Sula Vineyards slips 8% on Rs 116-crore excise duty notice from Maha govt

Shares of Sula Vineyards slipped 8 per cent to Rs 476.30 on the BSE in Wednesday's intra-day trade after the company received demand notice from the Government of Maharashtra on July 31, 2023. The stock has fallen 11 per cent from its record high level of Rs 534.70 touched on Tuesday, August 1, in the intra-day trade.

In an exchange filing, Sula Vineyards said the Demand Notice of Rs 115.90 crore (excise duty, along with the interest) was received by the company on the ground that, under the Maharashtra Manufactured Beer and Wine Rules, 1966, excise duty was recoverable on wine produced or manufactured from grapes produced in Maharashtra by blending wine brought from across custom frontier or from other states.

However, the company said the order does not affect the existing business or the activities of the company. "The company has always strived to and carried out its business in compliance with extant laws and regulations in letter and spirit," it said.

The company has filed a writ petition on August 1, 2023, before the High Court of Bombay, challenging the order (i.e., against the State of Maharashtra through Principal Secretary and others). The company further said it has been legally advised that the demand notice is not tenable in law in this matter.

Sula Vineyards is principally engaged in the business of manufacture, purchase, and sale of premium wine and other alcoholic beverages.

"With a strong harvest season this year, the company has been able to store good quality and quantity of stock which covers them for the next 18 months. The company remains confident of the growth momentum. While there are reports and forecasts of a weak monsoon, the full reservoirs in Nashik ensure that the company is well placed for the next two years to come," Sula had said in its FY23 annual report.

At present, Sula is the undisputed leader in wine in India. With wine industry growing at over 20 per cent year-on-year, the company is on a strong footing to ride the wave, it said.