New Delhi: New Delhi: German sportswear giant Adidas today said its group firm Reebok India will offer voluntary retirement scheme to employees as part of a restructuring exercise in the company, which has been allegedly hit by a Rs 870-crore fraud by two former top executives.
The Indian arm, Adidas India, is also consolidating supply chain by combining vendors for both the brands in India, apart from streamlining franchisees for Reebok India.
“We are looking for a fresh start of Reebok India by 2013 and as a part of it we are offering voluntary retirement scheme (VRS) to all the staff of the company,” said Adidas Group, managing director (market India), Claus Heckerott.
Reebok India has 200 employees and the VRS will be offered till the end of this month, he added.
Heckerott, however, declined to disclose the fund that has been earmarked for the scheme but said “the offer to the employees will be much more than the market average”.
He also denied such a step is being taken up due to a lack of trust about some of the employees who had worked under the previous management.
“This offer is across the board of all employees, there are very good talent among them. We want to help them move on while we look forward to a new beginning under a new business model,” Heckerott said.
Apart from the VRS, he said Reebok India is also streamlining the number of stores, under which the number would be reduced by one-third from the current 900 stores.
“As we are also changing the business model, with franchisees requiring to make their stores profitable, we expect that some of our existing partners will not be willing to take part in the current transition and hence there will be a decrease in number,” he said.
Reebok India at present has about 600 franchisees across India, he added.
Commenting on consolidation of vendors, he said, “Both Adidas and Reebok will have common suppliers in future. There will be multi-brand suppliers and our level of engagement with them will increase in terms of our global standard, but the group’s supplier base in India will be smaller going forward.”
He said the Adidas group will be investing €70 million on the fresh start of Reebok India.
“This will be mainly the cost providing fresh products to our stores and also for withdrawing old items,” he said.
In May this year Reebok India had filed an FIR alleging Rs 870-crore fraud by its former MD Subhinder Singh Prem and COO Vishnu Bhagat, which both of them have denied.
Heckerott said at present the police, SFIO and the I-T Department were conducting separate investigations and Reebok India is co-operating with it.
When asked about SFIO statement that the fraud amount could be inflated, he said the Adidas group stood by the figures it mentioned in the complaint filed with the Gurgaon Police.
On the report of Enforcement Directorate (ED) imposing penalty on Reebok India for alleged Foreign Exchange Management Act (Fema), Heckerott said, “In 2010 ED had asked for some information. We have not heard anything after that.”
Asked about complaints from about 80 of Reebok India’s franchisees in Delhi writing to the Adidas Group CEO Herbert Hainer, Heckerott said the company is working closely with the partners to resolve issues.
Reebok India had earlier said it was proactively deploying additional resources to address the concerns and expedite the resolution of issues with its partners but was getting delayed due to ongoing investigations.
Heckerott said Reebok India is not profitable at present. Under the new business model, the company has decided not to link its support to franchisees to the cost of stores and rather make them to directly buy products from the firm.