Amid price-hike standoff with UBL, CM Revanth Reddy says Telangana government will not succumb to pressure

Hyderabad: Amid the standoff with United Breweries Ltd (UBL) over the supply of beer to Telangana, Chief Minister A Revanth Reddy told the excise officials on Saturday that the government will not succumb to the pressure from the companies to hike prices.

On Saturday, Revanth Reddy held a review on liquor supply and beer prices with excise officials. Revanth Reddy directed the officials to adopt a transparent mechanism to select the companies that come forward to supply liquor to the Telangana state.

The Excise and Prohibition officials have been asked to follow a simplified trade policy to supply new liquor brands by the companies that have already been supplying alcohol to the TG Beverage Corporation Ltd. (TGBCL).

The Chief Minister cautioned the officials to follow strict rules in permitting the new companies to supply liquor in the state.

When the officials brought to the attention of the Chief Minister that UBL mounted pressure on the government to increase beer prices by 33.1 percent, Revanth Reddy said that the government will not succumb to the pressure by the companies. The officials were instructed to examine the beer prices in neighbouring Andhra Pradesh, Maharashtra, and other states.

“A decision on the price hike will be taken based on the report of the Price Fixation Committee headed by a retired High Court judge. The pending bills have been paid to the Excise Department from time to time in the last year,” said Revanth Reddy. He ordered the finance department officials to systematically clear the pending dues imposed by the previous government.

UBL on January 8 said that it is stopping the supply of the prized KingFisher and Heiniken beer to Telangana citing operational losses due to no increase in base prices and mounting pending dues.

“We have decided to immediately suspend supplies to Telangana Beverages Corporation Ltd. (TGBCL) due to significant and ongoing operating losses in Telangana. Despite our continuous efforts over the past two years, there has been no increase in the base prices offered for our products. This has resulted in escalating losses, making our operations in the state unviable. We have a fiduciary responsibility to all our stakeholders, and with each beer sold at a loss, it has become unsustainable for us to continue our operations,” said a statement from United Breweries Ltd.

Additionally, the company said substantial overdue payments for the supplies made to TGBCL further complicated the situation. The Brewers Association of India (BAI) has made multiple representations to the government regarding the industry-wide challenges, urging price increases to offset inflation, but unfortunately, there has been no resolution to date, said UBL.

Responding to UBL, Telangana excise minister Jupally Krishna Rao said that the company has demanded that the state Beverage Corporation increase the beer prices by 33 per cent, which would raise the current price of Rs 150 to Rs 250 per beer.

The minister said, hwever, the government has rejected this demand, citing the company's alleged monopoly behavior.

Rao mentioned that the previous government had left behind unpaid bills, with Rs 11,000 crores already paid and Rs 650 crores pending. Additionally, the Excise Department has Rs 2,500 crores in pending dues from the previous government.

Comparing beer prices across states, Rao noted that Karnataka and Andhra Pradesh have prices around Rs 180-190, while Telangana has a lower price of Rs 150.

On Saturday, Revanth Reddy also instructed the officials to issue a notification inviting new companies to submit their applications within a month's deadline. The companies must only apply under their brand names, and the selection process must be transparent, scrutinising their quality standards and supply capacity.