Strategic Planning_01

Strategic Plan 2023-28 PSPC VISION 2028 PSPC VISION 2028 Strategic Plan 2023-28

2 VISION PAKISTAN SECURITY PRINTING CORPORATION MISSION To be a globally recognized security printer having state of the art technology, customer satisfaction and highly skilled and engaged human resources To produce high quality banknotes and other security products at competitive price for domestic and international customers.

3 CORE VALUES Integrity l We stand behind our commitments l We perform our duties professionally and without personal bias l We perform our duties in an objective, non-partisan and non-ideological manner l We ensure the confidentiality of information we receive l We do not use our positions to personal advantage l We are honest while giving opinion and advice Innovation l We promote new ideas and challenge status quo for continuous improvement l We believe in transformation and strive for achieving excellence l We strive for constructive change l We make innovation both credible and appealing to the people we work with l We aim to impart and implement technology to improve stakeholders’ experience l We are committed to manage any impediments for adoption of technology Inclusion l We treat diversity as our strength l We value people for their diverse skills and ideas l We promote inclusivity within and outside the organization l We believe in gender mainstreaming l We respect and appreciate differences in age, gender, ethnicity, education, physical abilities, race, and religion among individuals l We maintain a work environment of respect and support People-Centric l We put people at the heart of policies and actions l We encourage honest and open engagement with stakeholders l We treat people with kindness and compassion l We are an equal opportunity employer l We foster a culture where employees feel valued l We believe in fair work life balance Concern for Environment l We believe in conservation of energy and resources l We care about the health and well-being of our people l We believe in net zero carbon emission l We keep our workplace neat and clean l We encourage initiatives to improve the work environment l We aim to become a paperless organization

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5 CONTENTS Message from Managing Director 9 PSPC’s SWOT Analysis 11 Strategic Plan at a Glance 12 Strategic Plan 14 Introduction 14 Major Challenges 14 Strategic Goals 16 SG01- To Produce and deliver high quality banknotes as per the need and expectations of State Bank of Pakistan while meeting or surpassing the industry standards 16 SG1-TO1: Printing Capacity Expansion to meet the growing banknote needs of SBP-Establishment of a new alternate state of the art Banknote manufacturing site with Capacity of 2500 million pieces. 17 SG1-TO2: BMR of Karachi Plant/Unit 17 SG1-TO3: Infrastructural Development and Business Sustainability 20 SG1-TO4: Environmental Sustainability/ ESG (Environment, Social Governance) 23 SG1-TO5: Digital Transformation 24 SG1-TO6: Organization Strengthening and Cultural Transformation 26 SG02- Tapping the Export Market 29

6 CONTENTS SG2-TO1: Establishment of Sales and Marketing Function 29 SG03- Expanding to Other Security Products (OSP) Business 29 SG3-TO1: Development of strategic plan for NSPC 29 PSPC VISION 2028- Key Success Factors and Deliverables 30 Monitoring & Reporting Mechanism of Strategic Plan 32 Sensitivity Analysis 32 Cost Estimates 33 Annexure: Cash Out Flow and IRR 36

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8 PSPC VISION 2028 STRATEGIC PLAN 2023-2028

9 Message from Managing Director I am pleased to present the Vision 2028 plan for Pakistan Security Printing Corporation (PSPC). The plan envisages a complete transformation of PSPC into a modern and state-of-the-art security printer with the capacity to print high-quality next-generation banknotes. The plan’s tagline, “Technological & Cultural Transformation” highlights the company’s key focus on the complete revamp of technology through equipment upgradation and capacity enhancement with the latest technology, elimination of manual processes through automation, and enhancing employee engagement through transparency, inclusive management, and fair & objective performance management systems. This plan discusses the challenges currently being faced by the PSPC and its plan and strategy to address these issues. The main challenges identified include old and obsoletemachinery, capacity constraints, a single site production facility, outdated infrastructure, lack of technological developments, manual quality control procedures, gaps in internal security, lack of skilled and motivated workforce, and operational issues with National Security Printing Company (NSPC). To address these challenges, the plan outlines our strategy and initiatives to be undertaken during next five years. The plan envisions increasing the production capacity to over 6500 million pieces in the next 5 years from the existing about 4000 million pieces per annum to meet the growing banknote needs of the State Bank of Pakistan (SBP), which is likely to increase to around 6500 million pieces by 2028 assuming a 10 percent annual growth. As Pakistan is predominantly a cash economy with about 80 percent business transactions settled in cash, this growth in the currency demand is highly likely despite extensive focus of the central bank on digitization of payment system. While the capacity enhancement will primarily be achieved through the new production facility in the upcountry, in the interim an offset and an intaglio machine will be added in Karachi to meet the demand growth during construction and installation phase of the upcountry production facility. This new line to be added in the existing unit at Karachi would be shifted to the new production facility in the up-country in year 4-5. The proposed new unit in the up-country will house a paper mill to produce the banknote paper, the printing unit, and the ink manufacturing unit and cater to the banknote needs of Central and Northern regions. It will have the latest technology for producing security paper as well as printing next-generation banknotes. The initial installed capacity of the paper mill will be 2500 tons per annum expandable to 5,500 tons whereas the printing unit will have a capacity of 2,500 million pieces per annum with the provisions to double this capacity. It will also have automated and optimized business processes and the technology for printing the latest security features like spark etc. The upcountry unit besides increasing the printing capacity will also provide the much-needed backup to the Karachi Unit enabling PSPC to continue printing even in case of unavailability of the Karachi Unit and vice versa. The process for selecting the site for the proposed plant is at an advanced stage and is likely to be completed by September 2023.

10 While the proposed unit in the upcountry will be designed on modern lines with state-of-the-art technology and highly optimized business processes, the existing unit in Karachi will be modernized and upgraded on similar lines. It will almost mirror the technology, infrastructure, business processes, and management and governance systems to be introduced in the up-country unit. The vision 2028 accordingly envisages several projects for a complete transformation of the Karachi unit into a modern and state-of-the-art security printer. The key projects include a complete overhaul or replacement of the old printing and finishing machines, elimination of manual quality control system including the manual examination of sheets, procurement of new machines (technology) for printing banknotes with the latest security features, redesigning the shop floor to improve the physical environment and optimize the business processes, major revamp of electrical infrastructure and an advanced HVAC system to ensure a suitable control environment for printing. Further, in order to ensure smooth, secure and hassle free storage and delivery of banknotes to SBP offices across the country, the finished note vault will be modernized and mechanized along with remodeling of remittance boxes and upgradation of the delivery and distribution infrastructure for live monitoring of the treasure movement. Similarly, the IT infrastructure, which is currently not in great shape will be fully revamped with the support and guidance of SBP IT Group. Although we have deferred implementation of Tier 1 ERP, all business functions will be automated and integrated largely using internal IT resources. We also have plans to fully transform into a paperless entity through digitalization of business and approval processes. Further, while implementing our plans and projects for the “Technological and Cultural Transformation” of PSPC, we will be highly cautious about the environmental impact of all our projects and initiatives. The technology to be procured and the business processes to be introduced including the waste treatment plants will be environment sensitive and friendly. Lastly, let me emphasize that this vision and plan cannot be implemented without the active engagement of our employees, the employees’ ownership of the initiatives envisaged in the plan, and a major revamp in the employees’ skills mix. The PSPC Leadership Induction Program (PLIP) is one of the key initiatives taken in 2018 to improve the skills mix, we will continue to induct fresh graduates particularly the Engineers under this program. There will be an extensive focus on training and development to continuously upgrade the employees’ skills mix in line with the industry’s best practices. We have already introduced the “Inclusive Management” style whereby all major decisions are discussed in detail in the management committee meetings and finalized in a consultative manner. A culture of openness, transparency, and fairness is being promoted to improve the employees’ engagement. Similarly, transparency in performance appraisal and associated monetary and non-monetary rewards will also be improved significantly. Further, an objective and transparent career progression policy will be introduced to allow adequate opportunities for employees to have competencies compatible with the organizational needs to move up the career ladder. All these plans are aimed at improving the employees’ engagement and achieving the desired cultural change in PSPC. I am optimistic that with the Grace of Almighty Allah, the support and patronage of the Board of Directors, and the dedication of PSPC employees, we will successfully transform PSPC into an Elite Banknote Printer. Saleem Ullah Managing Director, Pakistan Security Printing Corporation May 30, 2023

