CHAPTER – 1

1

INTRODUCTION

Human Resource (or personnel) management, in the sense of getting things done through people, is an essential part of every manager’s responsibility, but many organizations find it advantageous to establish a specialist division to provide an expert service dedicated to ensuring that the human resource function is performed efficiently.

Performance Appraisal is the process of assessing the performance and progress of an employee or a group of employees on a given job and his / their potential for future development. It consists of all formal procedures used in the working organizations to evaluate personalities, contributions and potentials of employees.

Performance appraisal is a process of summarizing, assessing and developing the work performance of an employee. In order to be effective and constructive, the performance manager should make every effort to obtain as much objective information about the employee's performance a possible. Performance Appraisal is a review and discussion of an employee's performance of assigned duties and responsibilities based on results obtained by the employee in their job, not on the employee's personality characteristics. Personality should be considered only when it relates to performance of assigned duties and responsibilities.

It is a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development.

In many organizations - but not all - appraisal results are used, either directly or indirectly, to help determine reward outcomes. That is, the appraisal results are used to identify the better performing employees who should get the majority of available merit pay increases, bonuses, and promotions. By the same token, appraisal results are used to identify poorer performers, who may require some form of counselling, or in extreme cases, demotion, dismissal or decreases in pay.

2

OBJECTIVES OF THE STUDY

To carry out the study we framed the following objectives

1. Identification of the technique of performance appraisal followed in VSP

2. Employee attitude towards the present appraisal system.

3. To identify and suggest measures to improve effectiveness specifically from quality perspective.

4. To study, identify and suggest measures to improve effectiveness specifically from

quality perspective.

5. To study and analyze the executive performance system and effectiveness.

6. To understand the gap between knowledge, skill and attitudes that exist and see how this gap can be

filled by planned guidance and training.

NEED FOR THE STUDY

Managing the performance of the employees is one of the toughest challenges which the organizations are facing today as this completely depends upon the employee’s commitment, competence and clarity of performance. If managed efficiently through a well planned reward practice and feedback mechanism, a performance management system can serve as an important tool for employee motivation and development. The need for the introduction of a robust system of performance management was felt during the period when the traditional performance appraisal mechanism started failing and its limitations were surfacing up. The performance appraisal system of the earlier period was missing objectivity as the diameters or the parameters for measuring performance were not clearly specified and the focus was on traits instead on behaviors or measurable targets. As a result, the employee’s morale and motivation to work was adversely affected due to an absence of a transparent feedback mechanism and lack of employee involvement in the entire process of appraisal. A performance management system overcomes the drawbacks of the traditional performance appraisal system by maintaining a futuristic approach instead of assessing the past contributions of the employees for evaluating the performance of the employees.

3

Performance management is a strategic tool and is holistic in nature as it pervades in every activity of the organization which is concerned with the management of individual, team and the overall organizational performance. The process is indispensable and very important for an organization as it is concerned with establishing a culture in which the individuals and teams can excel by continuously improving in terms of skill sets and the business processes.

Decisions regarding various personnel aspects such as promotion and merit increases. Performance measures also link information gathering and decision making processes

which provide a basis for judging the effectiveness of personnel sub-divisions such as recruiting, selection, training and compensation.

Accurate information plays a vital role in the organization as a whole. They help in finding out the weaknesses in the primary areas.

Performance Appraisal has been considered as the most significant an indispensable tool for an organization, for an organization, for the information it provides is highly useful in makingFormal Performance Appraisal plans are designed to meet three needs, one of the organization and the other two of the individual namely:

They provide systematic judgments to back up salary increases, transfers, demotions or terminations.

They are the means of telling a subordinate how he is doing and suggesting needed changes in his behavior, attitudes, skills or job knowledge. They let him know where he stands with the Boss.

Superior uses them as a base for coaching and counseling the individual. On the basis of merit rating or appraisal procedures, the main objectives of Employee Appraisal are:

To enable an organization to maintain an inventory of the number and quality of all managers and to identify and meet their training needs and aspirations.

To determine increment rewards and to provide reliable index for promotions and transfers to positions of greater responsibility.

4

SCOPE OF THE STUDY

The study covers various aspects like employee details, work nature, job specification, knowledge, and personality development of employees of the organization. The scope of any performance appraisal should include the following: provide employees with a better understanding of their role and responsibilities; increase confidence through recognizing strengths while identifying training needs to improve weaknesses; improve working relationships and communication between supervisors and subordinates; increase commitment to organizational goals; develop employees into future supervisors; assist in personnel decisions such as promotions or allocating rewards; and allow time for self-reflection, self-appraisal and personal goal setting.

To know the function of the organization as a whole and as will to know how the policies are made and implemented and conveyed to the employees. The study is to know in brief about the following departments.

Performance appraisal system in VSP. Human Resource Development Department.

Following departments were approached for survey during the project:-

Plant personnel COCCP(coco oven coal chemical plant) ES &F(Engg. shop & Foundry ) T & DC Department ED workers build in.

5

METHODOLOGY

To get information about satisfaction level of employees from performance appraisal

system and its effectiveness a stratified sample survey was conducted. For the present study

of the data has been collected from the following ways.

RESEARCH DESIGN:

Research Design refers to "framework or plan for a study that guides the collection and

analysis of data". A typical research design of a company basically tries to resolve the

following issues:

a) Determining Data Collection Design

                 b) Determining Data Methods

c) Determining Data Sources

d) Determining Primary Data Collection Methods

e) Developing Questionnaires

(1) Explorative Research Design:

Explorative studies are undertaken with a view to know more about the problem. These

studies help in a proper definition of the problem, and development of specific hypothesis is

to be tested later by more conclusive research designs. Its basic purpose is to identify

factors underlying a problem and to determine which one of them need to be further

researched by using rigorous conclusive research designs.

6

(2) Conclusive Research Design:

Conclusive Research Studies are more formal in nature and are conducted with a view to

eliciting more precise information for purpose of making marketing decisions.

These studies can be either:

a) Descriptive or

b) Experimental   

Thus, it was mix of both the tools of Research Design that is, Explorative as well as

Conclusive.

DATA COLLECTION:

    Data Sources:

The data required for the study has been through the following sources.

Responses from employees through questionnaire

Necessary information from HR departments has been collected through records and

register.

Information was also taken from journals, broachers, annual reports, magazines.

Responses from the workers through questionnaires.

The study has a scope of learning about the various programs Organized by the

personnel department till date and the programs which are going to organize and also the

analytical based programs which we will suggest based upon the survey.

7

The analysis will be based upon management requirement, individual requirements,

conditions prevailed etc., and the basic approach for the collection of primary date is by

conducting a survey with the help of a questionnaire.

The study has been made with the help of information collected from 2 sources they are:

Primary sources

Secondary sources

Primary sources:

The primary sources data are those which are collected a fresh and for the first time

and thus happen to be original in character.

Primary data is gathered through questionnaire from employees and workers. The

primary source of my study includes mainly the information given by the employees and

also through the discussions orientation classes given by the executives of the different

departments in the organization.

Secondary sources:

Secondary data are those, which have already collected by someone else, and

secondary data is collected through various records maintained by the personnel department

and manuals of the organization.

Organizational Websites

News Paper & Magazines

Organizational Literature

Library Books

8

Journals and Bulletins

Annuals Report

LIMITATIONS:Limitations of the present study are specified below:

The findings of the present study cannot be generalized as they are based purely limiting to the one unit of this singular organization without giving any comparisons to the practices in similar industry. Being a company spread all over India, for all practical reasons and limitations, we may not be able to travel to all Steel Plant units. Thus, this study limits to the Visakhapatnam Steel Plant only.

This study is more of professional oriented. Hence it cannot be constructed to denote and / or purported to standardize as a model for this project.

The time constraint there to study all the policies of VSP, as it is a very fast topic.

Sample size collected is not very large. Subjectivity on this part in interpretation and analysis.

A few limitations and constraints came in way of conducting the present study, under which the researcher had to work are as follows:

Ø      Although all attempts were made to make this an objective study, biases on the part of respondents might have resulted in some subjectivity.

Ø      Though, no effort was spared to make the study most accurate and useful, the “sample Size” selected for the same may not be the true representative of the Company, resulting in biased results.

The study is however subjected to certain limitations:

The time factor is a major limitation. The whole study was conducted within a period

of 45 days.

9

The study does not cover non-executives, some executive cadre and chair man and

managing director. The study confines itself only to assistant managers and general

managers.

Study is quality perspective has only been qualitative the information gathered in this

regard is mostly through information discussion.

Only the existing system is studies and no attempt has been made to identify and

analyze any new and dynamic performance system due to its constraints.

10

CHAPTER – 2

INDUSTRY PROFILE

11

INTROCUTION TO STEEL INDUSTRY IN INDIA

India got into the steel making in the early 20 th century when JRD Tata set up the first steel mill in the country in 1907 in Jamshedpur. Since then, the steel industry has undergone a lot of changes but the Tata Iron and Steel Company continues to be the largest private steel maker in the country. The steel industry in the 70s and 80s was dominated by TISCO & SAIL. With the price control regime in place, the steel companies could turn in a profit without any major effort. But the situation soon changed when the country decided to open the door for foreign investment in 1991. The pricing mechanism of Joint Plant Committee, which has been operating form 1964, was abolished with effect from January 1992.

In the initial economic reforms, industrialists saw the economy growing at 7% per annum and since steel consumption is directly linked to the growth in economy, it was assumed that demand for steel in the country would explode. This led to huge flow of investments into the steel industry and many EAF based steel units were set up. The 1st

phase (1914-1947) of its evolution can be traced to the beginning of the 20 th century when the steel industry made a beginning as an icon of active patriotism, thanks to the pioneering spirit of “Swedish” entrepreneurs in the private sector. This period saw a small but viable steel capacity of about 1 million tones.

Although the initial years justified these assumptions and steel consumption really took off, this scenario was not to continue for ling. The political instability and the resultant slow down in reforms saw the economic growth slowing down. The south East Asian economic crises were of course, the final nail on the coffin.

During the second phase (1947-1992) in the hands of the early planners this industry became an important instrument for attaining rapid economic growth because of the inherent advantage enjoyed by it. Firstly, India’s fast reserves of the basic raw materials conferred a certain competitive advance to this industry. Secondly the wide- ranging linkages, both forward & backward sector has with the rest of the economy made it an ideal catalyst for generating and sustaining economic development.

During the 4 decades, the Indian State invested heavily in creating large scale integrated capacities in the public sector as a part of the overall development strategy aiming at self sufficiency in the heavy & basic industries. The ensure state control at the

12

commanding heights of the economy, large-scale capacity creation was reserved for the public sector units (PSU) in a predominantly mixed economic environment.

Introduction of industry:

Rashtriya Ispat Nigam Limited - Visakhapatnam Steel Plant (RINL-VSP) popularly known as ‘Vizag Steel’ the ‘Pride of Steel’, a leading Central PSU under the Ministry of Steel is the first shore based Integrated Steel Plant in the country.

Vizag Steel known for its ‘Quality’ & ‘Customer Service’ is a market leader in longs with a share of about 10%. It has been supplying various grades of steel for construction of projects of National importance which include Metros, Power Sector, Bridges, Nuclear complexes and several others. RINL-VSP has exported finished products to countries like USA, UAE, Thailand, Bangladesh, Nepal, Sri Lanka etc. Its products are made from 100% virgin steel, maintaining stringent tolerances both in chemistry & physical properties. RINL-VSP has a wide marketing network spread across the country and is the “preferred steel maker” for the customers.

The Government of India has decided to set up an integrate Steel Plant at Visakhapatnam to meet the growing domestic needs of steel. Visakhapatnam Steel Plant was the effect of the persistent demands and mass movements. It is another step towards increasing the country’s steel production.

The decision of the Government to set up an integrated steel plant was laid down by the ten Prime Minister Smt. Indira Gandhi. The Prime Minister laid the foundation stone on 20th January 1971.

Vision:

To be a continuously growing world class company.

Harness our growth potential and sustain profitable growth Deliver high quality and cost competitive products and be the first choice of customer Create and inspiring work environment to unleash the creative energy of people Achieve excellence in enterprise management Be a respected corporate citizen, ensure clean and green environment and develop

vibrant communities around us

Mission:

13

To attain 16 million tons (Mt) liquid steel capacity through Technological up-gradation, operational efficiency and expansion; augmentation of assured supply of raw materials; to produce steel at international standards of cost and quality; and to meet the aspirations of the stakeholders.

Objectives:

Expand plant capacity to 6.3 Mt by 2008-09 with the mission to expand further in subsequent phases as per the Corporate Plan.

Stabilize 6.3 Mtpa expansions by 2012-13 with the mission to expand further in subsequent phases as per corporate plan

Revamping existing blast Furnaces to make them energy efficient to contemporary levels and in the process increase their capacity by 1 Mtpa, thus total hot metal capacity to 7.5 Mtpa

Be amongst top five lowest cost liquid steel producers in the world Achieve higher levels of customer satisfaction Vibrant work culture in the organization Be proactive in conserving environment, maintaining high levels of safety &

addressing social concerns

Human Resource Management as VSP

Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization. HRM can also be performed by line managers.

HRM is the organizational function that deals with issues related to people such as compensation, hiring, performance management, organization development, safety, wellness, benefits, employee motivation, communication, administration, and training.

Human resource:

14

Every organization is essentially a combination of physical and human resources (HR). Physical resources refer to materials, money and machines pre-arranged by the organization for production or trade. Human resources on the other hand, refer to the knowledge, education, skills, training and proficiency of the members of the organization. All organizational resources are important for achieving the objectives of an organization.

“Human resources are a whole consisting of inter-related, inter-dependent and interacting physiological, psychological, sociological and ethical components.”

Human Resource Development:

Human Resource Development (HRD) is the framework for helping employees develops their personal and organizational skills, knowledge, and abilities. Human Resource Development includes such opportunities as employee training, employee career development, performance management and development, coaching, mentoring, succession planning, key employee identification, tuition assistance, and organization development.

HRD philosophy in Visakhapatnam Steel Plant:

Employees of the organization are greatest and most valuable resources. Whole on the one hand, HRD should appropriately harness the employee potential

for the attainment of the company objective, the company on the other, as its corporate responsibility, should crate and enabling climate where in human talent gets the best opportunity for self expression, all round development and fulfillment,

People are more than mere resources and therefore it will be the company’s sincere endeavor to treat people with all the respect and that is warranted when employees are seen as more mere instrumentalities.

HRD as a management function will be given a place of strategic priority, along with function like production, maintenance, materials on finance in the overall scheme of management action in the company.

