Haryanas Spirited Revival
The vulture is a patient bird, says a member of Haryana chief minister Bansi Lals coterie. For two years we watched. The CM sent letters to all the neighbouring states begging them not to operate liquor vends near the Haryana border. Did they listen? Their apathy ensured that prohibition failed in our state. Now the CM will have his revenge.
And how. Bansi Lal has decreed that there will be no octroi or sales tax on liquor in his state. This means that a bottle of whisky or rum could be at least 25 per cent cheaper in Haryana, compared to the adjoining states of Rajasthan, Uttar Pradesh, Punjab and Delhi.
The imposition of prohibition in Haryana was a windfall for Delhi. This year the excise department reportedly netted over Rs 500 crore against a target of Rs 425 crore. And Delhi chief minister Sahib Singh Verma is already grumbling about Haryana opening liquor vends near the border to lure Delhites.
Its clear that the lifting of prohibition is about much more than having your evening sundowner in peace. The industries that played Sleeping Beauty under prohibition tourism, hotels and restaurants, real estate and of course the liquor industry are now hoping that Bansi Lal has given them a new lease of life.
The initial reaction has been jubilant, as Bansi Lal goes all out to ensure that Bacchus rules in Haryana. The states new excise policy allows liquor contractors to retail any quantity of alcohol, doing away with the annual quotas that were fixed at each years liquor vend auctions.
This time we have freedom, chants jubilant distributor OP Yadav, managing director, Superplus Whisky and Wines. The CM is allowing us to do any amount of business. And, till 11 pm, Delhites will come running to us. Their shops close at 7 pm. Is that any time to finish with your drinks?
Having a nightcap in Haryana will be a pleasant experience this time round. Haryanas new prohibition commissioner, K S Yadav says, We are actively encouraging liquor vends to stock only good quality liquor at cheaper rates.
Deputy superintendents of police have been authorised to carry out surprise checks at liquor vends to ensure no adulterated stuff is being sold. Against the 1,100 liquor vends in pre-prohibition Haryana, the state now boasts close to 2,000 vends. This could generate excise revenue of Rs 1,000 crore for the cash-strapped state.
Aside from replenishing Haryanas depleted coffers, the new policy will be a shot in the arm for other industries. Prohibition caused a slump in real estate prices, an industrial slowdown in Haryana and hotel and restaurant bankruptcies, says economist Professor A B Mitra from the Foundation for Organisational Studies, Gurgaon. But now that the taps been turned back on, many sectors have good reason to say Cheers.
Their cup runneth over
Naturally, liquor manufacturers have the most cause for celebration but some prefer to adopt a wait and watch policy. Liquor giant Shaw Wallace and Dharuhera-based Inertia Industries are gearing up to restart their beer manufacturing operations in Haryana. But arch rival United Breweries has no plans to immediately revive the Indo-Lowen Brau (ILB) brewery in Faridabad. The ILB brewery, with a capacity of 1.70 lakh cases of beer per month, used to churn out UBs popular beer Kingfisher and the stronger Kalyani Black Label and Bullet.
Shaw Wallace, which has a 51 per cent stake in Sonepat-based Haryana Breweries, prefers not to waste a moment. We will pump in sufficient funds to make the brewery operational in three months, says a senior company executive. Two years ago, the company had moved 60 per cent of this units bottling and labelling equipment to its Central Distilleries and Breweries in Uttar Pradesh. Now Shaw Wallace is reportedly investing Rs 10 crore to crankstart operations.
It is tougher to revive a brewery than a distillery beer-making is a continuous process and we laid off over 150 workers. To restart, we need to hire people and invest crores in equipment, explains I S Bhore, general sales manager (Breweries Division), UB Group. Valued at over Rs 40 crore when it was up and running, the bulk of the beer from this brewery flowed into Delhi and Rajasthan. Only one-fifth of its product was for sale in Haryana.
