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Carlsberg's India partner demands governance overhaul

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FILE PHOTO: Carlsberg beer cans are seen at a pub in Mumbai
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By Aditya Kalra

NEW DELHI (Reuters) -Carlsberg's partner in India called on the Danish brewer to improve governance standards at their joint venture on Wednesday, citing "grave concerns" over its operations.

Nepal-based Khetan Group and Carlsberg have been embroiled in a row since 2019 over how Carlsberg India has conducted internal inquiries into its business practices. This has led to protests from Khetan's representatives and raised concerns from Carlsberg India's auditor.

In its first public comment since the dispute began, Khetan's CSAPL (Singapore) Holdings Pte Ltd, the JV partner, urged Carlsberg "to honour its obligations to improve governance and act in the long-term interests of the business".

Carlsberg, one of India's biggest beer companies with a share of about 17% of a $7-billion market, said in a statement to Reuters that the company had taken efforts to improve governance in India to bring it up to "par with the high standards governing the other companies across our group."

"Unfortunately our JV partner has not always been a constructive partner in these efforts," Carlsberg added.

The Khetan group entity said in its statement that suspected governance issues prompted the resignation of Carlsberg India's auditor and an inspection of its accounts by Indian authorities.

It added that for several years it had "consistently expressed grave concerns over suspected irregularities and illegalities at the joint venture company's India business". It did not cite any evidence in its statement.

Carlsberg said it was not surprised by the move.

"As the commercial conflict with our JV-partner continues, we are unfortunately not surprised that our JV-partner and his representatives continue to share wide-ranging accusations," Carlsberg said in its statement.

The Carlsberg India partnership is managed by C.P. Khetan for the Khetan Group. However, Carlsberg has day-to-day control as its majority shareholder, the Khetan entity said.

Carlsberg India's auditor, an affiliate of global accounting firm PriceWaterhouseCoopers, quit last year after it declined for two successive years to give an opinion on the joint venture's financials, Reuters reported in November.

Carlsberg is also facing scrutiny from India's antitrust authority whose investigation found in 2020 that the company colluded with other brewers to fix beer prices.

A final ruling has not yet been given. Carlsberg has previously filed a leniency application in the case and in December declined to comment on the matter.

Meanwhile, internal investigations into allegations of unlawful practices at Carlsberg India found potential improper payments to government officials and other lapses, while another found child labour issues at one of its warehouses, Reuters reported in January.

Carlsberg said in response at the time it could not rule out breaches of policies and its code of conduct and did everything possible to prevent such incidents.

(Reporting by Aditya Kalra in New Delhi; Editing by Clarence Fernandez and Alexander Smith)

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