CONSULTANCY PROJECT

REPORT

Pakistan
Steel Mill Karachi
By

Mohammad
Akram
CIIT/FA13EMBA044/CVC

Master in Business Administration

(Executive)

COMSATS Institute of Information

Technology Virtual Campus - Pakistan

DEDICATION

I dedicate this final project report of MBA (Executive) to my Beloved

Parents and Respected Teachers.

ACKNOWLEDGEMENT
All praises and appreciations to ALLAH Almighty who is the most gracious,
merciful & beneficent, who gave me the courage & talent to complete this task
successfully.
We are deeply grateful to respected supervisor Noor-e-Matin who has guided me
throughout this report and given us the opportunity to expand our practical
knowledge. We are very thankful to all the education sector representatives who
provided me necessary information about research
This project was challenging experience for me as it took a great deal of hard
work & dedication for its successful completion. Whenever I felt lack of
confidence, my supervisor supported me and my friends as well. Due to working
man, it was challenge for me to complete this project within deadline. I worked
very hard to complete this project. My class fellows, colleagues and friends who
supported me directly or indirectly in this journey I would like to thank all of
them. My office boss, whenever I need his help so, they supported me at every
step and I'm gratitude to him for his support and guidance.

Executive Summery
The purpose of the study was to analyze the situation and performance
of Pakistan steel Mill Karachi. Pakistan steel mill Karachi is one of
prestigious organization of the Pakistan. But from last there daces its
performance is not satisfactory. In this report I try to identify the factors
that put negative impact on its performance either it is financial or
production. Pakistan Steel Mills also known as Pak Steels, is a global
competitive, multi-billion state-owned

mega-corporation and

the

producer of the long rolled steel and heavy metal products and entities in
the country.

Headquartered in Karachi, Sindh Province of Pakistan, the

PSM is the current largest industrial mega-corporation having a

production capacity of 1.1-5.0 million tons of steel and iron foundries.
Built with the contributions of the Soviet Union in the 1970s, it is the
largest industrial mega-corporation complex, vastly expanded in an
enormous

dimensions

construction

inputs,

involving

the

use

of

1.29Mn cubic meters of concrete; 5.70Mn cubic meters of earth work;

and contains 330,000 tons of heavy machinery, steel structures and
electrical equipment's. In this report I have tried to provide best
recommendations

so,

that

organizational

performance

should

be

improved. Human resource management is one most important asset for

organizational performance, but Pakistan steel mill organization is not
paying attention towards employee training & development so, although
it has sufficient resources to spent and lack of effective management,
Planning and control these resources are not being utilize properly. One
of major reason is political influence on Pakistan steel mill Karachi

whenever government change so, it start to influence the organization.

There are also many other factors which contribute to decline
organizational performance and these factors are lack of management
competency, ineffective Recruitment and selection policies , lack of
finances and many other factors. If the following recommendations and
suggestions may apply and follows which are mentioned at the end of
this report. This report was integral part of this semester to pass this
subject. I tried to make this report effective and inject maximum
information so that it should provide complete picture of organizational
performance and its scenario of Pakistan steel mill Karachi according to
project guidelines and perquisites.

Contents
Executive Summery.................................................................................................
1.Introduction..................................................................................... 1
1.1 History............................................................................................................. 1
1.2 HUMAN RESOURCE DEPARTMENT AT A GLANCE..............................................2
1.3 Products........................................................................................................... 3
1.4 Marketing & sales setup.................................................................................. 4
2.Objectives of studying the organization
....5
3.SWOT
Analysis

5
3.1 Strengths.................................5
3.2 Weakness............................................................................ 6
3.3 Opportunities................................................................................... 6
3.4
Threats
......................................................................................... 6
4.Organizational Structure


7
5.Departmental Structure...................................................................9
6. Identification of Problem..................................................................................10
6.1 Appreciation of Macro-environment...............................................................10
6.2 Situation Analysis.......................................................................................... 10
6.3 Problem statement........................................................................................ 11
6.4 Impact & Scope of problem........................................................................... 11
7. Conclusion....................................................................................................... 12
8. Recommendations........................................................................................... 13
9. References....................................................................................................... 14

