Tamil Nadu’s ‘corrupt’ Cash Cow Tasmac: How Politics & Liquor Got Here To Shape A Strong Mix Within The State

Sandhya Ravishankar

Twenty eight-year-old Parthiban stops through the neighborhood “wine keep”, which regardless of the moniker sells whatever however wine, in his autorickshaw. He is in a rush and asks for the “special” —“cuttings” of a brand new logo of alcohol locally called Andhra Packet.

“One slicing is enough to make you fly like a rocket,” he grins as he downs it. “I takejust for the kick.”

Andhra Packet is a small pouch of spurious liquor costing Rs 20 each. It became once sold surreptitiously, but has located its manner into alcohol stores run through the kingdom authorities.

That shouldn’t marvel: Tamil Nadu loves its drink and consumes 17% of the alcohol in the complete usa. Especially whilst this deadly cocktail of liquor and corruption is prepared by politicians.

The Birth of TASMAC

In 1983, after a spate of deaths due to consumption of spurious liquor, the then leader minister MG Ramachandran (popularly known as MGR) shaped two companies — one solely to marketplace liquor and any other to manufacture it. The marketing arm become called TASMAC, or Tamil Nadu State Marketing Corporation, and the producing arm become known as Tamil Nadu Spirit Corporation, or TASCO.

The idea at the back of this move is discovered within the coverage be aware of the time: “Taking into consideration the truth that illicit liquor influences the health and monetary conditions of a poor individual, the country’s intention is to wipe out illicit liquor. But for the reason that revenues to the kingdom are very high from alcohol that’s especially fed on by way of the higher lessons, the country objectives to tax that phase of people and offer cheap and right high-quality liquor for the ones among the poor classes who consume.”

By 1987 though, TASCO was abandoned and private companies have been allowed to fabricate liquor. Around the identical time tenders had been issued for non-public stores to retail alcohol, which until then was most effective available at high-priced hotels. It became the era of licence raj in which even the consumer needed to have a permit for a drink.

In November 2003, the then leader minister J Jayalalithaa introduced that the government would take over non-public retail income of alcohol within the country — with TASMAC having the monopoly to shop for liquor from manufacturers and sell it to purchasers.

The kingdom government’s coffers began to fill — TASMAC contributed Rs 3,800 crore in revenues in 2002-03. Its sales might grow hugely every year — around 20% each yr — to attain Rs 21,000 crore in 2012-13. Next yr’s (unofficial) goal is estimated to be Rs 25,000 crore.

The big sales generated by way of TASMAC had been vital for successive nation governments. The cash has frequently been used to provide freebies to woo the citizens — from colour TVs by using the DMK to loose fanatics, mixers and grinders via the AIADMK. As Tamil Nadu beverages extra, freebies waft in tandem.

Politics of Liquor

During MGR’s reign, simplest 5 groups were allowed to deliver liquor to the kingdom-run TASMAC. Today, 12 businesses manage the substantial liquor business in Tamil Nadu. As political fortunes exchange each five years, so do those of the liquor makers. Take United Spirits Ltd (USL, now owned via Diageo) and United Breweries as an instance.

USL enjoyed a 20% market share in Tamil Nadu all through the DMK regime. Until 2011, matters have been hunky dory.

Once the regime modified, so did USL’s fate. Market percentage dropped sharply to 12.38% as AIADMK boss J Jayalalithaa swept to energy with a massive majority. USL’s loss become Midas Golden’s advantage — its marketplace proportion rose to 16.62% from 7.2% at some stage in the DMK years.

Midas Golden Distilleries changed into set up in 2002, only a 12 months earlier than Jayalalithaa introduced the takeover of private stores within the kingdom.

The company is owned by way of a relative of Jayalalithaa’s confidante Sasikala. In overdue 2011, Sasikala had a public fall from grace, kicked out of the party unceremoniously at Jayalalithaa’s behest. She was ousted even from Jayalalithaa’s house. This changed into to prove fortunate for USL whose marketplace proportion again rose to twenty%. Jayalalithaa and Sasikala, but, patched up soon enough and all became well with Midas Golden.

In its 2011-12 annual report, a desperate USL lashed lower back at TASMAC. “In Tamil Nadu, any other big market each for the enterprise and for your organization, there has been a sustained attempt at favouring new, local gamers at the cost of hooked up countrywide players like your organisation. Your agency had the biggest marketplace proportion on this market and this strive at favouritism almost about patron call for affected your employer significantly,” it stated. TASMAC refused to take part in the tale.

