> ## Content Index > Fetch the complete content index at: https://www.moatmarginresearch.com/llms.txt > Use this file to discover other available public pages before exploring further. # Som Distilleries: The Licence Was the Business - URL: https://www.moatmarginresearch.com/som-distilleries-bhopal-licence/ - Published: 2026-09-27T02:48:23.000Z - Updated: 2026-09-27T02:48:23.000Z - Description: A court ordered Som Distilleries' Bhopal licences renewed after seven months. The company's own filings show what the licence was worth. - Author: A K Karthikeyan - Tags: Moat Insights **On 24 September, the Madhya Pradesh High Court ordered the state to renew all of Som Distilleries' manufacturing licences within 15 days. The Bhopal brewery has been shut since February. The company's own filings show what that licence was worth: about half its volume, half its quarterly income, and its investment-grade rating.** ## Seven months, in the company's filings | Date | What happened | | -------------- | ------------------------------------------------------------------------------------------------------------ | | 5 Feb 2026 | MP's Excise Commissioner suspended the Bhopal manufacturing licence (\[F\]) | | 2 Jun 2026 | Management said Bhopal supplied "roughly 50% of our volume" and assumed it would restart that month (\[Q4\]) | | 18–19 Jun 2026 | The FY27 licence application for Bhopal was rejected (\[R\]) | | 27 Jun 2026 | Infomerics cut the company to BBB from BBB+ (\[I1\]) | | 30 Jun 2026 | ICRA cut two subsidiaries to BBB- from BBB (\[I2\]) | | 13 Aug 2026 | Q1 results: total income down 49% (\[P\]) | | 20 Aug 2026 | Infomerics cut the company again, to BB+, below investment grade (\[I3\]) | | 24 Sep 2026 | The High Court quashed the rejection and ordered renewal (\[J\]) | The February suspension was tied to a case from 2012\. The company said it was not a party to it: the judgment related to individuals who, it said, were not its employees at the time of the judgment, and the High Court at Indore had stayed their sentences on appeal (\[F\]). ## What the licence was worth The best measure is the quarter the plant was shut for the whole three months. In Q1 FY27 (\[P\]): | | Q1 FY27 | Q1 FY26 | | ---------------- | --------------------------- | ------------ | | Total income | ₹268.8 crore | ₹530.1 crore | | EBITDA | ₹15.2 crore | ₹72.1 crore | | Profit after tax | ₹1.6 crore | ₹42.1 crore | | Volume | 45.79 lakh cases (down 48%) | | Asked on the call how much revenue the closure cost, management answered: "I think we lost about INR250 crores of revenue" (\[Q1\]). It also said the idle plant still costs "close to INR6 crores to INR7 crores per quarter" in interest, salaries and electricity. About ₹25 crore of finished goods sat in the plant (\[Q1\]). Bhopal is the company's largest brewery. It has 15.2 million cases a year of beer capacity, against 14.0 million at Hassan, 9.0 million in Odisha and 10 million at the new Uttar Pradesh plant (\[P\]). ## Why other plants could not fill the gap The obvious question is why the company did not supply Madhya Pradesh from its other breweries. It did look at it. Management said the cost of bringing beer in from another state "is exorbitant, and it will erode our margins. Not even erode, it will be at a loss, particularly because of the import fee, very huge import fees that Madhya Pradesh has" (\[Q1\]). That answer holds the whole economics of Indian alcohol. The state licence is not paperwork around the business. It is where the business starts. Each state controls who may make, move and sell alcohol inside it, and charges heavily to bring it in from outside. A licensed local plant is a real advantage, and it can be switched off by one state order. ## What held up Not everything fell. Management said the Hassan plant ran at about 60% utilisation and Odisha at about 70% in Q1, with case sales up about 30% in Karnataka and close to 40% in Odisha (\[Q1\]). The new Uttar Pradesh brewery, which cost about ₹300 crore, started commercial production in the quarter without new external debt (\[Q1\]). Gross debt to equity was 0.31x at June (\[Q1\]). On 5 September the board approved issuing warrants worth about ₹25 crore, at ₹77.81 each, to promoter Deepak Arora (\[W\]). ## The bear case, taken seriously - **An order to renew is not a running plant.