1. Introduction
Pakistan Steel Mills also known as Pak Steels, is a global competitive, multibillion state-owned mega-corporation and the producer of the long rolled
steel and heavy metal products and entities in the country. Headquartered
in Karachi, Sindh Province of Pakistan, the PSM is the current largest
industrial mega-corporation having a production capacity of 1.15.0 million
tons of steel and iron foundries. Built with the contributions of the Soviet
Union in

the

1970s,

it

is

the

largest

industrial

mega-corporation

complex, vastly expanded in an enormous dimensions construction inputs,

involving the use of 1.29Mn cubic meters of concrete; 5.70Mn cubic meters
of earth work; and contains ~330,000 tones of heavy machinery, steel
structures and electrical equipment's.
A controversial attempt was made to privatize the steel mills to global
private

ownership

under

counter-measure Privatization

Programme of Prime minister Shaukat Aziz. All attempts were thwarted by

the Supreme Court which launched a full-fledged investigation against the
attempts to privatize as private sector and lost the control of the steel mills
in matter of weeks. In spite of its enormous size and expansion, only 18% of
the capacity was in use and the steel mills requested a bailout plan of
Rs.12 billion to prevent its closure; the bailout plan was dismissed by the
government. Finally, the steel mills was brought back to governmentownership management under an inverse counter-measure Nationalization
Programmed of Prime Yousef Raza Gillani and since then, its operational
plant capacity has

been reached to

government financial assistance.

30%50%

after seeking the

1.1 History
After independence in 1947, it did not take long for Pakistan to come to
the realization that progressive industrial and economic development would
be impossible without the possession of a self-reliant iron and steel making
plant. The dependence on imports would cause serious setbacks to the
country along with an extortionately high import bill which would be
impossible to support. The initial idea for a domestic iron and steel mill was
put forward in the first five year plan of Pakistan (1955 - 1960). Debates
over the manufacturing process, supply sources of the requisite machinery
and raw materials, plant site, domestic ore versus imported ore, ownership
pattern, product mix and above all foreign financing credit kept the project
on hold for a considerable time.
In 1968 besides other factors, it was considered by the Government of
Pakistan that a basic steel industry should be established in the public
sector, as public sponsorship of the project would enable integrated
development of the steel industry in the country. In light of this, the
government decided that the Karachi Steel Project should be sponsored in
the public sector for which a separate Corporation under the Companies Act
be formed. As a result on the 2nd of July, 1968 Pakistan Steel Mills
Corporation was setup as a private limited company in the public sector in
accordance to the Companies Act of 1913, with the objective to establish
and run steel mills at Karachi and other places in Pakistan. In January, 1969,
Pakistan Steel concluded an agreement with V/O Tiajpro export of the then
USSR for the preparation of a feasibility report into the establishment of a
steel mill at Karachi. Subsequently in January, 1971 Pakistan and the USSR
signed an agreement under which the latter agreed to provide technofinancial assistance for the construction of a coastal based integrated steel
mill at Karachi. The foundation stone for this gigantic project was laid on the
30th of December, 1973 by the then Prime Minister Mr. Zulfiqar Ali Bhutto.
The mammoth construction and work of the integrated steel mill, never

experienced before in the country, was carried out by a consortium of

Pakistani construction companies under the supervision of Soviet experts.

