Hyderabad: The Telangana state government wants all liquor in the market to be made in Telangana. To push its revenue up by another Rs 2,000 crore per annum through excise sales, the government is working on multiple ideas to attract distilleries, besides increasing the alcohol consumption. It is in discussion with multiple liquor companies in Maharashtra, UP, TN, Karnataka, that have good markets both in TS and AP, to set up manufacturing units, citing industry-friendly policies.
As per the sales records of “production and demand” in 15 distilleries of Telangana, the state has an average sale of 17 lakh cases each month. Of these, 3.2 lakh cases are imported from various states.
The imported liquor is mostly branded and the companies do the bottling in the distilleries in the state for a certain price. “For instance, a different segment of Officer’s Choice brand, manufactured by Allied Blenders and Distillers, has a demand of over 3 lakh cases in both AP and TS per month.
Similar is the case with Seagrams, by Pernod Ricard Company and McDowell, which enjoys a good market in both states but do not have manufacturing units here. These companies want to establish their units locally as they would save money on transport and inter-state taxes,” said an Excise official.
The existing 17 distilleries (two are yet to be operational) in Telangana produce cheap liquor that have sales of over 14 lakh cases every month. The government is also mulling lowering “Under Proof” of liquor in anticipation higher sales.
“The present UP of liquor in the state is 25, containing over 42 per cent alcohol, when the UP is reduced to 35, the alcohol portion will be reduced to 37,” said Niranjan, owner of a distillery company in the state.
After lowering the UP, a liquor bottle that is currently sold for Rs 70 will be sold for around Rs 45-50. This will increase sales. “Maharashtra, which took a similar step, is enjoying additional sales of 4 lakh cases per month,” said an official.
Distilleries wary of new licences
There are over 17 distilleries in TS that are opposing the government’s decision to issue licence to establish new distilleries. They claim that this would affect them.
“Present liquor production capacity of distillers in the state is 25 lakh cases and the present market demand is over 18 lakh cases. After the state’s bifurcation, the liquor demand has dipped by 2 lakh cases. The sales would be further hit in the next two years as distilleries in AP would start operating. With a 10 per cent annual growth, the existing capacity of the distilleries will suffice for 10 years,” said M. Rajeshwar Rao of the Association of Liquor and Beer Suppliers.
Though the state is hoping for business from imported brands, whiskeys and premium brands in India are manufactured only in two-three units located outside the state.
“New distilleries might bring in additional revenue, but would affect the survival of the existing companies with increased competition,” said Niranjan, owner of a distillery firm.
Track and trace system not in place
The tag and trace system, which could put a check on the sale of non-duty paid liquor, thereby increasing revenue for the government, is not yet fully in place after nearly three years. The decision to affix the track and trace holograms on liquor bottles was taken in 2012 but has faced resistance from dealers.
D. Venkateswar Rao, president of the Twin Cities Wine Dealers Association, said, “Though we have installed the computers and other equipment as per the orders of government, the liquor bottle only shows up a code number instead of its origin of production and other details.”
Manufacturers are keeping track of additional expenditure incurred for affixing holograms since July 1. “We have asked for compensation for 20 paise per bottle, which is the cost of fixing the hologram,” said M. Rajeshwar Rao of the Association of Liquor and Beer Suppliers.
The matter is in court, and if the decision goes in favour of the manufacturers, the state will have to pay Rs 5 crore for the 50 lakh cases of liquor manufactured in TS since July 1, 2014. Sources say the government may decide to pass on the burden to the consumer.
