Hit by a major crisis that has gripped UK's steel sector, Caparo Industries, a part of Lord Swraj Paul's business empire, may go into administration, according to a British media report today.
Quoting unnamed sources, Daily Telegraph reported that the company, which has 1,800 employees and operates from 20 sites, was poised to file for administration, a process that is an alternative to liquidation.
A company in administration is operated by an interim administrator who must act in the interests of all the creditors and attempt to rescue the company as a going concern.
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The report said that the steel sector was reeling from a series of blows and Paul's company had been a victim to combination of cheap imports of Chinese steel depressing prices, high energy costs and onerous taxes.
The recent strength of pound is also understood to have been a major factor in the company's problems because it has made its products more expensive for export customers.
The newspaper said that not all the businesses within the Caparo Industries which also operates in automotive, aerospace and other sectors were facing difficulties with many of them believed to be viable operations with lucrative contracts that could allow them to trade their way out of trouble.
Filing for administration will give Caparo Industries the time it needs to identify those which are strong enough to survive while it restructures or seeks buyers.
Paul is one of Britain's 50 wealthiest people with a fortune estimated at two billion pounds. He holds a large stake in Caparo Industries through its parent company, Caparo Group.
The current crisis that has hit Britain's steel industry has also forced Tata Steel UK. The company was expected to announce more than 1,000 job losses this week. It had already shed about 1,000 jobs during this summer.