HRD does not refer to training alone, nor is it just a new name for training. In RINL/VSP HRD refers to creative and innovative initiatives in several

management functions for the development and growth of employees HRD should eventually be a core philosophy of all management actions and should

not remain merely a departmental/ sectional activity.

15

All functional and divisional heads responsible of various activities of the company will imbibe the HRD spirit and suitability integrates HRD into their plans, decisions and actions.

HRD objectives of Visakhapatnam Steel Plant:

To provide initially a suitable match between employee competence level and company’s work requirements

To faster an appropriate climate and culture which nurtures employee competence and adequate motivational levels for the application of their abilities to assigned jobs/roles with required commitment.

To enable employees seek greater identification with the company by fusing management decisions and actions with the requisite care, concern and developmental approach.

To initially enable the employees and the organization achieve its mission and objectives and business goals through HRD

Introduction on Performance Appraisal system:

Almost every organization in one way or another goes through a periodic ritual, formally or informally, known as performance appraisal. Performance appraisal has been called many things. The formal performance appraisal has been called a tool of management, a control process, an activity and a critical element in human resources allocation. Uses for performance appraisal have included equal employment opportunity considerations, promotions, transfer and salary increases. Primarily performance appraisal has been considered an overall system for controlling an organization.

Performance appraisal may be defined as a structured formal interaction between a subordinate and supervisor, that usually takes the form of a periodic interview (annual or semi-annual), in which the work performance of the subordinate is examined and discussed, with a view to identifying weaknesses and strengths as well as opportunities for improvement and skills development. Almost every organization in one way or another goes through a periodic ritual, formally or informally, known as performance appraisal.

Therefore, it can be said that, performance appraisal means systematic evaluation of the personality and performance of each employee by his supervisor or some other person trained in the techniques of merit rating. It employs various rating techniques for comparing

16

individual employees in a work group, in term of personal qualities or deficiencies and the requirements of their respective jobs. To quote dale Yoder,” performance appraisal includes all formal procedures used to evaluate personalities and contribution and potential of group members in a working organization. It is a continuous process to secure information necessary for making correct and objective decisions on employees.” The comparison of performance with job requirements helps in finding out the merit of individual employees in a week group. Supervisor or an independent appraiser may do rating.

The meaning of the word “appraisal” is “to fix a price or value for something”. This is used in finance in terms such as project appraisal or financial appraisal where a value is attached to a project. Similarly performance appraisal is a process in which one values the employee contribution and worth to the organization.

Performance appraisal can be defined as a system of measuring employee’s performance relative to the assigned or agreed objectives. The process starts with the supervisor and or with the subordinate agreeing on specific objectives that need to be met on an agreed time period. The objectives that are used in the Performance appraisal stem from the main organizational objectives that are reduced to Departmental goals and now to individual goals.

Performance Appraisal is an important component of the information and control system. In today’s flexible organizations, performance evaluations provide an effective way for managers to clarify performance goals and standards to enhance future individual performance. Thus, the purpose of performance appraisal is to improve the organization’s performance through the enhanced performance of individuals. The performance appraisal system:

Is an organizational necessity. Is based on well defined objective criteria. Is based on careful job analysis. Uses only job related criteria. Is supported by adequate studies. Is applied by trained qualified raters. Is applied objectively throughout the organization. Can be shown non discriminatory as defined by law.

17

By focusing the attention on performance, performance appraisal goes to the heart of personnel management and reflects the management's interest in the progress of the employees.

Objective of Performance Appraisal:

There are mainly two purposes for which performance appraisal is used by an organization:

(1) To improve the work performance of employees by helping them realize and use their full potential in carrying out the firm’s missions; and

(2) To provide information to employees for use in making work related decisions, more specifically, appraisals serve the following purposes.

1) Appraisals generate information to support administrative decisions. Promotions transfers and reassignments, demotions and termination’s are action based at least in part on performance.

2) Appraisals provide feedback to employees and thereby serve as vehicle for personal or career development because feedback provides:

• Reassurance that they are contributing and doing the right thing

• Awareness of the impact on the desired results

• A measure of the adequacy of performance (quality, quantity, speed etc.)

• Recognition of the importance and value of their performance.

3) Once the development needs of employees are identified appraisals can help establish objectives for training programmerrs. Thus evaluations provide a basis for changing performance plans, including objectives and standards of behaviors as business plans and conditions change.

4) As a result of proper specifications of performance levels, appraisals can help diagnose organizational problems. They do so by identifying training needs and the knowledge, abilities, and other characteristics to consider in hiring, and they also provide a basis for distinguishing between, effective and ineffective performers.

5) Appraisals are used as criteria in test evaluations. The rationale for differential treatment of employees needs to be consistent with company’s values, philosophy and strategy. It also

18

needs to be balanced with the desire for collaboration, rather than competition and conflict, sought in TQM.

Performance Appraisal - process map:

Methods of Performance Appraisal:

Currently most of the companies are using one of the following Performance Appraisal Methods:

19

1) 360 Degree Appraisal Method

2) Rating Scale Method

3) Management by Objective Method

Under the 360 Degree appraisal method the employee is rated from all angles i.e., by the superiors, subordinates, peers, suppliers, distributors, customers and clients. Under the Management by Objective method the employee goals are set mutually by the employee's and the management. And the employees are rated based on the accomplishment of these goals. Under the Rating Scale method each employee trait or characteristic is rated on a scale that usually has several points ranging from "poor" to" excellent" (or some similar arrangement).The traits assessed on these scales include employee attributes such as work quality, cooperation, initiative, punctuality and technical competence, etc. The selected traits should be in some way relevant to the appraiser’s job.

Performance Appraisal Policy in RINL:

In Rashtriya ispat nigam limited (Visakhapatnam steel plant), this appraisal policy is introduced in 1999-2000

OBJECTIVES :

Increase awareness of tasks/targets responsibility of executives at all levels through Performance Planning

Provide reliable, valid & objective assessment of performance on specific performance and potential factors

Distinguish differing levels of performance on relative basis Provide basis for determination of merit, efficiency & suitability for purpose of promotion Identify developmental needs of executives Facilitate process of executive development through tasks/target setting, self review performance

analysis & two way communication between appraise and appraiser. Covers all Non Board level executives including JOs/JSOs & Deputizes up to E-7 grade. Executives grouped under three categories & have specific type ( colour ) forms

JO to E-4; ( Yellow colour) E-5 /E-6; ( Pink colour) E- 7 ( Green colour) Executives in E-8 or above grade have been provided separate form by DPE from 2010-11.

Appraisal process:

Performance Planning Self Appraisal & Midterm Review - Performance Review Discussion ( PRD I)

20

Self appraisal & Final Performance Review Performance Assessment Development Plan Final assessment / grading

Performance planning: Based on the jobs, KPAs are identified for each executive in consultation with the Reporting Officer. Not less than 5 quantifiable targets with specific time frame are set on the 12 th April of every year.

Self appraisal & midterm review - Performance review discussion (PRD I):

Self appraisal to be filled up by apprise in the 1st week of October detailing about on the extent of fulfillment of tasks/ targets for the period April - September, constraints faced and help required. Reporting officer to hold a Midterm PRD session to discuss about:

Extent of tasks / Targets fulfilled Constraints faced Shortfall & its reasons Measures to avoid future setback in tasks / targets achievement Help required Thrust areas for next six months Modification / substitution of tasks, if any

After PRD session, apprise & Reporting Officer to sign the self appraisal & midterm review report

Self appraisal & final performance review:

Detail about extent of fulfillment of tasks/targets set for the period October – March, constraints faced, highlights of performance for the year

Apprise to fill up the self appraisal for final performance review by 12th April Detail about extent of fulfillment of tasks/targets set for the period October – March, constraints

faced, highlights of performance for the year During PRD, Reporting Officer to discuss with apprise about Extent of tasks / Targets fulfilled Constraints faced Shortfall & its reasons Highlights of performance Suggestions for improvement of performancePerformance

21

Assessment on performance and potential factors:

Multi tier assessment: First by Reporting Officer, Reporting Officer (O) and Reviewing Officer Final assessment: by Performance Review Committee (PRC)

Development plan: Based on the strengths/weaknesses of the executive, training programmerrs are recommended taking into consideration benefit to the individual and the organization.

Final assessment / grading: A maximum of 3 total factor scores are awarded to the appraisal by the Reporting Officer, Reporting Officer (O) and Reviewing Officer. The weight ages assigned are as follows

Officer Weight ages

Reporting Officer 50%

Reporting Officer (O) 25%

Reviewing Officer *25%

In case there is no Reporting Officer (O), the weight age for Reviewing Officer will be 50%. The total credit score is computed by the appraisal cell by multiplying the factor score given by the

authority and the weight ages given to them.

Grading:

22

Factors for Assessment Factor Score

JO-E4 E5-E6 E7

Performance 70 60 40

Potential 30 40 60

Appraisal Cell will provide the total scores of the appraisal in a given Appraisal Group in descending order with primary grades as per the score range as under:

Score Range Grade

86 and above O70 to 85 A50 to 69 B49 and below C

A distribution pattern has to be followed by the Reporting and Reviewing Officers while grading the performance levels of the appraise

Grade % of Executives\(Maximum ceiling)

O Up to 10%A Up to 20%B Not less than 55%C Up to 15%

The final grades are converted into credit points as under for the purpose of computing marks at the time of promotion as under:

Grade Credit PointsO 90A 75B 60

C 40

Performance Assessment:

Done after final performance review session Multi tier assessment First by Reporting Officer, Reporting Officer(O) and Reviewing Officer Final assessment by Performance Review Committee ( PRC)

Performance Assessment: Comparative statement showing factors for assessment of executives in various grades:

23

Factors for Assessment Factor Score

JO-E4 E5-E6 E7

Performance Factors

Quantity of output 15 10 10

Quality of output 15 10 10

Cost control/consciousness 10 10 10

Job knowledge and skill 10 10 NA

Discipline 10 10 NA

House/Record Keeping 05 NA

Team Working & Lateral Co-ordination

05 05 NA

Development of Sub-ordinates/

Ability to learnNA

05 10

Total 70 60 40

Potential Factors

Initiative 10 10 NA

Communication 10 10 NA

Commitment & Sense of Responsibility

05 05 NA

Management of Human Resources 05 05 05

Planning & Organizing NA 05 10

Problem Analysis & Decision Making NA 05 15

Ability to build a strategic vision NA NA 10

Leadership & Team Building NA NA 10

24

Business Sense NA NA 10

Total 30 40 60

Grand Total ( Factor Score ) 100 100 100

INDIA’S STEEL SCENARIO

Indian Steel industry has always remained isolated and protected by Government, where the steel industry was never expected to generate profit from business, but was expected to provide employment tot ht unemployed. Presently India is operating with open-hearth furnaces. The existing equipment, energy and labour in Indian Steel industry are much low than the developed countries

Indian Steel industry generates a significant among of waste materials, which can cause environmental problems. The four aspects of “Waste Management” namely – residue reprocess, recycle and recovery do not hold much ground in the Indian Steel Industry. The Indian companies cannot spend more for pollution control. The energy consumption per tone is 50-100% higher than that of the International norms

The Indian steel industries have developed a bit in the recent years. The production is going on properly. Many techniques are being implemented in the steel industries. The country’s aim is to sell quality steel. The government is also helping the steel industries in this basis. The apparent consumption of steel in shown below:

The development of steel industry in India should be viewed in conjunction with the type and system of government that had been ruling the country. The production steel in significant quality started after a 1990. The growth of steel industry can be conveniently started by dividing the period into pre and post independence era. In the period of pre Independence steel production was 1.5 million tons per year, which was raised to 9.0 million tones of target by the seventies. This is present of the bold steps taken by the government to develop this sector.

25

PROBLEM OF STEEL INDUSTRYNon-availability of good quality raw material is another problem faced by iron and

steel industry. The modern giant blast furnace needs high-grade iron ore and good metallurgical coal.

Further, the industry is unable to get good quality coke and manganese is which the principal raw materials next to iron ore are unfortunately most of our resources of manganese ore are of poor quality besides the non availability of good quality raw material, regular supplies of raw materials are very much handicapped due to the absence of good transport facilities. Another problem faced by the steel industry related to the difficulty in getting zinc supplies for the continuous galvanizing line.

TECHNICAL PROBLEMS

Bhilai had executed orders for shipment of rails to Iran, South Korea and Malaysia. Because of technical limitations, Rourkela plant is unable to substitute aluminum and Zinc for the production of galvanized sheet apart from source internal technical problems; our technology in the field of steel production is not a developed one when compared to other advanced countries. For instance, Japan is able to produce superior quality steel though they are importing raw material and additional material from other countries.

GOVERNMENT CONTROL AND PRICING POLICYSince 1941, India steel and iron industry was almost completely state regulated. Both

prices and distribution of steel were under the control of Govt. The Govt. decided to remove statutory control over the price and distribution of all, but a few categories with effect from 1st March 1964 the Govt., supervise the steel and iron inducted according to the recommendation of Raja committee. But Raj committee in fixing the steel price didn’t regulate the price of the raw materials.

Growth of Steel IndustryThe growth in a chronological order is depicted below:

S No Year Growth

26

1. 1830 Osier Marshall Heather constructed the first manufacturing plant at port-motor in Madras presidency.

2. 1874James Erskine founded the Bengal frame works.

3. 1899Jamshediji TATA initiated the scheme for an integrated steel plant

4. 1906 Formation of TISCO

5. 1911 TISCO started production

6. 1918 TISCO was founded

7. 1940-1950 Formation of Mysore iron and steel initiated at Bhadravathi in Karnataka

8. 1951-1956 First five-year plant – The Hindustan Steel Limited (HSL) was born in the year 1954 with decision of setting up three plants each with 1 million tones ingot steel per year at Rourkela, Bhili, Durgapur. TISCO started its expansion programmerr.

9. 1956-1961 Second five – year plan – A bold decision was taken up to increase the ingot steel output in India to 6 million tons per year and its production at Rourkela, Bhilai and Durgapur Steel plant started.

10. 1961-1966 Third five-year plant – During the plant the three steel plants under HSL, TISCO & TISCO were expanded*

11. 1964 Bokaro Steel Plant came into existence

12. 1966-69 Recession period - Till the expansion programmerrs were actively existed during this period

13. 1969-74 Fourth five-year plant - Salem Steel Plant started. Licenses were given for setting up of many mini steel plants and rerolling mills government of India. Plants in south are each in Visakhapatnam and Karnataka. SAIL was formed during this period on 24th January 1973.