1.2 HUMAN RESOURCE DEPARTMENT AT A GLANCE

Pakistan Steel, the largest public enterprise in Pakistan, in addition to its

vital role of industrialization in the country as the requirement of developing
a large contingent of skill manpower. To achieve this goal, the corporation
established a full-fledged Human Resource Development Department with
the task of planning; estimating, training, career planning and development
of manpower to the various integrate units of Pakistan Steel. The induction
of employees as a large magnitude coupled with functional diversities such
as those of an integrated Steel Plant and in calculation of necessary
practical skills in all of its multy-dimension facets as to made it necessary
for this department to develop comprehensive and all-encompassing blueprint for manpower development.

in the process of recruitment, training and development of manpower to

Pakistan Steel, the department as topped all the available resources in the

country, depended heavily on source aboard and creative infra-structural

facilities within the premises of Pakistan Steel to provide suitable
environmental and physical conditions for training and acquisition of
necessary practical skills and socialization within corporation environment
with personal initiative, prolonged experience and help from Soviet Union
and other aid-giving agencies like UNDP, UNIDO, and ILO, we have reached
a stage of maturity where we can handle any assessment of manpower
development for public enterprises, both in Pakistan and abroad. Manpower
requirements of Pakistan Steel have been tune of 13,000 to

14, 000

personals, inclusive of both categories of technical and non-technical

employees. The available training facilities within the country did not have
the capacity to provide such a large number of trend manpower according
to schedule of requirements. The main reason was the non-existence of
training facilities related to various specialized field of an integrated steel
plant in the training institute of Pakistan.

1.3 Products

Pakistan Steel billets

Coal Tar
Cold rolled
Hot rolled
Pig iron
Formed Section

 Coke
Oxygen & nitrogen
Coal Tar by product
Boulder Slag (By product)

1.4 Marketing & sales setup

In order to sell Pakistan Steels products profitably and in an efficient manner
the following procedures have been adopted under the guidelines of our
Marketing Department. To ensure the smooth flow of our products throughout
the country and to achieve on-time deliveries to our valued customers
Pakistan Steel has established Zonal Sales offices at strategic cities across
Pakistan.

Fig no. 1

2. Objectives of studying the organization

Pakistan Steel Mill is considered backbone to support country's economy and there are lots of
factor I have selected this organization to study. One of the main reasons that being a student of
Executive MBA that the purpose of the report is to investigate that why Pakistan steel Mill
Karachi is performance is not improving but as compare its competitors like Tewarki steel mill
and others as well. I consider this is best opportunity for me to investigate that impact of steel
sector on economy of Pakistan. This report will highlight the basic objectives of studying
organization. Steel industry play vital role in context of employment generation and to boost
GDP performance of the country as well. But from last 20 years it has been observed that
Pakistan steel performance is not being improved and it is going down to down. The purpose of
studying the organization is that what are the factors which are putting negative impact on its
performance and how the organizational performance can be improve. When Pakistan steel mill
was at peak in its performance so, at that time it was included in list of best producers of steel
in the world. But now there are countless factors that cannot be ignored and in this report I
would like to create purposeful results.

3. SWOT Analysis
A SWOT analysis alternatively SWOT matrix is a structured planning method
used to evaluate the strengths, weaknesses, opportunities and threats
involved in a project or in a business venture. A SWOT analysis can be
carried out for a product, place, industry or person. It involves specifying
the objective of the business venture or project and identifying the internal
and external factors that are favorable and unfavorable to achieve that
objective

3.1 Strengths
Strong Supply chain
Economies of scales

 Asset leverage
Financial Leverage
Advantage of size
Pricing power
Technological advantage

3.2 Weakness
Work inefficiencies
Weak brand
Weak Management
Lack of employees Training & development
Lack of effectiveness
Human Resource attrition
Outdated technology
High debt burden
Weak customer service

3.3 Opportunities

 New ventures with competitors

Increase product line
Plant expansion
Training & development of employees
Expansion of plants in other cities

3.4 Threats
Political risk
Government Regulations
External forces
Internal employee groups
Auction signal.

4. Organizational Structure
Pakistan Steel Management

CHIEF EXECUTIVE OFFICER

MAJOR GENERAL (RETD.)

