The region's currency crisis and other lost orders had also eaten into the firm's earnings and made business unprofitable.

``We are badly affected by the currency devaluations in Southeast Asia,'' company chairman Singha Weerasekera told Reuters by phone.

``We have to restructure if we are to remain in business. We are negotiating a new productivity agreement with our unions,''he said, adding that if an agreement was reached the company would like to restructure its equity and re-start operations.

Parquet makes wood flooring for export using rubberwood. The company said in a statement to shareholders it had lost a contract for 50 per cent of its capacity to be sold to the Spanish market over the next three years.

``To our surprise, we received a fax in mid-March from this buyer, requesting us to sell thiscapacity elsewhere as they had been offered a better price from a Malaysian supplier for a similar product as offered by us,'' the statement said.

It said almost all its other buyers had also asked for substantial price reductions saying they would place orders with other suppliers in the region if Parquet could not cut prices.

Weerasekera said the company employed some 400 people, all of whom would continue to be on the payroll until a solution was found to end the crisis.The company had a turnover of 102.4 million rupees and a pre-tax loss of 29.96 million in the year ended March 1997.

Latest financial figures were not available but Weerasekera said the company stood to lose $200,000 per month on cancelled orders.