Caparo breached bank covenants in wake of 2008 economic slump
Indian-born Lord Swraj Paul's UK-based engineering conglomerate, the Caparo Group admitted that a few of its companies had broken the terms of their bank covenants in wake of economic slump in 2008, which caused severe decline in trading conditions.
A report published in the Daily Mail newspaper stated that the Group had breached terms of certain bank loans, and it owed 257 million pounds due for payment within a year, which might lead it to trouble in accessing funds to run its normal operations.
The steel and engineering group reported a turnover of 861 million pounds, but a pre-tax loss of 3 million pounds. Group's auditor BDO cautioned that the group's prospects now depend on securing bank finance."
Commenting on the topic, auditor BDO said, "These conditions indicate the existence of a material uncertainty which may cast significant doubt about the group's ability to continue as a going concern."
Lord Swraj Paul, the group's 79-year-old chairman, said they had the support of its bankers and they were trying to restructure debts. He added that trading during the last six months of 2009 had improved.
Caparo operates in as many as fifty locations across Britain, Spain, Dubai, North America and India. The group provides work for around 6, 000 people worldwide, with more than half in Britain.