Loss-making Pakistan Steel Mills (PSM) has sought Rs25 billion financial bailout package from government to revive premier industrial enterprise to enhance its output to 1.1 million tonnes from 215,000 tonnes currently. An official source said a five year business plan developed by international consultancy, Deloitte, which has cash flow estimates for each succeeding year, has been submitted to Cabinet Committee on Restructuring (CCOR) for consideration and approval. Committee is likely to discuss the plan within next few days.
Committee will be also recommending three names to Prime Minister, appointing one of them as chief executive of the company. Appointment of new chief executive and approval of new business plan will allow government to conclude an investment deal with Russia that has assured an investment of $500 million in upgradation of the mill.
Mill was built with financial and technical cooperation of Russia. Government initially plans to enhance output to 1.5 million tonnes that would be subsequently enhanced to over 3 million tonnes. CCOR, he said, was likely to provide financial assistance from banks which would enable PSM management to enhance output to maximum level of 1.1 million tones. without enhancing output there was no other method available to bring the company out of current financial crisis he added. PSM has incurred losses of Rs26 billion in fiscal year 2008-09, Rs11 billion in 2009-10 and Rs11 billion in 2010-11. Government helped the entity by rescheduling its loans of Rs7 billion and providing cash assistance of Rs3 billion in fiscal year 2009-10. While it helped in restructuring loans of Rs8 billion and injected a cash assistance of Rs2 billion in 2010-11. Source said government had injected close to Rs5 billion in cash during last two fiscal years but PSM output had remained less than 20 per cent which was keeping the company in the red. Company management claims that a production level of 70 per cent was required to attain break even level. PSM meets close to one fourth of steel requirements in the country.
PSM, he said, was stressing for providing full assistance of Rs25 billion in one go instead of installments as they impede efforts of raising output of the entity to maximum limit. Company has more that 17,000 employees and even their per month salary bill was more than Rs700 million. Fixed per month cost was a heavy burden that required a huge financial assistance of Rs25 billion for a turn around in the entity.
