PAKISTAN STEEL

MILLS
Presented to:
Dr. Mohammad Hassaan Khan
PAKISTAN STEEL MILLS
INDIGO GROUP
Ali Raza Ansari
Waqas Tariq
Muhammad Bilal
Muhammad Nofil Ishaq
 BACKGROUND
 Nawaz Akhtar, one of the chairman of Pakistan
steel mills. The project was proposed in the first
five year plan (1955-1960)
 In 1956, Pakistan received a proposal from Soviet
union offering technical and economic assistance
of building proposed Steel mill
 In 1965, Pakistan steel mills cooperation was setup
as a company in public sector in accordance with
the companies act of 1913 with the objective of
establish and run steel mills in Karachi and other
parts of Pakistan
 The cooperation finalized the agreement with the
company in Soviet Union. Ayub khan had to resign
 Zulfiqar ali bhuttho become prime minister and he
decided to set up a steel mill at its current location
 Zulfiqar Ali Bhuttho laid the foundation of
Pakistan Steel mills
 Initiation of the Mills

 General zia ul haq stated it was, “the most greatest

and precious new year gift to the nation”.
 General Saeed Qadir declared mills as a,
“milestone on the road of economic freedom, all
around progress and national honour”
 Vitali S Smirnov ambassador of Soviet Union to
Pakistan said that the mills would the symbol of
friendship between two nations.
CURRENT STATE
 19,000 acres of land that houses 20 different plants
thermal power stations, forklifts, warehouses, conveyor
belts, railway yards and stockyards.
 All 20 processing plants shut
 5000 tones of rusted metal sits untouched
 2 way conveyor belt about 4.5 kilometer long is in
perfect shape but hasn’t moved an inch over year
 Large deposit of iron ore lie in an open yard
 12 railway coaches parked inside a wagon shape which
is used to fetch molten ore from one part of mill to
another
 2 blast furnaces at the iron making department stand idly
 Smell of gas still surrounds the area
 Plant had the capacity to produce 1.1 million tons of
steel per year
Circular debt of SSGC’s Reaction
• SSGC’s demand them to pay their bill of 35
billion rupees.
• After sending the final notice and cutting their
supply on June 10,2015 Pakistan steel mills shut
down.
• Restarting the plant very costly.
• It would take a lot of time and resources to reheat
the furnaces.
• Equipment will be rusted and new equipment
would have to be bought.
Mills
Performance
over the time
Mill • In 1999 steel mills made an annual loss of
performance 1.141 billion rupees,

/production • Total accumulated losses to 9.236 billion

rupees.
capacity • By 2005, the accumulated profit of 4.866
billion rupees

Production capacity
86%
In 2000-2001
76% 81%
In 1999-2000 In 2001-2002
92%
In 2002-2003
94% 89%
In 2003-2004 In 2004-2005
PRODUCTION
CAPACITY CHART
 PRODUCTION CAPACITY
CORRUPTION
• 2009-Federal Investigation Agency asked to
be involved to check charges of corruption
against the mills appointed PPP’s chairman
Moin Aftab Sheikh sacked by PM Gillani

• 2012-FIA dismissed on dissatisfactory

progress.
• NAB assigned the task. Again no progress.
HERO in the History of PAKISTAN STEEL MILLS-1992

• LT Gen Sabeeh Qamaruz zaman

• Appointed Pakistan Steel’s chairman in 1992
• After his appointment he immediately embarked
the plan to cut costs
• His first savings were in overtime, incentive,
medical, transport, etc.
• Within his 18 months of appointment,he becomes
able to bring down the total expenses from 223
million rupees to 165 million rupees
• In the era of sabeeh 1994, the mill is producing
their highest amount of production 95%
Issues faced by SABEEH (our hero)

• By unions, Russians staff and even the governments.

• Issue with Russian engineer
• Workers affiliated with political parties
• Ghost employees
 Click icon to add picture

Model

McKinsey 7-S Model

Model Implementation Steps

Step 1- Analyzing The problems

Step 2- Determining Solution
Step 3- Plan
Step 4- Implementation
Step 5- Review change
Model Implementation Steps

Step 1- Analyzing The problems

• Poor organisational culture.
• Poor governance.
• Inefficient observance of the rule of law.
• Inefficiency in all its processes.
Model Implementation Steps

Step 2- Analyze the current situation

• Rs 17 Billion loss annually.
• Employee number reduced to 9000 from 30000.
• Rs 20 billion package as golden handshake.
• PSM headed towards privatization.
Model Implementation Steps

Step 3- Plan
• Public-private partnership.
• Regular performance reports.
• Actual Implementation of objectives.
• Automation of work processes.
• Live below your means.
• Performance on large-scale assessments be explicitly and
publicly displayed
Model Implementation Steps

Step 4- Implementation
 Conclusion

There are biases and favouritism in the whole

process of privatisation, and how public servants
manipulate their positions to get undue benefits.
The PSM's current situation can be handled, with
the least possible damage done to its stakeholders
through a public-private partnership.
 Implications
• Transparency.
• Accountability.
• Assessment of performance will create motivation.
• Focus on achieving objectives.
• Better utilization of resources.
Hopefully the necessary steps will facilitate high levels of
achievement.