“Our organization maintains to face issues in Tamil Nadu in which its marketplace proportion dropped extensively because of ordering styles accompanied by using TASMAC,” stated United Breweries chairman Vijay Mallya in 2013.

The next 12 months, USL, in its annual record, said the employer had “intentionally de-emphasised income” to the tune of eight% because of “compelled curtailment of potential in Tamil Nadu” amongst others and brought that their Poonamallee facility close to Chennai could be hived off due to this reason.

Another stark example is that of Mohan Breweries, a employer that had the primary mover benefit in the course of MGR’s times in supplying liquor to TASMAC.

Mohan Breweries suffered large losses in the course of the DMK regime among 2009 and 2011 (see How Liquor Profits and Politics…). During the spat between Sasikala and Jayalalithaa in 2011, the organization’s earnings picked up remarkably however dropped dismally soon after the patchup.

In 2010, the then chief minister M Karunanidhi’s pals obtained licences for breweries. This list consists of Tropical Breweries run by Sharad Kumar, the then MD of Kalaignar TV, a DMK mouthpiece, as well as SNJ Distilleries and AM Distilleries.

Why TASMAC and its inner workings have by no means surely been uncovered is likely due to the unsaid code amongst politicians — stay and allow live. Both DMK and AIADMK leaders have close buddies jogging distilleries and breweries. During a DMK regime, the DMK’s buddies are favoured however the AIADMK associates are not completely wiped out — vice versa within the AIADMK regime.

This is a excessive-stakes cash game with political issues thrown in. By cartelising the liquor production commercial enterprise, politicians on both aspects of the political spectrum have ensured that the corruption keeps unabated or even while no longer in energy, the rival’s pals hold to make money. (See Political Connection…)

The Curious Case of McDowell’s

Tamil Nadu is one of the few states that loves brandy and McDowell’s, a brand owned through USL. McDowell’s is a telling instance of ways even the fate of famous brands may be decided with the aid of the all-powerful TASMAC.

The emblem’s inventory position as on November 6, 2014, (available at the TASMAC internet site) shows that Mc-Dowell’s is stocked in very small numbers compared with different manufacturers. Lesser regarded, even barely-recognized brands are properly stocked across the forty one depots of TASMAC.

“The cause isn’t always that the emblem is unpopular,” says a senior TASMAC respectable who spoke on condition of anonymity. “Brands are imposed upon stores. Pay money to officers or even if your brand has no takers, TASMAC will ensure that your stock movements,” he says. On being requested how, the reputable explains.

“Corruption of path,” he says. “It begins at the shopping stage and trickles down. The shape is like this. There is a Purchasing Committee within TASMAC that places the orders and deals with liquor producers. The liquor is going from the liquor manufacturer to 41 depots throughout the country.

The wide variety of instances (forty eight bottles is one case) relies upon on the call for contemplated by using the retail outlets which vicinity their orders with the depots. Retailers have to take inventory and ask for instant-promoting manufacturers once per week. From those depots, liquor is despatched to retail outlets,” he stated.

“If a company tells TASMAC officers that they’ll pay whatever between Rs 25 and Rs 50 in keeping with case, a deal is struck,” persevered the authentic. “Once orders are positioned, the liquor is going from that organisation to the depots. The depot is meant to send the manufacturers and numbers that the stores ask for. But due to the fact this corporation has paid bribes, the liquor produced through this corporation is compelled on stores,” he explains.

Retailers agree. “We are those who know the precise demand inside the marketplace and we ask TASMAC for the brands which might be rapid promoting,” agrees Saravanan, a retail outlet manager and treasurer of a CITU-affiliated TASMAC union.

“But TASMAC doesn’t supply us the manufacturers our customers ask for. Instead, we are forced to shop for a few indistinct brand or a slow-transferring brand. The depot workforce tells us that is all we’ve got and the famous logo has not are available in. In this way, famous manufacturers are killed. What will the customer do? Obviously he will purchase whatever he receives and complain for a chunk before moving on,” he says.

