Fitch Ratings has downgraded the Long-Term Issuer Default Ratings on India-based paper maker Ballarpur Industries (BILT) and its subsidiary Bilt Paper B.V. to 'C', from 'CCC'.

The downgrade follows Fitch's assessment that a default appears inevitable, given severe liquidity constraints, and resolves the Rating Watch Negative on BILT (Q,N,C,F)* and Bilt Paper, which has been in place since 29 July 2016.

BILT said in response to a stock exchange query on March 15, 2017 that it is in discussions with a domestic mutual fund regarding steps to resolve a potential default amicably. The exchange had sought clarification regarding news that the domestic investor plans to approach the securities regulator after BILT failed to honour its commercial paper obligations.

BILT has been not been forthcoming in providing Fitch and other relevant market participants with updates needed to adequately assess its liquidity position. Fitch had, however, highlighted in its commentary on January 30, 2017 that the company would have exhausted almost all possible remedies to avoid a debt default or restructuring if its discussions to secure funding and monetise assets are delayed or fail. There have been no announcements by BILT on material progress in these negotiations since then, indicating that a default is imminent.

Shares of the company declined Rs 0.85, or 4.29%, to trade at Rs 18.95. The total volume of shares traded was 390,411 at the BSE (12.56 p.m., Tuesday).