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Liquor stocks rally up to 12% after Supreme Court clarification

On Thursday, share price of United Spirits rose 3.9 per cent on Friday, that of Radico Khaitan and GM Breweries were up by 1.9 per cent and 4.35 per cent respectively.

By: ENS Economic Bureau | New Delhi | Published: August 25, 2017 2:12 am
liquor ban, liquor stocks, liquor price, alcohol ban, supreme court alcohol ban, indian express news It is not clear as to what percent of the hotels and restaurants that faced the ban on serving liquors (on account of the April 2017 order) will get relief due to the recent clarification by the Supreme Court

A day after the Supreme Court clarified that the ban on sale of alcohol within 500 meters of state and national highways does not apply within city limits, shares of all listed distilleries and breweries were up between 2 to 12 per cent as it lifted the concerns on impact of April 2017 SC order on liquor sale within city limits. It has also provided big relief to thousands of hotels and restaurants that are located within city limits and operate within 500 metres of a highway.

On Thursday, share price of United Spirits rose 3.9 per cent on Friday, that of Radico Khaitan and GM Breweries were up by 1.9 per cent and 4.35 per cent respectively. Other major gainers included Globus Spirits (12.10 per cent), Associated Alcohols & Breweries (9.98 per cent) and Som Distilleries & Breweries Ltd (3.39 per cent), among others. The Supreme Court order uploaded on Wednesday enables all liquor vends falling within the city limits and operating within 500 metres of a highway to apply for license renewal and continue with their business.

While it is not clear as to what percent of the hotels and restaurants that faced the ban on serving liquors (on account of the April 2017 order) will get relief due to the recent clarification by the Supreme Court, K Syama Raju, president, Federation of Hotel and Restaurant Associations of India (FHRAI) said that the court has provided much-needed relief and confidence to the industry players. “The relief provided by the Hon’ble Supreme Court will restore confidence and ease of doing business within the hotel and restaurant industry. It will provide the industry players not only to meet their financial obligations but also prevent job losses within the industry,” said Raju.

Industry analysts however point that anywhere between 75-80 per cent of bars and restaurants would be able to restart their business. The Supreme court order said, “The order does not prohibit licensed establishments within municipal areas. This clarification shall govern other municipal areas as well. We have considered it appropriate to issue this clarification to set at rest any ambiguity.”

The earlier Supreme Court order on April 1 had stipulated a complete ban on sale of liquor at all hotels and restaurants within 500 metres from the edge of a national or state highway, with the result that four star and five star hotels that came within the designated limits ran the risk of losing their premium status. The guideline and classification of the Ministry of Tourism explicitly stated that, “Bar licence is necessary for 4, 5, 5 Star Deluxe, Heritage Classic & Heritage Grand categories.” According to Ministry of Tourism data until December 2015, there are a total of 197 approved four star hotels in the country, and 252 five star and five star deluxe hotels.

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