Bira 91 Crisis Explodes: Founder Under Fire, Investors Demand Exit Amidst Massive Losses & Allegations!

Bira 91, a prominent Indian craft beer brand known for its urban image, is currently embroiled in a severe financial and operational crisis. The company, which has secured over $200 million in funding, is struggling with mounting losses and debts, with total liabilities exceeding ₹1,400 crore. In the fiscal year 2024, Bira 91 reported a net loss of ₹748 crore, adding to accumulated losses of ₹2,117.9 crore.

At the heart of the turmoil is allegations of financial impropriety against founder and CEO Ankur Jain and his family members on the board. They are accused of waiving off recovery of excess remuneration in contravention of the Companies Act, 2013, potentially involving millions of rupees. This has led to significant discord with investors.

Investors, including major stakeholders like Kirin Holdings (20.1% stake) and lender Anicut Capital, are reportedly in legal battles with the management and demanding the resignation of Jain and his family. In a significant move, investors have invoked clauses of convertible equity to take over the assets of The Beer Cafe, Bira 91's only profitable venture. Ankur Jain has filed a plea in the Delhi High Court against this takeover.

Employees have also raised serious concerns, alleging that the company owes ₹50 crore in Tax Deducted at Source (TDS) dues and that salaries from July 2024 and provident fund payments for over 15 months remain unpaid. A group of employees has written to government agencies, demanding a forensic and financial audit of the company.

Strategic missteps such as overhiring, offering high salaries, aggressive product launches, and supply chain disruptions due to operational model changes and inventory write-offs (₹80 crore) have contributed to the downfall. The company has also seen a revolving door for CFOs since 2019, raising concerns about financial controls. The latest auditor report flagged that current liabilities exceed assets by ₹487 crore and noted the substantial erosion of net worth in subsidiaries.

Impact: This news significantly impacts the Indian startup ecosystem and the broader consumer beverage market in India. It highlights potential risks in investment, management, and corporate governance for rapidly growing companies. It can lead to increased scrutiny of similar companies and investor caution, potentially affecting funding and valuations for startups. Rating: 8/10.

Difficult Terms: Craft brewery: A brewery that produces beer in small batches, focusing on flavour and quality rather than mass production. Startup: A young company founded to develop a unique product or service, bring it to market, and make it irresistible and irreplaceable for customers. Venture Capital (VC): Funding provided by investors to startups and small businesses with perceived long-term growth potential. Private limited company: A company whose shares are not publicly traded and are held by a small number of shareholders. Public limited company: A company whose shares can be bought and sold by the general public on a stock exchange. Remuneration: Payment for work or services, usually referring to salary, bonuses, and other benefits. Contravention: The act of breaking a law, agreement, or rule. Companies Act, 2013: The primary legislation in India governing the formation, operation, and regulation of companies. Provident Fund (PF): A retirement savings scheme mandatory for salaried employees in India. Tax Deducted at Source (TDS): A type of tax deduction required by the Income Tax Act, where the person paying the income deducts a certain percentage of the amount before crediting it to the recipient. Forensic Audit: An examination of financial records to uncover evidence of fraud or financial wrongdoing. Liabilities: What a company owes to others, including debts and other obligations. Statutory dues: Payments required by law, such as taxes, social security contributions, etc. Vendor dues: Money owed to suppliers or vendors for goods or services provided. Convertible equity: A type of security that can be converted into another type of security, such as common stock, at a predetermined ratio. Net Worth: The value of a company's assets minus its liabilities. SKU (Stock Keeping Unit): A distinct type of item for sale, like a specific flavour or size of beer. FY (Fiscal Year): A 12-month period for accounting purposes, often different from the calendar year. In India, it runs from April 1 to March 31.