By Aditya Kalra
NEW DELHI (Reuters) -India’s capital New Delhi has rejected Pernod Ricard’s application to renew its liquor sale licence, citing ongoing investigations into the company – the latest blow to the French spirits giant in a critical growth market.
Pernod in a statement to Reuters said it will challenge the decision and “is keen to restart supplies as soon as possible”.
The April 13 order from city authorities, seen by Reuters and not previously reported, said the decision was reached after reviewing Pernod’s licence application along with “considerable documents” received from investigating agencies in India.
It cited many of the agencies’ allegations, including that Pernod illegally made profits by giving false price information and financially supported retailers in exchange for stocking more of its brands, violating rules.
The 12-page order also stated, “Pernod Ricard India Private Limited and its employees had active involvement in the said criminal conspiracy.”
The maker of Chivas Regal and Absolut vodka has denied any wrongdoing.
Pernod told a Delhi court in March it has been “suffering massive losses” as its brands have not been available in the city for six months as its licence had been delayed. A judge had given the city two weeks to decide on the matter.
Pernod can lodge an appeal with senior Delhi government officials.
“Pernod Ricard’s business in India is a strong success story in spite of this situation in New Delhi city,” the company said in a statement.
The company counts India as a key market where it has a 17% share and competes with Diageo. While the market share for New Delhi alone is not available, industry sources say that as an urban tourist hub, the city serves as a showcase market for premium brands, making it critical for any liquor company.
Among other regulatory challenges in India, Pernod is also fighting a near $250 million tax demand for allegedly undervaluing imports.
Pernod has operated for more than 20 years across India where licences to operate are granted by states or in this case, the national capital territory, individually and in most cases have to be renewed every year.
(Reporting by Aditya Kalra; Editing by Edwina Gibbs and Louise Heavens)
