PSM BoD to meet today to approve name of CEO

Pakistan Steel Mills (PSM) Board is to meet on Tuesday (today) to finalize the name of Chief Executive Officer (CEO) and approve annual audited accounts of the "sick" entity, Director's report for the year ending on June 30, 2018 and appointment of auditors for the year 2018-19, sources close to acting CEO PSM told Business Recorder.

Five out of the 36 applications received against the advertisement of position of CEO were short-listed by Board's HR Committee for interview to be scheduled next week.

To be presided over by Aamir Mumtaz, Chairman PSM, the BoD will also discuss the progress on revival of the entity as he is holding meetings with foreign investors with a few officials in the Ministry of Industries and Production (MoI&P) unhappy with him for his "exclusive" interaction with them.

Insiders claim that a delegation operating in the steel sector is also expected to visit PSM.

The BoD is expected to approve re-constitution of Board Risk Management Committee. PSM's debt settlement plan will also come under discussion in the light of a correspondence between Ministry of Finance, Ministry of Industries and Production and PSM.

Board Memo for determination of interest on provident fund of employees, shifting of security from stocks/inventory to PSM non-core/vacant land, pending salaries issue of Pakistan Steel Fabricating Company Limited (PSFCL) and allocation/leasing of 4.69 acres downstream industries is also on the agenda.

The sources said vacant plots and sale of commercial plots of Gulshan e Hadeed will also come under discussion in the light of recent instructions of the Supreme Court of Pakistan.

Suggestions from Board Members on how to reduce cash burn and improve balance sheet and on how to use the large number of employees in a productive way will be deliberated upon.

According to the Board Memo, due to financial crisis in Pakistan Steel Mills since FY- 2008-09, the employee's provident fund is depleted due to non-payment of employees' and employer's contribution, loan deduction and markup thereon by the PSM to the Provident Fund Trust. "While PSM accrued interest on provident fund is @12.50% up to 2014-15 approved by BoD," the memo adds.

It also states that in view of determination of interest rate for the year 2015-16, 2016-17 and 2017-18, PSM Board constituted a committee comprising Dr. Imranullah Khan (Chairman of Committee to examine markup on employees Provident Fund), and Munir Bana (Chairman BA&CF) and CEO-PSM. The committee recommended the following:

"10 years average rate of Defence Saving Certificates (DSC) may be used as benchmark interest @8.52%, 7.49% and 7.63% for financial years 2016, 2017 and 2018 respectively on provident fund outstanding principal amount."

The 404th meeting of PSM Board held on September 14, 2019 concurred with the recommendations of the committee and approved the allocation of markups at the rates of 8.52%, 7.49% and 7.63% on provident fund balances for the years 2015-16, 2016-17 and 2017-18, respectively.

Now, in view of determining the interest rate for the year 2018-19, PSM has proposed that the same benchmark (10 years average rate of Defense Saving Certificates) may also be used for allocation of interest rate on provident fund outstanding principal amount for the year 2018-19. The average rate of 10 years Defence Saving Certificates (DSC) for the year 2018-19 comes to 10.80%.

The Board will approve rate of interest on provident fund outstanding principal amount of 10.80% for the year 2018-19 (being average rate 10 years of DSC).

The Chairman Board maintains that the current status of PSM is not business as usual. The revival of PSM will necessitate making revival-related decisions on a war footing. However, those decisions will not duplicate the routine administrative and financial powers of the Chief Executive Officer. The position of the CEO is being filled.