Himalayan Distillery has stopped making two of its popular brands of whiskies Royal Stag and Blenders Pride. The production of these whiskies, originally owned by international chain Seagram, was terminated three months ago.

The distillery said stern government regulations had forced it to stop manufacturing these two brands of whiskies which it had been producing for the past 16 years.

The government recently barred franchisees from paying royalty amounting to more than 6 percent of the gross profit to the franchisor. Canadian-based Seagram is said to have discontinued its alliance with Himalayan Distillery after the royalty amount was reduced.

Himalayan Distillery officials, however, said they had not received any official letter from Seagram. “But considering the reaction of the company, it will not continue its business in Nepal,” said a source. Seagram is reported to have stopped selling raw materials to Himalayan Distillery. According to the source, Seagram officials visited Nepal two months ago and destroyed the packaging items including bottles, boxes, labeling materials and lids used to seal the liquor bottles.

The company had been dispatching raw materials to the Nepali company from its production plant in Scotland.

Himalayan Distillery had signed an agreement with Seagram to provide 50 percent of the gross profit as royalty. However, under the new regulation, the Nepali company has to slash the royalty amount being paid to the franchisor.

The foreign company is also said to have expressed its discontent at the government’s lengthy procedure of paying royalty. As per the latest government rules, a Nepali company needs to obtain the approval of Nepal Rastra Bank after getting the Industry Ministry’s recommendation to pay the 6 percent royalty.

Himalayan Distillery had been producing 250,000 cartons of Royal Stag annually. The liquor is one of the popular brands among domestic consumers.  The closure of production has not only affected the Nepali company but also hit the government’s revenue collection and the workers employed in the factory.  “The distillery is planning to fire a number of workers,” said the source.