Pakistan Steel Mills (PSM) external auditors have reportedly calculated Rs 5.5 billion financial impact of the agreement with Collective Bargaining Agent (CBA) on its balance sheet, well-informed sources in PSM told Business Recorder. PSM has incurred Rs 19 billion financial loss in nine months of current fiscal year and analysts believe it would cross Rs 21 billion mark.
The sources said, Naresh Kumar, External Auditor PSM briefed the Board of Directors (BoD) recently that the audit committee had a detailed discussion on audit accounts and the major point raised was the CBA agreement which was announced by the government in August 2012. According to him, it was a subsequent event and no financial impact has been taken in financial statements and this issue is in detail in note 46 of the financial statements and 16 of cover letter.
The underlying principle was that the money was to come from government and the Board noted in their meeting held on October 15, 2012 that the disbursement of grant to workers in respect of Charter of Demand (CBA-PSMCL Worker''s Union) and the revision of pay scale of officers and future fulfilment of CBA agreement and relief for officers in excess of grant received would be subject to further grant by GoP or attaining financial viability by the Corporation.
He further explained that as per management calculations, financial impact of revised scales from earlier period would be approximately Rs 5.502 billion for the year 2011 and 2012 which is much more than GoP grant received. Therefore, the external auditors recommended that the Board should clarify whether salaries and allowances would continue to be paid as per the revised pay scales in excess of grant received or the benefits would be deferred till further grant would be received from GoP or the Corporation would achieve financial viability.
Chief Executive Officer (CEO) Major General Muhammad Javed (retired) who claims to have cordial relations with all the unions representing PPP, MQM and Jamaat-i-Islami, informed the Board that without any formula how can PSM enhance pay of employees with pay fixation. "We adopted methodology for disbursement. We are paying all the employees from the Rs 2 billion grant," the sources quoted him as saying.
The Board noted the CBA agreement and increase in officer''s pay scales and resolved that future fulfilment of CBA agreement and relief for officers would be provided by GoP or shall be borne by PSM on attaining financial viability in conformity with the earlier resolution passed by the Board on October 15, 2012.
The decision of the Board is as follows "the workers will be given Rs 1.186 billion in lieu of their Charter of Demand for the year 2010-2011 and officers to be given Rs 807.860 million over a period of 20 months. The timing of disbursement would be decided by PSM Management and the CBA. Board further resolved that the future fulfilment of CBA agreement and relief for officers would be subject to grants by GoP or attaining the financial viability by the PSM."
The present disbursement to workers and officers is being made out from the Rs 2 billion grant extended by the GoP with another Rs 1 billion grant to be released when PSM crosses 50 percent production mark. The total impact calculated by the External Auditors is worked out to be Rs 5.5 billion in terms of Audit Note No 46 and cover Note No 16 to be shown as liability in the books of accounts in the year 2012-13 out of which Rs 2 billion is in hand another 1 billion is to follow as grant. The Board has advised PSM Management to approach the GoP for provision of remaining amount of Rs 2.5 billion for the purpose.