By Rishika Sadam, Nandan Mandayam and Indranil Sarkar HYDERABAD/BENGALURU (Reuters) -Heineken-owned United Breweries on Wednesday stopped supplying beer to Telangana in southern India, following the state's refusal to allow price rises,

The suspension of supply to Telangana could meaningfully impact near-term earning, given operational deleverage. But United Breweries’ ask is reasonable, Kotak said.

United Breweries said the unpaid dues by Telangana Beverages Corp had made the continued supply of the company's beer to the state-owned beverage firm "unviable."

United Breweries said on Wednesday that it has suspended supplying beer to a state-run corporation in the southern Indian state of Telangana, which will halt sales of popular beer brands such as Heineken and Kingfisher in one of the country's top liquor-selling states.

TGBCL's failure to revise the basic price of the company’s beer since fiscal 2020 is one of the reasons behind the suspension, United Breweries said.

United Breweries Ltd’s shares fell over 7% after suspending beer supplies to TGBCL due to financial concerns and unpaid dues. The stock is currently trading 13% below its 52-week high, despite a 23% increase in net profit for Q2 FY25.

Telangana contributes 18% to United Breweries' volumes and 15% to its revenues. United Breweries has suspended beer supplies to Telangana Beverages Corporation Limited (TGBCL), the state-owned sole distributor, citing two key issues: no upward revision in base prices since FY20 despite rising costs, leading to EBIT losses, and overdue receivables.

Shares of United Breweries dropped 4 per cent on 8 January after the company confirmed the suspension of beer supplies to Telangana Beverages Corporation Limited (TGBCL). The decision was attributed to financial losses stemming from TGBCL's failure to revise the basic price of beer since 2019-20 and significant overdue payments for past supplies.

United Breweries Ltd (UBL), the maker of Kingfisher beer, announced on Wednesday that it has suspended the supply of its beer to Telangana Beverages Corporation Limited (TGBCL), the state's sole distributor of alcohol.

United Breweries Ltd has suspended beer supply to Telangana due to owed payments and low state prices. The Telangana Beverages Corporation Ltd and excise department have started rationing beer stocks to depots.

Telangana is India's biggest beer-consuming state, with Kingfisher, including Kingfisher Strong, Kingfisher Ultra, and Kingfisher UltraMax, accounting for around 60 per cent of the total sales. Telangana accounts for around 15-20% of United Breweries’ beer sales and 10%-12% of the company's earnings.