Craft beer maker Bira in tax soup amid vendor payment and salary delays

The Maharashtra value added tax (MVAT) department has issued a notice to all distributors of the beer brand in the state, directing them to pay any outstanding dues owed to B9 Beverages directly to the tax authorities instead, according to a circular issued in January that Mint has accessed through a distributor.

The company owes ₹26.38 crore in unpaid VAT to Maharashtra, and also needs to pay ₹7 crore to Madhya Pradesh, ₹4.8 crore to Delhi, and ₹4.7 lakh to Himachal Pradesh in similar taxes, according to its FY24 balance sheet that it filed late last week with the registrar of companies at the ministry of corporate affairs. It also had a VAT liability in Maharashtra of ₹30 crore, according to its balance sheet.

Distributors who received the notice have also been warned that if they continue making payments to B9 Beverages after receiving this notice, they could be held personally liable for the unpaid tax amount.

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"We received these notices out of the blue in January and are being questioned by authorities repeatedly for the unpaid dues by them. We can't understand why the company has not cleared VAT dues yet," a distributor told Mint on the condition of anonymity.

When contacted, Ankur Jain, the founder of the Delhi-based company, acknowledged the arrears. “There are arrears in taxes payable by the company across some departments. The company is fully engaged with the relevant departments and expects to discharge all liabilities in the current fiscal year, including MVAT and others," he said.

The reason for the delay in clearing VAT liabilities to Maharashtra, Madhya Pradesh, Himachal Pradesh and Delhi has been significant disruptions to the company’s business in the second half of FY24 and the first half of FY25 due to a change in the name of the company "which required us to re-register all our brand and labels and pause sales, and drastic changes in the route to market or stock issues in states like Delhi and Andhra Pradesh," Jain said in response to Mint's detailed questionnaire.

B9 also owes payments to vendors. A Delhi distributor told Mint that two years ago, the distributor had to pursue legal action for dues amounting to upwards of ₹10 crore before they were paid by the company. Staff salaries are also delayed by one to two months across different levels, a current employee and another who recently exited the company told Mint.

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In Maharashtra, government duties and taxes are paid by the manufacturer or ownership company which produces the beer. In this case, the VAT department has asked the distributors to circumvent payments to the company and go to them directly. In other states like Delhi, distributors pay the tax department directly when picking up stock from the manufacturer.

In Delhi, too, the company has had past pendency in payments to several distributors it has worked with. B9 – according to industry sources – has already worked with four distributors in the last two to three years in the city.

Another distributor in north India told Mint on the condition of anonymity that a case had to be filed in the National Company Law Tribunal (NCLT) to receive the dues that ran into several crores. Mint has seen this case document as well. Last year, the company agreed to settle this matter.

Business troubles in FY24

At a consolidated level, B9 Beverages, which expects to go public in 2026, said its revenue from operations in FY24 fell to to ₹638.5 crore, declining from ₹824.3 crore in FY23. Its losses surged to ₹748.8 crore, from ₹445.4 crore in FY23.

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The company said it suffered a loss largely due to an "unprecedented rise in material costs, current economic situation, weak demand, supply chain issues, etc.,."  In response to Mint’s questions, B9 Beverages said that in FY24 and the first half of FY25, it began to focus on improving its margins, optimising working capital, and cutting fixed costs. It invested in supply chain technology for demand forecasting, supply planning, and fulfilment, while also reshaping its sales approach. These have helped increase its revenue per litre by 6% year-on-year, improve gross margins to 66% from 59%, and raise variable margins to 40% from 25%. Working capital cycles were cut to 100 days from 200 days, and fixed costs have also been reduced by 27% year-on-year in FY25 so far.

However, the company said its revenue was dented due to the corporate name change, which required reapplying for licences and re-registering products across 27 states, causing delays during peak sales months.

Sales were also affected by policy changes in Andhra Pradesh and Delhi, key markets for the company. With Andhra Pradesh stabilising after new retail policies and Delhi expected to recover post-elections, the company said it grew 40% year-on-year last quarter and expects to grow 7% in gross revenue ( ₹700 crore) for FY25 while halving its Ebitda losses.

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Mint has learnt that the company owes about ₹700 crore in vendors payments and taxes to various states, but Jain denied this figure. "Liabilities to tax authorities and vendors are nowhere close to the stated amounts and are a fraction of the amount stated by you," he said.

According to industry sources, the company owes ₹500-odd crore to distributors, suppliers, marketing and PR agencies, and various private breweries it works with. Another ₹150-200 crore is due to various states.

Even today, the brand is scarcely available at vends in the northern Indian markets.

Employee payment dues 

Mint has also learnt that salaries of employees have been pending for the last two months at the senior level. They are delayed by a month for entry- and mid-level employees. On that, Jain said, "Payroll is delayed by two weeks and not two months. This is a one-off and temporary situation."

Ankur Jain, promoter and managing director, holds a 6.7% stake in the company, and will get ₹4.52 crore in salary in FY25. Next fiscal, he is set to get an increment of ₹20 lakh. 

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The promoter group, which includes Jain, owns 17.2% of the company, Japanese beer manufacturer Kirin holds 22.5%, Sequoia 13.4%, Peak XV 5.9%, Sith Sense 4.2%, Tiger Pacific has 4.1% and Japan's Mitsubishi UFJ Financial Group has 1.6%, and 5.3% are held by employees in stock options. The remainder 25.7% is with stakeholders classified as others.