27

14. 1974-79 Fifty five-years plan – The idea of setting up the fifth integrated steel plant, the first re – base plant at Visakhapatnam took a definite shape. At the end of the fifth five-year plan the total installed capacity from six integrated plants was up to 10.6 million tons.

15. 1979-1980 Annual plan. The Erstwhile soviet union agreed to help in setting up the Visakhapatnam Steel Plant.

16. 1980-1985 Sixth five-year plant – Work on Visakhapatnam Steel plant started with a big bang and top priority was accorded to start the plant. Schemes for modernization of Bhilai Steel Plant, Rourkela steel plant, Durgapur steel and TISCO were initiated. Capacity at the end of sixth five-year plant form six integrated plants stood 11.50 million tones.

17. 1985-91 Seventh five-year plant – Expansion works at Bhilai and Bokaro steel plant completed. Progress of Visakhapatnam steel Plant picked up and the nationalized concept has been introduced to commission the plant with 30 MT liquid steel capacities by 1990.

18. 1992-1997 Eighth five-year plan – The Visakhapatnam Steel Plant was commissioned in 1992. The cost of plant has become around 8755 cores. Visakhapatnam Steel Plant started the production and modernization of other steel plants is also duly engaged.

19. 1997-2002 Ninth five-year plant – Restructuring of Visakhapatnam Steel Plant and other public sector undertakings.

20. 2007-2012 Eleventh Five Year Plan – Expansion of Visakhapatnam Steel Plant(first and second phases) including other selected PSUs.

Steel Plants with Foreign Collaborations

28

S No PlantCollaboration Capacity of Finished Steel Products

1. Rourkela Steel Plant West Germany2. Bhilai Steel Plant Erstwhile USSR3. Durgapur Steel Plant Britan4. Bokaro Steel Plant Erst USSR

Annual Productions at Various Steel Plants

S No

Plant Collaboration Capacity of Finished Steel Products

Annual Production

1. Rourkela Steel Plant West Germany 7,20,000 tons

2. Bhilai Steel Plant USSR 7,70,000 tons

3. Durgapur Steel Plant Britan 8,00,000 tons

Original to Expand

S No PLANT ORIGINAL MT/Year

EXPANDEDMT/Year

1 Rourkela Steel Plant 1.0 1.8

2 Bhilai Steel Plant 1.1 2.5

3 Durgapur Steel Plant 1.0 1.6

4 TISCO 1.0 2.0

COMPANY PROFILE

A BRIEF PROFILE OF VISAKHAPATNAM STEEL PLANT:

29

BACKGROUND:

The Government of India has decided to set up an integrated Steel Plant at Visakhapatnam to meet the growing domestic needs of steel. Visakhapatnam Steel Plant was the effect of the persistent demands and mass movements. It is another step towards increasing the country’s steel production.

The decision of the Government to set up an integrated steel plant was laid down by the ten Prime Minister Smt. Indira Gandhi. The Prime Minister laid the foundation stone on 20th January 1971.

The consultant, m/s M N Dastur & co (Pvt) Ltd. submitted a techno-economic feasibility report in February 1972, and detailed project report for the plant, with an annual capacity of 3.4 million tons of liquid steel.

The Government of India and USSR signed an agreement of 12 th June 1979 for the co-operation in setting up 3.4 million tones integrates Steel Plant. The project was estimated to cost to Rs.3, 897.20 crores based on prices as on 4 th Quarter of 1981. However, on completion of the construction and commissioning of the whole plant in 1992, the cost escalated to Rs 8,755 crores based on prices as on 2nd Quarter of 1994.

Unlike other integrated Steel Plants in India, Visakhapatnam Steel Plant is one of the most modern steel plants in the country. The plant was dedicated to the nation on 1 st august 1992 by the then Prime Minister, Sri P.V.Narasimha Rao.

New technology, large-scale computerization and automation etc, are incorporated in the Plant at the international levels and attain such labour productivity, the organizational manpower has been rationalized. The manpower in the VSP has been limited to 17,500 employees. The plant has the capacity of producing 3.0 million tones of liquid steel and 2.656 million tones of saleable steel.

It has set up two major Blast furnaces, the Godavari and the Krishna, which are the envy of any modern steel making complex.

The economy of a nation depends on core sector industries like iron and steel. Steel is the basic input for construction, machines building and transport industries. Keeping in view the importance of steel the following integrated steel plant with foreign collaborations was constructed in the public sector in the post independence era.

30

Background:S.No Year Growth

1. 20.01.1971 The foundation stone of plant was laid by Smt. Gandhi2. 12.06.1979 An agreement was signed between Government of India

and the erstwhile USSR for setting up of an Integrated Steel Plant of produce structural & long products on the basis of detailed project report prepared by Dr.M.N.Dustur & Company

3. 01.02.1982 The construction of the Plant started4. 18.02.1982 Government of India formed a new Company called

Rashtriya Ispat Nigam Ltd. (RINL) and transferred the responsibility of constructing, commissioning & operating the plant at Visakhapatnam from Steel Authority of India Ltd. To RINL.

5. 1988 In view of the critical fund situation and need to check further increase in the plant costs, a rationalized concept was approved which was to crores Rs. 6849 crores based on 4th quarter of 1988.

6. July 1992 Finally all the units were constructed and commissioned at a cost of Rs.8526 crores. The Plant was dedicated to nation by the then prime Minister of India Late Sri P.V. Naarsimha rao

Since Commission VSP has already crossed many mile stones in the fields of production, productivity & exports. Coke rate of the order 509 kg/Ton of Hot metal, average converter life of 2864 heats an average of 23.6 heats per sequence in continuous Bloom caster. Specific energy consumption of 6.07 G Kg/ton of liquid steel, a specific refractory consumption of 8.94 kg and a labour productivity of 265 Ton/man year are some of the peaks achieved (during the year 204-05) in pursuit of excellence.

VSP Technology: State-of-the Art

7 meter tall Coke Oven Batteries with coke dry quenching Biggest Blast Furnaces in the country Bell-less top charging system in Blast Furnace 100% slag granulation at the Bf Cast House

31

Suppressed combustion – LD gas recovery system 100% continuous casting of liquid steel “Temporal” and “Stemcor” cooling process in LMMM & WRM respectively Extensive waste heat recovery systems Comprehensive pollution control measure

Main Products of VSP:

(a)Steel products :1. Angles 10. Net Coke2. Billets 11. Coal tar3. Channels 12. Anthracene oil4. Beams 13. HP Naphalene5. Swuares 14. Benzene6. Falts 15. Toulene7. Rounds 16. zylene8. Re-bars 17. Wash oil9. Wire Rods

(b)By-products:1. Granulated slag2. Lime Fines3. Ammonium Sulphate

VISION:To be a continuously growing world class company.

We shall,

Harness our growth potential and sustain profitable growth

32

Deliver high quality and cost competitive products and be the fist choice of customer

Create and inspiring work environment to unleash the creative energy of people

Achieve excellence in enterprise management Be a respected corporate citizen, ensure clean and green environment and

develop vibrant communities around us

MISION:To attain 16 million tone (Mt) liquid steel capacity through Technological up-

gradation, operational efficiency and expansion; augmentation of assured supply of raw materials; to produce steel at international standards of cost and quality; and to meet the aspirations of the stakeholders.

OBJECTIVES: Expand plant capacity to 6.3 Mt by 2011-12 with the mission to expand further

in subsequent phases as per the Corporate Plan. Stabilize 6.3 Mtpa expansion by 2012-13 with the mission to expand further in

subsequent phases as per corporate plan Revamping existing blast Furnaces to make them energy efficient to

contemporary levels and in the process increase their capacity by 1 Mtpa, thus total hot metal capacity to 7.5 Mtpa

Be amongst top five lowest cost liquid steel producers in the world Achieve higher levels of customer satisfaction Vibrant work culture in the organization Be proactive in conserving environment, maintaining high levels of safety &

addressing social concerns

CORE VALUES:

With a view to running the business in a transparent manner meeting the needs and expectation of the stakeholders, it was felt desirable to give utmost importance to the value

33

System in the company. Accordingly, RINL has finalized its Core Values, which are brought out below.

Commitment Customer satisfaction Continuous improvement Concern for environment Creativity & innovation.

HR Policy:

We, at Visakhapatnam Steel Plant, believe that our employees are the most important resources. To realize the full potential of employees, the company is committed to:

Provide work environment that makes the employees committed and motivated for maximizing productivity

Establish systems for maintaining transparency, fairness and equality in dealing with employees

Empower employees for enhancing commitment, responsibility and o accountability

Encourage teamwork, creativity, innovativeness and high achievement orientation.

Provide growth and opportunities for developing skill and knowledge Ensure functioning of effective communication channels with employees.

MAJOR SOURCES OF RAW MATERIALS

Iron Ore lumps & fines Bailadilla, M.P

BF Lime Stone Jaggayyapet, A.P

34

SMS Lime Stone Jaisalamer, Rajasthan

BF Dolomite Dubai

SMS Dolomite Madharam, A.P

Manganese Ore Chipurupalli, A.P

Boiler Coal Talcher, Orissa

Coking cock Australia

Water supply Yeluru canal, Andhra Pradesh

Power supply Captive power plant

MAJOR UNITS

DEPARTMENTS ANNUAL CAP.(‘000T)

UNITS (3.0 MT STAGE)

COKE OVERNS 2,261 3 Batteries each of 67 ovens & 7 Mts Height

SINTER PLANT 5,256 2 Sinter machines of 312 Sqm grate area each

BALST FURNACE 3,400 2 Furnaces of 3200 cum volume each

STEEL MELT SHOP 3,000 3 LD Converters each of 150 Cum. Volume and size 4 strand bloom casters

LMMM 710 4 Stand finishing MILL

WRM 8502 x 10 Stand finishing MILL

MMSM 850 6 Stand finishing MILL

MAN POWER PROFILE OF VSP

35

S No Category of Employees No of Employees1 Executives 5214

2 Non-Executives (Charge man, Technicians, Ministerial Staff and Khalasis

12611

Total 17825

Main Productions of Visakhapatnam Steel Plant

S No STEEL PRODUCTS BY PRODUCTS

1. Angles Nut coke

2. Billets Coke dust

3. Channels Coal tar

4. Beans Anthracene oil

5. Squares H P Naphalene

6. Flats Benzene

7. Rounds Tolunene

8. Rebars Zylene

9. Wire works Wash oil

10. ---------------------- Granulated slag

11. ---------------------- Lime fines

36

12. ---------------------- Ammonium Sulphate

PERFORMANCE INFORMATION

PRODUCTION PERFORMANCE: (‘000 TONS)

YEAR HOT METAL LIQUID STEEL SALEABLE STEEL

2000-01 3165 2909 25072001-02 3485 3083 27572002-03 3941 3356 30562003-04 4055 3508 31692004-05 3920 3560 31732005-06 4153 3603 32372006-07 4046 3606 32902007-08 3913 3322 30742008-09 3546 3145 27012009-10 3900 3399 31672010-11 3828 3425 30722011-12 3778 3310 29902012-13 3998 3456 3010

37

COMMERCIAL PERFORMANCE (Rupees in Crores)

YEAR SALES TURNOVER DOMESTICSALES

EXPORTS

2000-01 3436 3122 3222001-02 4081 3710 3712002-03 5059 4,433 6262003-04 6169 5400 7692004-05 8181 7933 2482005-06 8469 8026 4432006-07 9131 8487 4242007-08 10433 9878 5552008-09 10,408 10329 792009-10 10,635 10,284 3512010-11 11,517 11095 4222011-12 14462 14047 4162012-13 15451 15041 410

38

FINANCIAL PERFORMANCE (Rupees in Crores)

YEAR GROSS MARGIN

CASH PROFIT

NET PROFIT

2000-01 504 153 -291

2001-02 690 400 -75

2002-03 1162 975 521

2003-04 2073 2023 1547

2004-05 2462 2451 2008

2005-06 2383 2355 1251

2006-07 2633 2584 1363

2007-08 3515 3483 1943

2008-09 1268 1183 934

2009-10 1282 825 796

2010-11 1412 1247 658

2011-12 1167 1110 752

2012-13 1265 1250 845

39

EMPLOYEES DEVELOPMENT PROGRAMMERS:THORUGH TRANING & DEVELOPMENT CENTRE:

Training programs conducted converting a total number of 44,488 employees, which includes employees covered by T&DC (29,892 number), HRD, Safety Dept. and CISF Fire Wing thus achieving 11.46 man days of training per employee per year.

Thrust is given to departmental refresher programs covering over 10,000 employees which is 100% growth over last year. On the Job Training covered 7003 employees. 24 SOPs and 192 SMPs were translated into Telugu.

A Competency Mapping Model has been developed and executed in Sinter Plant covering Charge man to E-4 level.

With regard to quality of training, in reaction level feedback 87.12% participants rated >4 on a 5-point scale, in learning lever 84% participants scored >60% marks in post raining tests, in application level feedback, controlling officers rated >3.5 for 81% participants on 5-point scale.

365 employees were trained on Critical Equipment Training and 200 employees were trained on Critical Activities training (to take care of the critical contractual jobs).

Trade Tests were conducted for 1689 employees for the Inter Cluster promotions in different Works and Non-works Departments.

40

“Ukku Prarichayam”, a book on Steel making in Telugu has been reviewed, edited and printed and was released during the Training Week Valedictory Function.

Refurbishing of T&DC auditorium and Conference Hall has been done.New class room furniture procured. Three class rooms were air conditioned. 4 LCD projectors procured and fixed in the class rooms. The ambience of Trainees Hostel and T&DC canteen were improved.

Auditorium facilities and necessary help extended in organizing and conducting 35 programs including VRUDDHI summit, IREFCON-2006, WIPS Functions etc.

186 QC Projects have been submitted to MS Department against a target of 18 QCs during the year.

208 suggestions generated in T&DC against the target of 130 during the year.

