UB group breweries division president Kalyan Ganguly told The Financial Express that he was upbeat on the outcome of the meeting with the ministry officials. If the tax was slashed, beer sales would take off in the coming months, he said. ``Worldwide the total tax for beer is almost half as compared to India,'' he added.

Ganguly said while France charged a tax of around 16-17 per cent on beer, the duty on the product in the US market was close to 20 per cent against Karnataka's 37-38 per cent taxation. Unless state governments across the country reduced the excise and sales duty structure, Indian beer ventures would not make any profit in the future, he said.

``No company is likely to pump in additionalfunds to expand capacities in the country in these conditions. Once the new Government comes out with proper policies to bail out beer producers, the flow of funds from the UB group will increase. We have also met the finance minister of the West Bengal Government and officials of the Karnataka Government for the same purpose,'' Ganguly added.

Cost of production for 1 hecta litre of ordinary beer with a 5 per cent alcoholic content is around Rs 2,500. The inflation and vagaries of the weather saw the company going through a turbulent phase recently. During the first quarter of the current fiscal, UB posted a net loss of Rs 1.28 crore and a lower turnover during fiscal 1998-99 at Rs 348.30 crore (Rs 363.96 crore).

While the Union Government is against promoting high spirit brands in many parts of the country, it is doing much to boost the beer industry either. For instance, some states in India are offering zero duty on whisky production, according to industry sources.

According to UB group chairmanVijay Mallya, adverse Government policies, which seek to drive up revenues from the alcoholic beverage sector to bridge their fiscal deficits, have resulted in a very perceptible shift in consumption patterns. UB is also preparing a draft for the Government proposing a review of licensing and excise policies for the industry.