Alcohol Industry Bodies Write To Telangana Govt To Clear Rs 2,985 Crore Dues

India’s leading alcohol industry bodies have written to the Telangana Chief Minister, urging the state government to clear long-pending dues amounting to Rs 2,985 crore. The letter sent jointly by the Brewers Association of India, the Confederation of Indian Alcoholic Beverage Companies and the International Spirits and Wines Association of India warns that the sector is on the brink of operational disruption unless payments are released.

According to the industry groups, the pending dues include Rs 2,029 crore in outstanding payments for supplies made between May and August 2024, according to the letter accessed by NDTV Profit. An additional Rs 956 crore has accumulated as overdue amounts for sales made after August 2024. Companies allege that despite multiple meetings with government officials, there has been continued denial of legitimate dues and what they describe as unfair treatment from the state.

The bodies have cautioned that many companies may be forced to halt operations altogether because they lack the financial resources to continue production and supply without clearance of the accumulated dues. They also flag that the industry will be unable to meet the surge in festive-season demand expected from December unless funds are released immediately.

In the letter viewed by NDTV Profit, the associations urged the Telangana government to bring down the current outstanding payment cycle to 45 days, in line with existing tender agreements. They also requested a reduction in excise duty advances to 1% to ease working-capital pressures across the sector.

United Breweries, the maker of Kingfisher beer earlier this year suspend the supply of beer to the Telangana Beverages Corporation Ltd.

United Breweries explained that the decision stemmed from two primary reasons: TGBCL's failure to revise the basic price of the company’s beer since fiscal 2020, leading to significant losses, and the substantial overdue payments by TGBCL for beer supplied in the past.

The company stated that these factors had rendered the continued supply of beer to TGBCL "unviable."

UBL had total trade receivables of Rs 2,434 crore in its balance sheet as on Sept. 30, 2024, and the company had receivables of Rs 700-800 crore outstanding from Telangana for the period of January to May 2024.

Notably, TGBCL is a government-owned entity responsible for the wholesale distribution of alcoholic beverages in the state of Telangana. It acts as an intermediary between manufacturers and retailers, playing a crucial role in the state's liquor distribution network. The corporation’s policies and pricing structure significantly impact beverage producers.

However, it resumed the supply after 12 days on Jan 20 after TGBCL assured United Breweries that concerns related to pricing and outstanding payments will be addressed in a time-bound manner.