11 STRENGTHS WEAKNESSES • Financially sound parent organization (SBP). • Absolute monopoly in the local banknote and prize bond market. • Financial soundness of PSPC. • Secured sourcing of main raw material (Paper & Ink) through associates. (SPL and SIPPL). • Declared Alpha -1 installation by KPID. • Notified essential services organization by GoP. • Sole national authority for authentication of security documents. • Specialized workforce for banknote manufacturing. • Space available for sustainability projects like carbon foot print reduction through Solar Power Generations. • Suitable geographical location. • Old and outdated Banknote machines. • Old and outdated physical, electrical and HVAC Infrastructure and systems. • Capacity Constraint. • High production lead time. • Intensive manual inspection processes. • Single production site. • Operational hindrances with NSPC. • Lack of banknote design and master intaglio plate making capability. • Obsolete IT infrastructure with a lack of automation. • High proportion of outsourced staff. • Outdated HR policies’ framework. • In effective Business Continuity Plan (BCP). OPPORTUNITIES THREATS • Increasing trend of Annual Indent. • Expansion into other security products printing business (NSPC takeover). • International banknote market. • Sabotage, Sanctions & War. • Vulnerability to theft of treasure during transit. • Counterfeiting/forgery of banknotes. • Vulnerability to exchange losses due to exchange rate fluctuations. • Increasing popularity of cashless payment platforms (Credit/Debit Cards, Internet Banking, Mobile Banking, Cryptocurrency). • Elimination of paper-based prize bonds • Cybersecurity threats. • Probable discontinuation of Natural gas for power generation. PSPC’S SWOT ANALYSIS

12 STRATEGIC GOAL TACTICAL OBJECTIVES OPERATIONAL GOALS “To Produce and deliver high quality banknotes as per the need and expectations of State Bank of Pakistan while meeting or surpassing the industry standards” SG1-TO1- Printing Capacity Expansion to meet the growing banknote needs of SBP Establishment of a new alternate state of the art Banknote manufacturing site with Capacity of 2500 million pieces. (Timeline Year 4-5) SG1-TO2- BMR of Karachi Plant/Unit- i. Banknote Printing Capacity Enhancement (Timeline Year 1-2) ii. Existing Machines’ Complete Overhaul/ Replacement (Timeline Year 1-3) iii. Elimination of Manual Processes particularly in Quality Control (Timeline Year 1-3) iv. Acquisition of New Technology for Printing Next Generation Banknotes (Timeline Year 2-3) v. Retrofitting for UV Offset ink drying unit & UV numbering ink drying unit (Timeline Year 2-3) vi. Acquisition of CTIP and CTOP Technology (Timeline Year 2-3) vii. Health-check, upgradation, or replacement of Intaglio Plate-Making (IPM) equipment (Timeline Year 3) viii. Mechanization of PSPC Vault, Improving Packaging and Revamping Remittance Security (Timeline Year 1-2) ix. Strengthening of quality assurance and control systems of PSPC (Timeline Year 1-2) x. Revamping of Production Workflows & Business Process Re-Engineering (Timeline Year 2-5) xi. Strengthening BCP Framework (Timeline Year 2-3) SG1-TO3- Infrastructural Development and Business Sustainabilityi. Load management, Upgradation & Restructuring of Electrical Network System (Timeline Year 1) ii. Restructuring/Upgradation of Electrical Substations (Timeline Year 1-3) iii. Addition/Upgradation of Power Generation Sources (Timeline Year 1-3) iv. Replacement of existing HVAC System (Timeline Year 1-2) v. Replacement of Fire Prevention & Fighting Systems (Timeline Year 1-3) The table below summarizes the Strategic Goals and corresponding Tactical Objectives. Whereas the detailed Operational Objectives with timelines can be seen hereunder: STRATEGIC PLAN AT A GLANCE

13 vi. Water Supply Enhancement & Conservation (Timeline Year 1-2) vii. Revamping the existing drainage system (Timeline Year 1-2) viii. Installation of BMS-Building Management System Review of security infrastructure (Timeline Year 1-2) ix. Upgradation of security infrastructure (Timeline Year 1-2) G1-TO4- Environmental Sustainability/ ESG (Environment, Social Governance) i. Establishing an ESG Team (Timeline Year 1) ii. Reducing Carbon Footprint (Timeline Year 1-5) iii. Multiple Research and Consultancy Projects on Environmental Sustainability (Timeline Year 1-5) SG1-TO5- Digital Transformation i. Main (Production) and DR Data Centers (Timeline Year 1) ii. Business Applications Upgrade and Automation of the remaining Business Functions (Timeline Year 1-2) iii. Track & Trace System (Timeline Year 3-4) iv. Online Support from OEM for Machines’ Maintenance through VPN (Timeline = Year 1-2) SG1-TO6- Organization Strengthening and Cultural Transformation i. Establishing a PMO (Timeline Year 1) ii. Comprehensive Review of HR Policies (Timeline Year 1-5) iii. Delegation of Authority (Timeline Year 2-3) iv. Inculcating Open Door Policy to Create Culture of Trust and Transparency (Timeline Year 1) v. Employees wellbeing (Timeline Year 1-5) vi. Employees related Surveys (Timeline Year 1-3) vii. In house work load analysis (Timeline Year 1) viii. Talent Acquisition (Timeline Year 1-5) ix. Inculcating the culture of continuous learning and development (Timeline Year 1-5) x. Strengthening of Risk Management Function (Timeline Year 1-5) “Tapping the Export Market” SG2-TO1- Establishment of Sales and Marketing Function Establishment of Sales and Marketing Function (Timeline Year 4-5) “Expanding to Other Security Products (OSP) Business” SG3-TO1- Development of strategic plan for NSPC Development of strategic plan for NSPC (Timeline Year 1-5)

14 STRATEGIC PLAN INTRODUCTION Strategic planning involves defining an organization’s strategy or direction and allocating resources to attain strategic goals. Similarly, a strategic plan for PSPC is of critical importance to ensure sustainable growth, competitiveness, and long-term success. The basic objective of the strategic plan is to address challenges that impact PSPC’s overall efficiency, competitiveness, and sustainability. This section discusses the significant challenges which are currently being faced by PSPC. MAJOR CHALLENGES PSPC’s existing site faces challenges that need to be addressed and they are briefly discussed below. i. Old and Obsolete Machinery: PSPC is struggling to meet customers’ expectations due to outdated and aging machinery that has exceeded its useful life, causing production inefficiencies and breakdowns. Upgrading and modernizing machines are critical to producing high-quality banknotes and meeting rising demand. This will prevent delays in production and timely delivery of quality banknotes to its customer i.e. SBP. ii. Capacity Constraint: PSPC’s current annual production capacity for banknotes is around 4000 million pieces. However, with an expected increase in population and inflation, the annual demand for currency is expected to rise over to approximately 6,500 million pieces within the next 5 years. Therefore, the current production capacity is not sufficient to meet the projected demand of the customer, making it necessary to enhance the current production capacity. iii. Single Site Production Facility: The entire banknote production process, including substrate manufacturing, ink production, and security printing, is currently located at Malir Halt in Karachi. These concentrated operations at a single site pose a significant risk, as any unexpected event, such as a natural disaster or deliberate act of sabotage, could cause a complete halt in production. In addition to that, cost of transportation is huge as 60% of the product supposed to send upcountry from Karachi. iv. Outdated Infrastructure: PSPC is currently facing a range of infrastructure-related challenges that are hindering its ability to meet the evolving needs of its business. These include issues such as inadequate security measures, limited space for banknote storage, outdated electrical and HVAC systems, risks of urban flooding, and deteriorating building conditions at the estate. Given the urgency of these challenges, PSPC will prioritize taking immediate and decisive action to ensure the safety and security of its staff and customers, maintain the integrity of its banknote production, and continue to meet the demands of its customer. v. Lack of Technological Developments: PSPC is currently encountering major hurdles due to its failure to adopt modern technology and automate processes. The significant challenges for PSPC include reliance on manual operations, usage of unreliable data, segregated systems without adequate backups, and the absence of a well-equipped data center and disaster recovery site. To address these issues, PSPC will prioritize the

