SpiceJet says agreements with Sun Group extend only to marketing activities

SpiceJet, the troubled budget carrier, on Wednesday said its arrangements with group companies are based on commercial decisions without any possibility of extending or receiving special treatment.

Amid reports suggesting that huge sums of money were diverted by the airline to sister companies, SpiceJet asserted that it was run in a professional manner and arrangements with Sun Group were only a "natural progression".

"The company operates independently and on its own in a very professional manner and any possibility of extending or receiving any special treatment in terms of commercial terms for any of the group companies is completely misconceived.

Execution/extension of any arrangement is a commercial decision based on arm's length and has no other bearing to the same," SpiceJet said in a filing to the Bombay Stock Exchange (BSE).

The private sector airline has entered into agreements with its group-company only to the extent required for its joint marketing and media purchasing activities, it said.

These have been done after obtaining requisite approval of statutory authorities and in full compliance of the law of the land, SpiceJet added.

"... For all the related party transaction entered into by the company under such arrangement, the aggregate value of transaction for all the financial year 2011-12, 2012-13 and 2013-14 taken together is merely Rs 36.63 crore," the beleaguered carrier said.

According to the filing, Sun Group has a commanding presence in television, print and radio broadcasting and is a dominant player in most of its chosen market segments.

"It is by natural progression that SpiceJet would use the reach of Sun Group's reach to communicate to our customers about our products and services," the airline added.

SpiceJet, which is facing turbulent times, is looking to infuse fresh capital into the company and discussions are on with potential investors.

Meanwhile, SpiceJet's scrip closed marginally lower at Rs 18.10 a piece on the BSE.