Govt urged to cancel licences of 5 breweries

Bhubaneswar: The Odisha State Beverages Corporation (OSBC) has moved the State government for cancellation of factory licences and label registration of five breweries for not signing agreement with it for supply of beer during 2015-16.

The move followed after the companies failed to sign supply pact with OSBC, the state-run wholesale distributor of beer and Indian Made Foreign Liquor (IMFL), on or before the scheduled date.

Official sources said, the corporation has approached the excise commissioner for cancellation of factory licenses of these companies.

These leading liquor brands, which together account for about 80 per cent beer sales in Odisha, are opposing the reduction in offer price of beer to the extent of 20 per cent in the new excise policy of the State. The beer producers feel that the stiff cut in the offer price would result in business loss of over Rs 100 crore per annum.

Opposing the policy, liquor traders said the companies supplied a case of beer (12 bottles) to the corporation for Rs 500, and the State government charges Rs 500 on it as excise duty and other taxes. The trader keeps a margin of Rs 140. Now, a case of beer costs around Rs 1,140 and customer gets one beer bottle for Rs 95.

They further stated that now the State government was asking the companies to supply a case of beer to the corporation for Rs 400 instead of Rs 500. So they have backed out. “In this case, the State government will get Rs 600 instead of Rs 500 for one case of beer,” a trader said.

Interestingly, the reduction in offer price of the liquor manufacturers and profit margins of OSBC and retailers, as proposed in the new excise policy, will have no downward impact on the MRP (Maximum Retail Price) of liquor brands due to rise in effective rate of excise duty.

The state government had earned Rs 2,000 crore as excise revenue last year. It targets to earn Rs 2,500 crore this year following the implementation of the new excise policy.

In 2014-15, OSBC had supplied 90 lakh cases of beer to the retailers. Normally, March end to June is the peak season for beer sales and about 40 lakh cases of beer are sold during this period.