Ballarpur Inds written in red ink

In Sept’15, Ballarpur Industries had said that it was planning to sell its entire 98% stake in its Malaysian subsidiary, Sabah Forest  Industries to another Malaysia based company, Pandawa Sakti. The idea behind the stake sale was to raise money to reduce debt by some Rs.2000 to 2,200 crore from current debt of Rs.7000 crore.

What we hear today is that stake sale is yet to happen and bankers are now getting antsy as the deadline to clear more than Rs.850 crore worth of commercial papers is coming up for repayment from end of March.

The banks fear that any delay in repayment could mean roll-over of CPs and this in turn would mean they will have to make provisioning w.r.t their exposure in the company.

Banks with exposure to Ballarpur are Stanchart, Rabo, Citi, IDBI, ICICI, DBS, Kotak, Axis, Calyon, HDFC Bank, HSBC, JP Morgan, RBS, and the Singapore Bank UOB.

Though the company seems unperturbed and seems assured that it will be able to clear the payment, the market is anxious and the stock price is down around 5% at Rs.12.21. Its 52-week low is at Rs.11.80.