15 implementation of required technology and infrastructure for automation of operations, data security and data backup procedures, etc. vi. Economic factors: Economic factors such as inflation, fluctuating exchange rates, and changes in customer preferences can have a significant impact on PSPC’s business operations and require a cost-effective and flexible business model to address these issues. vii. Manual Quality Control Procedures: Being a banknote printer, PSPC’s reputation and success depend on the quality of its products. Ensuring consistency and high-quality printing requires a robust quality control system, which is a significant challenge for PSPC due to the complex nature of its machinery and production process. Currently, the quality inspection of banknotes is conducted manually without significant automation. viii. Gaps in Internal Security: Maintaining foolproof security is a top priority for PSPC as its operations are sensitive and confidential in nature. Therefore, mitigating and minimizing security risks to ensure the safety of the plant and its operations is a business priority. However, PSPC faces an ongoing challenge in this regard, especially with the emergence of new and evolving security threats and the need for an updated infrastructure design. ix. Lack of skilled & motivated workforce: PSPC is encountering significant human resources challenges, such as the recruitment of skilled and experienced senior management, lack of succession planning, the inadequate delegation of authority, outdated organization-wide policies, and unskilled outsourced workforce. To overcome these challenges, PSPC will train and develop its existing workforce and revise HR policies to meet current business needs. x. Operational Issues with NSPC: PSPC and National Security Printing Company (NSPC) operate, jointly, at PSPC’s production site at Malir Halt in Karachi. After the demerger in 2017, both companies agreed to share common facilities to achieve the business targets. However, sharing of facilities creates operational challenges for PSPC. This is mainly due to different business priorities that lead to lower efficiencies and performances.

16 STRATEGIC GOALS SG01: To Produce and deliver high quality banknotes as per the need and expectations of State Bank of Pakistan while meeting or surpassing the industry standards The first and foremost mandate and objective of the PSPC is to cater to the banknote printing needs of the State Bank of Pakistan, thus our key strategic objective is: The expectations of the SBP include: i. Production and supply of banknotes of different denominations as per its needs i.e., meeting the banknotes printing demand (indent) of SBP, which is growing by about 10 percent annually since last 10 years. ii. Timely deliveries of banknotes as per its (SBP) needs through a highly secured transportation using latest technology and tracking. iii. Produce current and next generation banknotes with latest security features i.e., the SBP expects that PSPC should be able to print the next generation banknotes as per the design and security features desired by it. The PSPC plant technology and infrastructure should not be constraint for SBP to issue next generation banknotes. The PSPC will acquire latest and state of the art banknote printing machines like silk screen printing for its existing plant at Karachi and the proposed new plant in upcountry to meet the SBP expectations. iv. Ensuring that the banknotes printed by PSPC meets the highest quality standards and that PSPC has the requisite quality control and assurance systems for ensuring the quality of banknotes. This is extremely important for enhancing public trust in the banknotes and protect the repute of SBP. v. Cost effective operations: Given the cost-plus profit pricing mechanism, the SBP also expects PSPC to produce high quality next generation banknotes at highly competitive cost. vi. System Generated Cost of Production Data: The SBP also expects PSPC to share system generated data on cost of production enabling them to determine the price of banknotes based on system generated data. vii. Robust BCP Arrangements: Another key expectation of our core customer from us is that a robust Business Continuity Plan is in place which is tested periodically. PSPC being the sole banknote printer for the SBP, it is critically important for PSPC to have effective arrangements for printing of banknotes without any unusual interruption. To achieve the above key strategic objective on an ongoing basis, our key focus in the next five years will be on developing the institutional capacity to satisfactorily meet the expectations of our key customerthe State Bank of Pakistan. Accordingly, the following tactical objectives/goals will be pursued during the plan period:

17 SG01: Printing Capacity Expansion to meet the growing banknote needs of SBP-Establishment of a new alternate state of the art Banknote manufacturing site with Capacity of 2500 million pieces. We plan to increase the production capacity to over 6500 million pieces in the next 5 years from the existing about 4000 million pieces per annum to meet the growing banknote needs of the SBP, which is likely to increase to around 6000 million pieces by 2028 assuming a 10 percent annual growth. While the capacity enhancement will primarily be achieved through the new production facility in the upcountry, in the interim an offset and an intaglio line will be added in Karachi to meet the demand growth during construction and installation phase of the up-country production facility. This new line to be added in the existing unit at Karachi would be shifted to the new production facility in the up-country in year 4-5 after completion of the construction work. The new production facility in the up-country will not only cater to the production capacity enhancement needs but would also provide the much-needed backup to continue printing banknotes in case of unavailability of the existing facility. It will also significantly reduce the cost and risks associated with transportation of currency form Karachi to other part of the country particularly to central and northern Punjab and Khyber Pakhtunkhwa. The up-country unit besides printing will also house the paper mill, owned and controlled by the PSPC. This would allow PSPC to have considerable control on the banknote production supply chain. It will also contribute positively in the PSPC’s profitability as the margins currently being paid to SPL will be partly saved on the paper to be produced by the PSPC’s paper mill for the new facility. However, the existing factory would continue to procure paper from SPL for its printing needs. The new banknote production facility will be designed on modern lines with optimized and automated business processes, and state-of-the-art printing technology and infrastructure to print next generation banknotes. We have targeted Islamabad and Lahore and adjoining areas for the new facility, it is likely to be finalized in next few months. The process for engagement of consultant for designing the facility will be initiated immediately after the site finalization. SG1-TO2: BMR of Karachi Plant/Unit i. Banknote Printing Capacity Enhancement While the printing capacity expansion will primarily be achieved through the new production facility in the up-country, however, we will add an offset and an intaglio machine each at the existing unit in Karachi to cater to the capacity expansion needs during the construction period of the new facility. The process for the same will be initiated after approval of the strategic plan and allocation of budget by the Board. ii. Existing Machines’ Complete Overhaul/ Replacement Most of our banknote printing machines, except an intaglio machine and a few numbering and varnishing machines added during last 3-4 years, have completed their useful life after serving us well for over 17-18 years. The machine cleaning and maintenance also get relatively lower attention in last 5-7 years due to almost doubling of the indent during this period, which has badly affected the health of the machines. The unsatisfactory machines’ health causes frequent unplanned shutdowns and breakdown maintenance, higher maintenance cost,

18 production delays, print quality issues and higher wastage levels and thus higher production cost. All these machines will either be completely overhauled and upgraded or replaced during next 5 five years. The decision to overhaul or replacement will be made based on the financial and technical feasibility of the overhaul option. The process for the same has already been initiated for the intaglio machines. iii. Elimination of Manual Processes There are several manual processes including inspection of banknote sheets for quality checking, replacement of defective banknotes with a fresh manual hand-numbered note or prize bond, vault management, finished & semi-finished secured inventory management etc. All these manual processes will be eliminated through acquisition of suitable technology. The recent initiation of operations of CNP machine has enabled us to directly inspect, number and varnish the higher denomination banknotes without the manual examination at the sheet department. Currently, only the KOMORI (the latest intaglio machine available with PSPC) printed sheets are being directly processed on CNP without the manual examination by Sheet department. Gradually, the SOI- Super Orlof Intaglio printed sheets will also be directly processed on CNP; for the purpose NOTASAVE, an important inspection system of SOI will be made functional/operative. Further, the need and feasibility of Single Note Inspection (SNI) machine in Cutting, Finishing & Packing department will be evaluated based on the results of automation of sheet inspection recently introduced. iv. Acquisition of New Technology for Printing Next Generation Banknotes In line with its vision to transform into a modern security printer having state of the art technology and infrastructure to produce next generation banknotes, PSPC will acquire new technology like Screen printing etc. This is critical for meeting the SBP expectations and enabling it to issue next generation banknotes having latest security features. Similarly, we will engage with Security Papers Limited (SPL)- an associated company of PSPC to upgrade and modernize the paper mill to produce paper having latest paper-based security features like M-Feature, application of Foils, latest threads etc. v. Retrofitting for UV Offset ink drying unit & UV numbering ink drying unit Currently PSPC use oxidative inks for offset printing and numbering, which take a minimum of 20 days to dry, leading to delays in production and increasing the risk of errors and smudging. We plan to procure the UV curing units and introduce new UV drying offset and numbering inks, which will reduce the ink drying time from 20 days to 24 hours. Further, we will also introduce cobalt-free inks and fountain solution in line with our plans to bring our operations at par with international best practices as well as to make them environment friendly. vi. Acquisition of CTIP and CTOP Technology The plan also envisages procurement and installation of the latest CTIP and CTOP technology to reduce its dependence on external sources to get the master/alto plates of banknotes prepared and amended as and when needed. The plan for acquisition of this technology is in line with our vision to become a modern printer having state of the art technology. This will address a significant capacity gap at PSPC and enable PSPC to meet its customer (currently SBP only) needs of new banknote designs, both regular and commemorative. The SBP has plans to issue a new series in next 2-3 years, the acquisition of CTIP and CTOP before the

