Competency Based Performance Management System: An Initiative Towards A High Performing Ofganization.

2.4.3 Organizational Development Organizational Development (OD) is a field of research, theory, and practice dedicated to expanding the knowledge and effectiveness of people to accomplish more successful organizational change and performance. OD is a process of continuous diagnosis, action planning, implementation and evaluation, with the goal of transferring knowledge and skills to organizations to improve their capacity for solving problems and managing future change. The import features of organizational development are as follows:  Organizational Change: The process of organizational development identifies areas of company operations where change is needed. Each need is analyzed, and the potential effects are projected into a change management plan. The plan outlines the specific ways in which the change will improve company operations, which will be affected by the change and how it can be rolled out efficiently to employees.  Growth: Organizational development is an important tool in managing and planning corporate growth. An organizational development analysis brings together sales projections and consumer demand to help determine the rate of company growth. This information is used to alter the company business plan and plan the expansion and use of company resources such as personnel and the distribution network to accommodate future growth.  Work Processes: When a company is involved in organizational development, it analyzes work processes for efficiency and accuracy. Any quality control measures required to attain company standards are put in place. Evaluators analyze duplicate process, or processes that can be combined for greater efficiency, and develop and implement detailed plans on how to improve company methods.  Product Innovation: Product Innovation requires the analysis of several kinds of information to be successful. Organizational development is critical to product innovation because it can help analyze each element of product development and create a method for using it effectively. Some of the processes that come together in organizational development to assist in product innovation are competitive analysis, technology development, consumer preferences, target market research, manufacturing capabilities analysis and patents and trademarks. 78

In summary, OD is a process of planned system change that attempts to make organizations better able to attain their short and long-term objectives. This is achieved by teaching the organization members to manage their organization processes and culture more effectively. A basic belief of OD theorists and practitioners is that for effective, lasting change to take place, the system members must grow in the competence to master their own fates. Finally, it is important to note that OD has two broad goals: organization development and individual development. Although it is not stated explicitly in the definitions, improving the quality of life for individuals in organizations is a primary goal of organization development. Enhancing individual development is a key value of OD practitioners and a key outcome of most OD programs. Minhas (2016) mentioned that organization development (OD) is a growing field of human resource management. It has its foundations in a number of behavioural and social sciences. OD practitioners are unashamedly humanistic in their approach to change management and delivering sustainable organizational performance. Lewis (2016) discovered OD is a term that has somewhat fallen out of favour with current thinking in management. There are several reasons for this. The first is that as often practiced; OD came to be seen as synonymous with a certain orientation towards people and feelings that left little room for discussion of “hard” business concerns. In other words, some OD practitioners focused on the individual and their concerns and assumed that this would automatically lead to changes in the organization. It has been mentioned in “organization development” - the Factsheet of CIPD, UK (June 2016), that organization development isn’t a new discipline and has always had a focus on people, but it’s only relatively recently become considered as a mainstream discipline of HR. OD supporters argue that its strength is its ability to transcend functional boundaries within organizations and as such it may be counter-productive to anchor it in the HR function. However, given the increasing need for the HR profession to act as a business partner and its role in guiding behaviours and reinforcing values, OD and its methods play a part in developing HR’s strategic role and its involvement in organizational change and organizational culture. 79

Rothwell et al. (2016) explored on organization development (OD), transformation, and change. The study also discusses on systems thinking, and its importance to OD practitioners. The various definitions of OD presented imply several key themes: OD is long-range in perspective, works best when supported by senior leadership; effects change primarily through education, emphasize employee participation, and empower the system to take responsibility for creating and evaluating results. Varshney (2015) mentioned that organizational development is a group of planned change methods that aims to enhance the organizational effectiveness and the general employee quality of work life. One of the major interventions of OD is structural intervention. It consists of a revision or modification in the organizational structure to achieve the transformation related goals. Vinesh (2014) revealed that training and development is the field which is concerned with organizational activity aimed at bettering the performance of Individuals and groups in organizational setting. It is a combined role often called human resources development (HRD) meaning the development of human resources to remain competitive in the marketplace. Training focuses on doing activities today to develop employees for their current jobs and development is preparing employees for future roles and responsibilities. It carries out an analysis that the objective of training and development is to creative learning organizations which ensure that employees through value addition can effectively perform their jobs, gains competitive advantage and seek self-growth: this measurable performance resulting from good training and development, shall enhance organization development. Idris et al. (2014) explored that organization development intervention (ODI) is a deliberately planned, organization-wide effort to increase an organization's effectiveness or efficiency. In order to revive the organization from low level of profitability, frequent conflicts among the stakeholders, customers’ dissatisfaction / low quality of service and high unethical practices among the staff to mention just a few, the study becomes pertinent. 2.4.4 Recognition and Rewards The power of employee recognition cannot be underestimated especially when they have thousands of lucrative opportunities in front of them. Who doesn’t want to attract, hire and retain the best talents of the industry? Why not explore the new ways to 80

foster employee motivation and drive them to achieve their targets then? After all an organization’s performance is directly related to the performance of its human resources. This is a simple logic; if you make their day, they make your organization. Employee rewards and recognition system is not just a positive thing to do with people, but communicating it effectively is an efficient tool in encouraging them to create and bring business success. Treating the employees like valuable assets and maintaining harmonious relationships with them doesn’t only yield business in present but also an effective strategy for future. Employers and management need to be pro-active to develop a talented and dedicated workforce that can take you to your goals. Establishing and implementing a reward system needs careful analysis of the company policies and procedures. Reward system of an organization should also be in alignment with its goals, mission and vision. Depending upon the job profile, both monetary and non-monetary rewards can encourage employees to contribute more to the organization.  Monetary Rewards: A raise in salary, incentives, movie tickets, vacation trips, monetary allowances on special occasions, redeemable coupons, cash bonuses, gift certificates, stock awards, free or discounted health check-ups for the entire family and school/tuition fees for employees’ children fall in this category. While designing company policies for monetary rewards, management should make sure that benefits should be as broad-based as possible. It requires sound planning and effective implementation.  Non-monetary Rewards: Non-monetary rewards may include trophies, certificates, letters of appreciation, dinner with boss, redecoration of employee cabin, membership of recreation clubs, perks, use of company facilities, suggestion awards, tie-pins, brooches, diaries, promotion, say in management, etc. A combination of monetary and non-monetary rewards can work wonders and drive employees to perform well continuously. A proper and efficient employee reward and recognition program can establish harmonious relationships between employees and employer. Ndungu (2017), explored that various studies have explored the concept of staff reward and recognition schemes and the effect they have on staff motivation and performance. Attention has also been given to how these programs contribute to the 81

