Diageo arm United Spirits says reports on CEO being summoned misleading, to cooperate with Delhi police in routine probe

United Spirits Limited, a subsidiary of Diageo India, has clarified that a news report that the company's CEO, Hina Nagarajan, was summoned by Delhi city police for a probe into liquor payments was misleading.
 A report published on July 25, 2024, by a prominent news wire, on Nagarajan. was “misleading”, the company said, emphasising that it “distorts the facts of a routine regulatory procedure”.

United Spirits shares were trading down 1.46 per cent, at ₹1,424, on July 26, 2024, at 1:23 pm, on the BSE.

In a statement filed with the exchange, United Spirits clarified that the notice received from the authorities was part of a standard information and fact-finding exercise. Such notices are typically addressed to the company head but are not specifically directed at the CEO. The notice requires a company representative to provide information related to operations between 2017 and 2020, which is a standard regulatory request.

"We believe similar notices have been sent to other manufacturers as well. This is a routine process, and we are fully cooperating with the authorities, as we always have," the statement read. "Diageo India has consistently maintained the highest standards of regulatory compliance, and any suggestion of culpability in the headline or article is irresponsible reportage."

Context of the investigation

The initial report by Reuters indicated that Nagarajan was summoned by New Delhi's anti-corruption police as part of an investigation into billing and discount practices involving government agencies that operate liquor retail shops. According to the Reuters report quoting sources and a police notice, Nagarajan was asked to appear before the police and provide various documents related to the company's sales during the specified period.

The notice directed Nagarajan to appear in person or through a company representative for the investigation. United Spirits confirmed receiving the notice and stated that it was in the process of sending an authorised representative to comply with the request.

Industry and market impact

The Delhi police investigation focuses on the practices of liquor suppliers to government-run retail shops, particularly regarding discounts offered for early payments by these agencies. The inquiry aims to determine if there was any wrongdoing in this process, per the Reuters report. 

Delhi remains a significant market for premium liquor brands, contributing substantially to Diageo's market share in India. Diageo, known for brands like Johnnie Walker, holds a 19% market share in India's $35 billion spirits market, according to Euromonitor. It competes with Pernod Ricard, which has faced challenges in obtaining licenses in Delhi since late 2020, Reuters reported.