By Rishika Sadam, Nandan Mandayam and Indranil Sarkar HYDERABAD/BENGALURU (Reuters) -Heineken-owned United Breweries on Wednesday stopped supplying beer to Telangana in southern India, following the state's refusal to allow price rises,

The suspension of supply to Telangana could meaningfully impact near-term earning, given operational deleverage. But United Breweries’ ask is reasonable, Kotak said.

Telangana contributes 18% to United Breweries' volumes and 15% to its revenues. United Breweries has suspended beer supplies to Telangana Beverages Corporation Limited (TGBCL), the state-owned sole distributor, citing two key issues: no upward revision in base prices since FY20 despite rising costs, leading to EBIT losses, and overdue receivables.

United Breweries said on Wednesday that it has suspended supplying beer to a state-run corporation in the southern Indian state of Telangana, which will halt sales of popular beer brands such as Heineken and Kingfisher in one of the country's top liquor-selling states.

TGBCL's failure to revise the basic price of the company’s beer since fiscal 2020 is one of the reasons behind the suspension, United Breweries said.

United Breweries said the unpaid dues by Telangana Beverages Corp had made the continued supply of the company's beer to the state-owned beverage firm "unviable."

United Breweries Ltd has halted beer supply to Telangana Beverages Corporation Ltd due to a longstanding issue over unrevised pricing since 2019-20, leading to substantial losses. Additionally, unpaid dues from the corporation have contributed to making the supply financially unfeasible.

The stock price of United Breweries closed 4.09 per cent lower in Wednesday's trade to end at Rs 1,990.50 per share on NSE.

Shares of United Breweries dropped 4 per cent on 8 January after the company confirmed the suspension of beer supplies to Telangana Beverages Corporation Limited (TGBCL). The decision was attributed to financial losses stemming from TGBCL's failure to revise the basic price of beer since 2019-20 and significant overdue payments for past supplies.

United Breweries, the manufacturer of Kingfisher beer, has announced a decision to halt the supply of its products to Telangana

Maker of Kingfisher beer, United Breweries saw a 4% share drop following its suspension of beer supply to Telangana Beverages Corporation Limited