19 issuance of new series by SBP will recover a portion of the initial cost in the first year of its installation. Further, this technology is a pre-requisite, if PSPC enters the export market, which we plan to explore in year 4-5 after the initiation of operations at the new facility in upcountry. The feasibility of establishing a design department in year 4-5 will also be made to align our capacity with those of reputed international security printers. vii. Health-check, upgradation, or replacement of Intaglio Plate-Making (IPM) equipment The Intaglio Plate-Making (IPM) department’s equipment, including the Nickel bath, Chrome bath, Grinding, Bending, Hole-Punch machines, distilled water generator, and other related machines, has been in use for around 30 years and has now reached the end of their useful life. We will get a health check of the equipment done to determine if it could be fully overhauled and upgraded; if not the whole system will be replaced with the latest equipment. viii. Mechanization of PSPC Vault, Improving Packaging and Revamping Remittance Security The existing mechanism of remittance packaging and its transportation though in line with FTR but outdated, inefficient, insecure and incompatible with our plans to automate and modernize the operations. This plan accordingly envisages major reforms and redesign of currency packaging, storage and remittance mechanism. We will shift to corrugated boxes from wooden boxes and also start barcoding of bundles and the corrugated boxes containing 10 bundles each. The PSPC vault will also be redesigned and mechanized in line with the new packing boxes. While we have already started sending the remittances through sealed containers, which are loaded and sealed at PSPC and opened at the respective SBP BSC office, we will start GPS tracking of the containers to have almost real-time monitoring of the treasure during the movement/transit. A control room will also be established at PSPC to monitor the treasure movement and alert the LEAs in case of any threat/emergency associated with the treasure. ix. Strengthening of quality assurance and control systems of PSPC The Strengthening of Quality Assurance and Control Systems of PSPC is essential to ensure that the banknotes produced by PSPC comply with the highest quality standards, resulting in enhanced public trust and safeguarding the reputation of the SBP. To achieve this goal, PSPC has obtained ISO 9001 and ISO 14001 certifications and aims to obtain ISO 14298. Additionally, PSPC intends to apply Lean Management and 6S principles to ensure quality and efficiency. x. Revamping of Production Workflows & Business Process Re-Engineering In order to enhance the efficiency, reduce waste and improve quality of banknote production, PSPC needs to adopt the best industrial practices and principles of Lean Manufacturing. This requires redesigning of the production facilities’ layout and re-engineering workflows and business processes. These changes are necessary to align with the current market practices and to remain competitive in the banknote printing industry. By adopting these practices, PSPC can ensure that the production of banknotes is streamlined, cost-effective and meets the highest quality standards. For the purpose we will engage the services of reputed international consultants to redesign the shop floor, production processes and workflows in line with lean manufacturing principles and best industrial practices. The training of our production team on the new production workflows and processes will be an important component of this

20 project to ensure smooth transition to the redesigned workflows. This will enable PSPC to streamline the banknote production process, reduce waste, improve efficiency, and meet the highest quality standards. xi. Strengthening BCP Framework The plan also envisages strengthening of the BCP framework to ensure continuity of operations even in difficult conditions. While most of our critical machines have redundancies, we will create the redundancy for a few remaining critical machines including the new CNC lathe machine for preparing new wiping cylinders. Currently, PSPC has only one CNC lathe machine for the preparation of wiping cylinders, which can lead to interruption in intaglio machines’ operations due to the lack of redundancy. Similarly, the Wiping Solution Recovery Plant (WSRP), currently has no redundancy in its Programmable Logic Controller (PLC), which can lead to unexpected downtime and maintenance issues of intaglio machines. The requisite equipment and PLCs etc. will be procured and installed to mitigate this risk. Further, the formal arrangements will be made with SPL and SICPA for keeping 50 percent of the buffer stock of banknote paper and ink to ensure uninterrupted supply of the paper and ink even during unexpected shutdown of their plants. The PSPC will maintain the remaining 50 percent of the buffer stock to continue operations during unexpected shutdown of SPL or SICPA units. In addition to that, multiple projects are planned to create redundancy and replacement of critical equipment to ensure continuous business operations. SG1-TO3: Infrastructural Development and Business Sustainability i. Load management, Upgradation & Restructuring of Electrical Network System This project aims to address the shortcomings of the existing electrical network, which includes obsolete infrastructure, inadequate capacity to handle increased load, ineffective power generation utilization, and no segregation of critical and non-critical loads. In order to address these issues, the complete restructuring of the electrical network is required to meet the future demands with flexibility, capacity, and capability of providing uninterrupted power to critical PSPC operations at all times. Several steps have been completed, including a network study and load flow analysis of the existing system, a health check assessment of existing network equipment, segregation of critical and non-critical loads, and a load shed scheme for uninterrupted supply for critical loads such as PSPC Machines, HVAC, CCTV, access controls, IT equipment and lights etc. Additionally, a load management scheme has been proposed to optimize energy mix output. The project will provide detailed reports and electrical drawings of the proposed electrical network with an optimum energy mix addressing all requirements of the system, along with provisions for future expansion. The pathway to proceed with the electrical network upgradation will be defined, with a better study of the existing electrical network including network single line diagrams (SLDs), Electrical Transient and Analysis Program (ETAP) based load flow and short circuit analysis, gap analysis of the existing electrical network, availing the best electrical practices to design electrical substations, and better planning of future load for at least 20 years.

21 ii. Restructuring/Upgradation of Electrical Substations The project aims to restructure the electrical system of PSPC, focusing on the upgradation of electrical substations. The consultancy report by NESPAK consultants has proposed a two-phase strategy for the execution of the project. Phase 1, focuses on the up-gradation of MV (11KV) and LV (400V) electrical Substation #3 (Quaid-e-Azam block), which involves the segregation of critical load, replacement of substation equipment, and implementation of the load shed scheme. Phase 2, involves the up-gradation of MV (11KV) and LV (400V) electrical Substation #1 & 2 (Sir Syed Block) based on load provided by NESPAK. iii. Addition/Upgradation of Power Generation Sources The restructuring/up-gradation of power generation sources will be executed in two phases. Phase 1, will involve the up-gradation of existing power generation sources, including the replacement of long block of existing gas generators, load sanctioning of K-Electric feeders, and up-gradation of diesel generators. Phase 2, will focus on the addition of power generation sources, including gas generators, diesel generators, and solar power. The addition/ up-gradation of power generation sources will ensure reliable power generation, cost savings in terms of energy generation, and the adoption of optimum energy mix. The current energy mix of PSPC consists of three primary sources: K-Electric, gas generators, and solar systems. K-Electric accounts for approximately 31.8% of the total energy consumption, while gas generators contribute 67.2%. The remaining 1% is generated through solar systems. In total, the combined energy output from these sources amounts to 15,723,286 KWh/year. In line with our commitment to sustainability and reducing usage of fossil fuels to meet the objective of reducing carbon footprint, PSPC has identified the need to transition towards a more sustainable energy mix and engaged a reputable consultant NESPAK to conduct comprehensive assessment of existing electrical network infrastructure and the energy mix. While the Cogen systems will remain our primary source of power due to its very low cost as compared to other options. We will significantly increase our solar generation to capitalize net metering facility by using ample land available at both sites i.e. Karachi and proposed site at Lahore. iv. Replacement of existing HVAC System The current HVAC system at the production facility is outdated and requires replacement to ensure that the recommended temperature, humidity, and dust levels are maintained. The existing system is almost 35 years old, has inadequate cooling capacity, and lacks control over humidity and temperature in the production areas. The Air Handling Units (AHUs) are also old and require frequent maintenance. PSPC based on the recommendation of a consultant has developed a phase-wise plan for the procurement and installation of new equipment, including Chillers, Pumps, Cooling Towers & Accessories, Motor Control Center (MCC), and Control Room. The upgraded HVAC system will not only provide a controlled printing environment needed for high-quality printing, but also contribute significantly in improving the HSE environment and infrastructure. It will also provide a better working environment to the employees, increase their productivity, and reduce absenteeism. The new system will also result in energy savings and a reduction in the carbon footprint of the organization