ACHIEVEMENTS AND AWARDS OF VISAKHAPATNAM STEEL PLANT

41

AWARD PURPOSE YEAR

ICC corporate governance and sustainability vision award 2013

for performance on sustainability and corporate governance

2013

CII-ITC SUSTAINABILITY AWARD – 2012 - ‘STRONG COMMITMENT’

for performance on sustainability 2013

awards at icqcc’12, malaysia -3 star (top most category) for 3 qc teams

for implementation of qc projects 2012

vishwakarma awards - vishwakarma rashtriya puraskar (vrp) for 17 employees

innovative suggestions for higher efficiency, productivity & process improvements

2012

awards at inssan -2012 - 1st place in the ‘excellence in suggestion scheme’ & 3 merit prizes

for implementation of suggestions 2012

QCFI award-2012 - best public sector organization

for promoting quality concepts 2012

national vigilance excellence award by vigilance study circle (vsc)

for eminent professionals in the field of vigilance

2012

CIO-100 awardfor excellence in it & special award under the category ‘networking pioneer’

2012

“indira gandhi rajbhasha shield” - first prize

for effective implementation of official language hindi

2012

Water efficient unit award from cii for excellence in water management 2012

IPE CSR corporate governance award- 2012’

for best practices in csr 2012

Green rating award by centre for science and environment under green rating project – 3 leaves rating (best in indian

for environmental performance 2012

42

steel industry)

Gold award - greentech national hr award by greentech foundation

outstanding achievement in training arena

2012

HR leadership award to dir(personnel), sri. y r reddy by hrd congress

outstanding contribution to the hr profession

2012

Green manufacturing excellence award by frost & sullivan’s – overall leaders

recognition for best green manufacturing practices

2012

Steel minister’s trophy for 2009-102nd prize for best integrated steel plant for 2009-10

2012

Great places to work award by great places to work institute and economic times 2011

for inspiring trust among its employees, for instilling pride in them and creating an environment in the work place that promotes camaraderie

2011

First prize - iim sustainability award-2011 by indian institute of metals

overall performnce 2011

Shram awards by ministry of labour & employment, govt. of india

5 shram awards for distinguished record of performance

2011

“excellent” and “distinguished” awards at the international convention on quality control circles (icqcc’11) held at yokohama, japan.

recognition for quality circle teams by union of japanese scientists and engineers (juse).

2011

“Indira gandhi rajbhasha shield” (first prize) by department of official language, ministry of home affairs, goi

effective implementation of official language hindi

2011

‘Excellent energy efficient unit’ award of confederation of indian industry by cii

recgonition for excellence in energy management

2011

First in mou rating for 2009-10 among the pses under mos

excellent mou rating among all psus under ministry of steel (mos) for the year 2009-10

2011

43

Ispat rajbhasha shield (first time) by department of official language, ministry of home affairs, goi

for remarkable work in progressive use and implementation of official language for the year 2008-09

2011

International convention on quality concept circles (icqcc) by icqcc

seven ‘quality circle’ (qc) teams and four ‘5s’ teams bagged ‘gold medals.

2010

Awards at ccqc-2010 by ccqc

teams from vsp bagged 20 gold, 7 silver and 2 bronze medals at the 10th chapter convention of quality circle (ccqc) forum of india

2010

Ispat suraksha puraskar award -2009 by jcssi

2 ispat suraksha puraskars 2009 for achieving no fatal accident consecutively during 2007 & 2008 by rolling mills zone and sms& ccd zone

2010

NIPM certificae of merit by nipm best hr practices 2010

Udyog ratan award by delhi telugu academy

for significant contribution in preservation and promotion of indian culture and for taking key initiatives towards csr.

2010

Award Purpose Year

1st Steel Minister's Trophy for the year 2006-07

VSP’s excellent Overall performancee

2010

'Best Management Practices' Award by Govt. of AP

In recognition of VSP’s performance in the areas of Production, Productivity, Labour Practices, Industrial Relations and Corporate Social Responsibility

2010

'Indira Gandhi Rajbhasha shield' given by His Excellency Vice President of India Dr. Hamid Ansari

For effective implementation of ‘Rajbhasha’, Hindi in VSP

2010

5S "Strong Commitment" for 5 S Excellence 2010

44

Award by CII

Viswakarma Rashtriya Puraskar Awards, 6th time in a row

National level awards instituted by Ministry of Labour, Govt. of India for the workmen in industries. Recognition for the innovative suggestions resulting in higher efficiency, productivity, quality, safety & working conditions, house-keeping and import substitution at enterprise level.

2010

5 No.s of the prestigious Prime Minister Shram Awards, 1'Shram Bhushan' and 4 'Shram Veer' awards, presented by Ministry of Labour and Welfare

Given annually to the excellently performing workers

2010

'National Sustainability Award'Second prize amongst the integrated steel plants given by the Ferrous Division of Indian Institute of Metals

2010

"Excellent Water Efficient Unit" award by CII

for Excellence in Water Management- 2010 at National level

2010

Global HR Excellence award by World HRD Congress

"Change Agent & Leadership Award" in Global HR Excellence Awards 2010-11 given by World HRD Congress at Mumbai

2010

National Awards by Public Relations Society of India (PRSI)

1. The trilingual in-house magazine 'Ukkuvani' bagged the First and Second prize under the Best Newsletter category for different entries. 2. First Prize for VSP’s website under the 'Corporate Website' Category

2010

Gold Award for Outstanding VSP has established World Class 2010

45

Achievement in Training Excellence by Greentech Foundation, New Delhi

Training infrastructure since inception and continuously improved training facilities

Strategic Leadership Award For CMD of RINL by Asia Pacific Human Resource Management congress , New Delhi

For his well known leadership and contribution to HRD and for being a role model as a thinker, a doer and a believer in change and for his strategic and iconic stature

2010

Global Human Resource Development Award of International Federation of Training and Development Organization, London

In recognition of outstanding performance in setting up of high standards in HRD and focus on initiatives that would motivate and Empower employees to do their best

2010

Udyog Ratan Award for CMD of RINL By National Industrial Conclave-2010, Ranchi

For his outstanding contribution in making VSP ‘turn around to a blue chip company’ and for being the architect of ‘special purpose vehicle’ for global acquisition of mines

2010

Great Places to Work Award By Great Places to work Institute and Economic Times, Mumbai

For inspiring Trust among its Employees, for instilling Pride in them and creating an environment in the work place that promotes camaraderie

2010

Town Official Language Implementation Committee Award, Visakhapatnam

For its exemplary Performance in Implementation of Official language

2010

INSSAN AWARD

VSP won this Quiz successively for 3 years in a row (2007, 2008 & 2009) achieving HAT-TRICK which is a National Record.

2009

Bagged third prize in ‘Public Relations National Awards-2009’

In the ‘Event Management’ category at the 31st All India Public Relations conference held in Chandigarh

2009

46

Bagged the First Steel Minister’s Trophy for the year 2006-07

For being the best integrated steel plant in the country (Runner Up)

2009

Adjudged ‘Energy Efficient Unit’ award by Confederation of Indian Industry Godrej Green Business Centre at the 10th National award.

For excellence in energy Management

2009

Won the TATA-Crucible Corporate Quiz.

For the best performance in the inter corporate business quiz, TATA-Crucible Corporate Quiz

2009

QC teams won Gold & Bronze medals at the International Convention on Quality Control Circles (ICQCC) convention at Cebu, Philippines in October 2009.

For Quality Circles 2009

Vishwakarma Rashtriya Puraskar Awards for the performance year 2007 5TH Time in a row.

For the best suggestions 2009

The ‘Indira Gandhi Rajabhasha’ Award

For the best performance in Hindi implementation during the year 2007-08 in September.

2009

ISPAT RAJYA BHASHA TROPHY.

For popularizing the usage of Hindi. 2009

RINL ranked No.2 globally for the popularity of website among the global steel makers.

Global survey by Steel guru for the most popular website among steel makers all over the world

2009

The ‘Best Place to work for- 2009’

Award given by “The Economic Times-Great Place to Work Institute” was won by VSP in June

2009

47

ISPAT RAJYA BHASHA TROPHY

For popularising the usage of Hindi. 2009

VSP bags ‘top assessee’ awardFor 2007-08 for paying highest central excise.

2009

Ukkuvani, the bi-monthly In-house journal was adjudged the ‘Best House Journal Devoted to Welfare of Employees’

For Employee welfare in ‘National Awards for House Journals’.

2009

QCFI-NMDC Trophy.For the ‘Best Quality Circle Implementing Organisation’ given by QCFI

2008

CII Award for ‘5-S’ to WRM Dept. of VSP in November

For Workplace Management. VSP is the 1st organisation in Steel Industry implementing ‘5-S’ at workplace management.

2008

Two QC teams, “Harmony” from WRM and “Vikas” from RMHP won EXCELLENT awards at International Convention on Quality Control Circles (ICQCC) at Dhaka, Bangladesh

Quality Circles 2008

“Ispat Suraksha Puraskar Award”

For ‘No fatal accident’ in 2006 & 2007 given by JCSSI (Joint Committee on Safety, Health & Environment in Steel industry)

2008

“Enterprise Excellence Award 2007” conferred by Indian Institute of Industrial Engineering (IIIE) in May 2008.

Excellence in overall performance 2008

Sri PK Bishnoi, CMD was awarded a Gold medal by the

For his significant achievement for ‘Sustainable Development’,

2008

48

Hon’ble Prime Minister, Dr.Manmmohan Singh at the 95th Indian Science Congress at Andhra University, Visakhapatnam

‘Improving the quality of life in society’ and ‘Supporting the cause of Science& Technology’

Second Prize for Organisational Excellence.

Efficient suggestion scheme operation given by INSSAN

2008

Best Organisation Award conferred by QCFI, Visakhapatnam Chapter

For promoting QCs in the organization

2008

Sri PK Bishnoi, CMD was presented UDYOG RATAN award by the Institute of Economic studies, New Delhi

For achieving excellence in Productivity, Quality, Innovation and Management.

2007

Sri PK Bishnoi, CMD was presented “Excellence Award” by the Delhi Telugu Academy

For significant contribution to the industry.

2007

Two QC teams, “Samruddhi” from SMS and “Trishakti” from LMMM won GOLD Medals at International Convention on Quality Control Circles (ICQCC) 2008 at Beijing, China in October 2007.

Best Quality Circles 2007

Sri PK Bishnoi, CMD was awarded the Best Chief Executive Gold Award of “Indira Gandhi Memorial National Awards-2007” by Institution of Engineers (India) Hyderabad.

Indira Gandhi Memorial National Awards

2007

National Award for e- Exemplary usage of ICT by Public 2007-08

49

Governance Sector Undertakings

Prime Minister's Trophy Best integrated steel plant 2005-06

Prime Minister's Trophy Best integrated steel plant 2005-06

Commendation prize for strong commitment to Excellence – CII Exim Bank Award for Business Excellence 2006

Overall Excellence in all activities of the company

2006

Strong Commitment - CII HR Excellence Award 2006

Excellence in HR processes and practices

2006

National Energy Conservation Award

Energy efficiency (First prize for 3 consecutive years and also a special award for achieving this). This is the 7th award in a row

1st - 2006 2nd - 2005 1st - 2004 1st - 2003 1st - 2002 2nd - 2001 Merit Certificate- 2000

Organizational Excellence Award

Efficient suggestion scheme operation given by INSSAN

2006, 2004

Business Achievement Award for Excellence

Environmental Conservation & Pollution Control presented by Confederation of Asia Pacific Chamber of Commerce & Industry

2005

CII -GBC National Award Excellence in Energy management 2005

Energy Conservation Award by AP Productivity Council

Best organization in Energy conservation initiatives

2005

Certificate of Appreciation by Institution of Engineers, AP chapter

Excellence in energy conservation 2005

National Award for Excellence in Water Management by CII

Excellence in water management 2005,2004

50

Leadership & Excellence Award in SHE (Safety, Health & Environment)

Excellence in SHE by CII South Zone 2004

CACCI Business Achievement Award

For environmental conservation & pollution control by FICCI

2004

World Quality Commitment International Star Award

Performance excellence, quality management & quality achievement, given by Business Initiative Directions, Paris in the Gold category.

2004

ICWA National AwardGood performance for excellence in Cost management

2004

Best Enterprise AwardFor surpassing MOU Targets, awarded by SCOPE

2003-04

Rolling shield for "Environmental Protection"

To recognize efforts in environmental protection, by Directorate of field publicity, Ministry of Information & Broadcasting

2002-03

Prime Minister's Trophy Best integrated steel plant 2002-03

Indira Priyadarshini Vrikshmitra Award

For massive afforestation efforts. Given by Ministry of Environment & Forests

2002-03

Best HR PracticesGiven by Indian Society for Training & Development (ISTD)

2002

Environment Excellence Award

for Energy conservation by Greentech Foundation, Delhi

2002

Best Enterprise Award, WIPS Given by SCOPE 2001-02

Award for Best Turnaround Given by SCOPE 2000-01

Best Management Award for outstanding contribution in 2000-01

51

management of industrial relations, labour welfare and productivity given by Govt. of AP

Shield for "Best efforts in Rain water Harvesting"

AP Pollution Control Board 2001

SAIL Chairman's Silver plaquefor no fatal accidents (for regular employees category)

2000

Paryavaran Parirakshak Award

in recognition of it's success in prevention of industrial pollution and preservation of ecological balance by reducing pollution to the minimum by installing sophisticated equipment and machinery in the factory. Given by Rotary District 3020 International

2000

Total quality, latest technology, sophisticated equipment, up to date knowledge, high skills, cost consciousness, production with less cost and customer satisfaction have become the hallmark of VSP.

Today, VSP is moving forward with an aura of confidence and with pride amongst its employees who are determined to give their best for the company to enable it to reaches heights in organizational excellence.

In 2012-13 :

Sales of By-Products:

During 2012-13, all time record sales of by-products of Rs 424 Crs was achieved. The performance represents a growth of 36% over that of 2011-12. The sales of By-Products during the year 2012-13 and 2011-12 are given in the following table.

Item 2011-12 2012-13 % Growth over

52

11-12 By-Products Rs 386 Crs Rs 424 Crs 42%

E-Marketing:

In line with the company’s objective of realizing sales at competitive prices while promoting transparency, thrust on –auction mode of sales was continued an overall sale of Rs. 241 Crores was achieved through e-auctions. The break-up of which is as shown below:

No of e-auctions Sales VolumeSaleable Steel 994 57,000 tPig Iron and related products 11 6,000 tBy Products, 75 1.48,000 t

Inventory Control:

Inventory of saleable steel was maintained at optimum levels throughout and the year ended with an inventory of 2, 29,000 tons.

District Level Dealerships (DLDs)/ RINL-RDS:

A novel RINL-Rural Dealership Scheme (RDS) was introduced by the company in January 2011. As per this Scheme, rural dealers are registered at block and panchayat level locations, so as to promote consumption of steel in rural areas and enhance reach in rural markets beyond those covered by District Level Dealers.

