MUMBAI: As soon as the Bihar Chief Minister Nitish Kumar announced his decision to ban the sale of alcohols as part of his poll promise, shares of liquor making firms have taken a down-ride.
Bihar CM Nitish Kumar said that the state government will soon formulate a plan to ban the sale of liquor in the state with effective from April 1st, 2016.
However, the stock market analysts seems not be worried of the downfall in the liquor stocks on Thursday and opined that there was nothing to be worried about it and claimed it as an occasional sentimental impact.
Liquor stocks have seen a sharp rise in the past few months after the announcements of global takeovers and mergers in the segment.
UP based Radico Khaitan, Diageo-controlled United Spirits and United Breweries were the stocks that felt the impact as the news of Bihar banning alcohols broke on Television channels.
Bihar Chief Minister Nitish Kumar had earlier promised to ban the sale of liquor in the state if he was voted back to power. The promise was chiefly made to woo the female voters in the state and accordingly, Nitish had retained his promise.
However, Financial analysts say that the ban will only make the alcohol consumers to crave for more. “It is all dependent on the type of law that the government will make. You see, there are a number of loopholes in the laws of Indian constitution itself. It is not difficult for the alcohol syndicates to find a way to induce the Bihar markets. It depends on whether the state bans only the sale of alcohols or both the ‘consumption and sale of alcohol’ in the state”, said an analyst who doesn’t want to be named.
“In short if the Government really intends to ban the sale of alcohol, it will first make sure to close all the loopholes in the law before implementing it. You can witness the stance of the Government in the coming days”, he added.
The alcohol ban came as a big blow to the manufacturing units in Bihar. Manufacturers and marketers declined to respond when asked for their comments on the latest developments in the state.