Liquor sales to touch 2.40cr cases in Andhra this fiscal

Liquor consumption in the state is expected to grow further to around 2.40 crore cases (a case contains 12 bottles of 750ml each) by the end of the current financial year as compared to a total sale of 2.28 crore cases in 2003-04. Average sales per month up to January 2005 stood at 20 lakh-plus cases.

The growth in liquor consumption in the state has been a bit higher at 11-12 per cent over the past few years as compared to around 10 per cent growth across the country. But this may not be maintained any further even by promoting cheaper segment sales as large population in Andhra Pradesh is already into the habit of drinking, industry sources feel.

Yet, armed with new measures such as promoting cheaper segment sales and increase of retail outlets, the state government is expecting to earn around Rs 2,600 crore in excise revenue alone through liquor sales and rentals for the year 2005-06 as compared to Rs 2,276 crore during the current year.

Revenues through sales tax (at the rate of 70 per cent) on liquor is expected to be over Rs 2,000 crore as compared to around Rs 1,800 crore during the current fiscal. Sales tax revenue from liquor and petroleum products alone constitute more than 35 per cent of the total sales tax receipts which were projected at over Rs 13,000 crore for the new fiscal.

When compared with other southern states (2003-04 figures), Andhra Pradesh stands first in total annual sales at 2.28 crore cases while Tamil Naidu fares second with total sales of 1.33 crore cases.

Though the per capita consumption levels are much higher compared to its southern counterparts, Kerala, tiniest of them all, comes third with a total volume of 91.16 lakh cases while Karnataka comes in the fourth place with a total volume of sales amounting to 74.9 lakh cases.

The total consumption of IML in the country by the end of the current financial year would be around 9 crore cases, according to market sources.

In a bid to further boost the revenues, the Andhra Pradesh government recently announced a revised excise duty structure with a strong bias towards the lower segment. While the excise duty on the medium category liquor has been increased by Rs 25, the increase is just Rs 10 on the ordinary category.

Further, retailer's margin on both medium and premium categories have been reduced to 20 per cent from the existing 30 per cent while it is at 27 per cent for cheaper category liquor. The government ensured a marginal decrease in retail prices as well.

Accordingly, the duty on ordinary liquor per proof litre will go up from Rs 35 to Rs 45. For medium category liquor, the duty will go up from Rs 45 to Rs 70 and the duty on the premium category is enhanced to Rs 80 from Rs 65. The hike in excise duty is expected to fetch the government anywhere between Rs 400 crore and Rs 500 crore in additional revenues.

Among the ordinary, medium and premium liquor categories, the ordinary liquor is expected to occupy 91 per cent of the total IML sales in the state following the implementation of the new excise policy from April 1, 2005, as compared to the existing 86 per cent.

Again for comparison sake, in Tamil Naidu where the government categorised IML into four namely ordinary (A), ordinary, medium and premium liquors, the ordinary category liquors account for 57 per cent of the total sales while the medium category's share is 37 per cent as per the 2002-03 figures of Tamil Nadu State Marketing Corporation Limited (Tasmac).

In Andhra Pradesh, the Congress government led by Y S Rajasekhara Reddy has made the sale of medium category liquor a less attractive business proposition to the retailer by increasing the investment on one side and reducing the margin on the other only to push the ordinary category sales.

Basic price for ordinary liquor is fixed up to Rs 400 per case, while it is between Rs 401 and Rs 700 for the medium category. Basic price for premium category is above Rs 700 per case.

Meanwhile, tender notification for procurement of liquor from manufacturers is expected to be issued by the Andhra Pradesh Beverages Corporation (APBCL), the sole wholesale distributor, tomorrow.