ISLAMABAD: The government has approved the handing over of Pakistan Machine Tools Factory (PMTF) to the Strategic Plans Division in an effort to turn around the ailing state-owned tools manufacturing unit.
PMTF, a unit of State Engineering Corporation, commenced operation in 1972. Its capabilities include manufacturing of conventional machines, components of automotive vehicles and a range of defence-related equipment.
Sales of the company, which peaked at Rs1.19 billion in financial year 2008-09, have been on the wane for years. A host of factors like global recession, lack of balancing, modernisation and replacement, and uncertainty over privatisation of the company contributed to its decline.
The government in 2011 approved an increase in PMTF’s credit limit by Rs1 billion, but it could not take the company out of distress. PMTF had potential orders of Rs3.94 billion, but due to shortage of raw material and other inputs, it was not in a position to execute the orders.
The Ministry of Industries and Production informed the Economic Coordination Committee (ECC) of the cabinet, in a meeting held last month, that PMTF’s assets as on June 30, 2018 were worth Rs6.92 billion and its liabilities stood at Rs5.59 billion. The liabilities included overdraft of Rs1.108 billion, accrued mark-up of Rs700 million and outstanding arrears of Rs865 million in salary and retirement benefits.
The ministry proposed three options for PMTF’s revival which included injection of Rs3.94 billion by the government comprising a soft loan of Rs2.105 billion and grant of Rs1.84 billion. The company management has projected a pre-tax profit of Rs195 million by financial year 2022-23.
In the second option, the Ministry of Industries has proposed privatisation of PMTF as after excluding liabilities it had assets of Rs1.337 billion. The ministry also proposed its handing over to the Special Projects Directorate without liabilities.
It told the ECC meeting that the two proposals of capital injection and privatisation to revive the factory had been tried in the past, but to no avail.
It was pointed out that the Strategic Plans Division had a track record of turning around ailing units and Heavy Mechanical Complex (HMC) was an example. Therefore, the ECC may consider the handing over of PMTF to the division with the condition that the company’s land would not be put to any other use and the share of production for civilian use would not be reduced.
A relief of Rs833 million may be allowed immediately to avoid any law and order situation, it was also suggested in the meeting.
The ECC approved the PMTF’s handover to the Strategic Plans Division without liabilities with the condition that its land would not be put to any other use. It directed the Ministry of Industries to submit details of the company’s assets and properties across the country along with their market worth.
The ECC also directed the ministry to present a plan for the disposal of surplus properties for its consideration.
Published in The Express Tribune, March 12th, 2019.
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