OSBC writes to govt for cancellation of licences of five beer companies

SABMiller, Carlsberg, United Breweries at the receiving end

Miffed with the adamant stand of five major beer makers for not signing the annual agreement for supply of beer, state-run Odisha State Beverages Corporation (OSBC), the sole wholesale distributor of alcoholic beverages in the state, has recommended to the state government for cancellation of their label registration and brewery licences for the year 2015-16.

The companies at the receiving end are-SABMiller India Ltd, Carlsberg India Pvt Limited, United Breweries Ltd, MP Beer Products Ltd and Devans Breweries Ltd, who have opposed the proposal of 20 per cent reduction in offer prices incorporated in the new excise policy of the state.

SABMiller India sells beer under the brand names of Haywards 5000, Fosters and Knockout while Tuborg and Carlsberg are the popular brands of Carlsberg India. Vijay Mallya owned United Breweries sells its beers under the head of Kingfisher, Kalyani Black Label. The main brands of MP Beer Products Ltd and Devans Breweries are Maharani and God Father respectively.

Together these five suppliers have more than 70 per cent market share in the state.

All the liquor manufacturers were given April 16 deadline by OSBC to sign the supply agreements. However, these beer manufacturers are hell bent on their decisions and did not sign the pact with the state PSU. Although the smaller companies have been asked to step up their supply, the beer availability and excise duty collection in Odisha have been severely affected by non-execution of agreement by the producers of major beer brands. Grant of brewery licence as well as label registration to these beer makers for the year 2015-16 is of little benefit to the state without execution of agreement, said Dwijaraj Kar, managing director, OSBC, in a letter to the state excise commissioner.

The excise duty collection has dipped by about 86 per cent in the first 15 days of the new fiscal compared to same period of the last financial year due to the crisis.

In view of the above, steps, as deemed fit, may be taken against the five suppliers in terms of cancellation/withdrawal of their label registration as well as brewery licence for the year 2015-16, Kar wrote in the letter. IMFL (Indian Made Foreign Liquor) suppliers too had opposed the reduction of 10 per cent reduction in offer prices, but they later relented and singed supply pacts with OSBC after the secretary of the state excise department assured them that a high power committee would look into their grievances.

Officials said, the committee,  formed to listen to the grievances of the liquor manufacturers, will not entertain any further pleas of  these five beer companies and no pacts will be signed with them.

“We will identify new brands for supply of beer in the state”, Kar added.

A committee has been constituted to look into petitions of the liquor manufacturers where they have contended that they will bear huge losses due to reduction in offer price as proposed in the new excise policy. “If their claims are found true, we will amend the policy, otherwise they will be forced to supply at the stated offer price in the state, said Damodar Rout, state excise minster.

As many as 31 IMFL and seven beer suppliers have signed pacts with OSBC.