overall realization of organizational goals. This study was conducted to determine the effects of reward and recognition on employee job performance. Shermon (2016), in his talk on “Designing and Managing an Effective Reward Management System” expressed that the Economics of Demand & Supply and Theories of Price Elasticity apply to human resources. But what complicates the management of human resources is that one has to superimpose complex theories of managing human behavior on basic economic theories. Designing and managing an effective reward system is, therefore, a management exercise that involves economic and financial expertise, apart from detailed knowledge of human behavior and also requires the ability to design a reward system not just for a few, but for a wider employee demographic and performance curve. On the economic and financial side, companies have been innovating plenty in the area of monetary rewards. The compensation landscape is dotted with individual performance related pay, merit pay, competency related pay, pay for contributions, bonuses and variable pay, incentive systems, deferred gratuities, stock programs, employee ownership mechanisms, golden handcuffs, stability packs, social identities, life style support, team remuneration rewards, risk pay, profit sharing schemes, profit related, schemes, role awards, and what you have based compensation schemes. The overall message is simple – improved performance will lead to improved remuneration. David et al. (2015) revealed that human resources are the most important among all the resources an organization owns. To retain efficient and experienced workforce in an organization is very crucial in overall performance of an organization. Motivated employees can help to make an organization competitively more value added and profitable. Reward management is concerned with the formulation and implementations of strategies and policies that aim to reward people fairly, equitably and consistently in accordance with their value to the organization. Reward management consists of analyzing and controlling employee remuneration, compensation and all of the other benefits for the employees. It aims to create and efficiently operate a reward structure for an organization. Edirisooriya (2014) mentioned that human resource is considered as a strategic asset in any organization because the accomplishment of an organization’s objectives largely depends on employees. Therefore, it is important to identify factors which 82

motivate employees for achieving goals. The objective of this study is to illustrate to what extent does employee rewards have an impact on employee performance in a public sector organization in Sri Lanka. Mehmood et al. (2013) discovered that managing performance in an organization is performed through reward system. The research enables to understand the current needs of an organization and its employees, their low productive behavior and the way how this behavior could be altered and how to make their performance boost up to the organizational needs and demands. Njanja et al. (2013) revealed that today’s organizations are operating in a very dynamic and highly competitive environment. To remain relevant in the market, they have to be able to respond quickly to ever changing customer demands. Reward management is one of the ways used by organizations for attracting and retaining suitable employees as well as facilitating them to improve their performance. The management has established rewards in their organization in pursuit of increasing employee performance so as to ensure prompt and quality service. It has been explored by Pratheepkanth (2011), that, organizations are increasingly realizing to establish an equitable balance between the employee’s contribution to the organization and the organization’s contribution to the employee. Establishing this balance is one of the main reasons to reward employees. Organizations that follow a strategic approach to creating this balance focus on the three main components of a reward system, which includes, compensation, benefits and recognition. The aim of this study is to investigate whether rewards and recognition has an impact on employee motivation. The results also revealed that staff, and employees from non-white racial backgrounds experienced lower levels of rewards, and motivation. On the basis of the above discussion, this study proposed the hypothesis as: H7: Organizational emphasis on the specific facilitators (vision-mission-goal- objectives, organization culture, organization development, recognition & rewards) will have significant on employee performance. 2.5 Indicators of Performance Management System In the era of cut throat competition and globalization, organizations have realized the importance of strategic HR practices for gaining a competitive edge over the 83

competitors. A well designed performance management system can play a crucial role in streamlining the activities of the employees in an organization for realizing the ultimate corporate mission and vision. Performance management is a useful tool for aligning all the major organizational functions and sub functions so that the focus is directed towards attainment of the organizational goal. Performance management is a much broader system as it is linked with the processes of planning, implementing, reviewing and evaluating, for augmenting growth and productivity at both the individual and organizational level. 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. Performance management facilitates improvement of quality of relationship amongst the members of the organization by encouraging sharing of expectations and building a climate of openness and mutuality. The significance of performance management has grown in recent times because most of the organizations are giving a lot of importance to employee development and talent management. Performance management has attracted the attention of many organizations towards the following aspects as discussed below. 2.5.1 Skilled Manpower A skilled or learned worker is often immediately ready to assume the responsibilities of a new job. They typically have an educational background that matches the qualifications for the job. On the other hand, unlearned or unskilled employees are usually not yet trained to perform specific jobs. They might lack educational requirements, and some might have language barriers to overcome. Small business employers often need to spend extra time teaching unskilled workers basic job functions. Mehta (2016) stated that presently the competition is going on sky high in the banking industry. Merely tough competitors can persist under these prompt changes. Every single bank wished to face this situation and emerge as victorious, but it was not as easy as one could imagine. For fast moving and complex world of new techniques, skills had forced banks to consider it and to adjust themselves to the changing banking environment. There was a requirement to advance competencies i.e. skill, knowledge and approach among the bank employees to make them more appropriate to the altering 84

circumstances and this was possible only if efficient and effective human resource practices, which would maximize value and minimize cost within the organization. Zainab et al. (2016) explored in their research studies that the business is dependent on its manpower for its growth and development along with its future sustainability. Further, this also plays a key role in determining the resource allocation for the jobs and is the key resource of skills either by recruitment or internal talent development to keep the business successful. In the field of business, HRM has a big role to play as a strategic partner of the same. It is concerned with managing, intake, development and making a growth strategy for the people’s career development is the key to its major activities. Oseghale et al. (2015) stated that their study investigated the skilled labour requirement in the construction industry of Edo State, Nigeria. The construction industry occupies a focal position in a nation’s economy. It is an essential contribution to the process of development. The study aimed at assessing the current state of the construction industry’s skilled workforce, causes and prevalence of skilled labour shortage and the effect of skilled labour shortage in construction project delivery. The research identified the most severe factors responsible for labour shortage to include; no clear carrier path, high mobility of construction workers and low wages. Jhawar et al. (2014) explored that the purpose of this paper is to study the impact of development of skilled work force through investment in training, welfare, working conditions, and wages on the logistics performance index. Availability of skilled manpower can improve the logistics performance significantly leading to reduction in logistics cost, logistics time, and making the system more reliable and safe. Although flexibility is not directly affected by skilled labour, but to achieve flexibility, strong infrastructure and ICT (Information and Communication Technologies) backup is required, which would be difficult to run without skilled labour. Pattnaik (2013) revealed in her studies on “Skilled Manpower Selection for Micro, Small and Medium Enterprises: A Fuzzy Decision Making Approach” that the supply of skilled manpower is a major strategy for entrepreneur to run the production process smoothly. Skilled manpower categorization, selection and performance evaluation are 85

