Losing buzz: Liquor firms in Telangana buckle under unpaid state bills

Alcohol manufacturers say payment delays are crippling operations, pushing working capital stress to dangerous levels and threatening supply stability

A deepening payment paralysis in Telangana’s liquor industry is beginning to choke manufacturing units and strain supplies, employment, and the broader investment landscape, industry bodies have warned, as unpaid dues accumulate to levels they describe as “unprecedented” and “severe”.

 

India’s alcoholic beverage (alcobev) industry groups — the Confederation of Indian Alcoholic Beverage Companies (CIABC), Brewers Association of India (BAI), and International Spirits and Wines Association of India — have jointly raised the alarm.

 

In a statement, the bodies observed that although alcobev sales and state revenue collections surged in October 2025 on the back of festival demand, payments to suppliers dropped sharply. The state released nearly 50 per cent less to manufacturers in October compared to the average disbursement over the previous four months.

 

Despite repeated meetings with senior officials including the deputy chief minister and the excise minister in October 2025 — and assurances of clearing long-pending dues from May–August 2024 — payments barely moved. After releasing about ₹484.58 crore by mid-October, the state stopped disbursements entirely, pushing total overdue outstanding to roughly ₹3,800 crore (including nearly ₹1,900 crore of new outstanding in 2025–26), breaching the 45-day contractual payment cycle.

 

A company executive said, “Telangana has stopped payments to liquor companies since October 15 and dues from June–August 2024 are still pending. We are in touch with authorities, but we have no clarity on when payments will resume.” He added, “It is a high-volume, low-margin state, and these payment delays are creating major working-capital issues.”

 

“These are not disputed amounts; they are published on the TGBCL (Telangana Prohibition and Excise Department) website,” said Vinod Giri, director general, BAI. “Put together, the industry is staring at more than the listed amount in unpaid dues, with no visibility on when it will be cleared.”

 

Giri said the long delays are stretching companies far beyond their financial limits. Liquor manufacturing in India operates under tight, government-regulated margins. Firms depend on predictable payment cycles because they must continuously buy grain, glass, packaging, and pay for logistics — all upfront. “They cannot absorb this ever-increasing working-capital burden indefinitely.” Though companies have continued supplies to avoid disruption, Giri warned that sustained pressure could force “tough calls”.

 

According to CIABC, Telangana earns an estimated ₹30,000 crore annually from liquor sales, or ₹2,800–3,000 crore a month. Yet suppliers routinely receive only a fraction of this. In 2024–25, the state accounted for about 3.7 million cases and contributed roughly 9 per cent to national sales.

 

“The interest cost alone at 12 per cent — the burden is enormous,” said Anant Iyer, director general, CIABC. For many small and mid-sized suppliers, interest accrued on ballooning overdue receivables now exceeds their earnings from sales to Telangana State Beverages Corporation. The delays, he said, pose an existential threat.

 

Attempts to find solutions have made little headway. One proposed remedy was to use revenue from the recent retail-licence e-lottery, which is expected to generate nearly ₹3,000 crore, to clear old dues. “All we get are assurances. There is still no clarity on when payments will be made. The state earns about ₹3,300 crore a month from alcohol sales but is not paying roughly ₹800 crore of it, which is the industry’s share,” Giri said.

 

Industry representatives suggest that competing fiscal commitments — including flood relief, teacher salaries, and welfare programmes — appear to be taking precedence, leaving supplier payments with lower priority.

 

The broader concern, Iyer said, is reputational. Companies have invested heavily in Telangana through breweries, distilleries, and bottling plants.

 

For now, supply lines are holding — but just barely. Without a sustainable, transparent payment mechanism, industry experts warn the situation could tip from financial stress into market disruption. 

The repercussions of continued delays extend far beyond manufacturers, highlighted Sanjit Padhi, CEO, ISWAI. “If dues are not cleared immediately, the state risks creating a crisis for the survival of the industry, which will also impact transporters, packaging units, logistics providers, and thousands of livelihoods.” 

 

Padhi further noted that the situation could also undermine investor confidence in Telangana- not only in the liquor sector, but across any industry supplying to the government.