AB InBev sets aside $30 million for unpaid Telangana dues as delayed payments squeeze brewers

Mumbai: Anheuser-Busch InBev, the world's largest brewer, has set aside $30 million against outstanding payments from the Telangana government, highlighting the financial risks of operating in India's state-controlled alcohol market, where delayed payments and restrictions on price increases are squeezing brewers.

The disclosure comes amid wider industry concerns over nearly $400 million Telangana owes to alcohol companies in dues. Industry groups have accused the state of breaching accounting rules over the outstanding payments.

Also read: Govt to meet liquor firms as domestic giants join foreign peers in Scotch dispute


Under the state's system, liquor companies supply products to government-run depots, which then distribute them to retailers, leaving manufacturers dependent on the government for payments.

Telangana is one of India's biggest beer-consuming states by volume. AB InBev chief financial officer Bernardo Novick said the company's total receivables from Telangana had remained relatively stable during the year, but some payments had been outstanding for an extended period.

"We decided to recognise this provision of $30 million," Novick said during the company's earnings call, adding that the brewer was making its best efforts to recover the outstanding amount and protect shareholders.

The company does not expect further meaningful one-off provisions from the situation, Novick said, while cautioning that circumstances could change.

The problem extends beyond AB InBev. United Breweries, which controls about half of India's beer market, had temporarily halted supplies to Telangana Beverages Corporation about a year ago because of operating losses and overdue payments. The brewer had said selling each beer at a loss had made continued operations in the state unsustainable, while substantial delays in payments for supplies to the state corporation had further complicated the situation.

Last week, United Breweries managing director Vivek Gupta said the company's business in Telangana had remained flat and it had lost some market share as a competitor continued to spend.