Molson Coors's international segment reported a loss from continuing operations in 2017 primarily driven by special charges due to alcohol prohibition in Bihar
As controversy over alcohol prohibition in Bihar rages on, global brewer NYSE-listed Molson Coors Brewing Company is still to receive approximately $3 million in certain Bihar receivables due from the government.
Molson Coors, famous for its global brands including Blue Moon, Coors Banquet, Coors Light, and Miller Genuine Draft, has a reasonable presence in India consisting primarily of operations in Haryana and Punjab and previously, Bihar. Its consolidated India business produces, markets and sells a beer portfolio consisting of Thunderbolt and Carling Strong.
The company's international segment reported a loss from continuing operations before income taxes of $19.7 million in 2017, compared to a loss of $39.7 million in the prior year, primarily driven by special charges as a result of total alcohol prohibition in Bihar, which resulted in an aggregate impairment charge of $30.8 million recorded in 2016.
"We continue to monitor legal proceedings impacting the regulatory environment as it relates to our ability to resume operations in the state. In addition, if the facts or circumstances associated with the expected collectibility of certain Bihar receivables due from the government of approximately $3 million, based on foreign exchange rates at December 31, 2017, adversely change or if future cash flows are adversely impacted relative to the projected cash flows used in the impairment analysis we may incur additional impairment or other losses in future periods," Molson Coors said in its 10-K form, an annual report required by the US Securities and Exchange Commission (SEC). The document was filed with SEC on February 14.
During the second quarter of 2016, a complete prohibition of the sale and consumption of all forms of alcohol in Bihar was implemented. "The government in Bihar did not grant production licences for export outside of Bihar for the fiscal year 2017, and as a result, we shut down our brewery in Bihar in April 2017," the $16-billion market cap firm said.
Molson Coors owns three breweries in India, where it uses ingredients to brew products, which are sourced through various contracts with local suppliers.
In the fourth quarter of 2015, the Bihar government announced plans to ban the sale of "country" liquor and to limit the sale of other forms of alcohol, such as beer, to certain government-owned outlets, effective April 1, 2016. On April 5, 2016, four days after the start of the ban on "country" liquor, the state government announced immediate changes to the ban, implementing a complete prohibition of the sale and consumption of all forms of alcohol.
"As a result of this ban, our Molson Coors Cobra India business is currently not operating and is idled pending any future change in law or regulation. This ban does not impact our Mount Shivalik business operating outside of Bihar," it said.
Molson Coors's international segment had acquired Mount Shivalik, a regional brewer, during the second quarter of 2015.
THE LOSS FIZZ
- Molson Coors's international segment reported a loss from continuing operations in 2017 primarily driven by special charges due to alcohol prohibition in Bihar
- It shut down its brewery in Bihar after the state government did not grant production licences for exports outside the state for 2017
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