BRIEF NOTE ON STEEL STRIPS LIMITED
Steel Strips Limited was promoted as a Joint sector Company by Shri R K Garg and Punjab Government through Punjab State Industrial Development Corporation Ltd. in the year 1975. This was a flagship Company of the Group for last more than 20 years. The Company’s operations were very well managed and Company generated substantial cash profits. The Company diversified its operations and installed a Mini Steel Plant in the Backward State of Himachal Pradesh, as a step towards integration and consolidation of its operations. Further in the year 1990 the Company installed a Modern Light and Medium Structural Rolling Mill with a view to add value to its own steel products by rolling the billets to make Special Alloy Steels for automobile forging industry.
The Company was a dividend paying Company till the year 1989. However, due to the liberalization policies of the Government of India adopted in the year 1991, our Company also started facing competition from cheaper imports. The management took various measures including widening of its customers’ base and catering to the demand of OEM Industries using Cold Rolled Strips, Special Alloy Steel & Rolled Products. As result of timely action of the management, the Company paid back entire term loans of various Financial Institutions. As a result of this, there were no term loans outstanding against the Company as at 31.03.1996.
However, during the mid nineties, the country’s economy had been passing through deep recession and turmoil due to uncertain Government Policies, frequent revision of Bank rates and steep hike of back charges by banks. The Company suffered major setback in the year 1997-98 and 1998-99 due to abrupt shrinking of demand of Steel products by automobile and engineering Industries as a whole. The debtors started defaulting on payments due to non-availability of funds with them or due to closure of their units. As such, the Company ran into financial crises. Steep hike in power tariff by State Electricity Board made operation of the Company unviable.
As a results of these factors, the management was left with no other alternative, except to close its units in 1998 & 1999 and as per the Audited Balance Sheet as at 31.03.1999 the Company had incurred losses of Rs.3288 Lacs which exceeded the Paid up Share Capital of Rs.828 Lacs and Free Reserves of Rs.1829 Lacs. As such the entire Net Worth of the Company stands had eroded and the Company had become a Sick Industrial Company in terms of the Provisions of Section 3(1)(o) of the Sick Industrial Companies (Special provisions) Act, 1985. In compliance with Section 15 of SICA, 1985, the Board of Directors made a reference to the Board for Industrial & Financial Reconstructions (BIFR).