INDIA – Beverage giant, Carlsberg plans to buy the remaining stake owned by its partner, Nepal-based Khetan Group in their Indian joint venture, after winning an arbitration case filed following a row over ill business practices in the country.
In an award issued on May 4, Carlsberg said an arbitration panel had declined to grant its partner “the relief it had been seeking based on the various allegations relating to governance and breach of the Shareholder’s agreement”.
Khetan Group, which owns 33.3% of shares in the holding company for Carlsberg’s businesses in India and Nepal, had referred disagreements over corporate governance standards to a Singapore arbitration tribunal.
The Copenhagen-based brewer has for years been locked in a commercial dispute with the partner amid an internal probe into the brewer’s local practices that sparked a boardroom battle and concerns from its auditor.
Carlberg’s local auditor had twice declined to give an opinion on its financials in 2019/20, citing divergent views from the three Khetan representative board members who repeatedly alleged regulatory lapses, to which the Tuborg-owner has denied any wrongdoing.
In 2018, Steve Deng, corporate affairs director for Carlsberg Asia told Reuters that as far as it is known, the divergent views among the Carlsberg India Board of Directors are the primary reason for the disclaimer of opinion made by the auditor, which will be included in the 2019/20 accounts.
The results, like last year’s (2017/18), have not been approved by the board’s three Khetan representatives but have been signed off by the seven nominated by Carlsberg, Reuters’ sources said.
Responding to the ruling, a representative for C.P. Khetan, who manages the Carlsberg India JV partnership, said in a statement the arbitration award was “partial”, and that arbitration is ongoing, and that it would make a “detailed response to Carlsberg’s allegations in due course”.
However, Carlsberg in its earnings statement said it “considers its position to be entirely vindicated by the liability award and is very satisfied with this outcome”.
Carlsberg India posts strong recovery of 50% growth in revenue
Meanwhile, one of India’s biggest beer companies, with a market share of about 17%, Carlsberg India has witnessed a “strong recovery” in the first half of 2022 as its business has grown 50 percent during the same period.
In markets such as China, the group’s business was impacted by the pandemic restrictions during the April-June period.
The group reported an organic volume growth of 8.9 percent, driven by Western Europe And Asia in the first half of 2022.
The company said both the Carlsberg and Tuborg brands grew strongly, which enabled it to gain market shares in its key states, signaling a good projection and “strong recovery” after a difficult start to the year due to the coronavirus pandemic.
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