ZAHEER AHMED KHAN
Tel :

0092 (0)21 99264155,

0092 (0)21 34750167

Fax:

0092 (0)21 34750166

Email:

ceo.@paksteel.com.pk
CEO Profile

PRINCIPAL EXECUTIVE OFFICER

PRODUCTION DIRECTORATE

WASIF MEHMOOD
Tel:

0092 (0)21 34750391

Fax:

0092 (0)21 34750835

Email:

Production@paksteel.com.pk
PEO(Prod)'s Profile

PRINCIPAL EXECUTIVE OFFICER

A & P / COMMERCIAL DIRECTORATE

HAMID PERVEZ
Tel :

0092 (0)21 99264101

Fax:

0092 (0)21 34750163

Email:

commercial@paksteel.com.pk
commercialsectt@gmail.com
PEO (Comm./A&P) 's Profile

ACTING PRINCIPAL EXECUTIVE OFFICER

(HRD / BMR&E/ P&S) DIRECTORATE

ABSAR NABI
Tel:

0092 (0)21 34750908

0092 (0)21 34750988

Fax:

0092 (0)21 34750939

Email:

hrd@paksteel.com.pk
procure.stores.psm@gmail.com

ACTING PRINCIPAL EXECUTIVE OFFICER

TECHNICAL SERVICES DIRECTORATE / C.E. ( PSFCL )

CAPT. (R) SHAMSI HASAN

Tel:

0092 (0)21 34750903

Fax:

0092 (0)21 99264333

Email:

ts@paksteel.com.pk

ACTING CHIEF FINANCE OFFICER

MUHAMMAD ARIF SHAIKH
Tel:

0092 (0)21 34750901

Fax:

0092 (0)21 34750171

Email:

dirfinance@paksteel.com.pk
AC

The Bank needs a grieveance handling department that should be repsponsible for
handling the internal problems of the employees.
Page 272 of 300
There is a dire need of more IT related personnel as the staff is not in touch with IT.
Thus due to lack of a computer specialist, assistance from the head office is seeked
time and again, which wastes time.
People have incomplete knowledge about Islamic banking and thus they can not
easily diffrentiate it from conventional banking. They have no reason to switch to
Islamic banking and the promotional activities of the BIPL are not as much effective.
Under such conditions the promotional activities of the BIPL need to be improved.
The bank should create awareness in people about how Islamic banking is different
from conventional banking and what are the benefits of islamic banking instead of
conventional banking.
BIPL is a newly established bank and its setup is only in Pakistan, so it is at a
comparitive disadvantage with those banks that have overseas branch networks
and huge number of investors.
Decision making is Centralized at BIPL, this can cause problems in the organization
and it wastes time in many operations of the bank.
BIPL Bahawalpur Branch faces the problem of Lack of space and furniture facility. At
rush or peek hours or busy days it causes inconvenience for staff, customers and
internees as well.
The seating arrangement and the furniture of wating areas is not of such a good
quality or design that the customer feels himself well accomodated or comfortable.
This is the reason customers avoid to sit in the wating area.
Lack of staff is clearly noticed in BIPL Bahawalpur branch.
Bank has no grievance department for the internal problems of employees.
Page 273 of 300
There is no research cell in the bank, which should be engaged in gathering the
information about the present actions of its competitors and demands of its
customers.
Lack of female staff can be noticed in almost all BIPL Branches. This creates some
problems for female (pardanasheen) customers. Women are reluctant to give their
personal information to or in the presence of male staff.
BIPL has no marketing and HR department at the branch level.
The air conditioning units in the branch are not capable enough to cool the huge
hall in scorching summer heat which is clearly expressed by many customers as a
huge inconvenience. Thus there is a need for another aircondetioning unit in the
hall.

