KARACHI, Dec 13: Privatization Commission (PC) on Thursday offered for sale the land of Pakistan Engineering Company Limited (PECO) located at Badami Bagh, Lahore.

The land, known as “Badami Bagh Works” has been offered on ‘as is where is’ basis through a competitive process, sources at PC said. Pre-bid conference is scheduled to be held on January 24 at Islamabad to facilitate the prospective bidders, and the date for bidding has been set at January 28, 2002.

The land has been offered by PC in three lots—lot A1, A2 and B. Lot A1 has an area of 19 kanals 4 marla; lot A2 has an areas of 4 kanal 10 marla and lot B consists of 13 kanal one marla. All of that is located in the South of Lahore Railway station and in the North of Badami Bagh Railway station.

Earlier, chairman PECO, Mian Suhail Aslam, had informed the shareholders in his report of mid-November that the PC was actively working to sell Badami Bagh land, proceeds of which would be utilized to pay SBP bonds and other government departments liabilities. “The financial position shown in the balance sheet, shall greatly improve after the adjustment of these liabilities,” the chairman said.

PECO, once a giant industrial complex in sound financial health, fell upon bad times, perhaps from the start of the last decade. The company has been accumulating losses, which including the loss of Rs203 million for the latest year, stood at Rs1.411 billion on June 30, 2001. The share in PECO is publicly traded since 1955; the price now carries a huge discount of 70 per cent.

Major products of the company included electricity transmission and communication towers, bicycles, electric motors, pumps and steel rolled products, etc.

During financial year 2000-01, the company pulled shutters on the Machine Tools and Power Loom shops, while the bicycle shop was operated to consume the available inventories. Electric motor shop operations were curtailed to produce motors to be coupled with pumps only. All of which showed considerable shrinkage of activity.

Against a tiny paid-up capital of Rs57 million, the accumulated deficit looks fearfully huge. The company had incurred a gross loss of Rs60 million for the latest year, which was made worst by about an equal sum in financial charges. Auditors noted that the company was under heavy debt burden and its long term and short term liability to the government and its institutions stood at Rs1.565 billion in the form of principal and outstanding interest.

According to PECO sources, the Federal government had approved a rehabilitation plan in consultation with Privatization Commission to improve the viability of the company, several years ago.

Under the plan Badami Bagh Works was closed on March 22, 1995 and plant, machinery, stocks and land were offered for sale in June, August and September 1995 in convenient lots as complete production unit and also separately. The offers received were lower than the reserve price and disposal could not be made.

Consequently, PC advised shifting of all machinery and structure to Kot Lakhpat Works so that the land could be offered for sale. Bidding for the sale of company including Badami Bagh was held on April 9, 1999 but no satisfactory offer was received.