Pakistan Steel Mills (PSM) during the fiscal year 2005-06 showed a profit of Rs 705 million, nearly 33 percent of the targeted Rs 2.125 billion set by the government.
Its capacity utilisation also lagged behind and stood at 62 percent against target of 90 percent, reason being serious operational problems it had been facing since May 2005, the ministry of finance (MoF) reported on Thursday.
The serious operational problems since May 2005 were, delay in capital repair, which restricted the capacity utilisation during the last three-quarters. However, capital repair of coke oven batteries was completed by June 2006, consequently, the capacity utilisation for production of steel had started increasing. Financial improvement plan (April-June-2006) released by finance ministry says that in view of capital repair of coke oven batteries, PSM although could not achieve the desired capacity utilisation, still present utilisation of 87 percent in the fourth quarter shows a positive sign from only 34 percent utilisation in the first quarter with an overall picture of 62 percent for the FY 2005-06.
Speaking about this, the ministry said that if the trend in increased capacity utilisation maintained, "it is highly probable that the anticipated targets for next FY 2006-07 will be achieved in terms of capacity utilisation". Though overall PSM profit during the fiscal showed a decline, its performance recorded significant improvement in the last quarter (April-June) by earning profit of Rs 1.503 billion against the target of only Rs 531 million. At the end of June, it held Rs 10.445 billion surplus cash as against the target of Rs 11.014 billion.
It further says, "for the quarter under review, the total cost factor (Rs 6.305 billion) has also shown decreasing trend as compared to the projected costs (Rs 7.446 billion). Increase of cost factor, in third and fourth quarters, transpires the effect of repair work (completed in June 2006) which increases the input cost for further production".
Its total net sales, during FY 2005-06 stood at Rs 23.858 billion or 72.2 percent of the projected value of sale (Rs 33.054 billion) for the year under review. Moreover, a target of Rs 8.264 billion was fixed for sales, and other income, during the fourth quarter (April-June 2006). The corporation earned net sales of Rs 7.816 billion, which are Rs 448 million less than its target.
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