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The payment dispute between the liquor companies and the government in Telangana is deepening and the dues of $337 million have affected the operations of the entire sector. Due to non-receipt of payment just before the festive season, companies can stop the supply, which can create a direct crisis on the availability of liquor in the state. Industry bodies have appealed to the government to make immediate payment so that business can continue as normal.
New Delhi. The liquor industry of Telangana is facing severe cash crunch these days and the situation has become so bad that even big global players are warning of stopping the supply. Dues of about 337 million dollars are due due to which the patience of companies and industry bodies seems to be breaking. Telangana is counted among the largest liquor consuming markets in the country, but due to the government depot model, every payment gets stuck directly with the state government. The outstanding payments from May 2024 have destabilized the entire sector and with demand set to increase by 75 percent during the festive season, the industry is considering it as a very serious crisis.
According to the letter sent by the industry associations, the government is stuck with outstanding dues of Rs 29.85 billion i.e. about $337 million. Companies say that due to non-clearing of old payments and continuous delay in new payments, the business model is no longer sustainable.
Heineken and other companies have already stopped supplies
United Breweries, which makes Kingfisher beer, had stopped the supply in January for this reason. Let us tell you that the command of United Breweries is currently in the hands of Heineken, which is an international liquor company. The industry is afraid that if the dues are not settled soon, many companies may have to stop operations because they are short of working capital.
Government depot model becomes a big problem
In many states including Telangana, liquor and beer are supplied only to government depots which then sell it to retailers. In this model, the entire payment system is dependent on the government and if payment is late, the entire chain is affected.
Demand increases by 75 percent during festive season
During the festive season, the demand for liquor increases by 75 percent compared to normal days, due to which the industry needs more cash flow. At such a time, due to payment being stuck, there may be a supply shortage which will greatly affect the retail market.
The industry is already under pressure from regulations and inquiries
India’s liquor market is already facing pressure from strict regulations and new advertising restrictions. Also, many big companies are facing anti-trust investigation, which has increased their additional compliance costs.
