Business

Tool factory’s bailout plea turned down

Approves Rs96m for salary payments on humanitarian grounds.

Our Correspondent March 30, 2015

The Economic Coordination Committee (ECC) approved only Rs96 million for the payment of three months’ salaries to employees of PMTF. STOCK IMAGE

ISLAMABAD: The government has turned down the Ministry of Industries’ demand to bail out another sick unit of Pakistan Machine Tool Factory (PMTF) – a parts producer of missile launchers and submarines systems – on the verge of closure due to liabilities running into the billions.

PMTF is a unit of the State Engineering Corporation (SEC), engaged in the production of machine tools, automotive transmissions, axle components, locomotive gears, pressure die cast parts and other products. The factory employs around 1,900 engineers, technicians, workers and service staff.

PMTF was the second unit for which the ministry sought a bail-out package after it wanted one for the Pakistan Steel Mills (PSM), which is also heavily engulfed in liquid liabilities. Like PSM, PMTF is also unable to clear salaries of its employees and lack of cash flows for executing normal budgeted activity. The Economic Coordination Committee (ECC) approved only Rs96 million for the payment of three months’ salaries to employees of PMTF.

The committee, in its meeting held on March 19, was further informed that PMTF’s total liabilities as of June 30, 2014 stood at Rs3.657 billion, which further increased to Rs3.717 billion by December 2014. These include current liabilities of Rs3.353 billion towards personal related dues and utilities, bank mark-ups, short-term liabilities of overdrafts and other accrued debts.

The ECC was also informed that in order to save this entity, PMTF had requested a bail-out package of Rs1.980 billion in the form of soft-term loans.

This package was to be utilised for meeting working capital needs, (Rs822 million), clearing bank dues to avail the essentially needed facilities (Rs335 million), and Rs823 million for retiring liabilities of retirees and existing employees.

The Privatisation Commission had advised the PMTF management to provide its proposed revival plan for Rs1.477 billion along with details of confirmed orders. However, it was proposed to approve Rs96 million on account of pending salaries with effect from January 1, 2015.

Published in The Express Tribune, March 31^st, 2015.

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