Pernod Ricard has acknowledged the charge-sheet and is cooperating with the authorities. The company denies all allegations and is relying on the judicial process to prove its compliance with applicable laws and regulations.
The Enforcement Directorate (ED) has accused the Indian branch of Pernod Ricard, the world’s second largest spirits company, of retail cartelization, money laundering, and misdeclaring prices. The second charge-sheet, filed by the ED on January 6, stated that Pernod Ricard provided a corporate guarantee of INR 200 crore to five retail entities as part of a cartel conspiracy. The company is also accused of concealing the true nature of the transaction and presenting it as legitimate by portraying the corporate guarantee as financial support when it was actually an investment from Pernod Ricard with the condition of maintaining 35% of Pernod brands in the retail zone at all times.
Details of Second Charge-Sheet Filed by ED
The court has taken cognizance of the second charge-sheet and has ordered the accused to appear during the next hearing on February 23. The ED filed the first charge-sheet in November of the previous year. The charge-sheet stated that the misdeclaration of ex-distillery prices, sales to super cartel retail zones, and the value of the corporate guarantee amount to INR 563 crore for the producer of Absolut vodka and Chivas Regal scotch. The company gained excess profits of INR 163 crore due to an increase in market share, according to the charge-sheet.
Pernod Ricard’s Business in India
In a letter to its global CFO, Helene de Tissot, while obtaining approval for the corporate guarantee, Pernod Ricard claimed it was working towards having a strategic advantage in 20 out of 32 proposed zones in Delhi as part of its “winning Delhi by distance” objective. The company’s COO, Rajesh Mishra, stated that apart from other strategic benefits, this had the potential to generate additional 14 million euros in benefits over a three-year period.
Pernod Ricard’s Response to the Charge-Sheet
Pernod Ricard has acknowledged the charge-sheet and is cooperating with the authorities. The company denies all allegations and is relying on the judicial process to prove its compliance with applicable laws and regulations. A spokesperson for the company stated that Pernod Ricard India is committed to being a responsible corporate citizen and is in compliance with the country’s laws.
Increase in India Revenue and Net Profit
Despite a limited presence in the mass segment, Pernod Ricard controls around 25% of the overall whiskey market in India, primarily through premium and semi-premium brands such as Blenders Pride, Royal Stag, and Imperial Blue. The company’s India revenue increased by 17% to INR 22,741 crore with a net profit of INR 1,459 crore in the year ending March 2022.
Change in Delhi’s Liquor Business and Policy
In November 2021, the Delhi government handed over the liquor business to private retail companies, leading to steep discounting. However, due to allegations of cartel formation and corruption in the framing and implementation of the excise policy, it was reversed back to the old regime where the government controls the sale of liquor.
