Adidas-India’s ex-MD slaps legal notice on company


Adidas-India’s ex-MD slaps legal notice on company

4 May 2012

The Adidas-saga in India seems to be taking a different turn.

After the global sportswear major on Monday admitted to “commercial irregularities” at the Indian unit of Reebok, it’s most popular and the leading sportswear brand in the country, ex-MD of Adidas in India, Subhinder Singh Prem, has sued his former employers for Rs 15 crores in damages. His lawyers have also demanded from Adidas, contractual dues of Rs 12.7 crores, which includes Prem’s performance bonus for 2011 and his severance package.

Though Adidas hasn’t divulged any further details other than the statement issued, Prem suggested that Adidas, which earlier this week said unspecified “commercial irregularities” in its Indian operations had forced it to take a Rs 870 crores charge, was fully in the loop on how the company was run. Prem also admitted that he did not quit the company on his own but was asked to leave citing “financial irregularities”.

Prem, who was appointed head of the combined entity’s Indian operations last year, denied being involved in any financial irregularity. On the contrary he had exposed three major frauds at Adidas, he pointed out. Prem says he was called to Arizona, US, on March 25 and after he presented his annual business plan there, he was coerced into disengaging from the company and promised a severance package. Four days later, he received a mail with termination letter, three hours before Adidas issued a statement containing reference to commercial irregularities in India. "The biggest scam was the scavenger deal running into Rs 200 crores, where about Rs 20 crores were illegally made by senior officials," Prem’s lawyers said in a legal notice to Adidas, its global CEO, board members and its various entities in India. "However, the scam was brushed under the carpet because it related to Adidas and not Reebok, and the request to notify the fraud to the auditors at the year-end was turned down by the headquarters," the notice added.

Adidas has three brands in India, including the flagship brand that shares the same name as that of the group, Reebok and TaylorMade. The latter targets the golfwear market, while Reebok and Adidas are known for sportswear products. Prem, who was earlier the Reebok India MD and took over as the Adidas India MD last year, has been credited with turning around Reebok’s fortunes in the country. In India, Reebok leads Rs 3500 crores market with a share of 53 per cent.