Caparo may enter administration

Caparo Industries, part of Lord Swraj Paul’s industrial conglomerate, the Caparo Group, is likely to enter administration, according to reports in the British press.

Caparo Industries, headquartered in the UK, is a major subsidiary of the Caparo Group, producing steel products for a wide range of industries, including the automotive and construction sectors.

It employs around 1,700 people and recorded a turnover of around £368 million in 2014, according to its annual report.

The downturn in the steel market, tepid demand in some of its sectors, and a strong pound that has hit UK exporters, has left the company struggling.

According to the Financial Times , which quoted two anonymous sources, the business could go into administration as early as Monday evening, with PwC the likely administrators. At the time of publication, Lord Paul and Caparo were not available for comment.

According to the annual report published in June, in financial year 2014 it reported a loss before taxation of £5.3 million for the year to December 2014, against a loss of £3.4 million for the same period the year before, which it attributed to difficult trading conditions in the second half of 2014, a rapid fall in steel prices and adverse exchange rate movements.

The news came amid (unconfirmed) press reports that Tata Steel would cut around 1,000 jobs in the UK, and days after a steel industry summit took place at which industry and unions called on the government to take urgent steps to support an industry hit by a strong pound, electricity prices far higher than the rest of Europe, weak demand and dumping by non-EU countries, including China.

“Caparo’s workforce produce quality finished steel products and has been battling against an increasingly challenging global market,” said Roy Rickhuss of the Community steel union.

Angela Eagle, the main opposition Labour Party’s spokesperson for business, called on the government to take action, and raise the issue of dumping with Chinese President Xi Jinping who visits Britain this week. Caparo Industries is made up of a number of businesses including Caparo Materials Engineering, which has been hit by slowdown in the automotive sector.

At its mill products division, the construction sector recovery expected in 2014 failed to materialise, while for Caparo India, automotive demand remained depressed.

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