Andhra Paper Revises Kadiam Unit Production Loss Amid Lockout

Andhra Paper Ltd. has updated its estimate for production losses stemming from a lockout at its Kadiam manufacturing unit. The company now projects a daily loss of 220 metric tons (MT), a sharp increase from the earlier estimate of 70 MT per day. This revised figure reflects the impact on the unit's entire daily production capacity since the lockout began on May 1, 2026. The company issued this clarification on May 5, 2026. Previously, Andhra Paper had reported a strike at the Kadiam facility starting April 27, 2026, which subsequently led to the lockout on May 1. The initial 70 MT daily loss estimate was based on the assumption of only partial operational disruption.

Scale of the Impact

The jump in estimated daily production loss from 70 MT to 220 MT highlights the severe operational impact at the Kadiam unit. This facility has an annual capacity of roughly 73,150 MT, meaning a complete shutdown for a single day affects approximately 0.8% of its yearly output. With the company's total annual paper capacity exceeding 250,000 MTPA, the Kadiam unit represents a significant portion of its operations. A prolonged halt could lead to considerable impacts on the company's revenue and profitability.

History of Labor Disputes

This is not the first time Andhra Paper has faced labor-related operational disruptions. In April 2024, its Rajahmundry unit experienced a lockout following a strike concerning wage policies and union elections. Earlier, in January 2025, the Rajahmundry plant saw a major strike that caused an estimated daily production loss of 510 MT. The current Kadiam situation started with a contract worker strike on April 27, 2026, before escalating to the current lockout.

Implications and Risks

The revised loss figure indicates a complete operational halt at the Kadiam unit. Investors will be closely monitoring the duration of the lockout and the company's progress toward resolving the dispute. The situation poses risks of sustained production losses, which could significantly affect the company's revenue and profitability. There's also a risk that further industrial unrest could damage its market standing and investor confidence, while testing its ability to meet customer demand and fulfill existing orders.

Peer Comparison

Andhra Paper operates in the competitive Indian paper market, alongside companies such as JK Paper Limited, ITC Paperboards, and Tamilnadu Newsprint and Papers Limited (TNPL). Its parent, West Coast Paper Mills Limited, also navigates similar operational challenges. While labor disputes can impact any industry participant, the recurring nature of these issues for Andhra Paper may suggest distinct internal challenges when compared to peers with more consistent labor relations.

Key Company Metrics

For context, Andhra Paper's Kadiam unit has a rated annual paper production capacity of approximately 73,150 MTPA, as of FY24. The company's total installed paper production capacity ranges between 240,000 to 259,400 MTPA (FY24-25). In the financial year ending March 31, 2025, the company reported revenues of ₹1,630 crore and a net profit of ₹89 crore. As of September 30, 2025, Andhra Paper held over ₹650 crore in cash and short-term investments.

Looking Ahead

Moving forward, investors and analysts will be watching:

• The duration of the lockout and any official updates on its resolution.
• The company's strategy and timeline for restarting operations at Kadiam.
• The financial implications for upcoming quarterly results, particularly Q1 FY27.
• Any potential effects on raw material sourcing or finished goods inventory.
• How Andhra Paper's operational stability compares with that of its industry peers.