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Rediff.com  » Business » Adidas takes Rs 1,090 crore hit due to Reebok India irregularity

Adidas takes Rs 1,090 crore hit due to Reebok India irregularity

March 07, 2013 14:08 IST

German sportswear giant Adidas on Thursday said its balance sheet for 2011 is negatively impacted by 153 million euro (over Rs 1,090 crore) due to 'commercial irregularities' at its arm Reebok India Co.

The company had in April last year stated that the estimated maximum negative impact due to the alleged fraud by its two top executives at Reebok India, could be up to a pre-tax amount of 125 million euros.

Adidas said it has corrected its consolidated financial statements as on December 31, 2012, in which the comparative figures for the year 2011 are restated and the opening balance sheet for 2011 is corrected to the extent that earlier periods are affected.

"The results of these restatements led to a reduction of net income attributable to shareholders of 58 million euro for 2011. In addition, shareholders' equity of the opening balance sheet for 2011 is negatively impacted by 153 million euro," the company said in a statement.

For the year 2012, the group had reported 6 per cent increase in overall sales to euro 14.9 billion, while its net cash position at year-end stood at euro 448 million.

Commenting on the group's financial performance, Adidas Group CEO Herbert Hainer said: "2012 has been another successful year for the adidas Group...The resulting margin improvements and significant cash flow generation underpin the trajectory and value we are unlocking with our Route 2015 strategic plan."

Last year, Reebok India had filed an FIR alleging Rs 870 crore (Rs 8.7 billion) fraud by its former MD Subhinder Singh Prem and COO Vishnu Bhagat, which both of them have denied.

While the investigations by government agencies are ongoing, earlier this year Adidas group had announced top management change in India with Erick Haskell, ex-COO of its China operations, coming in to head the business in the country as it looks to move on after the alleged fraud.

Reebok India had offered voluntary retirement scheme to 200 employees last year out of which said 84 have taken up the offer. It also downsized store count to 500 with two-third of the original franchisees staying on board with the company after its transition into a new business model.

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