Bankrupt PSL applies for 'sick' leave
Steel pipe manufacturer Jindal Tubular’s carefully crafted March 2015 agreement to take over the operations, maintenance and management of bankrupt rival producer PSL could soon be in tatters.
PETROWATCH learns PSL on May 28 filed an application with the Registrar of Companies declaring itself a ‘sick’ company under Section 15(i) of the Sick Industrial Companies Act, 1985. “If the application is accepted,” says a source, “PSL’s agreement with Jindal will be quashed and its assets auctioned to pay bankers debts.
” By the end of the last financial year to March 31 losses at PSL, India’s largest pipe manufacturer by volume, exceeded its entire net worth. “PSL has been making losses for the last two years after it started quoting aggressively to win GAIL pipeline contracts,” he adds.
“When GAIL started adopting the ‘reverse auction’ process to get the best price PSL’s margin reduced to as low as 5%. Add currency fluctuations and a small increase in steel prices and the tiny profit became a loss.
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