Global Alcohol Companies Seek $400 Million in Dues from Indian State Telangana
Alcohol Giants Accuse Telangana of Breaching Accounting Rules
By Aditya Kalra
Background on Telangana's Alcohol Distribution System
NEW DELHI, June 12 (Reuters) - Indian groups representing alcohol giants Diageo, Pernod Ricard, Heineken and Carlsberg, accused the southern Indian state of Telangana of breaching accounting rules over dues it owes them totalling nearly $400 million.
Telangana, the country's biggest beer-consuming state by volume, like many other local governments in India, requires liquor companies to supply only to state-run depots, which then sell to retailers, forcing the companies to rely on state governments for payment.
Longstanding Payment Issues
The system has long soured relations with big drinks companies and last year Telangana officials acknowledged they owed money to liquor firms without giving reasons for the delayed payments.
The state government has from this month been paying off new dues early, while old debts pile up, the industry leaders said. Contractually, early payments can be made at a slightly lower rate, but that has to be agreed with the companies that say the government is acting unilaterally.
Industry Response and Concerns
On Friday, industry bodies the Brewers Association of India, the Confederation of Indian Alcoholic Beverage Companies and the International Spirits and Wines Association of India, which together represent 80% of the country's liquor, beer and wines market, issued a joint statement raising concerns about the risk of bad debts.
Risk of Bad Debt
Potential Financial Burden
RISK OF BAD DEBT?
"Old outstanding (payments) may remain unpaid turning into bad debt over time thus creating massive financial burden and risk for the industry," the groups said, adding not paying old dues first was "fraught with non-compliance" with accounting standards.
The statement assessed the amount owing for December 2025 to April 2026 dues at 37.25 billion rupees ($392 million).
Government and Company Reactions
The Telangana government did not respond to requests for comment from Reuters, and neither did Diageo, Pernod, Heineken's United Breweries, Carlsberg and Anheuser-Busch InBev.
Challenges for International Alcohol Companies in India
For international companies, India has the lure of being one of the relatively few places where alcohol demand is growing, but the many obstacles to profitability include high taxation and separate regulations in each state as well as the current payments row.
Ongoing Legal and Regulatory Disputes
Pernod is also locked in an antitrust case and fighting a $314 million tax demand from India, while Anheuser-Busch InBev is contesting a competition law case.
(Reporting by Aditya Kalra; editing by Barbara Lewis)