Global Steel Industry: World crude steel production in 2012 registered highest ever yearly production

of 1414 Mt – a growth of 15% over 2011 which is 5% higher than the previous peak of 1346mt in 2009. Developing countries like china and India contributed by scaling new peaks and developed economies registered quantum jump from the low of 2011, which was however far short of their earlier peaks.

Country 2013 Mt 2012 Mt % GrowthChina 826.7 673.6 10.3Japan 129.6 88.5 29.3USA 100.5 78.2 40.3India 78.3 68.5 9.6

53

Russia 66.9 60.0 11.5South Korea 58.4 48.6 20.2Germany 43.8 32.7 33.9World 1645.5 1354.9 20.8

The majority of countries have recorded double-digit percentage rises in 2013 relative to 2012. The largest of these are found in the more economically developed regions. European Union, North America and Oceania-whose markets declined the most in the downturn of 2012.

In 2014, strong growth in steel production is expected in South America and the Middle East. Although the impact of this will be relatively small on the world total when compared to the dominance of china. Gains in the industrialized nations are likely to be modest MEPS forecast a year-on-year increase of approximately 4.4% for global steel production in 2015.

MEPS Global Crude Steel Production Forecast (Million Tons)

Region 2012 2013

EU 27 198.9 192.2

Americas 175.3 182.1

Asia 944.2 964.3

Others 186.7 196.5

Worldwide 1514.0 1585.0

II. STRENGTHS AND WEAKNESSES:

Strengths Weaknesses Availability of funds Ability to raise funds Availability of land and layout

for expansion up to 20Mt &

Lack of level playing field vis-à-vis others due to lack of captive iron ore & coking coal mines

Single location company – only

54

proximity to port Image as quality producer &

value for money supplier Superior basic technology at

inception time Cutting edge technology in

expansion to 6.3Mt Committed workforce

long products, exposed to cyclic markets

Due for major capital repairs and modernization

Steep rise in cost of production and fall in margins.

High cost of servicing huge equity.

Subdued international & sluggish domestic markets.

III. OPPORTUNITIES AND THREATS

Opportunities Threats Increased Potential demand

awaiting to be tapped. Improved investment in

infrastructure. Projected growth in steel

consumption. Improved availability of ports &

Logistics. Diversifying to new product mix

like Axles etc.

Stiff competition-entry of many new producers-JSPL, Adhunik, Bhushan, Maithan, Shyam steel, Ispat etc.

Price cut by competitors. Increasing raw material prices &

shift of value chain towards raw materials.

Oligopolistic coal supply side. Single iron ore supplier –

located in disturbance prone areas.

Predominant secondary sector in long products.

Expansion of capacities by the competitors and entry of international players.

Higher quality of life in VSP vis-à-vis surrounding areas.

55

V. OUTLOOK FOR THE COMPANY IN 2014-15 :

Likely capacity additions in the next two years are as shown below :Likely Capacity Additions in the country Mt

Existing Capacity Capacity Likely by 2014-15

Public sectors

SAIL 20.84 40.40

RINL 4.00 9.30

Private Sectors

Tata 9.80 19.00

Essar 4.60 14.50

JSW 6.60 11.00

Ispat Industries 3.60 4.20

JSPL 2.40 10.45

Bhushan Steel,

Bushan power & Steel

2.00 5.80

Others + Secondary 31.00 34.20

72.84 120.85

VI. RISKS & CONCERNS:

Areas of Concern:

1. Rising input prices particularly Iron Ore, Coal and Manpower cost.2. Aging production units for more than 20 years.

56

3. Timely commissioning and stabilization of Expansion Units.4. Maximization of net sales realization.5. Less flexibility in changing the product-mix with available mills.6. Single type product i.e. only long products.7. Lack of steel as compared to other steel producers having Mines.8. Continuation of Sluggish steel consumption.

In 2012-13:

COST REDUCTION MEASURES

The company’s commitment towards containing costs continued during the year with the following measures:

Nut coke in partial replacement of metallurgical coke in Blast Furnace. Use of Metallurgical waste to partially replace Iron Ore fines at Sinter plant. Blending of different types of straight coking coals to reduce Carbon Rate. Usage of LPG for bloom cutting, in place of Acetyl gas in CCM 1, 2 and 3. Utilization of LD slags in Sinter Plant (SP) and Blast Furnace (BF) to reduce

consumption of Limestone. Utilization of Lime dusts in SMS by way of Briquetting the lime. Reclamation of scrap from maintenance activities and use in SMS. Improvement in tundish life from 4.93 to 5.27 Heats. Conservation of power Water conservation. Collection and processing of copper scrap from electric motors, tuyeres, etc.

Marketing Performance Highlights Registered best ever Sales Turnover of Rs.10635 Cr. since inception. The Sales

Turnover corresponds to a target fulfillment of 108% against MOU target of Rs. 9861 Cr.

The sales volume of Saleable Steel during the year stood at 3.131 Mt, registering a growth of 20% over 2011-12.

The sales of Value Added Steels constituted 75% of Saleable Steel sales. Premium for Value Added Steels over Mild Steels showed improvement during the year.

57

Exports value of Rs.351 Cr. has been achieved during the year 2011-12, against Rs.78 Cr. in 2010-11.

ExportsVSP exported both Pig Iron and Saleable Steel during the year. In 2012-13, Export Sales of 145 thousand tons of Pig Iron and 58 thousand tons of Saleable Steel have been achieved. The Export Sales stood at Rs.351 cr. during 2011-12.

Value Added SteelsIn 2011-12, 2.36 Mt of Value Added Steel Products have been sold compared to 1.98 Mt in the year 2010-11, representing a growth of 19%. Sales of Value Added Steel as a percentage of Total Saleable Steel stood at 75.3% during 2011-12.

Project SalesDuring the year 2012-13, 6.59 lakh tons (including Internal Consumption at VSP) of steel products have been sold to Project Customers, compared to 6.71 lakh tons in the year 2011-12.

Employees' GrievancesRINL has a well laid down procedure for handling employees' grievances through committee system viz. Area Grievance Redressal Form (AGREF), Central Grievance Redressal Form (CENGREF). The redressal of employees' grievances are coordinated by the Zonal Personnel Executives who send monthly progress report on the number of employees' grievances received and redressed etc. for compilation, computerization and monitoring. The entire system of redressal of grievances is monitored centrally by Personnel Coordination Section. The status on employees' grievances received via redressed/ disposed of is given below:SAFETY & HEALTH

Safety is given due importance and the implementation of OHSAS 18001 has ensured a safe work culture in the organization. RINL-VSP was successfully certified for the latest version of OHSAS 18001:2007 in May '09. Continuous efforts on the implementation of safety standards, monitoring of risk control and other proactive measures have resulted in reduction / elimination of potential hazards.)

58

Activity has been awarded to an external agency and the work started in Sep '09. The following proactive measures were also undertaken to inculcate safety awareness:

Organization of interactive sessions between contract workers, contract supervisors Recognized trade union representatives on "working at height". Safety training programmerr on "Site safety and Road safety" Safety appliances exhibitions were organized. Campaign on "Hazards of using mobile phone while driving" was conducted. A lecture on "Construction Safety" by Jt. Chief Inspector of Factories was organized

covering incharges of Projects and supervisors of contractors.

CORPORATE SOCIAL RESPONSIBILITY

RINL in its own way is committed to social upliftment and is aware of its obligations to the society and is in the forefront of serving the society through its CSR initiatives. 2% of its net profit is earmarked for CSR activities. The CSR initiatives cover Environmental care, Education,Health care, People care, Peripheral development, cultural Efflorescence, Help during natural Calamities and as a Responsible Corporate Citizen rendering an helping hand to lead a meaningful life etc.

Environmental Care:. The flow of water from natural spring to storage tank is due to gravity and does not require any electrical power supply to operate. The supply is perennial so the water problem is solved permanently.The scheme was implemented under trying conditions in remote tribal areas of Paderu and Chintapalli. The project cost was Rs.18.80 Lakhs & about 1300 people were benefitted.Education:As stated, focus has been upon infrastructure development in the field of education. 20 number of school buildings have been constructed in 4 RH Colonies and other resources like Desk-cum-Benches and play equipment have been provided to schools. CSR Department provided scholarships for 225 students belonging to economically and socially marginalized sections of society.

59

Health Care: Medical Camps were continued to be organized as part of CSR initiatives in all RH Colonies and Peripheral Villages around the plant. These camps (35 in number) covered about 5000 persons and 1253 persons benefitted from Cataract Surgery.King George Hospital, Visakhapatnam (Rs.8 Lakhs) a Krushi Orthopedic Welfare Society, Visakhapatnam (Rs.7.35 Lakhs) was extended financial support for procurement of medical equipments. The beneficiaries are 100/day & 20/day (approx.) respectively.

People Care:(Value: Rs.53.17 Lakhs & beneficiaries: 26020 approx. ) Embarking to mitigate the hardships faced by the residents of RHCs and tribal areas, the following schemes were implemented:During the sweltering summer months, drinking water was supplied through tankers to 4 RH Colonies benefitting 15000 people per day, for a period of 64 days.

AREAS OF CONCERNFrom the above SWOT matrix emerging issues / concerns are as follows:(i) Short term & Medium termAs a result of continuous operation of the plant at higher capacities in special steel production, many of the plant equipment warrant immediate revamp and capital repairs. Utmost attention on maintenance related aspects is required so as to ensure upkeep of these equipments till the time major revamps / capital repairs are carried out.

(a) Raw Material prices:Profitability will be adversely impacted by steep escalation in prices of major raw materials:• Iron ore prices by 45% over 1st Jan. 2013 levels. • Imported coking coal prices for the 1st quarter of 2013-14 by 66% over the contract prices of 2012-13.

(b) Modernization & Capital RepairsDovetailing of revamping programmer of Steel Melt Shop (SMS) and Sinter machines with that of Category-I Capital repairs of Blast Furnaces is required, so as to minimize the loss in production on account of shutdowns in these units for carrying out major revamps / Capital repairs.

60

In 2011-12:

OPERATIONAL PERFORMANCE:

RINL has been surpassing the rated capacities of its production units since 2001 and continued the same trend for the year 2008-09. RINL recorded capacity utilization of 104%, 105% & 102% in Hot Metal, Liquid Steel and Saleable Steel respectively despite production curtailment in the second half of the year.

OTHER HIGHLIGHTS

Installation of combined blowing facilities in LD-3 are done in Feb' 09. Replacement of existing Gas Cutting Machine with a new machine in CCM-1 was implemented in Mar' 09.

Commissioning of two units of Argon tanks in ASP for the supply of Argon gas for combined blowing facilities.

Highest Value added production of 20,08,342 t with a growth of 6% over 07-08. Increase in Value Added Heats (15192 no’s) with a growth of 15% over 07-08. Value added production w.r.t Saleable Steel is 74% and is the best since inception. Hot metal & Liquid Steel crossed 58 Mt & 47 Mt Landmark on 11.02.12.

ENVIRONMENT MANAGEMENT

In the year 20011-12, the company was audited by M/s BVCI for continuation of ISO 14001:2004 certificate, which is valid till 2013. The company, in its endeavor to move beyond adherence to stipulated norms, has identified projects worth Rs. 391.6 Crores to improve environmental performance out of which projects worth Rs.24.46 Crores are already implemented.

Major Environmental projects completed during 2011-12.

PRODUCTION PERFORMANCE AT MINES: Mine 2011-12 2010-11 Madharam Dolomite Mine (lakh tons) 5.27 6.64 Jaggayyapeta Limestone

61

Achievements:

18.4% excess Over-burden handled over last year in Madharam Dolomite Mine Slow/Non-moving items were reduced by Rs 40 lakhs at Jaggayyapeta Limestone

Mines stores. Garbham Manganese Mine registered a growth of 23 % in dispatch as compared to

2010-11. The dispatch of River Sand from Sarepalli Sand Mine is 26,615 Tons, a growth of

3.69% over that of 2010-11.

Project Sales During the year 2011-12, 6.71 lakh tons (including Internal Consumption at VSP) have been sold to Project Customers compared to 7.21 lakh tons in the year 2010-11.

CORPORATE GOVERNANCE REPORT The Company strives to attain high standards of corporate governance. Hence, though not mandatory, a separate section on Corporate Governance is annexed and forms part of the Directors' Report.

SECRETARIAL COMPLIANCE REPORT Secretarial Compliance Report confirming compliance to the applicable provisions of Companies Act, 1956 and applicable rules there under, though not mandatory, obtained from a practicing Company Secretary, is annexed and forms part of the Directors' Report.

AUDITORS' REPORT

The Statutory Auditors' Report on the Accounts of the Company for the Financial year ended 31st March, 2012 is enclosed to the Directors' Report at Annexure-I.

C&AG COMMENTS

Comments of the Comptroller and Auditor General of India (C&AG) on the accounts of the Company and Replies thereto are enclosed at Annexure-II.

62

REPORT ON CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

Information required under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosures of Particulars in the Report of Board of Directors) Rules, 1988 regarding Energy Conservation, Technology Absorption and Foreign Exchange earnings and outgo during the Financial year 2011-12 are furnished in the Annexure-A to the report and also in Form-A and Form-B annexed to this report.

FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign Exchange earnings during the year 2010-11 were Rs.78.89 crores as against Rs.556.09 crores during the previous year. The Foreign Exchange Outgo during the year 2008-09 was as.3910.30 crores (including Rs 309.53 Cr on Expansion) as against Rs.2358.61 crores (including Rs 100.26 Crores) during the previous year.

PARTICULARS OF EMPLOYEES

There was no employee of the company who received remuneration in excess of the limits prescribed under Section 217(2A) of the Companies Act 1956 read with the Companies (Particulars of employees) Rules, 1975.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to provisions of Section 217 (2AA) of the Companies Act, 1956, the following statement relating to Annual Accounts for the financial year ended 31st Mar.2012 is made:i) The applicable Accounting Standards had been followed in the preparation of the Annual Accounts for the financial year 2011-12.ii) The Directors had selected such accounting policies and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period.

63

iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.iv) The Directors will prepare the Annual Accounts on a "going concern" basis.

In 2010-11:

Operational Strategy

A deliberate strategic trade-off was arrived at, in favour of maximizing production of value added

Steel, against achieving incremental growth in overall volume of production. This strategy helped not only in offsetting ever increasing costs of input materials, but

also helped in achieving higher levels of contribution and profitability. Growth in Project sales by 40% was also a major contributor to this achievement of

surpassing sales targets.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT FOR 2010-11

A. INDUSTRY STRUCTURE AND DEVELOPMENT

Economic Conditions and Steel Market However, business confidence in Asia remained high, unlike the declines experienced in the US and Europe. The international steel markets were characterized by high demand, driven in particular by the expansive trend in China. As per the IISI report, world crude steel output reached 1343.5 Million metric tons (Mt) for the year 2010, an increase of 7.5% over 2009. The total production quantity represents the highest level of crude steel output in history and it is the fifth consecutive year that world crude steel production grew by more than 7%. Without China, world crude steel production would have grown only at 3.3%. Other BRIC countries also maintained relatively high growth, with India and Brazil recording 7.3% and 9.3% increase respectively.

