Business

How Bira lost its way

Once a promising craft beer maker, the Sequoia-funded company is now facing its most challenging crisis ever.

The agents from the Directorate of Revenue Intelligence came sometime in February 2016, when Bira was the talk of the town.

At the time, urban beer drinkers were raving about this outsider, whose pints came as a surprising but welcome relief from years of living with Kingfisher, Bud and Fosters. In just under a year, Bira, operating as B9 Beverages Pvt. Ltd, had disrupted the market, so much so that Sequoia Capital, one of the biggest names in venture capital, invested in the company. Naturally, Ankur Jain, Bira’s founder and CEO, was basking in the glory of his newfound success. That’s when the investigators turned up. First at Jain’s house and then at his office in Delhi. Laptops were confiscated, as were certain files.

The agents alleged that Cerana Beverages Pvt. Ltd—Jain’s earlier beer importer company, which had been subsumed into B9 Beverages in 2015—had under-invoiced the value of some imported goods and evaded customs duties.

Cerana, founded in 2008, used to import craft beers to sell in India, and later acted as the importer for Bira, which was made by contract manufacturers in Belgium; however, the transaction value was split into two parts and only one invoice was charged to Cerana, according to a show-cause notice reviewed by The Morning Context. The other, marked for product development costs, was invoiced to a Hong Kong-based firm, also owned by Jain. The revenue intelligence department, an agency under the Central Board of Indirect Taxes and Customs, figured that this splitting of invoices was a way to escape duties on imported beer, and the show-cause notice was served.

Bira and Jain complied with the notice, but news of this investigation never got out.

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