Due to the disruptions caused by the nationwide lockdown, India’s beer startup industry is in dismay. It could take a while for the sector to maintain the logistics after being battered by COVID-19. The biggest challenge faced by beer startups is the management of working capital and finances involved. Given the current situation, each business holder needs finances to sustain their business and manage cash flow.The pressure building up in the credit lifecycle is becoming strenuous with each stakeholder holding tight in the situation. To stabilize the low liquidity or cash flow government should supportstartups withan easy availability of funds by extending loan against bill discounting to recapitulate business and ride this wave. Small initiatives and favorable policies will help these startups to persist.
The lockdown has taken a heavy toll on the beer startups and other summer essentials as we look forward to this season as a major contributor of sales for the year, accounting to approx. 25% (Incase markets are operational from 30th of April). The sales have been less by a huge percentage in March as compared to the previous months and not expected to revive in April given the current scenario. Many companies will witness loss due to expiration of stock in April, the stock keep units will have to be destroyed, in such scenario if government extends support & forgo duties, and companies can take a sigh of relief. The adverse impact of this crisis is expected to last for months and this will hamper the growth of the startups. Investing in online advertisement and strategic presence over the web, engaging audiences by running effective social media campaigns, will help the startups on a longer run. Rightly reinforcing the brand in consumer’s mind and expecting loyalty to play in is the need of the hour.
The current scenario of labor migration will cause a slower production rate after the lockdown redemption. Few processes used in beer manufacturing like yeast fermentation take an intermediary period of at least 15 days. Considering the favorable season for beer sales, the production of enough supply to meet the demand will be a challenge. The finances are still on a run; bore the companies such as duties, taxes yet are being paid on time in Delhi, UP & Uttarakhand. We expect the government to be more supportive in terms of a moratorium of license fees and duty and other taxes to help us sail through the difficult times. In this industry manufacturing is subjected to GST whereas output (finished product) is subject to VAT, this disharmony leads to enhanced cost of production without any set off benefit of input taxes. It would be a great initiative if government can consider condoning the input GST and extend support.
We understand that this is an unprecedented situation for all of us to manage and we at, Kimaya Himalayan Beverage LLP will be happy to extend support in the best of our capacities for any sort of assistance to our customers, colleagues, friends, acquaintances and their loved ones.
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