Raw material markets remained tight in 2010With continued growth in steel demand, the situation on the global iron ore market remained tight in 2013.

64

There was a 10% year-on-year increase in price (fob) of iron ore fines. The tightness in the iron ore market at mid-year 2011 was in part due to a decrease in domestic iron ore production in China and an increase in steel production.Sales value during the last 3 years Total steel sales volume during 2011-12 stood at 2.94 million tons. Domestic steel sales of 2.88 million tons ware registered during 2010-11. The focus during the year was on the development of actual user base in the domestic market. Around 61% of the steel was supplied to the actual user segment in 2010-11 compared to 59% during the previous year 2009-10.

Exports

Exports of iron and steel products were restricted to meet the domestic requirements, in line with the Government of India expectations to give priority to the domestic sales.As a result during the year 2011-12, 62 thousand tons of steel products and 255 thousand tons of Pig Iron were exported as compared to 121 thousand tons of steel and 159 thousand tons of Pig Iron in 2010-11. However in terms of value, there was a growth of 31% in exports as compared to previous year mainly due to buoyant steel market all over the globe. The exports of Iron and Steel products were made to the countries like Nepal, Srilanka, Thailand, Indonesia, Japan, Malaysia etc.

Value Added Steels

During the year, special thrust was given on improving sale of value added products, which has given rich dividends. For the year 2011-12, 18.27 lakh tons of value added steel products have been sold compared to 11.11 lakh ton during the last year i.e., 2010-11, representing a growth of 64%.

Performance in Project Sales

For the year 2011-12, 7.21 lakh tons (including internal consumption at VSP) have been sold to Project Customers compared to 5.55 lakh tons (including internal consumption at VSP) in the year 2011-12, representing a growth of 30%. Eastern & Northern Regions registered significant growth rates of 28% and 38% respectively.

65

In 2010-11:

Sales Performance

Best ever sales of Rs. 9151 Crs since inception was registered during 2010-11 with MOU target fulfilment of 105% which is 8% more than the sales turnover of Rs. 8491 Crs. in 2012-13 Domestic sales of Rs. 8726 Crs. In 2010-11 was also the best ever since inception.

Expenditure on Interest, Bank charges and Insurance costs while improving interest earnings on surplus funds.

The Company has taken up with GOI for early Redemption of Preference Shares Capital so as to bring down the capital base.

The Board of Directors had approved Redemption of Preference Shares of Rs.345 Crores for the year 2009-10 and Rs.700 cr. for 2010-11.

Rural marketing and new outlet

(i) With a view to making steel available in rural areas, additional 60 nos. of District Level Dealers (DLDs) were appointed in Southern States namely Andhra Pradesh, Karnataka, Tamilnadu, Kerala and Pondicherry, making VSP's presence in each and every district in South, taking the total number of DLDs to 99 nos.(ii) Three numbers of new Consignment Sales Agencies (CSA) were appointed in Raipur, Pondicherry & Jamshedpur. Coastal transportation could help in improving the overall dispatches and reduce dependence on rail and road transport.

CRM initiatives

(i) For the first time E-poll has been introduced in RINL/VSP portal vizagsteel.com for capturing on line customer feedback.(ii) A number of activities during the year has been taken towards improving customer satisfaction, like quicker settlement of quality complaints, answering to customer queries through portal in 24 hours, monitoring customer delivery norms etc.

66

MATERIAL MARKETING REVIEW

During the year 2010-11, timely availability of bulk and other raw materials required for higher level of production was ensured. Further to overcome uncertainties on availability of required quantum of materials, your Company, entered into MOUs with NINL/MMTC for LAM Coke, with NALCO for Aluminum Metal and with SAIL for supply of structural steel for expansion.

Other initiatives include the following:

Joint Venture MOU was signed with MOIL for producing Silicon Manganese and Ferro Manganese.

For widening coal supplier-base, expression of interest (EOI) of suppliers (to deal with the Company on long term basis) was invited. The response was satisfactory and follow-up actions were taken up. For Imported Coking Coal (ICC) three new firms were short listed through Expression of Interest.

The procurement policy for ICC and LAM coke was finalized during the year. 5S was implemented in almost all areas of Stores for better housekeeping and service. A few large size coal vessels were engaged, diversion of vessels from one port to the

other for discharge operations, etc. were gone in to achieve cost reduction. Efforts to reduce cost on account of logistics will continue. MOU with regard to "Integrity Pact" was signed with Transparency International

India and the same is being implemented in the tenders.

Raw material and capital mines

The performance of Madharam Dolomite Mine for the year 2010-11 was satisfactory with production of 6,57,020 tons and all time dispatch record of 6,50,363 tons of dolomite.

The performance of Jaggayyapeta Limestone Mine for the year 2010-11 was satisfactory with all time production record of 4,57,620 tons and dispatch record of 4,54,026 tons of limestone.

The % growth in respect of JLM production was 11.53% and dispatch was 12.49% as compared to 2009-10.

67

The production of Manganese at Garbham Manganese Mine was good i.e., 13,076 tons and dispatch was 9,361 tons.

"Expression of interest for acquisition of hard coking coal mines abroad" was placed in the Company's website. Responses from Australia, USA and Canada were received.

The Evaluation Committee constituted by the Management is following and reviewing the linkages for all the raw material required for expansion of steel plant to 6.5 MT stage.

Similarly offers for Joint Ventures participation for operating Low Silica Limestone Mine in the Sultanate of Oman are in progress.

CORPORATE SOCIAL RESPONSIBILITIES

Your Company firmly believes in giving back to the society. To give thrust to the Corporate Social Responsibility, a separate Department was formed.

Your Company has become a Member of the Global Compact Forum under the aegis of United Nations Organization.

Your company has framed the policy of Corporate Social Responsibility of RINL/VSP and was approved by the Board. According to the approved policy, financial contributions can be extended by RINL/VSP to (a) various Socially Beneficial Projects in and around VSP, (b) in the district of Visakhapatnam (c) in the State of Andhra Pradesh and (d) in Country at large.

The Board has also prescribed to contribute 2.0% of the Net Profit (PAT less accumulated losses, if any, carried forward) of the Company of the previous year towards CSR activities.

Your company started contributing for developmental works in RH Colonies and peripheral villages.

HUMAN RESOURCE MANAGEMENT REVIEW

Your company lays great emphasis on Human Resource Development. During the year, efforts were focused towards facilitating the organization to meet the

challenges of the new business realities in the changing economic scenario. Keeping in view the expansion of the plant, emphasis is being placed on specific

position related training needs and there is an attempt to customize programmers, to the extent possible.

68

Thrust also continued on optimum utilization of the human resources to achieve the higher productivity and establishment of work culture in line with the HR Policy

Man power

During the year 2010-11, 505 programmers were organized (143 in-house and 362 external), covering a total no. of 6207 employees (3974 executives and 2233 non-executives).

15 Nos. of internal Business & Management Quizzes (BMQs) were organized. A total of 318 student trainees joined for undergoing project-based/field work by which an amount of Rs. 5,10,650/- was generated as training charges.

3 teams were sponsored for 32nd National Competition of Young Managers (NCYM) conducted by AIMA, New Delhi and one team bagged Ist position in the Regional Round and3rd position in the Grand Finale.

MARKET SURVEY

Your Company conducted market Survey to assess the various specifications and grades in Wire Rods and Rounds around the country in various end use segments to assess the demand and the competitor’s presence.

This would be an input to implement the Sustainability Plan in 2007-08 to identify and increase presence in high value products and develop niche segment.

This would also assist in marketing products from expansion mills catering to new special steel grades.

CORPORATE PLAN 2020

India has been witnessing a major transformation in the steel sector with surging demand for steel, which closely follows the enhanced growth rate of the economy.

In order to meet the growing demand, it was decided to revise the Corporate Plan, which was prepared in the past aiming at expansion to 10 Mt by 2020.

In line with the decision to revise the Corporate Plan, different working groups were constituted. Initially, the Vision, Mission and Objectives were reviewed and revised.

Subsequently Capacity Build up Plan was prepared. Based on these, the Approach Papers were prepared by various working Groups.

69

The Approach papers were integrated and the Corporate Plan 2020 was prepared. The Corporate Plan envisages expansion of Plant capacity in four phases. In the Phase-1 and Phase-2, the capacity is planned to be raised to 6.8 Mt by 2008-09

and 8.5 Mt by 2013-14 respectively. Up to Phase-2, the Plant will continue to be in the long products segment.

Subsequently, it is planned to diversify into flat products. In Phase-3 and Phase-4, the capacity will be increased to 13.0 Mt by 2014-15 and

16.0 Mt by 2017-18 respectively. The ballpark figure of investment for all the four Phases of expansion was placed at

about Rs 26,000 cr. It was proposed to explore and adopt technologies like FINEX, AUSIRON,

HISMELT, MIDREX etc. from Phase-3, if found cost effective. For raw material security, it was planned to have captive iron ore and coal mines.

As far as Human Resource Management is concerned, it was planned to develop a highly motivated, innovative and competent workforce. Labour productivity of about 1000 tons per man-year has been envisaged by 2020.

The Corporate Plan 2020 was released by the Secretary, Ministry of Steel, and Government of India during the RINL Formation Day Silver Jubilee Celebrations at Visakhapatnam.

SEGMENTWISE OR PRODUCT WISE PERFORMANCE During the year 2010-11, the total sale of steel in tons was 3.266 million of which the

Domestic steel sales was 3.145 million and was the highest ever since inception and also registered a growth of 1% over previous year.

Around 59% of the domestic steel sale was supplied to the actual user segment in 2010-11.

VALUE ADDED STEELS Sale of value added steel products was 11.11 lakhs tons in 2010-11 against 9.27 lakhs

tons in 2009-10, representing a healthy growth rate of 20%. The percentage of value added steel sales in the total sales of saleable steel stood at

34% in 2010-11, which is the highest ever recorded till date. During the year, 62 new products were introduced in the market. Around 6.2 lakhs

tons of special steel was supplied to the automobile sector against 5.0 lakhs tons in 2005-06 registering a growth of 24%.

70

CHAPTER – 3

71

THEORETICAL FRAMEWORK

1. To carry out the study we framed the following objectives

2. Identification of the technique of performance appraisal followed in VSP

3. Employee attitude towards the present appraisal system.

4. Review of the current appraisal system in order to

a. Enhance productivityb. Attain global standards

5. To Provide Suggestions & Recommendation from the study conducted.

Importance and Purpose

Performance Appraisal has been considered as the most significant an indispensable tool for an organization, for an organization, for the information it provides is highly useful in making decisions regarding various personnel aspects such as promotion and merit increases.

Performance measures also link information gathering and decision making processes which provide a basis for judging the effectiveness of personnel sub-divisions such as recruiting, selection, training and compensation.

Accurate information plays a vital role in the organization as a whole. They help in finding out the weaknesses in the primary areas.

Formal Performance Appraisal plans are designed to meet three needs, one of the organization and the other two of the individual namely:

They provide systematic judgments to back up salary increases, transfers, demotions or terminations.

They are the means of telling a subordinate how he is doing and suggesting needed changes in his behavior, attitudes, skills or job knowledge. They let him know where he stands with the Boss.

72

Superior uses them as a base for coaching and counseling the individual. On the basis of merit rating or appraisal procedures, the main objectives of Employee Appraisal are:

To enable an organization to maintain an inventory of the number and quality of all managers and to identify and meet their training needs and aspirations.

To determine increment rewards and to provide reliable index for promotions and transfers to positions of greater responsibility.

Introduction to Performance Appraisal

Once the employee has been selected, trained and motivated, he is then appraised for his performance.

Performance Appraisal is the step where the Management finds out how effective it has been at hiring and placing employees.

If any problems are identified, steps are taken to communicate with the employee and remedy them.

Performance Appraisal is a process of evaluating an employee’s performance in terms of its requirements.

Performance Appraisal can also be defined as the process of evaluating the performance and qualifications of the employees in terms of the requirements of the job.

WHAT IS “PERFORMANCE APPRAISAL”?

Performance Appraisal is defined as the process of assessing the performance and progress of an employee or a group of employees on a given job and his / their potential for future development.

It consists of all formal procedures used in working organizations and potential of employees.

According to Flippo, “Performance Appraisal is the systematic, periodic and an important rating of an employee’s excellence in matters pertaining to his present job and his potential for a better job.”

73

CHARACTERISTICS

1.    Performance Appraisal is a process.

2.    It is the systematic examination of the strengths and weakness of an employee in terms of his job.

3.    It is scientific and objective study. Formal procedures are used in the study.

4.    It is an ongoing and continuous process wherein the evaluations are arranged periodically according to a definite plan.

5.    The main purpose of Performance Appraisal is to secure information necessary for making objective and correct decision an employee.

PROCESS

1.    Establishing performance standards

2.    Communicating the Standards

    3.   Measuring Performance

    4.   Comparing the actual with the standards

    5.   Discussing the appraisal

     6. Taking Corrective Action

LIMITATIONS

1.    Errors in Rating

2.    Lack of reliability

3.    Negative approach

4.    Multiple objectives

5.  Lack of knowledge

METHODS OF PERFORMANCE APPRAISAL

74

The foregoing list of major program pitfalls represents a formidable challenge, even considering the available battery of appraisal techniques.

But attempting to avoid these pitfalls by doing away with appraisals themselves is like trying to solve the problems of life by committing suicide.

The more logical task is to identify those appraisal practices that are (a) Most likely to achieve a particular objective (b) Least vulnerable to the obstacles already discussed.

Before relating the specific techniques to the goals of performance appraisal stated at the outset of the article, I shall briefly review each, taking them more or less in an order of increasing complexity.

The best-known techniques will be treated most briefly.

ESSAY APPRAISAL

In its simplest form, this technique asks the ratter to write a paragraph or more covering an individual's strengths, weaknesses, potential, and so on.

In most selection situations, particularly those involving professional, sales, or managerial positions, essay appraisals from former employers, teachers, or associates carry significant weight.

.

GRAPHIC RATING SCALE

This technique may not yield the depth of an essay appraisal, but it is more consistent and reliable.

