SABMiller India

SAB Miller files plea against AP beer procurement body

Chennai, Business Standard, 15 May 2009
NEW DELHI: Brewing major SABMiller on Thursday said it has moved the Andhra Pradesh High Court seeking its intervention on state beverage corporation's decision not to procure the company's beer.

The company alleged Andhra Pradesh Beverage Corporation Ltd (APBCL), the sole body through which liquor is sold in the state, has stopped procurement of beer from SABMiller and UB Group from March 31, 2009 following a dispute between the companies and th e state body over increasing the beer prices.

“The company has filed an application with Andhra Pradesh High Court on April 21, 2009, seeking its intervention in the matter,” SABMiller spokesperson said. UB Group officials when contacted declined to comment on the issue, saying that the matter is sub judice.

Last October, UB Group and SABMiller jointly filed a case in the high court seeking an upward revision of procurement prices of beer by APBCL.

The state corporation has not revised the procurement price of beer in more than a decade, despite 300-400 per cent rise in costs and a significant increase in the retail prices, SABMiller said.

SABMiller spokesperson said that softening its stand later the company agreed to supply beer to APBCL at the prevailing prices but it has not received any order till now.

Meanwhile, the group beat forecasts with just 4 percent dip in annual earnings on Thursday and warned that the strong dollar and high commodity costs would continue year. “Global economic conditions and consumer demand weakened during the year and there remains little visibility as to the timing of any recovery,” the group said in a statement.

“In the current year we expect commodity cost pressures to continue, given existing contractual arrangements. In addition, the currency translation effect of the strong US dollar will impact our results,” the group added.

However, the group said it remains confident in its medium-term prospects as it looks to cut costs and investment spending as the brewer suffered as economic conditions have worsened.