The state government has taken over the spirits retail. Andhra Pradesh accounts for almost 8-10% of total spirits and beer consumption in India. The suppliers are striving for immediate release of Rs 765 crore by the state.
The Association of Liquor and Beer Suppliers, which represents companies such as United Spirits, Pernod Ricard, United Breweries and AB InBev, stated that the state’s excise agency’s sales revenue in the past four months was 7,081 rupees and 15% of sales revenue withheld total revenue from suppliers , The trade organization called it “horrific and unjust”. ET has a copy of the letter.
The Treasury and Excise Department at Andhra Pradesh did not respond to ET’s requests.
The state spirits industry operates on a purely credit-based inventory and customs revenue model, and the excise duty department only pays for the value of the inventory and the advance duties after the entire inventory has been sold.
“The suspension of payments for September through December will result in a huge deficit in the availability of working capital to re-invest in further supplies,” the letter said to the Secretary of State of the State Treasury and Andhra Pradesh State Beverage Corporation.
“Given the delays mentioned above, we humbly request that you immediately release 50% of the amount of Rs 1,533 crore (Rs 765 crore), which may at least satisfy the demand for the Sankranthi Festival,” it said.
At the end of last year, the state introduced a new cash policy that included the deletion of existing cash licenses, the issue of new permits from January 2020, and a 40% reduction in the number of bars.
This has already led to a sharp decline in the amount of alcoholic beverages in the country: from October to December, the amount of spirits decreased by 32% compared to the previous year, while the amount of beer decreased by 63%. The January numbers are similar too – spirits have dropped 40% in the past three weeks, while beer has declined 56%, according to the State Excise Department.
This comes at a time when companies are experiencing slower growth from quarter to quarter as taxes rise and alcohol consumption is throttled in some states.
United Breweries, which controls almost half of the beer market with brands like Kingfisher, had said that 2020 would continue to be challenging for the industry unless there was a dramatic macroeconomic turnaround.
“There will be a base effect. Hopefully we will see growth in the first quarter (January to March) this year as the base effect of the first quarter of 2019 was depressed due to elections. However, this will be nullified by the fact that Andhra Pradesh, a large market, will be significantly reduced due to government policies, ”UB CEO Shekhar Ramamurthy told ET earlier this month.
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