Carlsberg Group is investigating its business unit in India for alleged financial irregularities, The Economic Times reported. Global auditor PwC's local affiliate recently declined to give an opinion on Carlsberg's 2018-19 India results. According to a regulatory filing from February, three of the brewer's India board members did not sign-off on the financials, alleging regulatory lapses.
The Danish group has now started an internal audit under the supervision of Carlsberg Group’s global integrity committee to examine all processes related to permits and licences. The company has also reopened previously closed investigations.
Carlsberg said the probe followed accusations made by its local partner. When Carlsberg entered the Indian market in 2007, it formed a joint venture called South Asia Breweries with Sri Lankan partner, Lion Brewery Ceylon in which is Carlsberg owned 45% and Lion brewery the rest.
"We have, for some time, been engaged in a very difficult commercial conflict with our Indian joint venture partner about the repayment of a $43 million loan he owes us and his wish to sell his stake in the business early at an unreasonably high price," Steve Deng, corporate affairs director, Carlsberg Asia said.
“As the commercial conflict intensifies, our partner and his representatives on the Carlsberg India board have decided to circumvent appropriate governance structures and share a series of wide-ranging accusations at all possible opportunities, including in the Carlsberg India annual report,” said Deng.
Carlsberg plays only a minor role in the beer market in Idia. United Breweries (UB) the producer of the popular Kingfisher beer brand which is partly owned by Heineken (inside.beer, 2.2.2020) and AB InBev together control three-fourth of India's beer market.
“We are currently taking two steps back after three steps forward in 2018. Indian market needs to adapt to the new reality, especially in pricing. And in that respect, we think that further in 2020 we should be able to continue our growth trajectory,” Cees ’t Hart, global chief executive officer of Carlsberg, said on an investors call last month. The maker of Carlsberg and Tuborg grew only 1% in volume last year, although value grew in high single digits.