The crisis at Adidas’s India operations continues as
the German sports major has called on the Indian authorities to launch a criminal probe into the commercial irregularities at Reebok India. “Based on the commercial irregularities we have uncovered at Reebok India, we have now filed a criminal complaint with the Indian law enforcement authorities in order to start the formal investigation,” the Adidas group said in a statement on Saturday. “The matter now rests with the Indian law enforcement authorities,” it added.
Adidas is yet to elaborate on what it means by the commercial irregularities at Reebok India. But the after replacing Subhinder Singh Prem with Claus Heckerott as Managing Director of Adidas India at the start of May and company later issued a statement admitting to “commercial irregularities” at the Indian unit of Reebok, its most popular and the leading sportswear brand in the country.
Prem in turn issued a legal notice to the company asking for Rs 15 crores in damages. The lawyers have also demanded from Adidas, contractual dues of Rs 12.7 crore, which includes Prem’s performance bonus for 2011 and his severance package.
Adidas has also announced plans to close up to a third of the 1,000 franchise stores that Reebok has in the country, as part of its restructuring plan to begin 2013 with a clean sheet in this market. “The situation in India, although unfortunate, will allow us to now accelerate plans to improve a specific underperformance part of our business,” Adidas chief executive officer Herbert Hainer had said in a statement issued on April 30.