decisions of strategic importance to micro, small and medium enterprises. Global competition, mass customization, high customer expectations and harsh economic conditions are forcing enterprises to rely on external skilled manpower to contribute finished products and to manage a growing number of processes and functions that were once controlled internally. Thus skilled manpower performance evaluation is very important to choose the right manpower for the right enterprises. Mok et al. (2012) explored in their research paper “A Good Worker is Hard to Find: Skills Shortages in New Zealand Firms”, that skills are an important determinant of the economic performance of people, firms, industries and economies. Shortages of skilled labour directly constrain production and prevent firms from meeting demand and using available inputs efficiently. The success of policies to enable the emergence and performance of successful businesses depends upon having a workforce with the appropriate skills. Abizadeh et al. (2007) stated that their paper examines the effect of trade openness on the productivity of skilled labor intensive and unskilled labor intensive industries in the group of 20 Organizations for Economic Co-operation and Development (OECD) countries. Using panel data and fixed effects approach, it was found that skilled workers’ relative gains in productivity exceed those of their unskilled counterpart. Given this differential impact of trade openness on the relative productivity of the skilled and unskilled intensive industries, the findings lend support to the conclusions of past studies that skilled labor is likely to be more pro trade than unskilled labor. Since workers in skilled intensive industries benefit more, in terms of productivity gains (and thus perhaps in terms of wages), from trade expansion than their unskilled counterpart, it would seem logical that workers working in skilled intensive industries (relatively higher number of skilled workers) are more likely to be pro trade than workers working in unskilled intensive industries (relatively higher number of unskilled workers). 2.5.2 Low Turnover In human resource context, turnover is the act of replacing an employee with a new employee. Partings between organizations and employees may consist of termination, retirement, death, interagency transfers, and resignations. An organization’s turnover is measured as a percentage rate, which is referred to as its turnover rate. 86

Turnover rate is the percentage of employees in a workforce that leave during a certain period of time. High turnover may be harmful to a company's productivity if skilled workers are often leaving and the worker population contains a high percentage of novices. Companies will often track turnover internally across departments, divisions, or other demographic groups, such as turnover of women versus men. Most companies allow managers to terminate employees at any time, for any reason, or for no reason at all, even if the employee is in good standing. Additionally, companies track voluntary turnover more accurately by presenting parting employees with surveys, thus identifying specific reasons as to why they may be choosing to resign. Many organizations have discovered that turnover is reduced significantly when issues affecting employees are addressed immediately and professionally. Priyanka and Dubey (2017) revealed that the idea to investigate the motivation behind the turnover intentions of frontline staff in Indian Retail Sector stems from the fact that the organized retail market in India is characterized by high level of employee turnover. It becomes one among the various threats the retail sector is facing now-a-days. Therefore, it becomes imperative for the employers to initiate strategies that will lower the frequency of turnover. For this, it is necessary to investigate and identify the motives behind their intention to quit. Turnover intention precedes the actual turnover, therefore it becomes important to understand the reasons behind their intention to leave the job and then take corrective measures if needed. To overcome with monotony in working environment, organizations are giving employees higher challenges, which create future leadership with better exposure. On the whole if an organization offers the career rather than just a job there will be least turnover. Kwame et al. (2017) explored in their research studies that productivity is a very important issue for every organization. Productivity of an organization is thus mostly affected by several factors including employee turnover. Employee turnover is considered to be one of the challenging issues in business nowadays. It is becoming a major problem among most companies in the world, especially in low paying jobs. Employee turnover can be extremely upsetting and disturbing for any company. It makes employers find it very difficult to maintain a stable and successful operation. The purpose of this study was to identify the causes of employee turnover; examine the effect of labour turnover on performance of the organizational and identify strategies for reducing employee turnover 87

in Zoomlion Ghana Limited. The study therefore recommends that recognition for significant accomplishment, chance of advancement and giving opportunity to grow and career development has to be taken in to consideration. Rubel et al. (2017) mentioned in their research studies that employee turnover has long been a topic of central interest to management scholars and practitioners. Despite the plethora of empirical studies devoted to employee turnover, researchers still search for explanations as to why people quit their jobs. It is also found an increase in the likelihood that the ethical climate of the workplace would reduce turnover when employees had a higher level of support from their line managers or supervisors. Researchers have found that turnover intention and actual turnover can be influenced by demographic, job-related, and external factors as well as the broader ethical climate of an organization. They have also found that maintaining an ethical climate helps secure organizational growth through the retention of skilled and qualified employees. Carriquiry (2017) revealed that despite the extensive research on the consequences of Mergers and Acquisitions (M&A), employee mobility has been rarely studied as an outcome. Given the well-established link between turnover of top employees and firm/unit performance, this is surprising. Here, researcher has studied the impact of M&A on employee turnover and how employee mobility affects firms’ human capital resources. The researcher has also observed that M&A increase the probability of turnover for different groups of employees at the target firms and predict that M&As represent exogenous shocks for employees of the target firm, increasing their likelihood of leaving the firm. Bhutto and Shaikh (2017) defined in their studies that with the arrival of World Trade Organization (WTO), organizational changes and reforms have been pondered constant. Transformational leadership has played a drastic role in transforming organizations from bottom to top as evident from corporations such as Facebook, Wal- Mart, Google, and many more but on contrary turnover intention have been found a factor, very troublesome and chronic violating diversity, growth, organizational prosperity and hampering attainment of objectives set by top management. Quitting of an employee means quitting of tacit knowledge and loss of social capital. Turnover increases operation cost and cost on induction and training. 88

Ampomah and Cudjor (2015) stated that their study focused on the effect of employee turnover on organizations with reference to the Electricity Company of Ghana (ECG). High employee turnover rates may jeopardize efforts to attain organizational objectives. To reduce the rate of turnover, management should review condition of service for employees; and also ensure that the working environment is conducive. It can be said that employees leave or quit the organization simply because, they are not satisfied with their working conditions and this affect the organizational efficiency greatly in the sense that experienced workers leave and the organization has to spend money and time to hire, recruit, select and train new employees to replace those who have left. Katsikea et al. (2014) focused in their research studies that predictably, sales organizations invest substantial financial and human resources in developing effective sales forces and yet salespeople are among the highest ‘risk group’ in terms of staff turnover. For export sales settings, the organizational consequences of this form of turnover are even more severe. This study develops a comprehensive conceptual model of seventeen hypothesized relationships among key structural, supervisory-related, and psychological factors, and examines this homological network that leads to explaining export sales managers’ intentions to quit. The findings reveal the favorable impact of formalization and the unfavorable impact of centralization upon both role ambiguity and role conflict. The study finds that both formalization and centralization relate positively to the export sales management behavior control system. The study also discovers moderation effects of psychic distance and export sales managers’ experience. 2.5.3 Low Absenteeism Absenteeism means being absent from work. Employees may take a leave or not report to work for a variety of reasons. Some of these may be uncontrollable factors like sickness, emergency, accidents, etc. However, employees may also take leave when they are capable to attend work. This may result out of low motivation levels and dissatisfaction with one’s work. Unscheduled leaves hurt a company the most. Absenteeism presents a huge cost to the company and thus should be monitored closely. At the same time, it has to develop HR policies to raise the motivation levels of employees and decrease absenteeism due to culpable reasons. The company should take 89

