In a significant development for the Indian craft beer industry, B9 Beverages, the parent company of popular brand Bira 91, is facing a severe leadership crisis. Large institutional investors, including Kirin Holdings and Peak XV Partners, are reportedly in discussions to remove founder and CEO Ankur Jain from his position. This move comes in the wake of mounting losses and growing concerns over the company's governance.

The Catalyst: A Costly Name Change

The crisis at Bira 91 stems from a corporate name change initiated in late 2023. This seemingly routine administrative action had far-reaching consequences:

• The company was forced to reapply for licenses across all states where it operates.
• Sales came to a halt during this process.
• Approximately ₹80 crore worth of inventory became unsellable.

Financial Repercussions

The impact of this error on the company's financials has been severe:

Employee Unrest and Operational Challenges

The company's troubles have extended beyond its balance sheet:

• Over 250 employees have petitioned for Jain's removal.
• Unpaid salaries amount to approximately ₹50 crore.
• Vendor payments have defaulted.
• The workforce has been cut by more than half.
• Previously planned IPO has been shelved after BlackRock withdrew its participation.

Fundraising Efforts

In an attempt to address its financial woes, Bira 91 is:

• In advanced talks to raise $132 million from Global Emerging Markets group.
• Aiming to use these funds to clear dues and restart operations.

Management's Response

Despite the mounting pressure, Ankur Jain has defended his leadership. He stated that his focus remains on:

1. Completing the ongoing fundraising efforts.
2. Protecting the interests of the company's employees.

This situation at Bira 91 highlights the critical importance of careful corporate governance and the potential consequences of administrative oversights in the competitive craft beer industry. As the company navigates through this challenging period, the outcome of the leadership discussions and fundraising efforts will be crucial in determining its future trajectory.

B9 Beverages, the company behind the popular Bira 91 beer, is facing significant financial challenges as it prepares for its planned IPO. The company's auditor has issued a going concern warning, raising questions about its ability to continue operations in the face of substantial accumulated losses and negative cash flows.

Financial Woes

The company's financial situation appears precarious, with the following key issues:

The auditor's report highlights that these conditions create material uncertainty about B9 Beverages' ability to continue as a going concern. The company's net worth has been completely eroded by the accumulated losses, which stand at ₹21,179.75 crore.

Employee Unrest

Adding to the company's troubles, over 250 employees have written to the Board and investors, demanding a change in leadership. Their grievances stem from delayed salaries and reimbursements, indicating potential cash flow issues within the organization.

Management's Stance

Despite these challenges, the management of B9 Beverages remains optimistic. Founder Ankur Jain has stated that the excess of current liabilities over current assets is not unusual for growth-stage businesses. The management has expressed confidence in the company's ability to realize assets and discharge its obligations.

Financial Reporting Delay

It's worth noting that B9 Beverages has not yet filed financial statements for the most recent fiscal year, which may raise additional concerns about the company's financial transparency and reporting practices.

Looking Ahead

As B9 Beverages approaches its planned IPO, the company faces significant hurdles. The going concern warning, mounting losses, and employee unrest present substantial challenges that the company must address to instill confidence in potential investors and stakeholders.

The situation at B9 Beverages serves as a reminder of the financial complexities and risks associated with rapidly growing companies in the competitive beverage industry. As the company works towards its IPO goals, it will need to demonstrate a clear path to profitability and address the concerns raised by both auditors and employees.