The Maharashtra Value Added Tax (MVAT) department has directed all distributors of Bira beer to redirect any pending payments to tax authorities instead of the brand’s parent company, B9 Beverages, according to a report by Mint. This move follows a significant tax liability owed by the struggling beverage firm amid financial distress.
According to a circular issued in January, accessed by Mint through a distributor, B9 Beverages has outstanding VAT dues amounting to Rs 26.38 crore in Maharashtra. The company also faces similar tax obligations in other states, including Rs 7 crore in Madhya Pradesh, Rs 4.8 crore in Delhi, and Rs 4.7 lakh in Himachal Pradesh. The company’s balance sheet for financial year 2023-24 (FY24), filed with the Ministry of Corporate Affairs last week, also recorded a VAT liability of Rs 30 crore in Maharashtra.
Distributors have been warned that any payments made to B9 Beverages after receiving the notice could result in personal liability for the unpaid tax amount. This directive has raised concerns among distributors, some of whom have reported being questioned repeatedly by authorities regarding the dues. Some have even expressed frustration over regulatory scrutiny, asking why the company has not settled its VAT payments.
Why hasn’t Bira settled its tax dues?
The company attributed the delay in clearing VAT dues to disruptions in business operations during the second half of FY24 and the first half of FY25. A change in the company’s name required B9 Beverages to re-register its brands and labels, leading to a temporary halt in sales. Additionally, significant shifts in distribution channels and supply chain issues in key markets like Delhi and Andhra Pradesh further exacerbated financial constraints.
Payment and salary delays
Beyond tax liabilities, B9 Beverages also reportedly faces difficulties in meeting vendor payments. Additionally, employee salaries have been delayed across various levels, with reports indicating payments are overdue by one to two months.
Industry estimates suggest that B9 Beverages owes nearly Rs 700 crore in vendor payments and state taxes. The Mint report further states that the company has unpaid dues of approximately Rs 500 crore to distributors, suppliers, marketing agencies, and private breweries. An additional Rs 150-200 crore is owed to various state governments.
Financially too, the company has seen a steep decline in its performance. Revenue from operations for FY24 fell sharply to Rs 638.5 crore, down from Rs 824.3 crore in FY23. Losses, meanwhile, widened significantly to Rs 748.8 crore from Rs 445.4 crore in the previous year.
B9 Beverages, which aims to go public in 2026, faces mounting pressure to stabilise its operations and clear its tax obligations. To this end, the company has also restructured its name from B9 Beverages Private Ltd to B9 Beverages Ltd.