London, Oct 19 (IANS) Caparo Industries, led by Indian-origin British peer Swraj Paul, was on Monday reported to be on the brink of going into administration as a fallout of the UK steel crisis.
Quoting sources, the daily Telegraph here reported that the steel and engineering products major founded by Lord Paul, which was considering funding options over the weekend, could go into administration on Monday as parts of its business have been under enormous pressure.
The report said legal advisers and potential administrators are on standby and that the firm of Pricewaterhouse Coopers (PwC) would be given the lead mandate for administration work.
Caparo reported an annual operating loss of 700,000 pounds for 2014 as compared with the previous year’s profit of 3.1 million pounds. Its UK operations posted much higher losses at 2.5 million pounds, compared with the 1.7 million pounds profit made the year before.
Britain’s steel industry has fallen into deep crisis due to cheap Chinese imports, higher energy costs and the current strength of the pound sterling.
Losses at UK’s largest steelmaker, Tata Steel, have forced it to announce 700 job cuts in Yorkshire and several hundred layoffs at its South Wales plant. The company’s losses doubled last year to 768 million pounds.
In early October, Sahaviriya Steel Industries UK went into liquidation after it announced closure of its plant in Redcar, resulting in 1,700 job losses.
A combination of international price of steel plummeting within a year from about $500 a tonne to around $280 and the flood of Chinese steel had a damaging impact on UK’s steel industry.
Caparo, which had an auto ancillary unit in Singur in India’s West Bengal state, still has 18 acres of land in the area.