22 v. Replacement of Fire Prevention & Fighting Systems The current fire hydrant system at PSPC is outdated and needs to be replaced with a reliable and efficient one that meets international guidelines and best practices. The plan envisages an effective fire prevention and fighting system including a fully functional fire hydrant system in line with the Provisions of Pakistan-Fire Safety Building Code 2016. The project for the installation of a modern fire hydrant system that meets all international standards has already been initiated; RFQ has been developed through a reputed consultant and the procurement process has been initiated. The new fire hydrant system is likely to be in place within one year. vi. Water Supply Enhancement & Conservation To improve the water supply, PSPC plans to procure a new water supply connection from the Karachi Water and Sewerage Board (KWSB) and upgrade the existing RO plant. The new RO plant will have a high recovery rate and will be capable of meeting the factory’s water requirement of approximately 180,000 gallons per day, with the daily processing capacity of 140,000 to 160,000 gallons. The RO plant upgradation will ensure an adequate and reliable water supply and decrease reliance on expensive external sources. vii. Revamping the existing drainage system The existing drainage system is over 50 years old and is in a very bad shape and cannot accommodate the increasing load of industrial and domestic wastewater. It causes severe flooding during moon soon and chokes and overflows at different points even during the normal times. The Plan thus envisages complete replacement of the existing drainage system, the process for which has already been initiated. The project also includes an effluent treatment plant to ensure that wastewater is treated before it is discharged in the main drain of the area. We have already engaged a consultant to examine /assess the drainage system as well as the Effluent Treatment Plant (ETP) and give recommendations for their complete overhaul/replacement keeping future needs as well. Further, as the PSPC, SPL and SICPA are house in the same premises, the possibility of having shared facilities including drainage, effluent treatment plant, water supply etc. will be explored to economize the cost of these facilities. viii. Installation of BMS-Building Management System The Building Management System (BMS) is an integrated system that is designed to monitor and control various building services, including HVAC, lighting, and security systems. The BMS is important for optimizing building performance, ensuring energy efficiency, reducing operational costs, enhanced occupant comfort, and extended equipment life. It also enables the management to monitor the building’s systems on real-time basis, enabling the management to identify potential problems before they become major issues. Additionally, the BMS can provide valuable data and insights into building performance, which can be used to further optimize the operations and reduce energy consumption. ix. Upgradation of security infrastructure The plan envisages a major boost in the security infrastructure to ensure safety and security of the premises, the HR and the company’s assets. Currently the major reliance of security is on DSF/Army Guards with limited use of technology. The Access Control System (ACS) is outdated and has worked way beyond its normal life and needs urgent replacement. There

23 is no vehicle inspection mechanism, CCTV though quite extensive, however monitoring and surveillance is manual with no use of AI etc. We will get a comprehensive review of our security infrastructure by National Electronics Complex of Pakistan (NECOP) to develop a layered and integrated security surveillance system. Based on the recommendations of NECOP, the process for procurement and installation of an Integrated Surveillance System will be initiated including the ACS, the Vehicle access management, 24/7 Security Control room, the AI based surveillance through CCTV etc. Additionally, an intrusion detection system will be installed on the outer boundary wall, and the security illumination and communication infrastructure will be reviewed. The main entry/exit gate and alternate (masjid gate) will be redesigned in line with overall upgradation of the integrated security system. This will meet KPID standards for a highly secured premises with state-of-the-art control and command, and a secure main and alternate entry/exit systems. SG1-TO4: Environmental Sustainability/ ESG (Environment, Social Governance) i. Establishing an ESG Team Sustainability and Environmental, Social, and Governance (ESG) factors have become increasingly important for the companies worldwide. With the growing importance of sustainability in the business world, it has become necessary for companies to integrate sustainability into their core strategies and operations. Further, it is now normal for manufacturing companies to have staff dedicated to delivering ESG objectives, PSPC will also establish the ESG Team to lead and steer the ESG objectives. It will develop a comprehensive and systematic approach to reduce the environmental impact of its operations, including resource management, waste reduction, and energy efficiency. Further, to promote Good governance practices, clear governance structures and processes that promote transparency, accountability, and ethical behavior shall be introduced. ii. Reducing Carbon Footprint Carbon footprint is a critical aspect for organizations to consider as it can lead to cost savings, regulatory compliance, and improved reputation. In line with this, PSPC will undertake the identification and calculation of its carbon footprint, under Scope 1 and Scope 2 of Green House Gas (GHG) Kyoto Protocol, using internationally recognized methodologies like GHG Protocol Corporate Standard. The calculation will include direct and indirect emissions from PSPC’s operations such as energy use, transportation, and waste management. To reduce and offset its carbon footprint, PSPC will develop strategies that include energy efficiency measures, promoting sustainable transportation options, waste reduction, and carbon offsetting. These strategies will be implemented with the ultimate goal of achieving carbon neutrality in 10 years. PSPC will set annual targets and report progress towards achieving carbon neutrality. PSPC will also seek certification for ISO 14064 and PAS 2050, international standards for carbon footprint accounting and product life cycle assessment, respectively. This certification will demonstrate PSPC’s commitment to transparency and accountability in managing its carbon emissions.

24 Implementing this proposal for carbon footprint reduction will provide several benefits for PSPC, including cost savings, improved reputation, compliance with regulations, competitive advantage, and contributing to the global effort to address climate change. iii. Multiple Research and Consultancy Projects on Environmental Sustainability PSPC plans to initiate a series of research and consultancy projects aimed at enhancing the sustainability of its operations and environmental management. The projects include consultancy on wastewater treatment and effective re-utilization of sewage as well as industrial wastewater, procurement and installation of a wastewater treatment plant, large-scale composting of complete banknote paper waste, paper shredding plant overhauling, research on composting of waste intaglio inks and ETP sludge, disposal of waste intaglio inks, and procurement of a new incinerator. PSPC also plans research and conduct a feasibility to monitor and control indoor air quality using Internet of Things (IoT) and Artificial Intelligence (AI), collect and reutilize condensation water, initiate smart approaches to save energy and resources, consult on existing energy utilization, and integrate existing systems with IoT and AI to transform into green buildings. They also aim to replace landscapes with polyculture gardens such as cacti gardens, shrubs and herbal gardens, and Miyawaki forests. SG1-TO5: Digital Transformation The existing IT infrastructure and business applications of PSPC are at initial stages of development with no data center, primary or backup, a relatively weak network with limited connectivity particularly at the shop floor, not all the officers and staff having desktops or laptops, and business applications developed on an outdated platform having several gaps and control weaknesses. Further, the applications are not integrated and operate independently, whereas about 35 percent of the business functions have no application at all. The staff has limited confidence in the accuracy and reliability of the applications and thus maintains manual registers for recording different transactions including issuance of material etc. There is excessive usage of paper for seeking approvals, raising requisitions etc. and no formal record management system exists in the company. The plan thus envisages major interventions to strengthen, expand and secure the network infrastructure, support paperless environment, provide desktop/laptop to all the officers with inter and intranet connectivity, reliable and secure primary and backup (DR) Data Centers, upgradation of Oracle licenses and Database, removal of gaps/weaknesses in the existing business applications along with BPR, developing applications for the business functions not yet automated, integrating the applications and moving towards paper less environment during the plan period. i. Main (Production) and DR Data Centers The main (Production) and backup (DR) Data Centers will be established at the SBP main data center Karachi and SBP DR site in Hyderabad. The SBP main data center in Karachi is at an advanced stage of development and is likely to be operational by November 2023, where 4 racks will be allocated for PSPC to house its servers and related equipment. A dual connectivity between the PSPC and SBP main data center will be established once construction is completed. All the equipment available in PSPC’s server room will be moved to SBP main data center in Karachi, and procurement for upgrading servers will also be done. Similarly, the SBP will provide one rack to PSPC at its disaster recovery site at Hyderabad enabling PSPC to establish its DR site using the infrastructure already available with SBP. The dual connectivity