steps to engage the employees so that they enjoy their work and are absent only for genuine reasons. Singh et al. (2016) discovered that in the increasingly competitive and challenging environment within which organizations operate today, absenteeism is a complex issue. Resulting from absenteeism, businesses are faced with impeded productivity, inefficient service delivery, and reduced performance, thereby negatively affecting sustainability. Absenteeism is, therefore, a significant concern in the field of human resource management. The aim of this study was to investigate the impact of absenteeism and the extent to which it negatively affects organizational performance. Onikoyi et al. (2015) have shown that there was a significant relationship between absenteeism and corporate performance. Based on the findings, it was recommended that organizations should identify the causes of workers’ absenteeism and seek means of reducing it, avoid regular hiring and firing of staff, discourage workers from taking irrelevant excuses to be absent from work by ensuring that workers are paid based on the hourly rate system and ensure that staff are motivated by paying them commensurate wage rate that will encourage them to remain on the job and improve their performance. Tiwari (2014) stated that absenteeism is a type of unscheduled activity which threatens the organization to fall in danger as it leads to the disruption of the daily process. Absenteeism converts the organization into a deviant work place behavior. It makes the employees to violate the norms of the organization leading to a disastrous output. Such effect of absenteeism affects the turnover of the organization leading to decreased selection and training cost. Absenteeism also affects the level of satisfaction among the employees and organizational performance. Scoppa and Vuri (2014) investigated the relationship between unemployment and worker’s absenteeism at the individual level. They exploited a large Italian dataset of individual work histories based on social security administrative records (WHIP) in which, in addition to standard information on individuals and firms, they observed employees’ absence rates, which relate to the local unemployment rate. Their empirical analysis aims to test the role of unemployment as a worker discipline device, considering 90

the different degree of job security offered by the Italian Employment Protection Legislation to workers employed in small and large firms. Rathod and Reddy (2012) stated that absenteeism is one of major human problem of Indian industries. Titan is world’s fifth largest manufacturing plant for watches. The study is concerned with the issues, causatives, and remedial measures related to absenteeism. The research helps the organization to know their current practices regarding absenteeism in Titan industry. It suggests ideas to improve the business in a better prospect and result in organizational development. Kehinde (2011) explored that employees not showing up for work when scheduled, can be a major problem for organizations. Most researches had concluded that absence is a complex variable and that it is influenced by multiple causes, both personal and organizational. Job satisfaction has been noted as one of the factors influencing an employee’s motivation to attend. Some researches that investigated the relationship between job satisfaction and absenteeism have found no correlation between these two variables whereas other studies indicate a weak to moderate relationship between these two variables. Results obtained indicate that the extrinsic sources of job satisfaction have a direct impact on absenteeism. Thus, his paper recommends that employers should pay due attention to extrinsic sources of job satisfaction as major practical tools to reducing absenteeism. 2.5.4 Improved Morale and Motivation Morale can be defined as the total satisfaction derived by an individual from his job, his work-group, his superior, the organization he works for and the environment. It generally relates to the feeling of individual’s comfort, happiness and satisfaction. In short, morale is a fusion of employees’ attitudes, behaviours, manifestation of views and opinions - all taken together in their work scenarios, exhibiting the employees’ feelings towards work. Motivation is a state of mind. High motivation leads to high morale and greater production. A motivated employee gives his best to the organization. Devi and Vijayakumar (2016) discovered that the success of any organization lies in the hands of the employees working in it. There are two magical words which make the employees to involve and outperform in their work which are morale and commitment. Morale is a moral condition with respect to cheerfulness and zeal. It is a state of mind, 91

and an emotional attitude. Atambo and Ayaga (2016) explored that lack of motivational factors has been a major hindrance on employees’ performance, motivational factors like job security, training, enough salary, compressed work which have favorable effects on employees’ job satisfaction and productivity and lack of flexible time which provides employees with time for pursuing their hobbies or taking care of family - all have effect on performance. Cunningham (2016) discovered that employee engagement is vital for company success. However, working in the manufacturing environment can often be repetitive and mind-numbing. Repetitive work, if not addressed correctly, can have negative impacts on individuals and society. It can cause stress-related mental and physical health problems, employee dissatisfaction and turnover, dysfunctional union/management relationships, and large social class differences in wealth. Managers must rely on human potential in order to improve their employees’ overall performance. When an employee withdraws from his or her task, engagement levels decrease and this leads to burnout. Ibrahim and Brobbey (2015) examined the impact of employee motivation on organizational performance in the financial sector in Ghana. Findings from the study suggest that leadership opportunities, recognition and employee appraisal, meeting employee expectations and socialization are the key factors that motivate employees. The findings further revealed that managerial standards, motivation, commitment, employee evaluations, positive work environment, technology, lack of incentives, comfort level and poor management are factors that affect employees’ performance. Further, the study shows the impact of motivation on organizational performance as improving employees’ level of efficiency, helping employees to meet their personal goals, employee satisfaction, and helping employees bond with the organization. Shoraj and Llaci (2015) stated that organizations wish to perform successfully in the market and if possible to have a sustainable economic growth. However, in the current circumstances of globalization and strong competition, technology is advancing at a rapid pace, hence making the market an unsafe environment. The business organizations would have to make full use of all resources available. It is already a well-known fact that human resources or organization personnel constitute a key asset for achieving success. The purpose of this study is to analyze the impact produced by the motivation of employees on organizational effectiveness. 92

