Patna, July 30: The UB Group is mulling closing down its brewery in Bihar.

This comes after the Bangalore-headquartered United Spirits Limited (USL) announced earlier this week that they had decided to shut down their distillery located at Hatidah on the Patna outskirts.

The USL is a part of the UB Group with its headquarters at the UB Tower in Bangalore. Sources in the brewery, which was set up at a cost of around Rs 270 crore and became operational last year, told The Telegraph that with most of the brewery employees either laid off or transferred, the company was in touch with Praj, a Pune-based company, experts in setting up brewery plants.

"In the current scenario of prohibition, the brewery has been defunct since two months now. Though a final decision regarding the same is to be taken by the board of directors of the company, we are mulling an exit. A Pune-based company called Praj has been contacted who expertise in setting up breweries. At this moment, nothing more can be said as the final decision on the shifting and the new state to shift the brewery is yet to be decided," an official told The Telegraph.

The official pointed out that setting up the brewery in a different state was being given a serious thought.

"The breweries of UB are located in many states in the country. So, if the brewery shuts down here, it has to be planned properly as to which state it would be transferred to. The problem with here is the land at Naubatpur, around 30km from Patna, on which the brewery has been established. Unlike the other breweries like that of Carlsberg and Molson Coors Cobra, we have been given the land on lease by Bihar Industrial Area Development Authority (Biada) for 99 years. Though I am not aware of the amount paid to the government for the land, the company had to fight a tough and bitter battle in court after the farmers and landowners started protesting. In addition to paying Biada, the company had to pay the farmers too," the official said.

The Biada, a wing under the state industries department, had decided to acquire 96 acres for industrial purposes at Naubatpur in 2011 and the UB Group had been given 42 acres for the brewery. Of 42 acres transferred to the UB group, about 13 acres belonged to 27 farmers who later approached the court for quashing the acquisition and subsequently the lease deed of the company. One of their allegations was that the state government had acquired land from them by promising a sugar factory but then had given land to UB for a brewery. On July 6, 2012, Patna High Court cleared the hurdles in the way of UB.

"The advantage with the other breweries lies that they bought land from the landowners directly and set up the brewery. So, if at all they decided to wind up, they can sell off the land and in this way, can balance the losses. In the case of UB, there is no such chance. We have been told that it would take anything between Rs 35 to 40 crore to shift the entire brewery," the official said, adding that presently, there were just four people working in the brewery. When it started to function, there were 70 people in the brewery and 75 in the sales team. The brewery has the capacity to manufacture 10 lakh cases of beer each month.

In talks with The Telegraph earlier, the representatives of Carlsberg, which has a brewery at Bikram, around 24km away from Patna, had said that in view of the tremendous investment made in the state, the prohibition would have an impact on business. The Danish company has invested around Rs 140 crore towards the setting up of the brewery.