Ballarpur Industries suffers as US imposes tariffs

Even as the US government imposes import duties on Chinese and Indonesian paper, it is the leading Indian paper manufacturer, Ballarpur Industries which may suffer the most.

Ballarpur Industries, in recent years has invested heavily to modernise its production facilities. The company for same purpose had taken huge loans and the creditors now may be a worried lot as the company may struggle to repay the debts in time owing to the oversupply of paper in Indian markets.

Since the US duties, the Chinese and Indonesian paper manufacturer have targeted Indian markets and the supply from these Asian competitors clubbed with increasing digitalisation is something that is posing humongous challenge for Ballarpur.

India, recently has reduced import duties on paper and it has further aggravated the pain for the biggest paper manufacturer in India.

The problem is so severe, due to overcapacity, that the company faces risk of defaulting its creditors. Ballarpur Industries in February deferred coupon on $200 million perpetual bond that were sold in 2011.

The paper industry in India has suffered recently and put together the 60 listed paper companies have generated a total loss of nearly $99 million in past one year.

With paper imports doubling since 2010 and the Asian competitors from China and Indonesia dumping their excessive inventory into Indian markets after the US duties the Indian Paper Manufacturers Association has been requesting a relief from the government.

Ballarpur Industries has generated over 40 per cent return in one year period. The stock closed at Rs 18.35 per share, down by Rs 0.40 per share or 2.13% on Friday.