Osabiya and Joseph (2015) stated that their study seeks to unravel the factors that affect construction workers’ motivation and the corresponding effect of the identified motivational factors on workers’ performance and overall productivity. Ganta (2014) explored in his studies that most employees need motivation to feel good about their jobs and perform optimally. Some employees are money motivated while others find recognition and rewards personally motivating. Motivation levels within the workplace have a direct impact on employee productivity. Workers who are motivated and excited about their jobs carry out their responsibilities to the best of their ability and productivity of the individuals will increase. Shahzadi et al. (2014) mentioned that employee motivation is considered as a force that drives the employees toward attaining specific goals and objectives of the organization. Now days, it is one of the sizzling issue in organizations since everybody wants to make best use of their financial and human resources. The results of this study show that significant and positive relationship exists between employee motivation and employee performance. It is also concluded that intrinsic rewards have a significant positive relationship with employee performance and employee motivation. Dobre (2013) revealed that the majority of organizations are competing to survive in this volatile and fierce market environment. Motivation and performance of the employees are essential tools for the success of any organization in the long run. 2.5.5 Job Satisfaction and Commitment Job Satisfaction is the level of contentment a person feels regarding his or her job. This feeling is mainly based on an individual's perception of satisfaction. Job satisfaction can be influenced by a person's ability to complete required tasks, the level of communication in an organization, and the way management treats employees. Agyare et al. (2016) revealed that, performance appraisal is credited by researchers as a tool for spurring employees towards the attainment of organizational goals. Considering employees’ attitudes as a vital component in the attainment of organizational goals, this study investigated the impacts of performance appraisal on the job-satisfaction and commitment of employees. The study revealed that employees’ job satisfaction is positively related to and impacted by fairness in the appraisal system, linking appraisals with promotion, clarity of roles and feedback about their performance. The study also 93

revealed that employees’ commitment is positively related to and impacted by the linkage of appraisals with salary, identification of training needs, clarity of performance appraisal purpose and employee involvement in the formulation of appraisal tools. Donald et al. (2016) stated that the objective was to investigate the relationship between employees’ job satisfaction and organizational commitment among academic staff members in higher education institution of South Africa. In the business world, employees are among the most important determinants and leading factors that determine the success of an organization and its competitive advantage in a long-run. In other words, employees have become valuable assets for the continued existence of the organization. On the other hand, employee’s low level of satisfaction might lead to less work commitment and high turnover from the organization, as well as physical withdrawal or they may retreat from the organization emotionally or mentally. Ismail and Razak (2016) mentioned that their research is to evaluate the association between job satisfaction and organizational commitment. This finding confirms that when employees satisfied with intrinsic satisfaction and extrinsic satisfaction from his or her job condition may lead to greater organizational commitment in the studied organizations. Kargun et al. (2016) revealed that, in this tough competitive environment, survival of firms depends on using the assets of the firms in the best way. The most important asset of the firms is the human factor. Employees’ commitment to organizations is the sole ingredient to maintain business continuity. Employees’ commitment to organizations is not only an important condition to keep the business going but also to increase productivity. Matching the employees and the suitable work may increase job satisfaction of the employees. As a result, the employee who has maintained job satisfaction adapts the work easily and keeps the business going. The aim of Mangkunegara and Miftahuddin (2016) is to determine the effect of transformational leadership and job satisfaction to employee performance. The results showed that transformational leadership and job satisfaction influence to performance positively and significantly either partially or simultaneously. The successful of managing the human resources in the company is one of the formations of survival and evolves in organization. David et al. (2015) explored the factors influencing job satisfaction and organizational commitment of working individuals. The study also tries to examine the impact of gender difference on organizational commitment and job 94

satisfaction. The objective of the study was to explore the underline factors affecting job satisfaction and organizational commitment and also to see the impact of gender difference on employee's job satisfaction and organizational commitment in an organization. Gangai and Agrawal (2015) examined the relationship between components of organizational commitment and job satisfaction of the employees. The results shown that there is a highly significant correlation among factors of organizational commitment, including both gender. But, there is no significant correlation between job satisfaction and organizational commitment. The findings of present study can help the organization, in planning and developing the strategies to enhance the organizational commitment of the employees which directly link to the organizational performance, effectiveness, productivity of the organization. 2.6 Impact of Performance Management System on Organizational Performance Human resource management is concerned with the people dimension in management. Since every organization is made up of people, acquiring their services, developing their skills and talents, motivating them to higher levels of performance and ensuring that they continue to maintain their commitment, are essential to accomplishing organizational goals and objectives. As a result, this can provide the organization with a clear competitive edge and openly contribute to the organizational success in general. Performance management is the heart of any HR processes in an organization as it influences the rest other HR functions or processes. The following are the impacts of PMS on organizational performance: 2.6.1 Profit Margin Every business should earn profit to survive and grow over a long period of time. It is the index to the economic progress, improved national income and rising standard of living. No doubt, profit is the legitimate object, but it should not be over emphasized. It is the yardstick for judging not just the economic, but the managerial efficiency and social objectives also. Profit margin indicates the profitability of a product, service, or business and can be expressed as a percentage, the higher the number, the more profitable the business. 95

Hamid et al. (2017) stated in their research that in any organization, performance of organization is very important. The super objective of all organizations is to improve their performance. There may be three areas that create or to enhance the organizational performance: employee development, adequate compensation, and organizational citizenship behavior (OCB). The aim of their study is to investigate the organizational performance of Ufone and Mobilink franchises in Sargodha City, Pakistan. The results show that the higher level of compensation management, organizational citizenship behavior and employee development practices that will lead to a higher level of organizational performance, also indicate that compensation management, organizational citizenship behavior and employee development is positively associated with organizational performance. For the purpose of achievement of profit margin, organizations have to apply their human resource effectively and efficiently. Organizations have to be aware of human resource, need to know about HRM more realistically and have to keep their human resource up-to-date. Consequently, managers play significant role for the purpose of achieving company’s goal and meet profits. Albalooshi et al. (2017) stated that their study was aimed to investigate the combined effect of job satisfaction, job loyalty, team and management performance, rewards and recognition on profitability of banks in United Arab Emirate (UAE). Internal human factors such as reward and recognition and management performance affect the profitability of Islamic banks. This serves as motivational factor for this study to examine and determine some of the internal human factors that have influence on the profitability of Islamic banks. Temtime (2016) explored that working capital optimization, as an act of balancing liquidity and profitability, presents significant challenges when small businesses lack managerial expertise and access to affordable capital and credit facilities. To remain successful through efficient utilization of working capital, small business leaders need to understand the association between working capital management (WCM), working capital policy (WCP), and business profitability (PFT). Profitable businesses may provide employees and communities with better jobs; stock ownership; and development infrastructures such as road, healthcare, and educational facilities. Richardson (2014) discovered that when employees become dissatisfied at an organization, they may 96

