Carlsberg, the beer major is having troubles with its Indian operations. Though the company enjoys a 19% market share in the Indian beer market, its problems appear to be with their Indian partner and some employees. The allegations against them are potentially unlawful and unethical practices by some employees. These include promoting sale of company products in prohibited areas, potential improper payments, kickbacks from its customers and misappropriation of sales promotion schemes, payments, etc. All these allegations are of a serious nature and now the company has asked its global integrity committee to oversee the internal audit being undertaken of the Indian operations.
The company is consulting with external law firms in the matter. The company claims its troubles started after its local partner in the joint venture, South Asia Breweries raised a lot of issues. According to Carlsberg, it has “been engaged in a very difficult commercial conflict with their Indian JV partner about the repayment of a $43 million loan he owes Carlsberg and his wish to sell his stake in the business early at an unreasonably high price”.
Carlsberg believes the Indian JV partner is taking advantage of the conflict between the companies and has been committing acts not in consonance with the law and it involves the directors on the board of Carlsberg India who are representatives of the Indian JV partner. They have refused to approve the latest account statements of the company citing lack of clarity.
The liquor industry in India is highly regulated and each state has different laws governing the sector. Carlsberg is saying that the investigations they are trying to conduct are also hampered by non-cooperation from the Indian partner’s representatives.
It may be recalled that a couple of years back, an ex-employee of Carlsberg India had alleged that the company tried bribing government officials in Hyderabad in 2015-16. An independent inquiry conducted on the charges found nothing concrete. The employee had been removed from service earlier.
The outcome of the investigations now being conducted will be eagerly awaited.