KARACHI: Chief Executive Officer of Pakistan Steel Mills, General (Retd) Muhammad Jawed on Friday said that PSM needs Rs 20 billion immediately to meet its capital requirement and to pay its immediate liabilities.
For saving this national asset from further deterioration, he said Rs 11 billion be released within seven days and Rs 9 billion in next 15 days.
The CEO Pakistan Steel unveiled these facts while giving a presentation to Federal Minister for Industries and Production Shahzada Ahsan Ashraf Sheikh during the Minister's visit to Pakistan Steel here.
General (Retd) Muhammad Jawed said Rs 11 billion are required for raw materials and the remaining amount for payment of other utilities.
He listed the reasons for the failure of PSM's revival. These included insufficient working capital to complete the logistic cycle, delay in release of funds, difficulties in opening of L/Cs with National Bank of Pakistan, delay in revival of L/Cs facility of Rs 3 billion by NBP.
He said the business plan for revival of PSM was prepared by world renowned professional firm, M/s Deloitte, in November, 2011 and the plan in principle was approved by the Economic Coordination Committee (ECC) and later by the Cabinet in December 2011.
The salient features of the plan, he said, are: The Fresh injection of Rs 11 billion be made at a tentative interest rate of 14% to finance mainly working capital.
Repayment of principal amount be deferred for 3 years.The Government should pick up the interest cost for first 3 years, of Rs 5.12 billion against issue of shares-- Out of outstanding Term Loan of Rs 8 billions, principal amount of Rs 5 billion (Rs 3 billion overdue as of June 30, 2011 and Rs 2 billion due during FY 2012) will be restructured and deferred for a period of two years. However, interest will be paid as per schedule.
He said that had the bail- out amount been paid in lumpsum and the amount was sufficient enough, the situation would have been positively different.
Giving details of the bail- out packages, he said that in 2008-09, the amount of Rs 20 billion was demanded and 50% amount was received.
Rs 6,492 million were utilised to pay old liabilities and Rs 3,506 million only were available as working capital.
He further said in 2009-10, Rs 25.133 billion were demanded. Rs 10.608 billion were sanctioned and Rs 9.907 billion received. Of this amount, Rs 4.277 billion were consumed to pay old liabilities and Rs 5.633 billion only were in balance as working capital. In 2011-12, Rs 11 billion were demanded and we got only Rs 6 billion, he said.
The CEO PSM said in 2012-13, 27.740 billion were demanded as bail- out package-IV, but Rs 14.6 billion were sanctioned and Rs 9.150 billion were received. Rs 6.050 billion were paid for old liabilities and only Rs 3.1 billion were left as working capital.
The CEO, PSM informed the Minister about the financial status of Pakistan Steel as on January 31, 2013.
The long term liabilities amounted to Rs 29.627 billion, deferred liabilities were Rs 13.480 billion, other liabilities figured Rs 45.287 billion, he said.
General (Retd) Muhammad Jawede said when he had left the office of Chairman Pakistan Steel in 2007-08, the net profit was Rs 2.081 billion and Rs 8.252 billion were contributed to the national exchequer as taxes and duties. Rs 8.987 billion were cash/ bank balance. The production capacity was 82%.
In 2008-09, he said the production dropped to 65 % of total capacity. Rs 26.526 billion was net loss. In 2011-12, the net loss was Rs 22.273 billion and the capacity utilised was simply 19 percent.
From July 12, 2008 to January 13, 2009 the net loss occurred was Rs 13.108 billion and the capacity utilisation remained at 12 percent.
CEO, PSM informed that the work on the agreement signed with Russian officials for the revamping and expansion of Pakistan Steel was in progress. Russia has offered dollars one billion package in this regard.
Within one month, the formalities related to the agreement would be finalised after the PSB board meeting, he said.
The Federal Minister for Industries and Production appreciated the sincere efforts and commitment of Pakistan Steel's management and workers and hoped for early revival of this important public sector industry.
He assured his full support and cooperation to the PSM management struggling for the revival and expansion of the Mill.
Later, the Minister visited the PSM plants to have on-the-ground account of the current situation of the mill.
Chairman, PSM People Workers Union (CBA) Shamshad Qureshi, President, Dhani Baksh Samoon, General Secretary Syed Hammedullah and Vice Chairman Muhammad Ali Zardari also accompanied the Minister.
The Minister also visited his alma-mater Pakistan Steel Cadet College.
He was briefed about the upgradation of the facility and the achievements so far besides its future plans. -Reuters
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