develop negative behaviors that impede profits and productivity. On the basis of the above discussion, this study proposes the hypothesis as: H8: Performance management system is the heart of any HR processes which will enhance the profit margin of the organization. 2.6.2 Customer Satisfaction Customer satisfaction is the measure of how the needs and responses are collaborated and delivered to excel customer expectation. It can only be attained if the customer has an overall good relationship with the supplier. In today’s competitive business marketplace, customer satisfaction is an important performance exponent and basic differentiator of business strategies. Hence, the more is customer satisfaction; more is the business and the bonding with customer. Ndikubwimana and Berndt (2016) stated that despite banking services in Rwanda, which have low levels of penetration, it is important for banks to focus on providing quality service to their customers. This is due to the effect it has on customer satisfaction and consequently on customer retention. The purpose of the research is to investigate the satisfaction of banking customers in Rwanda with regard to financial services received and the investigation of these perceptions of Rwandan banking customers regarding service quality and satisfaction has indicated positive perceptions. Customer satisfaction is a part of customer’s experience that exposes a supplier’s behavior on customer’s expectation. Customer Satisfaction is the overall essence of the impression about the supplier by the customers. This impression which a customer makes regarding supplier, is the sum total of all the processes he goes through, right from communicating supplier before doing any marketing to post delivery options and services and managing queries or complaints of post-delivery (Ganiyu, 2017). Morgan and Govender (2017) stated in their research article that the South African mobile telecommunications environment has become increasingly competitive, thus there is increased focus on acquiring and retaining loyal customers in order to facilitate repeat purchases, guarantee future revenues and shield the customer base from competitive activity. On the basis of the above discussion, this study proposes the hypothesis as: 97

H9: Performance management system will have a significant relationship with the customer satisfaction measures. 2.6.3 Low Wastage Low Wastage or waste minimization is a process of elimination that involves reducing the amount of waste produced in society and helps to eliminate the generation of harmful and persistent wastes, supporting the efforts to promote a more sustainable society. Waste minimization involves redesigning products and/or changing societal patterns, concerning consumption and production, of waste generation, to prevent the creation of waste. The most environmentally resourceful, economically efficient, and cost effective way to manage waste is to not have to address the problem in the first place. Waste minimization should be seen as a primary focus for most waste management strategies. Proper waste management can require a significant amount of time and resources; therefore, it is important to understand the benefits of waste minimization and how it can be implemented in all sectors of the economy, in an effective, safe and sustainable manner. Subramanian and Ramkumar (2017) mentioned in their research that the implementation of lean methodology can be traced back to the 1960’s with Toyota’s implementation of a production system, known as Toyota Production System (TPS), which eliminated wastes in Toyota plants. The successful implementation of lean practices not only led to reduced costs, but also to improved profits resulting from an integrated partnership in the value chain and supply chain, which led the way to sustainable development. The implementation of lean strategies started in the manufacturing domain, with emphasis on waste reduction and continuous improvement. Here, it was the people who were involved in suggesting ways of improving. This paved the way for the efforts towards continuous improvement in organizations. The United States Environmental Protection Agency (EPA) defines that Waste minimization refers to the use of source reduction and/or environmentally sound recycling methods prior to energy recovery, treatment, or disposal of wastes. Waste minimization does not include waste treatment, that is, any process designed to change the physical, chemical, or biological composition of waste streams. For example, compacting, neutralizing, diluting, and incineration are not typically considered waste minimization practices. EPA's preferred hierarchical approach to materials management includes source reduction, 98

recycling, energy recovery, treatment, and finally, disposal. In contrast, the United Nations Environmental Programme (UNEP) uses the following definition: “Waste minimization refers to strategies that are aiming to prevent waste through upstream interventions. On the production side, these strategies are focusing on optimizing resource and energy use and lowering toxicity levels during manufacture. Strategies that are considered to minimize waste and thus improve resource efficiency in or even before the manufacturing process are, for example, product design, cleaner production, reuse of scrap material, improved quality control, waste exchanges, etc. On the consumption side, waste minimization strategies aim to strengthen awareness and prompt environmentally conscious consumption patterns and consumer responsibility to reduce the overall levels of waste generation.” Raj and Seetharaman (2013) explored that companies generate waste every day, but do not manage them properly. Waste management is very important for a company’s profitability. This is because if a company can manage its waste properly, reduction in waste can help the company to reduce its cost. Environmental management systems, green supply chain management, reverse logistics, workforce education and training and Incentive Rewards Programs (IRP), can help companies reduce their waste. On the basis of the above discussion, this study proposes the hypothesis as: H10: Performance management system will have a significant impact on reduction of material wastage. 2.7 Research Gap The review of literature illustrates that there is a lack of research on the relationships between facilitators of PMS, factors influencing PMS, and indicators of PMS; along with the impact of PMS on organizational performance. Further, these studies have primarily emphasized on specific issues while ignoring some major aspects which are contributing towards performance management system and organizational performance. The issues relating to the specific aspects which are silent in the contemporary research are identified on basis of review of literature and highlighted in the table 2.1. 99

Table 2.1: Identification of Gaps in Literature Major Aspects Gaps in Contemporary Literature Workplace Environment  The jobs are standardized so that individuals are experiencing low stress.  Superiors are very cordial and caring.  Employee competencies set clear performance expectations for individuals, Employee Competency  enabling them to make better decisions and work more effectively. Desired levels of competencies enable employees to be more proactive beyond their individual roles, by learning additional competencies that are valued by the organization. Performance Standards  Performance standards enable employees to differentiate between acceptable and Expectations  and unacceptable results. Performance standards increase job satisfaction, because employees know when tasks are performed well.  Performance appraisal serves as a basis for influencing working habits of the Performance Appraisal employees. Employee Training  Performance appraisal is an ongoing activity for maximum exploitation of individual resources.  Employee’s training ensures competitive edge in the market.  Training programmes creates opportunities for career development and personal growth, an important factor in retaining workers. Post Appraisal Measures  Post appraisal measures help management in deciding about the promotions, transfers and rewards of the employee. Source: Compiled by the author. The facilitators and factors influencing PMS have been explored through extensive literature review, which may enhance the effectiveness of the PMS. Finally, the relationship between PMS and organizational performance was explored. Based on the review of literature, ten hypotheses were derived and a hypothesized model was developed (figure 2.3), which was empirically validated in order to draw the conclusion. FACTORS FACILITATORS OF PMS INFLUENCING PMS  Mission, Vision, Goal & Objectives  Organization Culture  Organizational Development  Recognition & Rewards WORKPLACE H1 H7 IMPACT OF PMS ON ENVIRONMENT H2 ORGANIZATIONAL H3 INDICATORS OF EMPLOYEE PERFORMANCE PERFORMANCE COMPETENCY MANAGEMENT PROFIT MARGIN PERFORMANCE SYSTEM H8 STANDARDS & H9 CUSTOMER EXPECTATIONS  Skilled Manpower  Low Turnover SATISFACTION PERFORMANCE H4  Low Absenteeism H10 APPRAISAL H5  Improved Morale & H6 LOW WASTAGE EMPLOYEE Motivation TRAINING  Job Satisfaction & POST APPRAISAL Commitment MEASURES 100 Figure 2.3: Hypothesized Research Model

