Government of Pakistan
Privatization Commission

PRIVATIZATION OF PAKISTAN STEEL MILLS MOVES AHEAD

Islamabad, July 20, 2005

The Privatization Commission (PC) initiated the formal process for the privatization of Pakistan Steel Mills Corporation (PSMC) with a kick off meeting chaired by Mr. Tahsin Khan Iqbal Secretary PC at PSMC Bin Qasim, Karachi today.

The meeting reviewed the transaction structure and other steps regarding the privatization process of PSMC and decided to ensure the timely completion of the transaction as already targeted by December 31, 2005. Chairman PSMC Lt. Gen. (Retd) Abdul Qayyum and the senior officials of PC also attended the meeting. The Financial Advisor for PSMC gave a bird's eye view of the plant including brief history, operational efficiency and detailed balance sheet. Participants of the meeting visited few plants of PSMC.

The government has decided to privatize PSMC by offering 51 % to 74 % equity stake with management control to a strategic investor through a transparent and competitive process. It is inline with the government's endeavor to promote the development and modernization of the steel sector through liberalization, deregulation and private sector participation.

The PC has recently appointed Citigroup Global Markets Limited, UK to act as Financial Advisor along with a consortium of technical, legal and accounting/ tax/ HR advisors comprising respectively Corus Consulting Limited, Orr Dignam & Co and A.F. Ferguson & Co.

PSMC is a wholly owned GoP company located 40 km south east of Karachi at Bin Qasim. PSMC commenced commercial operations in various phases from 1981 through 1985. The company has a total workforce of approximately 13200 with a production capacity of 1.1 million tones of steel per annum. With a vast total area of 18,600 acres, there is considerable room for expansion. In the concluding financial year 2004-05 PMSC has created new records of productivity, sales and profit. With average capacity utilization of 89 %, PSMC attained aggregated sales of Rs.32.11 billion against a budgeted target of Rs.26.79 billion and net after tax profit of Rs 6 billion. PSMC also deposited Rs. 8.9 billion as sales and income taxes in the financial year and wiped out losses of over Rs 9 billion accumulated in the last 25 years.

Source: http://www.privatisation.gov.pk/Handout/HO-AR-05/July-05/HO-2072005%20Privatisation%20of%20Pakistan%20Steel%20Mills%20Moves%20Ahead.htm