25 between PSPC and SBP BSC Hyderabad will also be established to operationalize the DR Data Center. ii. Business Applications Upgrade and Automation of the remaining Business Functions Although, the plan doesn’t envisage implementation of tier 1 ERP as recommended by AF Ferguson in its report, the existing applications will be upgraded and integrated and remaining business applications will be developed largely using the internal resources of PSPC. Currently, about 65% of the business activities and operations are automated and 35% are still manual. The existing business applications (65%) will be upgraded to remove the gaps identified by Ferguson in its report on IT infrastructure. Simultaneously, the work on developing the applications for the remaining 35% of business processes will be initiated and completed within 18-24 months of the approval of plan by the Board. For some applications needed urgently, the services of software houses shortlisted by SBP may also be taken. The proposed upgradation includes upgrading the existing versions of Oracle Forms/Reports and Database from 6i and 10g respectively to the latest supported stable versions, migration of existing applications to the latest versions, and phase out of identified gaps to optimize business processes. This upgrade is expected to enhance productivity in terms of human resources, cost, time, business processes, and manufacturing operations. This would also enable PSPC to move towards paperless environment where bulk of the communication and approvals are made electronically. For the purpose, the possibility of implementing the SBP’s Knowledge management system in PSPC will be evaluated. Further, we will also assess the feasibility of implementing a Tier 1 ERP in year 4 and 5 if the upgraded/newly developed business applications prove ineffective in catering to the significantly enhanced business needs. iii. Track & Trace System PSPC currently has no system to track the finished good from the raw form at any stage of the production cycle. There exists a long drawn largely manual process to reconcile the banknotes produced with the blank sheets provided to the printing unit. The plan thus includes a project for undertaking the feasibility of establishing an effective track and trace system to track a single banknote from the origination of the printing process i.e. to the blank sheet used to produce the banknote. The track and trace system will be a hybrid system, combining both manual and automated processes. Additionally, the system will be a home-grown solution, specifically tailored to the processes’ needs and requirements. iv. Online Support from OEM for Machines’ Maintenance through VPN PSPC requires online support from OEMs for its banknote machines for timely resolution of errors, faults and issues in the machines and analysis thereof. To achieve this, the application/ interface will be developed for collecting the real time data from machines including the machine logs and allowing the OEM to access the data and the logs online through a secure Virtual Private Network (VPN). The security of VPN will be assessed by SBP CISO; however, access will be provided on need basis i.e. as and when needed by the PSPC. This would enable the OEM to fix the machine issues without physically visiting the site and thus would reduce machines downtime, improve productivity as well as machine health, bring efficiency in machines’ maintenance, and better analysis of machines’ errors for continuous improvement.

26 SG1-TO6: Organization Strengthening and Cultural Transformation The ambitious and challenging plan highlighted in the above pages cannot be implemented with an inefficient organization structure and a disengaged HR having very limited exposure to global best practices. Thus, the management intends to make the organization structure more responsive to the organizational needs and objectives, empower the middle management to take decisions through suitable delegation of powers, promote the culture of openness, transparency, fairness, and participative and consultative decision making. Further, there will be extensive focus on training and development and enhancing exposure to domestic and international institutions to ensure continuous improvement in the skills mix of our HR. In line with our vision to be an institution having suitably skilled and fully engaged HR, periodic employee engagement surveys will be conducted and focused interventions shall be made based on the surveys’ findings. The major initiatives in this area shall include: i. Establishing a PMO A PMO, or Project Management Office, will be established for overseeing and managing various projects to ensure that they are timely completed, are within the budget, and meet the desired quality standards. The PMO will be responsible for defining and maintaining project management standards and methodologies, providing project management tools and templates, coordinating with all the stakeholders of the project, ensuring full coverage of the project from all aspects, sequencing the project in a way to minimize disruption and wastage, tracking project progress, identifying and mitigating risks, and communicating project status and results to stakeholders. The PMO will consist of a team of project managers, project coordinators, and other support staff who work together to plan, execute, and control projects. Considering the numerous projects planned in this strategic plan, the role of the proposed PMO will be very crucial in smoother implementation of the strategic plan and timely and successful completion of the projects. ii. Comprehensive Review of HR Policies In line with our plans to promote the culture of transparency, openness, and participatory and consultative management, a comprehensive review of HR policies will be conducted to align them with our vision for the PSPC. Further, most of the policies were formulated over a decade ago and are no longer aligned with the current technology, social, economic, and legislative landscape. Previously the corporation was wholly-owned by the Ministry of Finance. However, since the acquisition by the State Bank of Pakistan, the legal framework has undergone significant changes. In the first phase, critical policies will be reviewed and revised to comply with regulatory requirements and market practices. This will include, but not be limited to, the Performance Management System, Succession Planning, Training & Development, Service Regulations, Compensation & Pension Philosophy. These revisions will aim to promote transparency, strengthen corporate governance, and alignment with our current objectives. iii. Delegation of Authority To ensure smoother implementation of the strategic plan and achievement of strategic goals, there is a need to empower the middle management to make quick decisions and take responsibility for operational matters. This will require developing a delegation of authority

27 matrix and organizational hierarchy that clearly outlines responsibilities and accountabilities for smooth processes and meeting deadlines. Decentralization of the organizational hierarchy will enable middle management to take swift decisions and run operations smoothly. iv. Inculcating Open Door Policy to Create Culture of Trust and Transparency in order to promote the culture of trust, transparency and openness, various initiatives will be undertaken including but not limited to regular town hall meetings to facilitate communication between management and employees, establishment of an employee portal for easy access to policies, procedures, notices, personnel information, etc. and increased interaction and easy access of employees with the HR team. These initiatives will promote trust and accountability, improve communication, increase job satisfaction and productivity, and timely redressal of employees’ grievances. v. Employees Wellbeing In order to strengthen the bondage between the employees and promote cross-functional teamwork, we have plans to take several initiatives including organizing bi-annual sports events, establishing a gymnasium and officers club, installing vending machines, arranging retreats for high-performing employees, scheduling periodic picnics and study tours of different companies within Karachi, and organizing an annual dinner for employees and their families. Such recreational activities will help improve mental health and self-esteem, reduce anxiety and stress, increase creativity and confidence, enhance cooperation and teamwork, provide leisure time and breaks from work, and enhance employee engagement. vi. Employees related Surveys It is crucial to conduct surveys regularly to measure employee engagement, satisfaction, and market alignment resulting from various initiatives. Accordingly, we plan to conduct the employee engagement surveys, pulse surveys, and specific surveys to get continuous feedback from employees on ongoing challenges and issues. vii. Inhouse Workload Analysis PSPC recognizes the importance of maintaining an efficient and productive work environment. To ensure optimal work allocation and productivity, an in-house workload analysis exercise will be conducted. This exercise will involve a comprehensive assessment of the current workload distribution within the organization. By analyzing the workload, we aim to identify any existing gaps or areas of inefficiency that may hinder employee performance and organizational effectiveness. The analysis will also help us understand the workload requirements for each role and department, allowing us to align resources effectively. Through this exercise, we will gather valuable insights that will enable us to optimize work allocation, improve task prioritization, and enhance overall productivity. This commitment to understanding and optimizing workloads will ensure that PSPC provides a supportive and balanced work environment that is attractive to potential candidates. Furthermore, the findings from the workload analysis exercise will serve as the foundation for formulating a comprehensive long-term plan, spanning five years, to guide prospective recruitments and ensure that PSPC’s workforce is aligned with the organization’s strategic goals.

28 viii. Talent Acquisition At PSPC, we recognize the importance of developing a strong employer brand to attract and retain high-quality talent. PSPC, as an employer, is not well-known among recent graduates, making it difficult to find potential candidates during recruitment. To address this, we have devised a strategic approach to increase awareness among our target pool of candidates. Firstly, we will actively engage with institutes and universities nationwide by participating in career drives, talent acquisition programs, and job fairs. This will allow us to directly interact with students, providing them with information about PSPC, showcasing our culture, career opportunities, and employee benefits. We will also initiate summer internship program and allow the students of professional institutes of engineering, IT and business management to create awareness about our business, and cultural and work environment. Lastly, we will maintain an active online presence, particularly on social media platforms such as LinkedIn and Facebook, where we will share engaging content and updates about our organization. By implementing these initiatives, we are confident that we can effectively build our employer brand and attract the top talent we need to drive our organization’s success. ix. Inculcating the Culture of Continuous Learning and Development Training and Development will be one of the key instruments and strategy to be used not only for continuous skills enhancement and grooming but also for improving employees’ engagement. We will tap in house, domestic and international resources for suitably training our HR based on objectives assessment of their training and development needs. The HRD will develop training programs in consultation as well as alliances with reputed training institutes within and outside Pakistan. This would also include participation in important national and international events on security printing and exposure visits to reputed banknote and security printers globally. x. Strengthening of Risk Management Function PSPC has recently developed and implemented an enterprise risk management (ERM) framework, and developed the RCSAs- Risk Control Self-Assessment for all functions and operations of PSPC. This framework has enabled PSPC to identify, assess, and mitigate risks across its operations. The PSPC’s existing capacity to effectively identify, assess and manage the risks faced PSPC is at nascent stage and needs significant improvement both in HR and risk management systems. As the ERM has been recently introduced, currently, the risk sensitization and awareness amongst the line managers is also at primitive stage. The strengthening of the risk function will therefore, be amongst the priority areas during the plan period. PSPC will invest generously in building this capacity to have an effective and well-functioning risk management function in PSPC with all three lines of defense i.e. line/business managers, RMD and Audit having adequate capacity to ensure effective implementation of ERM framework. In addition, the integration of risk management function into core operations, policies and procedures will be prioritized to ensure organization’s preparedness to manage, monitor and mitigate the risks.

