Investors flag operating issues as Bira91 looks to raise fresh capital

Bira91 faces liquidity and operational challenges as revenue drops and losses widen; company seeks $100M funding to restart production and pay employees

Investors of craft beer maker Bira 91 have raised concerns about capital burn rate and operating performance, even as the company looks to raise fresh rounds to augment growth and start production.

 

“There has been a promise to deliver, which has not been met in terms of operating performance and revenue scale. The company has been struggling with liquidity. It’s not just about name change, it had operating challenges — both in terms of working capital and managing business — across different states for a while,” an investor told Business Standard.

 

While the company has raised several rounds of capital, “the burn rate is also very high and without working capital, the engine cannot work. It has been struggling with capital for the last 12-18 months. But when one has pending liabilities, the capital also gets washed out quickly,” the investor added.

 

Meanwhile, another investor pointed out operating issues at the company, including a less-than-desirable length and breadth of distribution and an international foray “that in hindsight, was too early.”

 

According to data from Tracxn, institutional investors hold 28.6 per cent stake in the company. It is led by PeakXV, Sofina, Sixth Sense, MUFG and Tiger Pacific. Kirin Holdings holds another 20.3 per cent.

 

In 2017, the craft beer maker had announced plans to start distribution in at least five international markets within two years of being founded. 

 

“State government taxation is part of running the business and should not be blamed. Cash burn remains quite elevated. The struggle for Bira was that it very rarely had consistently good quarters without any external issues impacting the business,” the investor said.

 

In the unlisted space, the company’s market value declined to ₹1,500 crore from ₹8,000-9,000 crore. 

 

Buyer interest has declined as there is a lot of uncertainty around what is going on and future filings will be watched closely,” Dinesh Gupta, co-founder, UnlistedZone, said.

 

However, even as issues continue, Ankur Jain, co-founder and chief executive officer (CEO) told Business Standard that he is staying put.

 

“We are in the process of ensuring that there’s capital available for growth. It is happening in three forms, the first of which is structured credit that we have received terms for. We are in the process of finalising equity commitments as well with strategic investors. Both of these are expected to conclude late this quarter or early next quarter,” Jain told Business Standard.

 

He said that the company is looking to raise around $100 million mainly from new domestic investors.

 

“Before that, we are also looking to raise some interim capital, to help us resume work in several states and augment our business,” he added, without revealing details about the quantum of interim capital and names of potential investors.

 

The company is expecting to start production immediately after Diwali to ensure markets like Delhi, UP, Pune, Mumbai, Thane, Bengaluru, and Northeast are serviced, he further said.

 

At Bira 91, employee salaries have been on hold for the past six months, while operations have come to a halt.

 

“The interim capital will also go towards retiring dues for all employees, statutory dues, and working capital,” Jain added.

 

According to financial data accessed by business intelligence firm Tofler, B9 Beverages Pvt. Ltd reported a 31.5 per cent drop in revenue from operations to ₹554.8 crore from ₹810.1 crore in the year-ago period. Meanwhile, its net loss rose to ₹643.5 crore from ₹391.4 crore in FY23.

 

Investors say the brand continues to have value. “Things are on the move right now and the idea is to recapitalise the company in some form, which is the main agenda for all stakeholders, including the company management,” said one of the people quoted above. He did not divulge details about any conditions that may have been placed on infusing fresh capital.

 

Earlier this week, a report said that some large institutional stakeholders in B9 Beverages have started discussions on the removal of Jain, citing his inability to run the financially-troubled company, according to four people aware of the development.

 

Most shareholders, the report stated, agreed to infuse fresh funds into the company on condition that Jain steps down.

 

“It looks like investors want more control over the company’s direction,” said one of the people quoted above. 

 

However, Jain, denied claims of any investor wanting to pour in capital. “No investor has come to me saying they want to infuse capital,” he said.

 

According to data accessed from Tracxn, the company had last raised $25 million in March 2024.

 

(With inputs from Samie Modak)