Indo-Lowen Braus traditional markets are now being supplied by United Breweries, Ludhiana, which has a capacity of 2 lakh cases of beer per month. The UB Group could be understandably reluctant to restart operations to avoid a problem of overproduction. The UB Group, which has two contract breweries in Rajasthan and 12 other breweries scattered throughout India, is sourcing beer for Haryana from Punjab and Uttar Pradesh.
An industry report puts the size of Haryanas beer market at 1.25 million cases per annum, valued at over Rs 30 crore. Shaw Wallace will be hoping to regain its 36 per cent market share, ceding 22 per cent to the UB Group. Before prohibition, Shaw Wallace sold approximately 0.41 million cases per annum while UB sold roughly 0.25 million cases.
Sunil Tandons Inertia Industries, maker of the popular Sandpiper beer, was emerging as a strong player before prohibition. When both production and exports from Tandons only brewery in Dharuhera was banned, the market development done by the company went down the drain. Now Inertia Industries has renewed its Rs 7 lakh brewery licence and is reviving its Sandpiper brand. Similarly, Damanjit Singhs Kool Breweries, which has a tie-up with Munich-based Hofbrau to manufacture beer, had spent nearly Rs 7 crore before prohibition was imposed. With its plans on the backburner for two years, the company is now investing Rs 35 crore to set up its brewery at Dharuhera.
Haryana is primarily a hard liquor and strong beer market, says Pramod Krishna, secretary general, Confederation of Indian Alcoholic Beverage Companies (CIABC). The state is one of the leading liquor markets in the north, consuming 2.8 million cases each year. Thats on par with Uttar Pradesh and slightly bigger than Delhi, which consumes 2.2 million cases a year. The largest markets in the north, incidentally, are Rajasthan with a consumption of 5.1 million cases and Punjab at 3 million cases.
Haryanas market size is a magnet for all the major liquor manufacturers. We are looking at a gain of about 25 to 30 per cent from doing business in Haryana, says a senior executive at International Distillers India (IDI). By 15 April, all our major brands including Smirnoff Vodka, Archers Peach Schnapps and Gilbeys Green Label will be available. IDIs best-selling whisky, Gilbeys Green Label, was the first brand to be available in Andhra Pradesh after prohibition was lifted. Today, it is the market leader with 30 per cent market share.
But to repeat this success in Haryana, IDI will have to wrest market share from Haryanas favourite whisky McDowells Bagpiper. The UB Groups bottler in Haryana, Associated Distilleries, has already begun production with such fast-moving brands as Diplomat Whisky, McDowells Bagpiper, and McDowells Celebration Rum. Associated Distilleries has a capacity of 75,000 cases per month of IMFL and roughly two lakh cases per month of country liquor.
Some manufacturers are mixing a little caution into the general jubilation as they point to the spirit-lowering example of Andhra Pradesh. After prohibition was lifted in Andhra Pradesh, demand dropped by almost half. And there was a steep fall in sales from liquor vends, warns Anand Jha, managing director, Vintage Distilleries.
Before prohibition, Andhra Pradesh consumed eight lakh cases of IMFL and six lakh cases of beer per month. Now, theres a 30 per cent drop in sales from liquor vends. One reason for the drop is the operation of the parallel liquor business known as the seconds market. This denotes the liquor smuggled into the state without payment of excise and sold directly to consumers, says Jha. After the Andhra Pradesh experience, the liquor trade might be wise to underplay its projections for Haryana.
House full once more?
Haryana has resurfaced on Indias tourism map. After two years of being in dire straits, the states beleaguered hospitality industry is revving up for action, says an official of the Hotel & Restaurant Association of Northern India.
In fact, Haryana Tourism which operates 46 resorts in the state, is pumping in Rs 2 crore to carry out a massive refurbishment exercise. Everything from the bars to the bathroom fittings are getting a facelift, down to the 200 Sony television sets that will replace older models in the revamped 800-odd deluxe rooms at these resorts.
The lifting of the ban will mean a 30 per cent rise in the turnover of our food and alcohol business. It should generate revenues of Rs 7 to 8 crore, says Apoorva K Singh, additional managing director, Haryana Tourism Corporation. In the first year of prohibition room-occupancy fell from 76 per cent to 64 per cent. Now we are hoping it will bounce back to 76 per cent.