CHAPTER - III ORGANIZATIONAL PROFILE

CHAPTER - III ORGANIZATIONAL PROFILE Performance management system in an employee oriented organization is very important to assess the performance of employees as well as to motivate them to contribute effectively in the organization. In the competitive world today, employee performance is the key for success of an organization. Organizations in the steel industry have a large manpower. A dedicated manpower will be able to contribute greatly towards profit and prosperity of the company. Rourkela Steel Plant (a unit of Steel Authority of India Limited) has been selected for the purpose of study. 3.1 Steel Authority of India Limited 3.1.1 Brief Overview Steel Authority of India Limited (SAIL) – A Maharatna Company, is one of the largest state-owned steel making company based in New Delhi, India and one of the top steel makers in the world. With an annual turnover of ₹ 49,767.10 crore (US$7.4 billion) (FY 2016-17). It is a public sector undertaking which trades publicly in the market is largely owned by Government of India and acts like an operating company. Incorporated on 24 January 1973, SAIL has 79,601 employees (as of 01-Oct-2017). With an annual production of 13.39 million metric tons, SAIL is the 24th largest steel producer in the world. The Hot Metal capacity of the company will further increase and is expected to reach a level of 23.5 million tonnes per annum by the end of the Financial Year 2016-17. Shri P.K Singh is the current Chairman of SAIL. SAIL operates and owns 5 integrated steel plants at Bhilai, Rourkela, Durgapur, Bokaro and Burnpur (Asansol) and 3 special steel plants at Salem, Durgapur and Bhadravathi. It also owns a Ferro Alloy plant at Chandrapur. As part of its global ambition, the company is undergoing a massive expansion and modernization programme involving upgrading and building new facilities with emphasis on state of the art green technology. SAIL is a public sector company, owned and operated by the Government of India. According to a recent survey, SAIL is one of India's fastest growing Public Sector 101

Units. Besides, it has R&D centre for Iron & Steel (RDCIS), Centre for Engineering and Technology (CET), Management Training Institute (MTI) and SAIL Safety Organisation (SSO) located at Ranchi capital of Jharkhand. 3.1.2 Background and History  The Precursor SAIL traces its origin to the formative years of an emerging nation - India. After independence the builders of modern India worked with a vision - to lay the infrastructure for rapid industrialization of the country. The steel sector was to propel the economic growth. Hindustan Steel Private Limited was set up on January 19, 1954.  Expanding Horizon (1959-1973) Hindustan Steel (HSL) was initially designed to manage only one plant that was coming up at Rourkela. For Bhilai and Durgapur Steel Plants, the preliminary work was done by the Iron and Steel Ministry. From April 1957, the supervision and control of these two steel plants were also transferred to Hindustan Steel. The registered office was originally in New Delhi. It moved to Calcutta in July 1956, and ultimately to Ranchi in December 1959. The 1 MT phases of Bhilai and Rourkela Steel Plants were completed by the end of December 1961. The 1 MT phase of Durgapur Steel Plant was completed in January 1962 after commissioning of the Wheel and Axle plant. The crude steel production of HSL went up from 158 MT (1959-60) to 1.6 MT. A new steel company, Bokaro Steel Limited, was incorporated in January 1964 to construct and operate the steel plant at Bokaro. The second phase of Bhilai Steel Plant was completed in September 1967 after commissioning of the Wire Rod Mill. The last unit of the 1.8 MT phase of Rourkela - the Tandem Mill - was commissioned in February 1968, and the 1.6 MT stage of Durgapur Steel Plant was completed in August 1969 after commissioning of the Furnace in SMS. Thus, with the completion of the 2.5 MT stage at Bhilai, 1.8 MT at Rourkela and 1.6 MT at Durgapur, the total crude steel production capacity of HSL was raised to 3.7 MT in 1968-69 and subsequently to 4MT in 1972-73. IISCO was taken over as a subsidiary in 1978 and later merged in 2006.  Holding Company The Ministry of Steel and Mines drafted a policy statement to evolve a new model for managing industry. The policy statement was presented to the Parliament on December 2, 1972. On this basis the concept of creating a holding company to manage inputs and outputs under one umbrella was mooted. This led to the formation of Steel Authority of 102

India Ltd. The company, incorporated on January 24, 1973 with an authorized capital of Rs. 2000 crore, was made responsible for managing five integrated steel plants at Bhilai, Bokaro, Durgapur, Rourkela and Burnpur, the Alloy Steel Plant and the Salem Steel Plant. In 1978 SAIL was restructured as an operating company. Since its inception, SAIL has been instrumental in laying a sound infrastructure for the industrial development of the country. Besides, it has immensely contributed to the development of technical and managerial expertise. It has triggered the secondary and tertiary waves of economic growth by continuously providing the inputs for the consuming industry. 3.1.3 Major Units  SAIL Integrated Steel Plants: 1. Rourkela Steel Plant (RSP) in Odisha was set up with German collaboration (The first integrated steel plant in the Public Sector in India, 1959) 2. Bhilai Steel Plant (BSP) in Chhattisgarh was set up with Soviet collaboration (1959) 3. Durgapur Steel Plant (DSP) at Durgapur, West Bengal was set up with British collaboration (1965) 4. Bokaro Steel Plant (BSL) in Jharkhand (1965) was set up with Soviet collaboration (The Plant is hailed as the country’s first Swadeshi steel plant, built with maximum indigenous content in terms of equipment, material and know-how) 5. IISCO Steel Plant (ISP) at Burnpur in Asansol, West Bengal  Special Steel Plants 1. Alloy Steels Plants (ASP), Durgapur, West Bengal 2. Salem Steel Plant (SSP), Tamil Nadu 3. Visvesvaraya Iron and Steel Limited (VISL), at Bhadravathi, Karnataka  Ferro Alloy Plant 1. Chandrapur Ferro Alloy Plant (CFP) in Maharashtra  Refractory Plants - SAIL Refractory Unit (SRU) 1. SAIL Refractory Unit, Bhandaridah in Jharkhand 2. SAIL Refractory Unit, Bhilai in Chhattisgarh 3. SAIL Refractory Unit, IFICO, Ramgarh in Jharkhand 4. SAIL Refractory Unit, Ranchi Road in Jharkhand 103

