Privatisation list: ECC refuses to de-list PMTF

The Economic Co-ordination Committee (ECC) of the Cabinet has refused to de-list Pakistan Machine Tool Factory (PMTF) from the privatisation list, well-informed sources in Ministry of Industries and Production (MoI&P) told Business Recorder. Presided over by Prime Minister, Shahid Khaqan Abbasi, the ECC approved Rs 300 million to the organisation to settle payment of dues of its retired employees, the sources added.
Giving the details, sources said, Ministry of Industries & Production informed that PMTF, Karachi is a strategic engineering unit operating under the State Engineering Corporation (SEC), MoI&P. It was established in 1968 with a share capital of Rs 291.000 million for achieving import substitution and developing the capital engineering industry. PMTF has developed high-tech engineering capital items and is contributing significantly to the national economy through import substitution.
The factory is serving various sectors of the country including Pak-Army, Rangers, Civil Armed Forces and the auto-industry. PMTF was on the verge of total collapse in FY 2008 and the company defaulted on account of non-payment of legal dues to its retired employees. The company till July, 2015, continued sustaining huge losses. The salaries of employees on the payroll were seven months due, and orders in hand could not be completed on time and as a result LDs were imposed.
The company also lost its MD, as he was assassinated near the factory gate on his way back home. MoI&P took up the matter with Finance Division, seeking a one-time relief amounting to Rs 823.000 million to clear the dues of PMTF's retired employees. In response, Finance Division stated that PMTF has the potential of manufacturing a wide variety of products and it had shown a positive trend in its production and revenues recently. Moreover, the liabilities of PMTF are not a charge on the federal government. Therefore, PMTF may settle its liabilities by itself.
The Ministry of Industries and Production further noted that the comments of the Finance Division with regard to PMTF's potential are appreciated, as the company since 1970 has been operating on a commercial basis without any government support. PMTF in this process, has off-loaded foreign/local loans, as well as twice undertook BMRE from its own resources. In July, 2015, with the change in management at SEC level, PMTF has turned around from a loss of Rs 570.000 million (June, 2015) to generating a pre-tax profit of Rs 62.100 million in June 2017. The company achieved its highest ever sales of Rs 1.201 billion during FY 2016-17.
SEC/PMTF management made strenuous efforts and arranged funds / advances from its customers to manage inputs for completing orders in hand and secured orders from the Civil Armed Forces, Rangers and Pak-Army in the backdrop of security requirements for CPEC projects. PMTF also earned export orders worth Rs 1.581billion. This enabled the company to move on but PMTF, to date, could not discharge its legal liability towards its long outstanding dues of employees who retired from 2008 to 2015.
The Ministry of industries and Production apprised that during this period, members of both the National Assembly and Senate Standing Committees on Industries & Production also visited PMTF and recognizing its status as a strategic public sector entity, have recommended the following:
De-listing of PMTF from the privatization list ;(i) bail-out package of Rs 3 billion which includes (a) clearance of loans through government funding; and (b) payment of out-standing dues of retired employees.
The Ministry of Industries and Production further apprised that although, PMTF's operations are now running smoothly, however, it is not in a position to generate extra funds to discharge its long standing personnel related dues of its retired employees. The management is facing constant threats from employees and the morale of the Company has deteriorated primarily because the uncertainty over payment of terminal benefits is adversely affecting the milieu of the company.
The Ministry of Industries and Production stated that PMTF should be financially supported and recommended one-time financial grant/loan of Rs 823.000 million to PMTF, in order to settle the payment of dues owed to its retired employees. The delay in payment of dues is adversely affecting PMTF'S operations, disturbing industrial peace and has the potential of creating a law & order situation.
During ensuing discussion, on a query of the Prime Minister, it was stated that outstanding dues of the retired employees of PMTF pertained to the period 2008-2015. Currently, the strength of existing and retired employees of PMTF is 1600 and 620 respectively.
Secretary, Finance Division stated that due to financial constraints, it would be difficult to grant Rs 823 million to PMTF. He further stated that liabilities of PMTF are not a charge on the federal government; therefore, PMTF may settle its liabilities by itself. The Prime Minister observed that he did not agree with the recommendation regarding de-listing of PMTF from the privatization list.
The Finance Minister stated that although the Federal Government has very little fiscal space after 7th NFC award, however, in view of strategic nature of PMTF in the engineering sector of the country, Finance Division may provide Rs 300 million to the PMTF. The Prime Minister agreed to the proposal.