is giving more scope for the lady people. Now my query is, what is the CapEx for the next 2 years? How many aircraft to be purchased? That is one. Then how many -- 2 number is, how many were affected by COVID, how many have recovered and what -- how many fatalities are there and what vaccination levels? And three, what is the CapEx for the next 2 years? How many aircraft we are to purchase? How much margin we got in the repatriation in the lockdown time -- repatriation flights, charter flights and the cargo flights? Next is, we have … aircraft as on March 31, '21. Sir, how many added last 3 months? We have a defined whistle-blowing policy. Any sort of fraud or any miscreant -- anything is detected under the whistleblowing and especially by the staff and the agents? Sir, lastly is what is the road map for the next 3 years, especially with the COVID and what lessons we have learned from the COVID and how to handle the COVID atmosphere? I have supported all the resolution. I wish the company all the best. I wish, sir, you and your team, IndiGo team, very good health so that you can be performer, maybe not this year, maybe next year or year after that, once the COVID is disappeared and we forget about the COVID. So I'm wishing the best and may God bless this airline. And one more request, sir, I would like some discount as a shareholder. We don't get dividend. So please do consider because we may have to go to our hometown and, I, being a senior citizen, I think I am just waiting when Air India will do when I have to go to my native place. So please, sir, you give some senior citizens some discount because most hitting is the senior citizen in this time of all this COVID times. So with this, I thank you very much for giving me this platform to speak.

Thank you, madam. I request our next speaker, Mr. [ Hirano Gotwani ] [Operator Instructions].

I am Hirano Gotwani from Calian. Convey my good wishes to all the people over attending this meeting, that's Mr. Chairman, Mr. Damodaran. It is a great pleasure to see Rakesh and Bhatia. Your concern are our concern. I appreciate your presence. Gentlemen, what is the protection we need from the state authorities? Is there any representation for that? Because aviation industry is a troubled industry, we are at huge losses. And unless and until a state is not providing protection, the facilities, this industry will be in trouble. No, they are 1 child, 1 baby, but at least on the nation's side on the national and the development, we should be protected and respected, particularly given the concession from state authorities. Another thing is, how is our capacity utilization? And can we add -- the expand in hospitality added value product, particularly our name brand IndiGo tea, Indigo coffee, IndiGo water, mineral water for the drinking hospital industry? Because we have to expand, no other alternative to established and survive, because globally, we've seen the aviation industry become in trouble. If the diversification activity will be there, there will be some protection. Is there any sacrifice from employees and management in this period, particularly sacrifice I know I won this particular managerial payment, some allowances and all these things because survival of our business is important. At this time, we should sacrifice as we are sacrificing dividend for the future of this valuation. Any capital restructures in progress? Any capital restructure? Because once we face the loss, we have to restructure the equity, adjusted the premium, are any other more? When is there is a good time to come out with the right issue, bonuses and the dividend? What is your official ambition in this regard? Mr. Damodaran you are expert in that. And your team is also good. Anyway, my good wishes to all of your team met. Good luck.

Thank you, Mr. Hirano. I request our next speaker, Mr. Vikas Chandrakant, [Operator Instructions]. Mr. Vikas Chandrakant, [Operator Instructions] No response received. I'll proceed with our next speaker, Mr. Narinder Singh Chahal, [Operator Instructions]. Mr. Narinder Singh Chahal, [Operator Instructions]. Sir, no response received. I request our next speaker, Ms. [ Romola Vajia ] [Operator Instructions].

Asset allocations to [indiscernible] as you all we all know that are doing well...

Your voice is not clear.

In the business. Impact risk. Is it fine now? Is it better?