Typically, a graphic scale assesses a person on the quality and quantity of his work (is he outstanding, above average, average, or unsatisfactory?) and on a variety of other factors that vary with the job but usually include personal traits like reliability and cooperation.

It may also include specific performance items like oral and written communication.

FIELD REVIEW

75

The field review is one of several techniques for doing this.

A member of the personnel or central administrative staff meets with small groups of ratters from each supervisory unit and goes over each employee's rating with them to

(a) Identify areas of inter-rate disagreement

(b) Help the group arrive at a consensus

(c) Determine that each ratter conceives the standards similarly. .

FORCED-CHOICE RATING

Like the field review, this technique was developed to reduce bias and establish objective standards of comparison between individuals, but it does not involve the intervention of a third party.

MANAGEMENT BY OBJECTIVES

To avoid, or to deal with, the feeling that they are being judged by unfairly high standards, employees in some organizations are being asked to set - or help set - their own performance goals

RANKING METHODS For comparative purposes, particularly when it is necessary to compare people who

work for different supervisors, individual statements, ratings, or appraisal forms are not particularly useful.

Instead, it is necessary to recognize that comparisons involve an overall subjective judgment to which a host of additional facts and impressions must somehow be added.

There is no single form or way to do this. The best approach appears to be a ranking technique involving pooled judgment. The two most effective methods are alternation ranking and paired comparison

ranking.

1.    “Alternation ranking”:

Ranking of employees from best to worst on a trait or traits is another method for evaluating employees.

76

Since it is usually easier to distinguish between the worst and the best employees than to rank them, an alternation ranking method is most popular.

Here subordinates to be rated are listed and the names of those not well enough to rank are crossed.

Then on a form as shown below, the employee who is highest on the characteristic being measured and the one who is the lowest are indicated.

Then chose the next highest and the next lowest, alternating between highest and lowest until all the employees to be rated have been ranked.

2.    “Paired-comparison ranking”:

This technique is probably just as accurate as alternation ranking and might be more so.

But with large numbers of employees it becomes extremely time consuming and cumbersome.

ASSESSMENT CENTERS

So far, we have been talking about assessing past performance. What about the assessment of future performance or potential? In any placement decision and even more so in promotion decisions, some prediction

of future performance is necessary. How can this kind of prediction be made most validly and most fairly?

360 DEGREE FEEDBACK

Many firms have expanded the idea of upward feedback into what the call 360-degree feedback.

The feedback is generally used for training and development, rather than for pay increases.

Most 360 Degree Feedback system contains several common features. Appropriate parties – peers, supervisors, subordinates and customers, for instance –

complete survey, questionnaires on an individual.

77

360 degree feedback is also known as the multi-ratter feedback, whereby ratings are not given just by the next manager up in the organizational hierarchy, but also by peers and subordinates.

Appropriates customer ratings are also included, along with the element of self-appraisal.

Once gathered in, the assessment from the various quarters are compared with one another and the results communicated to the manager concerned.

Another technique that is useful for coaching purposes is, of course, MBO. Like the critical incident method, it focuses on actual behavior and actual results,

which can be discussed objectively and constructively, with little or no need for a supervisor to "play God."

Advantages

Instead of assuming traits, the MBO method concentrates on actual outcomes. If the employee meets or exceeds the set objectives, then he or she has demonstrated

an acceptable level of job performance. Employees are judged according to real outcomes, and not on their potential for

success, or on someone's subjective opinion of their abilities. The guiding principle of the MBO approach is that direct results are observed easily. The MBO method recognizes the fact that it is difficult to neatly dissect all the

complex and varied elements that go to make up employee performance.

Disadvantages

This approach can lead to unrealistic expectations about what can and cannot be reasonably accomplished.

Supervisors and subordinates must have very good "reality checking" skills to use MBO appraisal methods.

They will need these skills during the initial stage of objective setting, and for the purposes of self-auditing and self-monitoring.

Variable objectives may cause employee confusion. It is also possible that fluid objectives may be distorted to disguise or justify failures in performance.

78

Benefits of Performance Appraisals

Measures an employee’s performance. Helps in clarifying, defining, redefining priorities and objectives.

Motivates the employee through achievement and feedback.

Facilitates assessment and agreement of training needs.

Helps in identification of personal strengths and weaknesses.

Plays an important role in Personal career and succession planning.

Clarifies team roles and facilitates team building.

Plays major role in organizational training needs assessment and analysis.

Improves understanding and relationship between the employee and the reporting manager and also helps in resolving confusions and misunderstandings.

Plays an important tool for communicating the organization’s philosophies, values, aims, strategies, priorities, etc among its employees.

Helps in counseling and feedback.

Rating Errors in Performance Appraisals

Performance appraisals are subject to a wide variety of inaccuracies and biases referred to as 'rating errors'. These errors can seriously affect assessment results. Some of the most common rating errors are: -

Leniency or severity: - Leniency or severity on the part of the ratter makes the assessment subjective. Subjective assessment defeats the very purpose of performance appraisal. Ratings are lenient for the following reasons:

a)  The rate may feel that anyone under his or her jurisdiction who is rated unfavorably will reflect poorly on his or her own worthiness.

b)  He/She may feel that a derogatory rating will be revealed to the rate to detriment the relations between the ratter and the rate.

79

c)  He/She may rate leniently in order to win promotions for the subordinates and therefore, indirectly increase his/her hold over him.

Central tendency: - 

This occurs when employees are incorrectly rated near the average or middle of the scale. The attitude of the ratter is to play safe.

This safe playing attitude stems from certain doubts and anxieties, which the ratters have been assessing the rates.

Halo error: - 

A halo error takes place when one aspect of an individual's performance influences the evaluation of the entire performance of the individual.

The halo error occurs when an employee who works late constantly might be rated high on productivity and quality of output as well as on motivation.

Similarly, an attractive or popular personality might be given a high overall rating. Rating employees separately on each of the performance measures and encouraging ratters to guard against the halo effect are the two ways to reduce the halo effect.

Rater effect: -

This includes favoritism, stereotyping, and hostility. Extensively high or low score are given only to certain individuals or groups based on

the ratter's attitude towards them and not on actual outcomes or behaviors; sex, age, race and friendship biases are examples of this type of error.

Primacy and Regency effects: - 

The ratter's rating is heavily influenced either by behavior exhibited by the rate during his early stage of the review period (primacy) or by the outcomes, or behavior exhibited by the rate near the end of the review period (regency).

For example, if a salesperson captures an important contract/sale just before the completion of the appraisal, the timing of the incident may inflate his or her standing, even though the overall performance of the sales person may not have been encouraging.

One way of guarding against such an error is to ask the ratter to consider the composite performance of the rate and not to be influenced by one incident or an achievement.

80

Performance dimension order: - 

Two or more dimensions on a performance instrument follow each other and both describe or rotate to a similar quality.

The ratter rates the first dimensions accurately and then rates the second dimension to the first because of the proximity.

If the dimensions had been arranged in a significantly different order, the ratings might have been different.

Spill over effect: - 

This refers lo allowing past performance appraisal rating lo unjustifiably influence current ratings.

Past ratings, good or bad, result in similar rating for current period although the demonstrated behavior does not deserve the rating, good or bad.

ROLES IN THE PERFORMANCE APPRAISAL PROCESS

a)  Reporting Manager

Provide feedback to the reviewer / HOD on the employees’ behavioral traits indicated in the PMS Policy Manual

Ensures that employee is aware of the normalization / performance appraisal process Address employee concerns / queries on performance rating, in consultation with the

reviewer

b)  Reviewer (Reporting Manager’s Reporting Manager)

Discuss with the reporting managers on the behavioral traits of all the employees for whom he / she is the reviewer

Where required, independently assess employees for the said behavioral traits; such assessments might require collecting data directly from other relevant employees

c)     HOD (In some cases, a reviewer may not be a HOD)

Presents the proposed Performance Rating for every employee of his / her function to the Normalization committee.

HOD also plays the role of a normalization committee member Owns the performance rating of every employee in the department

81

d)  HR Head

Secretary to the normalization committee Assists HOD’s / Reporting Managers in communicating the performance rating of all

the employees

e)  Normalization Committee

Decides on the final bell curve for each function in the respective Business Unit / Circle

Reviews the performance ratings proposed by the HOD’s, specifically on the upward / downward shift in ratings, to ensure an unbiased relative ranking of employees on overall performance, and thus finalize the performance rating of each employee.

PROJECT REPORT ON "PERFORMANCE APPRAISAL" LITERATURE REVIEW AND CONCEPT FORMULATION

Human Resource (or personnel) management, in the sense of getting things done through people, is an essential part of every manager’s responsibility, but many organizations find it advantageous to establish a specialist division to provide an expert service dedicated to ensuring that the human resource function is performed efficiently.

“People are our most valuable asset” is a cliché, which no member of any senior management team would disagree with.

Yet, the reality for many organizations are that their people remain under valued, under trained and underutilized.

Following are the various functions of human resource management that are essential for the effective functioning of the organization:

1. Recruitment.2. Selection3. Induction4. Performance Appraisal

82

5. Training & Development

Definition of Questionnaire

List of a research or survey questions asked to respondents, and designed to extract specific information. It serves four basic purposes: to

(1) Collect the appropriate data,

(2) make data comparable and amenable to analysis,

(3) minimize bias in formulating and asking question, and

(4) To make questions engaging and varied.

Some disadvantages of questionnaires:

Questionnaires, like many evaluation methods occur after the event, so participants may forget important issues.

Questionnaires are standardized so it is not possible to explain any points in the questions that participants might misinterpret.

This could be partially solved by piloting the questions on a small group of students or at least friends and colleagues.

It is advisable to do this anyway. Open-ended questions can generate large amounts of data that can take a long time to

process and analyze. One way of limiting this would be to limit the space available to students so their

responses are concise or to sample the students and survey only a portion of them. Respondents may answer superficially especially if the questionnaire takes a long

time to complete. The common mistake of asking too many questions should be avoided. Students may not be willing to answer the questions.

They might not wish to reveal the information or they might think that they will not benefit from responding perhaps even be penalised by giving their real opinion.

83

Students should be told why the information is being collected and how the results will be beneficial.

They should be asked to reply honestly and told that if their response is negative this is just as useful as a more positive opinion. The questionnaire should be anonymous.

Some advantages of questionnaires:

The responses are gathered in a standardised way, so questionnaires are more objective, certainly more so than interviews.

Generally it is relatively quick to collect information using a questionnaire. However in some situations they can take a long time not only to design but also to apply and analyse (see disadvantages for more information).

Potentially information can be collected from a large portion of a group.

This potential is not often realised, as returns from questionnaires are usually low. However return rates can be dramatically improved if the questionnaire is delivered and responded to in class time.

1. Collection information through questionnaires

Some countries reflected by supplying partial information, particularly related to financial data.

2. Evaluation of the questionnaires through tables

3. General evaluation of the replies

4. Density of sediment monitoring network

5. Exceptional cases

6. Content of summary table

7. Evaluation of the replies on the questionnaires

8. Shortcomings of the report

Performance Standards

84

How does the Team Leader decide what's acceptable and what's unacceptable performance? The first step in answering this question is to establish written Standards.

Performance expectations are the basis for appraising employee performance. Performance standards let the Team Leader to compare the employee's performance

with mutually understood expectations and minimize ambiguity in providing feedback.

Having performance standards is not a new concept; standards exist whether or not they are discussed or put in writing.

When the Team Leader observes an employee's performance, he usually makes a judgment about whether that performance is acceptable.

Standards identify a baseline for measuring performance. From performance standards, the Team Leader can provide specific Feedback describing the gap between expected and actual performance.

Guiding Principles

Effective performance standards: Serve as an objective basis for communicating about performance. Enables the employee to differentiate between acceptable and unacceptable results. Increase job satisfaction because employees know when tasks are performed well. Inform new employees of your expectations about job performance.

Characteristics of Performance Standards

Standards describe the conditions that must exist before the performance can be rated satisfactory.

A performance standard should: Be realistic, in other words, attainable by any qualified, competent, and fully trained

person who has the authority and resources to achieve the desired result . Describe the conditions that exist when performance meets expectations. Be expressed in terms of quantity, quality, time, cost, effect, manner of performance,

or method of doing Be measurable, with specified method(s) of gathering performance data and measuring performance against standards.

Performance Appraisal Effectiveness MBA (Human Resources)

85

Expressing Standards

The terms for expressing performance standards are outlined below: Quantity: Specifies how much work must be completed within a certain period of time. Quality: Describes how well the work must be accomplished. Specifies accuracy,

precision, appearance, or effectiveness. Timeliness: Answers the questions, by when? , How soon? , Or within what period? Effective Use of Resources: Used when performance can be assessed in terms of

utilization of resources: money saved, waste reduced. Effects of Effort: Addresses the ultimate effect to be obtained; expands statements of

effectiveness by using phrases such as: so that, in order to, or as shown by. Manner of Performance: Describes conditions in which an individual's personal

behavior has an effect on performance, e.g., assists other employees in the work unit in accomplishing assignments.

Method of Performing Assignments: Describes requirements; used when only the officially prescribed policy, procedure, or rule for accomplishing the work is acceptable.

86

CHAPTER – 4 QUESTIONNAIRE & ANALYSIS

87

QUESTIONNAIRE ON PERFORMANCE APPRAISAL SYSTEM.

Respected Sir/Madam

I Yalagala Nagavinay, Student of Dr. L.Bullayya P.G College,( Andhra university). As a partial fulfilment of my course MBA, a project title “Performance Appraisal System in VSP” is being undertaken. Therefore, I would like to request you to kindly fill up the questionnaire given below to able me substantiate and complete my project. The information that you have furnished will be keep confidential and strictly used for academic purpose only.

Thanking you for your valuable time and help with best regards.

PERSONAL INFORMATION

Name:

Employee No:

Designation:

Department:

E-Mail Address:

Please tick the appropriate options for the statements given below.