Supplies do not reach the branch on time and as a result the customers suffer
delays.
The computer systems in BIPL are very slow and another reson for the slow speed is
that the router was damaged due to power fluctuations. The IT expert needs to find
a way to speed up the system speed. Because of slow speed, customers have to
wait to give their biomatrics and get their Pay Orders issued.
Speed of the intra-net is too slow and thus employs dont use it and waste such a
precious resource.
The Bahawalpur branch has no lockers facility for its customers.
Opportunities:
BIPL provides its customers many services free of cost, its products promise
customers maximum possible benefits and uses the latest technologies. These
differential advantages give BIPL an edge over all other conventional and Islamic
Banks.
BIPL is currently a local bank, it needs to go multinational. BIPL should start opening
branches all around the world in the world s biggest financial markets like USA, UK
and UAE. A large number of Muslim communities are living in these countries who
are interested in authentic Islamic banking.
Bahawalpur Branch of Bank Islami needs to have a proper parking for customers
and the staff to park their vehicles.
Bank can offer special financing schemes for farmers especially in agrarian cities.
The Bank should increase its advertising programs by using all available Medias of
advertising like TV, cable, radio and bill-boards to increase its business by providing
more information to people about Bank Islami. It should also bring some new
elements in its advertising campaigns like how Islamic banking is different from
conventional banking, what are the unique features of Bank Islami and what are the
benefits of islamic banking instead of conventional banking. BIPL needs to show its
differential advantages to its current and potential customers through
advertisement.
The trend of Islamic banking is on the way of tremendous popularity and spreading
out to the whole world. If BIPL establishes a vast branch network throughout the
world then it can make progress in leaps and bounds as compared to other banks.
Page 275 of 300
Its an era of information technology and due to heavy competition in the market,
only the fittest will survive (survival of the fittest) only those organizations can
survive that follow new technology and keep themselves up to date with the latest
developments in technology. BIPL has all the competence and capabilities to avail
maximum benefit out of the new technology that they are using for their banking
setup.

Previously and even now many people were not in the favour of conventional
banking system due to Riba. BIPL provides a chance to people to do Riba free
banking. People are now switching from conventional to Islamic banking. This
increasing trend towards Islamic banking is a grand opportunity for BIPL.
Pakistan is a country with Muslims in majority. Thus there is a strong potential of
Islamic banking in Pakistan because it is already working at its peak in some Asian
countries and many other Islamic countries. This proves to be another opportunity
for BIPL to make sky rocketing progress.
BIPL has an opportunity to hire young highly qualified and talented candidates who
do not prefer to work with those banks who deal in Riba. This is a great
opportunity for BIPL to attract fresh minds and competitors Employees as well.

Threats:
Many new Islamic banks and islamic sections of already existing banks are now
being established in Pakistan. BIPL will face intense competition in the coming year.
Many other banks now a days are providing services based on latest technologies
although they are not providing all latest services like free online banking, etc.
These banks can prove to be a threat in the long run.
Now the world is a global village so competitors may arise from anywhere in the
world at any time. Many commercial banks are now dealing in Islamic modes of
financing and Islamic Banking like bank Al-Falah, etc. These banks have an
established goodwill in the market and many customers would prefer these banks
when they will deal in both conventional and Islamic banking. These banks can also
attract BIPLs existing customers thus they are a great threat for BIPL.
Usually people have a mindset that there is no difference between Islamic banking
and conventional banking and Islamic banks are deceiving under the name of Islam.
These wrong perceptions need to be removed otherwise they can also cause
problems for BIPL.
Meezan Bank Limited is the premier Islamic bank and providing its services nearly in
the same way as BIPL is providing and it also has a strong network of branches all
over Pakistan thus resulting in a reduction in overall market share of BIPL.
Due to the recent international financial crisis, terrorist activities in Pakistan and the
recent severe floods in Pakistan has brought the economy of the country to an
almost stand still. It means there is less investment and low financing demands in
the banking sector.
As bank does not possess a large branch network so customers face inconvenience
in dealing with the bank.

Law and order situation in Pakistan is shoddier discouraging and is totally reducing
investor confidence to invest anywhere.
High rate of taxes on banking companies.
In the near future the world is going to be a free trade zone so the concept of
survival of fittest will be in action.
Due to terrorist activities in Pakistan the economy is moving very slow. It means less
investment and as a result low financing demand.