** The court gave 15 days, to around 9 October. None of the filings read says when production will actually restart. - **The state may not be finished.** The filings do not say whether the government will appeal. The licence was suspended once over a case the company says was not about it, and it could be challenged again. - **Lost drinkers may not return quickly.** An investor on the August call made exactly this point. Management agreed: "It is a long haul. It is not easy" (\[Q1\]). - **The ratings are still below investment grade.** Infomerics' BB+ was assigned in August (\[I3\]). A restart may not change it quickly. - **The same exposure remains.** Every brewery depends on its state's goodwill. Karnataka and Odisha carry the business today on the same kind of licence that Bhopal lost. ## Why it matters Som Distilleries shows that in a state-licensed industry, the licence is the moat and also the biggest single risk. The court order restores the first. It does not remove the second. ## What to do with it 1. **Read licences as assets.** For brewers and distillers, ask which plant supplies which state, and what the import fee would be if it stopped. 2. **Watch four things:** - the actual renewal, due by around 9 October; - the first quarter with Bhopal running again; - any appeal by the state; - whether the ratings recover. 3. **Separate recovery from normal.** Q1 FY27 is a floor, not a base. But the June guidance of about ₹1,400 crore of sales assumed nine months of Bhopal operation (\[Q4\]), and that time has already been lost. ## Sources - **\[J\]** [Som Distilleries, High Court judgment intimation, 26 Sep 2026](https://nsearchives.nseindia.com/corporate/SDBL%5F26092026162518%5FSE%5Fintimation%5F26092026%5F.pdf) (NSE) - **\[F\]** [Som Distilleries, licence suspension press release, 5 Feb 2026](https://nsearchives.nseindia.com/corporate/SDBL%5F05022026173008%5FSE%5Fintimation%5F050226%5Flicssuspensionsd.pdf) (NSE) - **\[Q4\]** [Som Distilleries, Q4 FY26 earnings call transcript, 2 Jun 2026](https://nsearchives.nseindia.com/corporate/SDBL%5F05062026141155%5Fearningtranscript.pdf) (NSE) - **\[R\]** [Som Distilleries, licence rejection, 19 Jun 2026](https://nsearchives.nseindia.com/corporate/SDBL%5F19062026200217%5FSE%5Fintimation%5F190626sd.pdf) (NSE) - **\[I1\]** [Som Distilleries, Infomerics rating, 27 Jun 2026](https://nsearchives.nseindia.com/corporate/SDBL%5F27062026180211%5FSE%5Fintimation%5F270626sd.pdf) (NSE) - **\[I2\]** [Som Distilleries, ICRA ratings of subsidiaries, 30 Jun 2026](https://nsearchives.nseindia.com/corporate/SDBL%5F30062026175143%5FSE%5Fintimation%5F300626sd.pdf) (NSE) - **\[P\]** [Som Distilleries, Q1 FY27 investor presentation, 12 Aug 2026](https://nsearchives.nseindia.com/corporate/SDBL%5F12082026165758%5Fearningscall1208sd.pdf) (NSE) - **\[Q1\]** [Som Distilleries, Q1 FY27 earnings call transcript, 13 Aug 2026](https://nsearchives.nseindia.com/corporate/SDBL%5F20082026171620%5Fearningscallsd2008.pdf) (NSE) - **\[I3\]** [Som Distilleries, Infomerics rating, 20 Aug 2026](https://nsearchives.nseindia.com/corporate/SDBL%5F20082026195051%5FSE%5Fintimationsd.pdf) (NSE) - **\[W\]** [Som Distilleries, board approval of promoter warrants, 5 Sep 2026](https://nsearchives.nseindia.com/corporate/SDBL%5F05092026174937%5Ffundraisingflr30sd.pdf) (NSE) --- > Educational research, not investment advice. Every figure above is drawn from Som Distilleries & Breweries' own filings, investor presentation and earnings-call transcripts, read from the primary documents on 27 September 2026\. No buy/sell recommendations, no price targets. Moat & Margin is not a SEBI-registered Research Analyst or Investment Adviser.