Pakistan Steel needs Rs.20 billion immediately: CEO

KARACHI: Chief Executive Officer of Pakistan Steel Mills, General (Retd) Muhammad Jawed on Friday said that PSM needs Rs 20 billion immediately to meet its capital requirement and to pay its immediate liabilities.

For saving this national asset from further deterioration, he said Rs 11 billion be released within seven days and Rs 9 billion in next 15 days.

The CEO Pakistan Steel unveiled these facts while giving a presentation to Federal Minister for Industries and Production Shahzada Ahsan Ashraf Sheikh during the Minister’s visit to Pakistan Steel here.

General (Retd) Muhammad Jawed said Rs 11 billion is required for raw materials and the remaining amount for payment of other utilities. He listed the reasons for the failure of PSM’s revival. These included insufficient working capital to complete the logistic cycle, delay in release of funds, difficulties in opening of L/Cs with National Bank of Pakistan, delay in revival of L/Cs facility of Rs 3 billion by NBP.

He said the business plan for revival of PSM was prepared by world renowned professional firm, M/s Deloitte, in November, 2011 and the plan in principle was approved by the Economic Coordination Committee (ECC) and later by the Cabinet in December 2011.

The salient features of the plan, he said, are:  The Fresh injection of Rs 11 billion will be made at a tentative interest rate of 14% to finance mainly working capital.  Repayment of principal amount be deferred for 3 years. The Government should pick up the interest cost for first 3 years, of Rs 5.12 billion against issue of shares– Out of outstanding Term Loan of Rs 8 billions, principal amount of Rs 5 billion (Rs 3 billion overdue as of June 30, 2011 and Rs 2 billion due during FY 2012) will be restructured and deferred for a period of two years. However, interest will be paid as per schedule.

He said that had the bail- out amount been paid in lump sum and the amount was sufficient enough, the situation would have been positively different.

Giving details of the bail- out packages, he said that in 2008-09, the amount of Rs 20 billion was demanded and 50% amount was received. Rs 6,492 million were utilised to pay old liabilities and Rs 3,506 million only were available as working capital.

He further said in 2009-10, Rs 25.133 billion were demanded. Rs 10.608 billion were sanctioned and Rs 9.907 billion received. Of this amount, Rs 4.277 billion was consumed to pay old liabilities and Rs 5.633 billion only was in balance as working capital. In 2011-12, Rs 11 billion were demanded and we got only Rs 6 billion, he said.

The CEO PSM said in 2012-13, 27.740 billion were demanded as bail-out package-IV, but Rs 14.6 billion were sanctioned and Rs 9.150 billion were received. Rs 6.050 billion were paid for old liabilities and only Rs 3.1 billion were left as working capital.

The CEO, PSM informed the Minister about the financial status of Pakistan Steel as on January 31, 2013.

The long term liabilities amounted to Rs 29.627 billion, deferred liabilities were Rs 13.480 billion, other liabilities figured Rs 45.287 billion, he said.