The Ministry of Industries and Production, showing concern over the dismal performance of Pakistan Steel Mills Corporation (PSMC), has asked the Corporation to make concerted efforts to increase productivity and profitability.
Sources in MOIP said that these instructions have been issued by the ministry after reviewing Pakistan Steel's performance during the first eight months, in which the PSMC has posted billions of rupees losses and suffered from low productivity.
In order to review the performance of Pakistan Steel Mills, a meeting was held under the chairmanship of Mian Manzoor Ahmed Wattoo, Minister for Industries and Production, in the last week of March 2009.
Minutes of the meeting made available to Business Recorder show that during the meeting the officials of PSMC, including its chairman, tried to convince the meeting members that the current dismal performance and losses of the mill are the result of the global economic meltdown and the declining trend in the prices of the commodity in world market.
PSMC officials informed that the Corporation has posted a loss of Rs 11.130 billion during the first eight months of current fiscal year against a profit of some Rs 3.445 billion last fiscal year 2007-08.
However, the Minister expressed deep concern over the low capacity utilisation and losses being incurred by Pakistan Steel and specifically mentioned that in the year 2004-2005 the profit had crossed Rs 6 billion. He further stated that the present performance reflected negatively on the working of the present Government and there is need to improve the position.
Pakistan Steel Chairman clarified that due to the global recession steel industry all over the world has been affected badly. Therefore, the performance of PSMC too has been badly affected. "Economic recession across the globe had forced European Union (EU), USA and India to impose 85 percent, 153 percent and 30 percent respectively as multiple duties on steel products to curb dumping of cheap imports and save their local industries," another official of PSMC informed the meeting.
The minister said that problems being faced by the corporation are understandable, however the need is for better planning to improve the efficiency of PSMC. He also asked the management of PSMC to gear up the activities and raise productivity of the mill during the remaining period of the current fiscal year to reduce the losses.
"This needs better planning and effective and timely administrative measures to reduce the impacts of adverse factors," the minister said. Chairman, Pakistan Steel responding to the observations of the Minister, stated that they had already initiated measures to enhance the profitability of the mill. While international prices of raw material ie iron ore and coal, which are indexed on 1st April every year, are expected to be lower this year and there will be sizeable saving on account of cost of raw material, he added.
It may be mentioned here that the Ministry of Production is considering to sell Pakistan Steel products through an open auction to determine their genuine prices, as at present PS is facing huge losses for under-cost sales of some items. In another move the ministry has proposed 15 percent regulatory duty on the import of three steel products to improve PSMC performance.