29 SG02: Tapping the Export Market SG2-TO1: Establishment of Sales and Marketing Function The PSPC is likely to have some spare capacity in year 4 or 5 of this strategic plan after completion of the proposed PSPC unit in the up country. Thus, after satisfactorily meeting the requirements of our key customer- the SBP, the PSPC will utilize the spare capacity to produce high quality banknotes for other central banks and monetary authorities. In 2027 and 2028, subject to operationalization of the upcountry unit, PSPC will explore developing relationships with other central banks through bilateral contacts and/or participation in the open tenders. The PSPC will have comparative advantage over other global commercial printers due to cheap labor and domestically produced low cost banknote paper. Currently, Afghanistan and Nepal are having their currencies printed from abroad, in the Asian region. While out of 54 African countries, only 9 have their own printing facilities while the rest of countries print them through global printers, which is likely to be a good opportunity for PSPC to access these markets. With the planned significant improvement in our capacity and modernization and automation of our facilities, we are likely to be highly competitive in production of banknotes and thus probability of winning the tenders is likely to be strong. The PSPC will also assess the possibility of creating the sales and marketing function in year 4 or 5 to attract new customers/central banks. SG03: Expanding to Other Security Products (OSP) Business SG3-TO1: Development of strategic plan for NSPC Before the acquisition by the SBP, the PSPC was undertaking both the banknote printing and OSP business. The OSP function was separated and given to a new company i.e., NSPC owned by Federal Government. This bifurcation however, has significantly increased cost both for the NSPC and the PSPC besides negatively impacting the organization culture. There were a number of synergies between the banknote and OSP business, which have since been wasted due to the bifurcation. Further, both the PSPC and the NSPC workers work at the same shop floor with different compensation benefits including bonuses and annual increments, which hurts the factory environment and the culture. Furthermore, there have been disputes between the two organizations over the allocation of space to NSPC for expanding the business. We believe that re-merger of NSPC with PSPC will bring back the synergies, improve cost efficiency and improve the organization culture. Thus, efforts will be made for re-merger of the NSPC with PSPC and thus PSPC will expand its scope to OSP subject to the acquisition of NSPC. A detailed plan will be made for the OSP business subject to the acquisition.

30 The PSPC vision 2028 is a very aggressive and ambitious plan given the large number of projects and the limited time frame of 5 years. An effective implementation and execution strategy are thus a pre-requisite to implement the plan and achieve the strategic objectives. Accordingly, a steering committee under the lead of MD shall be constituted to ensure effective implementation of the plan. The satisfactory implementation of the plan as per the defined timelines will enable PSPC to have following outcomes: i. Completion and Timely Delivery of SBP Banknote Indent The first and foremost objective of PSPC is to meet the growing banknotes demand of the SBP. Thus, one of the key outcomes of the plan implementation will be consistently completing the SBP indent and meeting its expectations regarding timely deliveries, banknote quality, and cost efficiencies. The failure to complete the indent and/or meeting the SBP expectations on banknote quality etc. will be considered as the management’s inability to implement the plan. ii. Printing Capacity Enhancement The expansion in printing capacity to 6500 million pieces from existing 4000 million pieces will be another key outcome of the plan implementation. All this additional capacity will be created through establishment of an integrated banknote production unit in the up-country, which is likely to be operational in year 4-5 of the plan. During the interim construction period of the upcountry unit, some printing capacity will be added to the existing unit in Karachi to meet the increase in banknote demand during this period. This additional capacity will later be shifted to the upcountry unit once construction is completed. iii. Timely Establishment and Operationalization of Upcountry Unit The timely and successful establishment of the upcountry unit and its operationalization in years 4-5 will be one of the most critical projects and operational goals of the PSPC Vision 2028. The unit, will be designed by a reputable international consulting firm, will comprise a fully owned and operated paper mill by PSPC to meet the paper requirements of the upcountry unit. Additionally, it will include a printing unit with a capacity of 2,500 million pieces and a security inks unit provided by SICPA. This composite facility will cater to the banknote needs of the Central and Northern regions of country. iv. Balancing Modernization and Revamping (BMR) of the Existing Unit in Karachi The BMR of the existing unit in Karachi is a key component of our drive for achieving technological transformation. This involves health check of existing machines (old printing and finishing machines) and their complete overhaul or replacement. This will improve the reliability, printing capacity, quality and cost efficiency. The corrective and unplanned maintenance time will reduce significantly which will result into enhanced printing time/ capacity and reduction in maintenance cost. The replacement of some of the machines particularly, the intaglio machines with new technology will also significantly reduce intaglio ink consumption, which is one of the biggest cost components in the banknote cost structure. The BMR will include acquisition of new cutting-edge technology like screen printing enabling the unit to enhance its printing and finishing capabilities, as well as design and manufacture new banknote with latest security features. Additionally, manual processes such as banknote inspection, vault management, and remittance security will be automated through the implementation of advanced systems and technologies. KEY SUCCESS FACTORS AND DELIVERABLES

31 v. Revamping of Electrical, HVAC, and Physical Infrastructure The PSPC Vision 2028 envisages a complete revamp and transformation of the PSPC’s electrical and HVAC infrastructure to bring it on par with modern and professionally managed security printers. The existing infrastructure is old, outdated, inefficient, and unreliable, posing a potential risk of operational disruptions. The key deliverables under this initiative include a comprehensive study and analysis of the existing electrical system. This involves conducting a network study, load flow analysis, and health check of network equipment. Additionally, the project aims to segregate critical and non-critical loads and develop a load shed scheme to ensure uninterrupted power supply for critical loads. The deliverables also encompass upgrading the existing power generation sources at PSPC. This includes the replacement of the Long Block of existing gas generators and the addition of gas generators, diesel generators, and solar power to achieve net-zero energy consumption. The HVAC system will be upgraded through the procurement, installation, and commissioning of new equipment, accompanied by necessary civil work. Additionally, a Building Management System (BMS) will be installed to monitor and control various building services, including HVAC, lighting, and security systems. vi. Revamping of IT infrastructure and Digital Transformation The revamping of IT infrastructure and business applications will be another important outcome of the successful implementation of the PSPC Vision 2028. The deliverables include establishment of a reliable and fully secured main and DR Data Centers, strengthening and optimization of network infrastructure, upgradation and integration of existing business applications and automation of the remaining 35% of business functions. The plan also envisages digitization of proposals initiations and their approvals to substantially move towards paperless environment which will minimize paper usage. Additionally, the feasibility of implementing a Tier 1 ERP system in years 4 and 5 will be assessed if the upgraded/newly developed business applications are found to be ineffective in meeting the significantly enhanced business needs. vii. ESG (Environment, Social Governance) Initiatives The company’s ESG Team will drive the organization’s sustainability efforts by developing a comprehensive approach to reduce the environmental impact of operations, implement social responsibility strategies, and enhance governance practices. Key deliverables include measuring the carbon footprint, implementing strategies for carbon footprint reduction such as energy efficiency measures and sustainable transportation options, seeking certification for carbon footprint accounting, setting annual targets for carbon neutrality, consulting on wastewater treatment and management, researching sustainable methods for managing industrial waste. viii. Cultural Transformation The cultural transformation whereby a culture of openness, trust, transparency, fairness, teamwork, and solution orientation could be promoted and nurtured is the most important intended objective of the PSPC Vision 2028 along with technology upgradation. This will be achieved through revision in HR policies and practices, improving transparency and governance, encouraging openness, consultative decision making, a fair and objective

