Carlsberg India joint venture partner wants the Denmark-based brewer to boost governance standards. The Nepal-based Khetan Group and Carlsberg have been embroiled in a commercial dispute, amid an internal inquiry into the brewer’s local practices that triggered a boardroom battle.Carlsberg is one of India’s biggest beer companies, with a share of about 17% of a $7 billion market.
CSAPL (Singapore) Holdings Pte Ltd, the Khetan Group’s holding firm, urged Carlsberg to honor its obligations to improve governance and act in the long-term interests of the business. According to an official statement, suspected governance issues prompted the resignation of Carlsberg India’s auditor and the launch of an inspection of its financial accounts by Indian authorities. “For several years it has consistently expressed grave concerns over suspected irregularities and illegalities at the joint venture company’s India business.”
The brewer, as per Reuters, had previously blamed the auditor’s decision to quit in 2020 on highly disruptive side-effects of the commercial conflict with its joint venture partner. “The auditor’s resignation in November, after the firm, an affiliate of PriceWaterhouseCoopers, had declined for two successive years to give an opinion on the joint venture’s financials,” the report stated.
Steve Deng, corporate affairs director for Carlsberg Asia, had then said that the divergent views among the Carlsberg India Board of Directors is the primary reason for the disclaimer of opinion made by the auditor, which will be included in the 2019/20 accounts. Reports attributed the auditor’s resignation to disagreement among some board members and compliance concerns, including a review of complaints around the promotion of beer in prohibited areas. A source said the auditor’s view is that if it cannot give an opinion for two consecutive years, then it has to quit.
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Moreover, Carlsberg is also under scrutiny from India’s antitrust authority, which has said the Danish brewer colluded with other companies to fix beer prices, although a final ruling is awaited. An investigation into the accusations of unlawful practices at Carlsberg India found potential improper payments to government officials and other regulatory lapses, while another found child labor issues at a warehouse.
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