The Hindu Business Line : IMFL prices not fixed by Govt, says KSBC chief

THE State Government and the Kerala State Beverages Corporation Ltd (KSBC) do not fix the price of various brands of India-made foreign liquor (IMFL) sold in the State, said Mr T. Balakrishnan, Chairman, KSBC, and Excise Commissioner, Government of Kerala. He made this observation while addressing a press conference in the city on Monday to explain the reason for the recent hike in the prices of IMFL sold in the State.

KSBC, which is the sole distributor of IMFL in the State, has adopted a `free pricing' system to determine the prices of IMFL in the State, Mr Balakrishnan said. This system has been followed for the last two financial years — 2003-04 and 2004-05.

Under the `free pricing' system, companies that sell IMFL inform KSBC of the price at which they will sell various brands of liquor in the State. This price, which is determined by the liquor companies based on their costs, is applicable for one year, Mr Balakrishnan explained.

Based on the price quotes received from the liquor suppliers, KSBC places an initial order of 11,000 cases with each registered supplier. Further orders are, however, based on market demands, with fast-moving liquor brands receiving more orders, he said.

Over the past several months, the costs of some products — particularly extra neutral alcohol — used in the manufacture of IMFL have increased sharply, he said. In the light of this development, the companies that supply IMFL to KSBC had requested the State to reduce excise duties to offset this hike.

The State Government, however, turned down this request, following which the liquor suppliers increased the prices of various brands sold by them with effect from April 1 this year, he added.

Following this revision, the prices of many brands of IMFL sold in Kerala have increased by between 0.41 per cent and 46 per cent over prices in 2004-05, said Mr N. Shanker Reddy, Managing Director, KSBC. In the last financial year, the average price increase of IMFL sold in the State was 7 per cent, he added.

The recent revision of IMFL prices was a routine measure and followed the same procedures as in the previous two years, Mr Balakrishnan said. Similarly, KSBC continues to insist that all its suppliers ensure that 25 per cent of their supplies is made up of cheap liquor. This is in keeping with the Government's policy of ensuring the availability of liquor at reasonable prices and also to prevent the sale of `seconds' in the State, he explained.

At the same time, the Excise Department plans to introduce more measures to check the smuggling of IMFL into Kerala, he said. The department also plans to take strong measures against illicit distilling in the State.

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