32 performance and reward management system. The measure of success will be the higher engagement levels measured through employees’ engagement surveys inter alia covering the above parameters. ix. HR Skills Enhancement and Succession Planning The PSPC Vision 2028 have extensive focus on HR skills mix enhancement through talent acquisition and development. The deliverables include an independent skills gap assessments and development of plans to bridge the skills gaps. The deliverables also include targeted training programs based on the professionally conducted TNA, filling key/critical positions and developing Monitoring & Reporting Mechanism of Strategic Plan A robust reporting and monitoring mechanism will be in place for monitoring the implementation and execution of the plan by tracking and assessing the progress towards each and every goal, tactical objective and project. The Strategic Plan Steering Committee chaired by Managing Director shall review the progress on the strategic plan on monthly basis. This committee shall update the Board about the on bi-annual Basis. The ongoing review of the plan would also enable us to make adjustments in the plan based on some major changes in the internal and/or external environment with the approval of the Board. Further, the annual business plans as well as the capital budget to be sought from the Board shall be primarily derived from and linked with the strategic plan. This would also enable the management and the Board to track the progress on implementation of the plan. Sensitivity Analysis The PSPC Vision 2028 envisages huge investment in printing capacity enhancement and technology upgradation with the printing capacity increasing to 6500 million banknotes in year 4-5. The additional capacity will be created by establishing the PSPC unit in the upcountry. The downside risk of the plan is substantial reduction in banknote demand due to digitization of payment systems resulting into access capacity, which may remain unutilized. This risk will be addressed by tapping the international banknote market whereby PSPC would print banknotes for other central banks. Given the technology upgradation envisaged in the plan and cheaper HR and paper cost, PSPC will be able to compete in the international banknote printing business. Even if the export market is not tapped, the upcountry unit with a capacity of 2500 pieces is needed to minimize the treasure transportation related cost and risks and create redundancy of the Karachi unit to manage the business continuity risk. Furthermore, the printing capacity of 6500 units is based on a three-shift working schedule, which can be shifted to a two-shift working schedule in case of reduction in banknote demand. This will not have any adverse impact on the PSPC profitability due to cost plus profit margin pricing mechanism in vogue with SBP. This will however increase the banknote printing cost for the SBP. This shift adjustment aligns with the normal global practice observed in the industry. By proactively making this adjustment, PSPC can optimize its resources and maintain operational efficiency in response to the reduced volume of banknote orders from SBP.

33 COST ESTIMATES This section provides detailed cost estimates for various initiatives outlined in the plan, accompanied by relevant assumptions. Existing Site BMR Machinery & Equipment: • Complete overhauling or replacement of old machines and outdated technology-USD 28 million. • Acquisition of new machines and technology like screen printing, CTIP, CTOP is about Rs.6 billion. • The value of machines in foreign currency (C&F) is US$ 15 million at an exchange rate for 1USD = 300 PKR. • Import duties and taxes on import of new machines & replacement of existing machines is Rs. 4 billion. • Cost of Revamping of physical, electrical and HVAC infrastructure is Rs.5 billion. • Rs.200 million has been kept for Business Process re-engineering and, revised layout of shop floor to improve efficiency, remove redundant and unnecessary processes and align with best practices. • Rs.4 billion has been kept for security and administrative equipment. • Training and capacity building of HR- annual estimated expenditure of Rs. 100 million. • The financing for the existing site will be supported by the retained earnings of the PSPC and funding from the State Bank of Pakistan (SBP). Growth in Banknotes Demand: • Quantity Base: The sales quantity for the existing site is based on the indent of 2023-24, which serves as the baseline for estimating the sales volume. • Annual Increase in Quantity: There is an anticipated annual increase in the quantity of sales for the existing site, which is expected to grow by 10% each year. • Even in case the growth projection of 10% doesn’t materialize, the capacity expansion at new site is needed to mitigate the Business Continuity and currency transport related risks. • The paper source for the existing site will remain Security Papers Limited (SPL); the new site will however have its own paper unit owned, controlled and managed by PSPC. • Base price for the raw material (paper and ink) is determined based on the prices set for the year 2021-22 with 10% annual increase. • Other overheads have been increased by 10% to account for inflation and other cost factors. • Subsequent to establishment of new production site, the surplus capacity after fulfilling SBP demands, would be utilized by tapping international banknote printing orders. New Site Land, Building, Machinery & Equipment: • The new site, to be acquired on lease, comprises 100 acres of land. The estimated cost for the site is Rs. 4 billion; actual value being assessed by DC Lahore. • As per plan, an advance non-refundable premium amount of Rs. 400 million is required, which represents 10% of the estimated cost. Additionally, the estimated annual rental is Rs. 80 million per annum, 2% of the estimated cost; actual nonrefundable premium/advance and annual rental to be negotiated with PBC based on the market value being assessed by DC Lahore.

34 • The estimated cost of building for the new site is Rs. 8 billion determined based on the estimated covered area of new site is 80,000 square meters with average cost of Rs.100,000 per square meter. • The cost of machines on the new site is Rs. 61 billion. • The estimated value of machines in foreign currency (C&F) for the new site is US$ 156 million. The exchange rate for 1USD = 300 PKR. • Import duties and taxes on import of new machines replacement of existing machines Rs.14 billion. • In order to augment production capacity, 1 Offset and 1 Intaglio machine would be initially installed at Karachi factory and subsequently shifted to new factory upon completion of infrastructure. • Electrical and HVAC infrastructure to cost Rs.4 billion. • Cost of other assets on the new site is Rs.1 billion which includes security and administrative equipment. • The new site will be financed entirely by the State Bank of Pakistan. • Paper Mill: The new site will have its own paper manufacturing facility, to cater to the banknote paper needs of the Lahore unit; the Karachi unit will continue to source its paper needs from SPL. The PSPC owned paper mill in upcountry would save the 28% margin on the cost being paid to SPL; the overall cost of the Lahore paper mill will also be lower than the SPL cost due to better efficiency of new unit and moderation of cost due to shared facilities and support functions. • Start of Production at Second Site: Production at the second site is scheduled to commence in the fiscal year 2026-27. • Maximum Capacity of Second Site: The maximum capacity of the second site is 2,500 million pieces. Hiring of Employees: • Production (Banknote Printing): 250-300 new employees will be hired for the banknote printing production department at the new site. • Production (Paper Manufacturing): 75-100 new employees will be hired for the paper manufacturing department at the new site. • Admin: 50 new employees will be hired for administrative roles at the new site. • Average Monthly Salary: The projected average monthly salary will be Rs. 100,000. • DSF:100 DSF guard will be deployed at the new site at average monthly salary of Rs. 70,000. • Administrative structure and support functions would be centralized from existing site. Out of the above projected costs; 70% is based on quotations received and 30% on the basis of best estimates.

35 ANNEXURE

36 Tactical Objective Description 2023-24 2024-25 2025-26 2026-27 2027-28 Printing Capacity Expansion to meet the growing banknote needs of SBP (New Site) Land Acquisition of Land on lease Rs. 0.48 billion Rs. 0.08 billion Rs. 0.08 billion Rs. 0.08 billion Rs. 0.08 billion Building Designing of Factory by the Consultant Construction Construction Completion of construction Rs. 1 billion Rs. 2.5 billion Rs. 2.5 billion Rs. 2 billion Machinery Opening of LCs for machines US$ 13 Million* (Rs. 6 Billion) US$ 102 Million (Rs. 43 Billion) US$ 41 Million (Rs. 12 Billion) Administration, IT & security Equipment Rs. 3 billion Rs. 2 billion Total Rs.75 billion Rs. 1.5 Billion Rs. 8.6 Billion Rs. 48.6 Billion Rs. 16.1 Billion Rs. 0.1 Billion * In order to augment production capacity, 1 Offset and 1 Intaglio printing machine would be initially installed at Karachi factory and subsequently shifted to new factory upon completion of infrastructure. BMR of Karachi Plant/Unit Complete overhauling or replacement of old machines Opening of LCs for machines US$ 19 Million (Rs. 8 Billion) US$ 8 Million (Rs. 3 Billion) Machinery Opening of LCs for machines US$ 11 Million (Rs. 5 Billion) US$ 4 Million (Rs. 1 Billion) Engineering & Auxiliary Equipment Rs. 2 billion Rs. 3 billion Administration, IT & security Equipment Rs. 1 billion Rs. 3 billion Total Rs.26 Billion Rs. 3 Billion Rs. 19 Billion Rs. 4 Billion GRAND TOTAL Rs.101 billion Rs.4.5 Billion Rs.27.6 Billion Rs.52.6 Billion Rs.16.1 Billion Rs. 0.1 Billion The investment would generate an IRR of 10%. CASH OUT FLOW AND IRR