1. Since how long have you been working in this company?

a) <1 year b) 1-3 years c) 3-6 years d) Above 6 years

2. Are you aware about performance appraisal system?

a) Yes b) No

3. Is performance appraisal essential in the organization?

a) Yes b) No

4. Was you performance evaluated earlier?

88

a) Yes b) No

5. How often is the performance appraisal done?

a) Annually b) Every 6 months c) When there is need only d) can't say

6. Is the appraisal system helping you to improve your performance?

a) Yes b) No

7. Who assess your performance?

a) Self b) Supervisor c) Department head d) Subordinates

8. Do you have a set of clear established goals/objectives/performance criteria?

a)Yes b)No c)can't say d)Any other(Please specify)

9. Satisfaction level regarding present appraisal method?

a) High satisfaction b) Satisfaction c) Dissatisfaction d) can't say

10. Does the result meet your expectation?

a) Yes b) No

11. How do you feel during appraisal?

a) Motivation b) Encourage c) Discourage d) Criticized

12. What is your reaction when you heard about the appraisal decisions?

a) Happy b) Bad c) Fear d) Bored

13. Are your strengths and weaknesses informed to you after appraisal program?

a) Yes b) No

89

14. Were you given any advices/suggestions to improve your Weakness/Incapability?

a) Yes b) No

15. Does your superior provide you in terms of actual data on your performance/targets?

a) Yes b) No c) can't say

16. While taking decisions relating to transfers and promotions is the performance to be the primary criteria?

a) Agree b)Disagree c)Strongly agree d)Strongly disagree

17. Have you received any awards for good performance?

a) Yes b) No

18. Is present system of performance appraisal perfect tool for promotions and increments?

a) Agree b)Disagree c)Strongly agree d)Strongly disagree

19. Does your department facilitate the career opportunities?

a) Yes b) No

20. The performance appraisal helps to win co-operation and team work?

a) Strongly agree b) Agree c) Neither agree Nor Disagree

d) Disagree e) Strongly disagree

90

Kind of performance appraisal       

S I No. Options Percentage Respondents

1 Self Appraisal 40% 802 360 5% 10

3

Annual Performance appraisal 50% 100

4Confidential report 5% 10

  Total 100% 200

91

COMMENT:- The above table 1 shows that most of the respondents (40%) are strongly agree. Some of them are agree(50%).over all other is (5%)who disagree and above this may be, the employees in vsp are satisfied to do work with pleasure due to various reasons like work culture , latest technology and so on It is found rather appear that the organization providing favorable climate to employees in their work life. so ,employees of vsp are happy to work with the organization.

92

1) Does Performance appraisal system encourage people to plan their work in before

S I No. Options Percentage Respondents

1 Agree 50% 1002 Disagree 10% 20

3Strongly Agree 40% 80

4Strongly Disagree 0% 0

    100% 200

93

COMMENT:-

The above table 2 shows that respondents agree (50 %.). Disagree (10%) Strongly disagree (0%) and remaining strongly (40%).with the statement performance appraisal system encourages people to plan their work well in advance.

This question or case in more relevant to executives and supervisors. but incidentally the non executives were also of the same opinion that means they are also very well aware of work planning and duties allotted to them.

This is found that organization work procedure to production achievement is very good and the relation of performance assessment procedure is effective.

Performance appraisal in VSP mainly focus on

94

S I No. Options Percentage Respondents

1 Potential 10% 202 Performance 24% 483 Both 65% 1304 None 1% 2

  Total 100% 200

COMMENT:

95

The above table shows that respondents(65%) employees in VSP mainly focus on both performance and potential types appraisals ,where it also shows (24%) of employee only focus on performance where it gives correct information,(10%) this total gives remaining focus on potential factors of an employee.

Which method of Evaluation is used to measure thetargets & tasks in VSP

S I No. Options Percentage Respondents

1 Points 40% 802 Bar codes 0% 03 Grades 60% 1204 None 0% 0

  Total 100% 200

96

COMMENT:

The above table explains maximum respondents(60%) wants to measure the tasks and targets in grades because it gives direct information with each grade explanation and remaining (40%) of respondents want to know tasks in points.

97

2) Do you think performance appraisal should be taken

S I No. Options Percentage Respondents

1 Quarterly 30% 602 Half yearly 50% 100

3Once in cluster period 19% 38

4 None 1% 2

  Total 100% 200

98

COMMENT:

The above table explains maximum respondents (50%) want to take performance appraisal should be taken in half yearly because it gives proper information of an employee in an organization ,remaining (30%) want to performance appraisal should be taken in quarterly and remaining (19%) want to give in once in a cluster ,only 1% specifies nothing.

99

3) How many subordinates works under you

S I No. Options Percentage Respondents

1 0-5 30% 602 6 to 10 45% 903 above 20 5% 104 None 20% 40

  Total 100% 200

100

COMMENT:

The above table explains about number of subordinates who works under each superior where the respondents (45%) of employees working under them ,remaining (30%) have maximum of 5 subordinates working under each superior,(5%) have above 20 employees under them .this explains only about the workers in each superior.

101

4) Do you think that performance appraisal helps to know the strength and weakness of Subordinates

S I No. Options Percentage Respondents

1 Agree 50% 1002 Disagree 30% 603 Strongly agree 20% 404 Dis agree 0% 0

  Total 100% 200

102

COMMENT:

103

The above table explains about does the performance appraisal system helps in knowing the strength and weakness of subordinates to this statement employee are agree (50%) and employee are strongly agree (30%).so employee (50%) are agree to this system is useful to knowing the strength and weakness of subordinates and it is important activity to assess the performance of the employee.

In the interaction with de employees, it has been expressed by them that their disagreeness is not with respect to the system of performance evaluation but, their disagreeness with respect to question that this is meant for sub ordinates.

5) What is the Best performance appraisal system in relevant to applications in VSP

S I No. Options Percentage Respondents

1 360 35% 702 Self appraisal 35% 70

3Online Job allotment 8% 16

4 Both 20% 405 None 2% 4

104

  Total 100% 200

105

COMMENTS:

The above table explain us about the best performance appraisal in Visakhapatnam steel plant according to employees agree with self appraisal and 360 degree appraisal(35%),however remaining (20%) of respondents felt as it is both (self as well as 360).

6) Is it necessary to supply feedback in performance appraisal

S I No. Options Percentage Respondents

1Strongly Agree 40% 80

2Strongly disagree 5% 10

3 Agree 50% 1004 Disagree 5% 10

  Total 100% 200

106

Who conduct the appraisal system

S I No. Options Percentage Respondents

1 Supervisor 10% 20

2Controlling officer 60% 120

3reporting officer 30% 60

107

4 None 0% 0

  Total 100% 200

108

The above table shows that the total number of respondents (60%) will conduct controlling officers where they have higher appraisal performance, the remaining (30%) will be conducted by reporting officer and superior will conduct (10%).

Is it important to maintain the employee records/ data/documents related to performance appraisal (or) confidential report

S I No. Options Percentage Respondents

1 PA or CR 30% 60

2

Need for Character record 30% 60

3 Transparency 40% 804 None 0% 0

  Total 100% 200

109

COMMENT:

The above table shows that the total number of respondents (40%) agree to represent transparency of the record,(30%) of the employee want maintain character record which even includes(30%) confidential reports in knowing the performance of employee record information.

7) Have you ever suggested any modification to add/del

110

performance appraisal in booklet

S I No. Options Percentage Respondents

1 Yes 70% 1402 No 20% 403 None 10% 20

  Total 100% 200

111

COMMENTS:

The above table shows that the total number of respondents(70%) agree that they have the chance to suggest some modification such as AGM,GM,DM. Remaining (20%) employee disagree because they think that it is not their right to suggest any thing in the booklet.

8) Did you face any problem in performance appraisal ,If “Yes” What are the

Problem: ____________ Solution: ____________

S I No. Options Percentage Respondents

1Openly expressing 10% 20

2 Hesitating 20% 40

112

3Express w/o self details 30% 60

4 None 40% 80

  Total 100% 200

113

COMMENT:

The above table shows that respondents (40% ) are not willing to express their problems .As (20% )of the employees are hesitating to express their problems . Remaining (30%) wants to express their problems w/o giving their details and the rest (10%) are openly expressing their problems, which says that even though they are having problems they don’t want to express.

SUMMARY

The graphical analysis for the various units clearly shows that the company’s performance appraisal programs are very beneficial to the workmen and also the HR department has been successful in implementing appraisal programs which have met the needs of the workmen and also beneficial to the company.

Performance appraisal for all the workmen in various units like Knowledge sharing programs, Technical, behavioral has been really beneficial to all the workmen and also to the employees.

114

The questionnaire is one of the most important in performance appraisal program which has been undergone by many of the workmen and many have been of the opinion that it is one of the most important performance analysis program analyzed by the company.

CHAPTER – 5FINDINGS

115

SUGGESTIONS CONCLUSION

FINDINGS

From the survey on workmen it is clearly evident that most of them are satisfied with the appraisal programs provided by the organization.

The RINL-VSP, Visakhapatnam has put in its best efforts in implementing various activities for the welfare of workmen.

116

The appraisal programs have been fruitful to the organization as the productivity levels as well as the overall work efficiency of the employees have increased after the questionnaire programs.

However in the survey,

We have found that some of the employees have attended the questionnaire programs even though they have been called for it.

Even though there is pollution in the electrolysis department, the company has been successful in tackling this problem by providing the workmen with various guarding equipments.

This appraisal will help to know the performance of each and every employee through appraisal system, where steel plant provided annual performance system .it also provides different stages of appraisal forms E-7,A-5 etc.

Where it can be differeciated by providing different color representation to each grade employees which also includes Non-technical and Technical employees.

Without this appraisal the performance of employee can be known at different stages from subordinates and superiors.

SUGGESTIONS

1) The objective of the questioner is highly sensitive, such information shall be utilized only for analyzing the data why, it cannot be considered for evaluation of the system as a whole.

2) In such kind of questionnaire name, department, employee no, should not be optional.3) Online performance appraisal system will be more beneficial to both employee

&employer.4) Appraisal system should be more transparent so that each employee can improve

himself.5) To learn the subject is very essential for manager, it is occasion.6) In VSP, proper manger appraisal system is useful, so we can suggest other

organization.7) There should awareness about performance appraisal.

117

In the past four years of employment in Visakhapatnam it is found a well educated/qualified were employed in cluster A,B, C posts of workmen cadre(Non- executives.) The above can be understand in simple manner that1) For the posts of kalasi out of around 300 number it is found more than 250 were

with higher qualifications varying from ITI+Inter to degree/ Engineering/post graduation.

2) For the post of technicians out of around 400 member it I s found more than 50%were with higher qualification varying from diploma/BSC/B.Tech. It is understood form the above because of the importance of the job and its related Payment/wages many of the educate people are opting employment in Visakhapatnam though it is underemployment.

Hence it is relevant to have a relook with respective assessment of performance of the individual/employees at cluster A,B,C levels of workmen. Keeping of the individual/employees at cluster A,B employees annual assessment is in the form of annual confidential report has to be changed by incorporating two more parameters(Nine parameters are existing)

The parameters that can be suggested are:1) INNOVATIVENESS: - Indigenous quality to bring out the innovative ideas of the employees which we can expect even from the cluster A workmen also as they were highly qualified.2) LEVEL OF SKILL/KNOWLEDGE:-To assess the actual level of skill possessed by each employee especially in these low carde so asa to have a data their skill with respective to the qualification that of irrespective to the cadre, which may useful to deploy or redeploy at appropriate positions.

It is found from the both executives and non-executive performance system form that of self appraisal and confidential report the potentials facts of innovativeness is not available. The factor “innovativeness” is also one of the core values of Visakhapatnam. In additional to that Visakhapatnam having a different forum receive the innovative ideas from bottoms of the working level and up all higher levels.

The forums are:-

118

1) Suggestions scheme2) Samalochana3) SFCC(Shop floor corporative committee)4) SFCC(Safety committee)5) Department production committee

Hence it is suggest the potential factor called “innovativeness” can be considered as an appropriate assessment factor to incorporate in both self appraisal and CR for both executive &non executive respectively .thus will definitely help organization as well the individuals to grow further.ie

In our view this kind of appraisal should be future projected to CEO-VICE PRESIDENTS or any such supervisor.

CONCLUSION:

Iron and Steel play a significant role in the growth of the economy of the country and in every manufacturing sector they are the most essential elements that are required. Hence Iron and Steel industries have achieved very high significance in the present developing era.

Out of all the steel industries present in India, Visakhapatnam Steel Plant is the one that proved itself to be one of the best developing organization. The Prime ministers award for the best Integrates Steel Plant was awarded to VSP in the recent past. This depicts

119

the success level of the organization. Even though this organization faced as severe setback few years ago, it recovered and achieved success with in a very short period, which shows the determination and hard work of the employees and as well as the efficiency of the directors and other higher officials of the organization.

Success cannot be achieved sole handedly and hence it is the hard work devotion, dedication and determination of the employees of the VSP that made this organization to flourish at greater heights. The net profit of the organization for the year 2003-2004 was nearly 1521 cores (Provisional). This shows the extraordinary performance of the organization.

This project helped me to know the working conditions, After having analyzed the data, it was observed that practically there was no appraisal in the organization. To be an effective tool, it has to be on the continuous basis. This is the thing that has been mentioned time and again in the report, as, in the absence of continuity, it becomes a redundant exercise. Before actually deciding drafting what should be the kind of appraisal the following things should be taken care of:

1.    The very concept of performance appraisal should be marketed throughout the organization. Unless this is done, people would not accept it, be it how important to the organization.

2.    To market such a concept, it should not start at bottom, instead it should be started by the initiative of the top management. This would help in percolating down the concept to the advantage of all, which includes the top management as well as those below them. This means that the top management has to take a welcoming and positive approach towards the change that is intended to be brought.

3.    Further, at the time of confirmation also, the appraisal form should not lead to duplication of any information. Instead, detailed appraisal of the employee’s work must be done – which must incorporates both the work related as well as the other personal attributes that are important for work performance.

4.    It should be noted that the appraisal form for each job position should be different as each job has different knowledge and skill requirements. There should not be a common appraisal form for every job position in the organization.

120

5.    The job and role expected from the employees should be decided well in advance and that too with the consensus with them.

6.    A neutral panel of people should do the appraisal and to avoid subjectivity to a marked extent, objective methods should be employed having quantifiable data.

7.    The time period for conducting the appraisal should be revised, so that the exercise becomes a continuous phenomenon.

8.    Transparency into the system should be ensured through the discussion about the employee’s performance with the employee concerned and trying to find out the grey areas so that training can be implemented to improve on that.

BIBLIOGRAPHY

HUMAN RESOURCE MANAGEMENT - P.SUBBA RAO

HUMAN RESOURCE MANAGEMENT - ASWATAPPA

121

HUMAN RESOURCE MANAGEMENT / PERSONNEL MANAGEMENT – L.M.PRASAD

HUMAN RESOURCE MANAGEMENT / PERSONNEL MANAGEMENT – STEPHEN P.

ROBBINS

http://www.vizagsteel.com www.indiasteel.com

122