TRIVANDRAM, May 7:Kerala State Beverages Corporation's (KSBC) anti-cartel hedge against the supplying distilleries appears to have created ripples among the IMFL suppliers to the state, even before the corporation's strategic move is a week old.

According to sources in the IMFL business, major distilleries like United Breweries and McDowell are already sniffing around on KSBC's bulk order offer on five percentage price discount.

If it were not for the production problems, it would have been the local suppliers like Paulson Distilleries (Chalakkudy), Superstar Distilleries (Palakkad) and Nisha Distilleries (Palakkad) who would have benefitted most from the KSBC offer, a representative of a major distillery told Financial Express on Monday.

With the statistics indicating that the liquor demand in the state may go up as high as five times, major distilleries are definitely interested, he says. By the sales of liquor in April alone, the distilleries are estimated to have made a profit of Rs 30 crore.

KSBC had announced a bulk order offer, by which the distilleries willing to give a five per cent discount in price would get two point weightage in deciding the quantum of the order.

The corporation also fixed a penalty clause of Rs 5,000 per load fine to distilleries that defaulted the monthly supply deadline.

According to the sources in distilleries, many of the suppliers are not too happy with the penal clause. "With the problems in molasses supply still unsolved, it is difficult to stick to supply deadlines," said a suppliers' representative.

KSBC, meanwhile, is firm on introducing market discipline. "It is too early to comment considering that the suppliers have been given about a fortnight to quote their prices", said KSBC managing director Yogesh Gupta. "Yet, the suppliers must be knowing that, with the recent price rise, they are not exactly in a seller's market.

Kerala, next to Punjab as topper in the consumption of alcoholic beverages, is the market for about 20 per cent of the IMFL produced in the country," he said.

Ten days ago, however, KSBC was forced to concede a point or two when its supplying distilleries quoted a higher price-band for their popular brands. In the state, largely known as a rum and brandy market, Redstar Rum and Silverstar Brandy had pitched for a price hike as high as 60 per cent. The suppliers had pleaded that the prices by which IMFL was supplied to KSBC was about 30 per cent less than that given to neighboring states.

For instance, a 750 ml bottle of McDowell brandy - one of the most popular brands - costs Rs 424 in Tamil Nadu, Rs 426 in Karnataka, Rs 599 in Andhra Pradesh, Rs 590 in Maharashtra.

Its cost in Kerala is a mere Rs 368.

KSBC's board meet last week had agreed upon a 25 per cent price hike for those brands which demanded 25 per cent or more increase. The brands which sought for price hike less than 25 per cent are to get their quoted prices.

According to KSBC, the corporation had yielded more to the cost push inflation of beverages rather than to the demand-pull factors. Introduction of competition for bulk orders are also expected to keep any informal cartels at bay.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.