High on Corruption

At the depots, there is greater to this tale of corruption. “We are advised beforehand which manufacturers to delay,” said a depot staffer who did now not wish to expose his call. “The officers who trouble the orders could inform that precise organization ahead that there will be a purchase order for a precise amount and to maintain the stock geared up. The enterprise will preserve it ready and dispatch it to the depots as quickly as they get the order. The popular logo even though gets the order most effective toward the weekend with out previous note and they’ll take approximately a week to get their inventory equipped and send it to the depots. But seeing that we, the depot personnel, are informed earlier, we will delay unloading the stock. This way that the famous emblem might be dispatched to stores only about 10 days from the day they acquired the indent,” he adds. Meanwhile the now not-so-famous corporation’s stock has reached the cabinets and customers are shopping for it since their favored popular emblem is not to be had.

“Purchases in TASMAC aren’t made on the idea of demand however on the basis of corruption,” says Thiruchelvam, CITU union leader in TASMAC. “Lower variety gadgets are not purchased, handiest higher variety items are bought due to the fact a 375-ml or 750-ml bottle is more profitable for the producer. So he strikes a deal and guarantees that most effective the bigger bottles attain the cabinets even as the sector bottles do not come. As a end result the patron is forced to buy greater alcohol than he dreams,” he says.

Thiruchelvam provides that even premium phase brands, which can be normally bought simplest with the aid of the top middle elegance, also are driven aggressively in this way. “If you study any TASMAC retail outlet today, you’ll find boxes stacked as much as the ceiling,” says Saravanan. “These are the little known manufacturers which are thrust upon us, which don’t promote. The retail store owners are the losers in this entire recreation,” he adds.

The Real Demand

Since the Purchasing Committee depends on facts available at the depots instead of the shops, depots thrust little recognized brands at the stores and thereby the actual demand from the client isn’t recorded. The Purchasing Committee has powers to issue up to 50% extra orders to shop for a specific emblem based on a calculation using depot sales because the base parent.

Since depot income figures do no longer mirror the real call for, the consumer does no longer get his choice and precise brands may be pushed into retail outlets. “If a employer desires to introduce a new brand into the marketplace, the bribe is going as much as Rs 60 lakh,” says an industry insider who makes IMFL in Tamil Nadu.

Bars connected to TASMAC retail outlets too are in call for and it also includes human beings connected to political events who get licences to run the 800-odd bars inside the nation. “To get a licence for a bar, one has to shell out between Rs 2 lakh and Rs eight lakh as bribe to politicians,” rues a TASMAC employee who runs a bar in Chennai.

TASMAC shops themselves are categorized into A, B, C and D, with the A class clocking the very best sales of over Rs 25 lakh a month. Even shop supervisors who look to stable a switch to the A category stores must cough up Rs 1 lakh. Otherwise, their request will virtually sit at the desk of officers involved.

This corruption then trickles to the shops, in which the purchaser is charged extra for each bottle by using the store supervisor, in spite of TASMAC trekking charges in November, the second one increase in two months. “We emerge as being compelled to buy some of these brands that truely don’t move, so how will we make our money back?” requested a retail shop manager on situation of anonymity.

“So we add Rs 5-10 in keeping with bottle. What else can we do?” The entice of spurious liquor is an excessive amount of for retailers to face up to. Andhra Packet is a shining example. “The books will not reflect these sales in any respect. Spurious liquor is a serious hazard and poses health dangers,” says Thiruchelvam of CITU. “In the beyond few months already 3 illicit liquor factories had been shut down across the nation,” he adds.

Private organizations additionally push their slower selling manufacturers directly to clients through TASMAC. “Salesmen of private organizations offer us Rs 250 in step with case of 48 bottles as bribe to push their brand,” says the retail save manager. “But we want to promote at least 10 cases before we get the money.”

Turning a Blind Eye

In March this yr, the Madras High Court passed an order on a case filed by Golden Vats together with a take hold of of smaller distilleries and breweries. The courtroom ordered TASMAC to prepare truthful and transparent hints for issuing orders and indents and additionally directed TASMAC to make all manufacturers available to the consumer.

Golden Vats had long past to courtroom alleging ‘malafide intentions’ on the a part of TASMAC to sell sure brands over others.

It seems that nobody is inclined to easy up TASMAC as successive nation governments have a stake in corruption and unfair practices taking organization root inside the enterprise.

While TASMAC itself has started bleeding, with a Rs 100-crore loss published in 2012-13, little is being carried out to salvage the scenario.

In the stop, it is the patron who pays and receives a few loose tidbits thrown with the aid of politicians along his manner in go back.

(The creator is a freelance journalist based in Chennai)