ISLAMABAD: Mismanagement is adding to the financial woes of the Pakistan Steel Mills (PSM) where salaries of employees and fixed overheads are being met through bailout packages from the federal government, observed the Auditor General Report 2018-19.
The PSM was at zero production level since 2015, but the mill management has not made any effort to recover Rs2.79 billion shown as taxes refundable on its balance sheet from the tax authorities, the report pointed out.
The report highlights loss of approximately Rs33.01m due to non-utilisation of a vacant space [10,081 sq ft] at FTC building owned by the PSM. The auditors have suggested that the land should be rented out to generate revenues.
The report has also pointed out the PSM was overstaffed and out of 312 sanctioned strength for XENs 1,638 were employed, while 1,166 AXENs were holding positions against 794 sanctions posts.
Besides, the mill has continuously failed to recover around 344 acres of its township land encroached by various entities and the value of land has been estimated at Rs3.44bn by the expert appointed by Privatisation Commission.
The report states that the PSM management shared the inquiry report in this regard with the auditors in January 2019.
“The audit team directed the PSM that recommendations of the inquiry committee be implemented immediately and take up the matter with the law enforcing agencies for early vacation of encroachment,” the report read.
However, no progress was reported till the finalisation of the Audit report 2018-19, it added.
The AGP report also highlighted cases of embezzlements and loss by the mill officers including loss of Rs6.11m due to misappropriation of weekly bazaar income, irregular payments of Rs21.38m in terms of house rent allowance to officers and employees.
The auditors noted unjustified medical bills amounting to Rs22.84m, other financial losses too have been highlighted in the AGP report, such as allotment of vehicles to non-entitled persons, etc.
The report also pointed out that there was no system of carrying physical count and valuing the scrap material in the steel mills as a result, such material was reflected in the financial statements at zero value.
The auditors had suggested that unallocated land should be classified as ‘investment property’ instead of an item of property, plant and equipment. The area of land should be classified, as investment property, but PSM did not identify so.
The mill made no formal estimation of useful life of each part of plant separately since inception and a single rate of 5 per cent is charged to whole plant for depreciation, the report discloses.
The report further said that no physical verification of immoveable fixed assets including plant and machinery was made since the inception of PSM and therefore, impact of this matter on carrying value of operating assets could not be determined.