World
India
United Breweries, the maker of Kingfisher beer, has announced that it will resume beer supply to Telangana Beverages Corporation Limited (TGBCL), following a brief suspension earlier this month. The decision, which was made on January 20, has already seen United Breweries’ stock jump 5%, signaling a positive response from investors.
Temporary Decision to Address Pricing and Payments Issues
In an exchange filing, United Breweries clarified that the move is an “interim decision” aimed at benefiting consumers, workers, and stakeholders. The company explained that it has been in ongoing discussions with TGBCL, which has assured United Breweries that it will address the outstanding issues, including pricing adjustments and overdue payments. The company emphasized that the supply resumption will remain in place as long as these concerns are addressed in a timely manner.
Why United Breweries Suspended Supply to TGBCL
Earlier this month, United Breweries made headlines when it suspended its beer supply to TGBCL due to unaddressed pricing issues. The company highlighted that the basic price of its beer had not been revised since the 2019-2020 fiscal year, leading to significant financial losses. Additionally, TGBCL had substantial overdue payments for beer supplies from previous months, further compounding the issue.
Stock Performance and Market Reaction
Following the announcement of the decision to resume beer supply, United Breweries’ shares surged by more than 5%, reaching Rs 2,052 as of 11:18 AM on January 20. This increase comes after a dip in stock value earlier in the month when the suspension was first announced, causing shares to fall over 4%. Over the past year, United Breweries has seen a notable rise of approximately 10% in its stock value.
TGBCL’s Role in Telangana’s Alcohol Distribution
TGBCL, a government-owned public sector enterprise, holds a monopoly over the wholesale and retail distribution of alcohol in Telangana. As the sole distributor of alcoholic beverages in the state, any disruption in supply to TGBCL affects the availability of alcohol throughout the region.
What’s Next for United Breweries?
While the resumption of beer supply is a positive sign for both United Breweries and its stakeholders, the company has made it clear that the situation remains fluid. The success of the interim decision will largely depend on the outcome of negotiations regarding pricing and outstanding payments.
ALSO READ: Wipro Exceeds Q3 Expectations: Positive Broker Reactions Signal Higher Stock Opening
