Carlsberg aims to resolve dispute with Indian partner over sales practice

Carlsberg is looking to resolve a commercial dispute with its joint venture partner in India, an executive said on Monday, amid an internal probe into the firm's local sales practices that sparked a boardroom battle and concerns from its auditor.

Global auditor PwC's local affiliate recently declined to give an opinion on Carlsberg's 2018-19 India results, citing divergent views from three of the brewer's India board members who did not sign-off on the financials, alleging regulatory lapses, a regulatory filing from February shows.

Steve Deng, Carlsberg's Corporate Affairs Director for Asia, told Reuters via e-mail that many of the issues were the result of an "unusual and difficult" commercial conflict with its Indian joint venture partner, Nepal-based Khetan Group.

"This is a shareholder dispute between us and our JV partner ... We look forward to an early resolution of the commercial dispute," Deng said in his e-mail.

Deng did not fully detail the dispute, but last week told India's Economic Times newspaper it revolved around repayment of a loan owed to Carlsberg by its partner and the partner's wish to sell its stake in the business at "an unreasonably high price".

Khetan Group has not commented publicly. C.P. Khetan, who manages the India Carlsberg partnership, did not respond to an e-mail from Reuters seeking comment. The three dissenting board members - who are all nominated by the Khetan Group - also did not respond.

The three directors wrote to India's commerce and corporate affairs ministries in August calling for an investigation into what they said was non-compliance around applicable laws with respect to trade discounts, advertisement and sales promotion, the regulatory filings showed.

The other seven directors, nominated by Carlsberg, found the practices were in line with industry norms and approved the 2018-19 results, the filing said.

Neither of the ministries answered e-mails from Reuters seeking comment. It is not clear if they launched an investigation.

The local PwC affiliate, Price Waterhouse Chartered Accountants, while declining to comment on the results, also flagged other concerns in the filing, including complaints around the promotion of Carlsberg products in prohibited areas.

The auditor did not respond to a request for comment from Reuters.

"Carlsberg India has already completed investigations into sales processes and tightened its internal processes as a consequence. Additional investigations are still ongoing in accordance with our strict policies," Deng said.

Asked if the dispute could impact Carlsberg's day-to-day operations, Deng told Reuters on Monday that India remained one of its strategically important markets where it was committed "to delivering business results".

Carlsberg accounted for 16% of India's $7 billion beer market in 2018, making it the third biggest player, IWSR Drinks Market Analysis estimates.

Last year, an investigation by the Competition Commission of India concluded Carlsberg colluded to fix beer prices with other companies. A final ruling in that matter is still pending.