In 1995-1996, Haryana Tourism showed a profit of Rs four crore, only to find itself in the red in the first year of prohibition to the tune of Rs 1.5 crore. This year, the corporation has a turnover of Rs 60 crore and is likely to break even. With prohibition being lifted in Haryana we are looking forward to a big jump in our turnover, says Rajan Gupta, managing director, Haryana Tourism Corporation.
The corporation has been quick to renew its L-4/5 Liquor Licence for its 26 tourist complexes. In order to sight additional revenues, it has also applied for three more licences to operate bars at Blue Bird in Hissar, Surkhab in Sirsa and Rosy Pelican in Sultanpur.
The optimism has spread to upmarket establishments on the outskirts of Delhi, such as the Resort Country Club, the new five-star hotel The Bistrol and the Chancellor Club, in Haryanas Palam Vihar. We will open Chancellor Clubs refurbished bar, Bulls Eye on April 20. At Rs 30,000 per annum, the licence fee is cheaper than Uttar Pradesh, which costs Rs 65,000. On a good night, Bulls Eye can rake in over Rs 6,000, says an optimistic Manoj Marwah, general manager, of the Chancellor Club, Palam Vihar which boasts 1,200 members. Its no coincidence that the club hiked its annual subscription fee to Rs 3,000 from 1 April.
Similarly, the eight-year-old Resort Country Club in Gurgaon is preparing to welcome back its corporate clients. The Club was used by companies for dealer conferences, seminars, and even intra-department business sessions. We lost 70 per cent of this clientele after prohibition, says Roop Sodhi, Director, The Resort Country Club. The occupancy rate at the 20 room-resort which was as high as 85 per cent before Haryana went dry, nosedived to barely 35 per cent in July 1996. According to Sood, even club members who frequented the Resort Country Club to get their game of golf on the 50 acre, 9 hole course, stopped coming in as regularly. Now we are confident things will change. Who wants to play golf on a hot day without chilling out with beer?
Hiccups in real estate
Haryana needs more than Bacchus to boost realty. Gurgaon still does not have the infrastructure to trigger a bull run in real estate, says an executive at property consultants, Richard Ellis. Indeed, the Gurgaon colonies have hung out a Work in Progress sign for the last 20 years. Residents have to face drinking water problems, power cuts in summer and waterlogging during the monsoons. This isnt about to change with a flick of the administrative pen.
The lifting of prohibition has raised expectations of a boom in real estate prices. But that hasnt helped the property developers whove been hoping for a quick killing. So far the gains are only minimal. Says G R Bahri, director, Unitech Ltd: The lifting of prohibition hasnt jack-knifed prices. But there is a five to 10 per cent increase.
Real estate experts say that Gurgaon and the rest of Haryana will benefit primarily because prime land is hard to find in Delhi. Also, in Delhi most transactions are messy, freehold conversions being excessively complicated. Buyers tend to be attracted to Haryana and Gurgaon in particular simply because they can get clear and freehold titles to their properties.
Of course, real estate developers still believe that Gurgaon is the Promised Land for property deals. Says Bahri: With MNCs and Indian companies relocating their offices to Gurgaon there is a strong demand for upmarket apartments and independent bungalows. Even old enquiries are now maturing.
Others say that it will still take time. Despite Pepsi, Coke, Hindustan Lever, GE Capital, Alcatel, Bechtel, Siemens and Perfetti buying space in DLF Corporate Park or the Millennium Plaza, real estate prices will only go through the roof in Gurgaon when supporting infrastructure comes up, says Ashok Kwatra, managing director, Realvalue Property Investments.
The real estate merchants may need more than a few stiff pegs to get their show on the road. But the liquor and tourism industry are in good spirits, and perhaps the biggest beneficiaries are the states citizens. The return of Bacchus to Haryana means that they wont have to drive all the way to Delhi to quench their thirst any more.