HYDERABAD: United Breweries Limited (UBL) on Wednesday decided to suspend, with immediate effect, the supply of beer to the Telangana Beverages Corporation Limited (TGBCL), due to the latter not releasing dues to the tune of Rs 658.95 crore.
The UBL has also asked the state government to increase beer prices by 33%.
Reacting to UBL’s demand later in the evening, Excise Minister Jupally Krishna Rao said that it was not possible to hike beer prices, as it would burden consumers.
The minister pointed out that UBL had a monopoly on beer sales and was pressurising the government to increase prices. “We will not succumb to their pressure,” Krishna Rao declared. UBL holds a market share of 69% in liquor sales in Telangana and supplies “Kingfisher” brand beer.
Krishna Rao and Excise & Prohibition Director Chevvuru Hari Kiran told reporters that if the government were to accept the demand of the distillers and increase beer prices by 33%, a bottle of the brew priced at Rs 150 could cost Rs 250, burdening consumers.
The minister cited the company’s claim that bills were pending and losses were high. “But the government paid Rs 1,131 crore to UBL and bills worth Rs 658.95 crore are pending. Of the total bills worth Rs 40,000 crore pending in the state due to the previous BRS regime, the Excise department has pending bills worth Rs 2,500 crore,” Krishna Rao explained.
The minister said that after the Congress came to power, the Excise department cleared bills worth Rs 1,130.99 crore.
Telangana has a stock of 14L cases of UBL beer
Krishna Rao said that as of date, Telangana has a stock of 14 lakh cases of UBL beer. He said that the government dues were Rs 407.34 crore on December 7, 2023.
A committee was formed with a retired judge to look into the demand of increasing beer prices and a decision would be taken after the panel files its report, he said.
Meanwhile, the UBL informed the Bombay Stock Exchange (BSE) on Wednesday that it has decided to suspend the supply of beer to TGBCL with immediate effect.
“This decision has arisen because (a) TGBCL has not revised the basic price of the company’s beer since 2019- 20, resulting in huge losses in the state and (b) significant over dues remaining unpaid by TGBCL for the past supply... As a result, the continued supply of our beer to TGBCL has been rendered unviable...” UBL said in its note to the BSE.
Later, UBL released a media statement, saying: “We have decided to immediately suspend supplies to TGBCL due to significant and ongoing operating losses in Telangana. Despite our continuous efforts over the past two years, there has been no increase in the base prices offered for our products. This has resulted in escalating losses, making our operations in the state unviable.”
The statement said that UBL has a fiduciary responsibility to all its stakeholders. “.... with each beer sold at a loss, it has become unsustainable for us to continue our operations. Additionally, the substantial overdue payments for the supplies made to TGBCL further complicate the situation. The Brewers Association of India (BAI) has made multiple representations to the government regarding the industry-wide challenges, urging price increases to offset inflation, but unfortunately, there has been no resolution to date,” the statement said.
An Excise official told TNIE that 69% of the sales were of beer supplied by UBL. “They supply Heineken, Kingfisher Ultra, Kingfisher Premium, commonly known as Kingfisher Light and other brands to the state,” the official said.
Another Excise official said that the department follows a 45 day cycle for releasing the payment. Dues were pending for April-August 2024 and submitted to the Finance department for release.