 Central Units 1. Centre for Engineering and Technology, Ranchi 2. Research and Development Centre for Iron and Steel, Ranchi 3. Management Training Institute, Ranchi 4. SAIL Safety Organization, Ranchi 5. SAIL Consultancy Division (SAILCON), New Delhi 6. International Trade Division, New Delhi 7. Environment Management Division, Kolkata 8. Central Marketing Organization, Kolkata 9. Growth Division, Kolkata 10. Raw Materials Division, Kolkata 11. Transport & Shipping, Kolkata 12. Collieries Division, Kolkata 13. Central Coal Supply Organization, Dhanbad Brief Description - SAIL Integrated Steel Plants  Rourkela Steel Plant Rourkela Steel Plant (RSP), the first integrated steel plant in the public sector in India, was set up with German collaboration with an installed capacity of 1 million tonnes. Subsequently, its capacity was enhanced to 2 million tonnes of hot metal, 1.9 million tonnes of crude steel and 1.67 million tonnes of saleable steel. After implementing a massive modernisation and expansion, Rourkela Steel Plant has enhanced its capacity to 4.5 million tonnes of Hot Metal and 4.2 Million Tonnes of Crude Steel. RSP was the first plant in India to incorporate the LD technology of steel making. It is also the first steel plant in SAIL and the only one presently where 100% of slabs are produced through the cost-effective and quality-centric continuous casting route. It is SAIL’s only plant that produce silicon steels for the power sector and high quality pipes for the oil & gas sector. Its wide and sophisticated product range includes various flat, tubular and coated products.  Bhilai Steel Plant Eleven times winner of the Prime Minister's Trophy for Best Integrated Steel Plant in the country, Bhilai Steel Plant (BSP) is India's sole producer & supplier of world class rails for Indian Railways including 260-metre-long rails, and a major producer of large variety of wide and heavy steel plates and structural steel. With an annual production 104

capacity of 3.153 MT of saleable steel, the plant also specializes in other products such as wire rods and merchant products. The entire range of TMT products (Bars & Rods) produced by the Plant is of earthquake-resistant grade and superior quality. The plant also produces heavy structurals including channels and beams. Since BSP is accredited with ISO 9001:2000 Quality Management System Standard, all saleable products of Plant come under the ISO umbrella. The Plant's HR Department is also certified with ISO 9001:2000 QMS Standard. IS0:14001 has been awarded for Environment Management System in the Plant, Township and Dalli Mines. The Plant is accredited with SA: 8000 certification for social accountability and the OHSAS-18001 certification for Occupational Health & Safety. BSP has received Integrated Management System (IMS) Certificate by a single certifying agency (M/s DNV), integrating QMS, EMS, OHSAS & SAMS - becoming the first SAIL unit and among few corporate houses in India to achieve this unique distinction. Among the long list of national awards it has won, Bhilai has bagged the CII-ITC Sustainability award for three consecutive years. BSP won 1st prize in National Energy Conservation Award 2013 in Integrated Steel Sector in recognition of major energy saving initiatives in 2011-12 and '12-13. The Plant again won this award for Year 2014 for achieving a 5% saving in thermal energy consumption and savings of 2% in electrical energy consumption over the previous year. Location: Forty kms west of Raipur, the capital city of Chhattisgarh, along the Howrah-Mumbai railway line and the Great-Eastern highway, stands Bhilai Steel Plant (BSP).  Bokaro Steel Plant - A Partner in Nation Building Bokaro Steel Plant - the fourth integrated plant in the Public Sector - started taking shape in 1965 in collaboration with the Soviet Union. It was originally incorporated as a limited company on 29th January 1964, and was later merged with SAIL, first as a subsidiary and then as a unit, through the Public Sector Iron & Steel Companies (Restructuring & Miscellaneous Provisions) Act 1978. The construction work started on 6th April 1968. The Plant is hailed as the country’s first Swadeshi steel plant, built with maximum indigenous content in terms of equipment, material and know-how. Its first Blast Furnace started on 2nd October 1972 and the first phase of 1.7 MT ingot steel was completed on 26th February 1978 with the commissioning of the third Blast Furnace. All units of 4 MT stage have already been commissioned and the 90s' modernization has further upgraded this to 4.5 MT of liquid steel. The new features added in modernization of SMS-II includes two twin-strand slab casters along with a Steel Refining Unit. The Steel Refining Unit was inaugurated on 19th September, 1997 and the Continuous 105

Casting Machine on 25th April, 1998. The modernization of the Hot Strip Mill saw addition of new features like high pressure de-scalers, work roll bending, hydraulic automatic gauge control, quick work roll change, laminar cooling etc. New walking beam reheating furnaces are replacing the less efficient pusher type furnaces. A new hydraulic coiler has been added and two of the existing ones revamped. With the completion of Hot Strip Mill modernization, Bokaro is producing top quality hot rolled products that are well accepted in the global market. Bokaro is designed to produce flat products like Hot Rolled Coils, Hot Rolled Plates, Hot Rolled Sheets, Cold Rolled Coils, Cold Rolled Sheets, Tin Mill Black Plates (TMBP) and Galvanized Plain and Corrugated (GP/GC) Sheets. Bokaro has provided a strong raw material base for a variety of modern engineering industries including automobile, pipe and tube, LPG cylinder, barrel and drum producing industries. People - The moving force: Bokaro Steel values its people as the fulcrum of all organizational activities. The saga of Bokaro Steel is the story of Bokaroans erecting a gigantic plant in the wilderness of Chhotanagpur, reaching milestones one after another, staving off stiff challenges in the liberalized era, modernizing its facilities and innovating their way to the top of the heap. Directions: Bokaro Steel is working towards becoming a one-stop-shop for world-class flat steel in India. The modernization plans are aimed at increasing the liquid steel production capacity, coupled with fresh rolling and coating facilities. The new facilities will be capable of producing the most premium grades required by the most discerning customer segments. Brand Bokaro will signify assured quality and delivery, offering value for money to the customers.  Durgapur Steel Plant Durgapur steel plant was set up in the late fifties with an initial production capacity of 1 MPTA (million tons per annum) crude steel which was progressively increased to 1.8 MTPA during the last modernization in nineties with the prime objective of achieving higher level of production, improvement in productivity and quality, conservation of energy, reduction in cost of production & minimization of environmental pollution. DSP is currently implementing its Modernization & Expansion Plan (Phase-I) with main objectives:  Conversion of available semis into value added rolled products  Near 100% concast production with phasing out of top pouring ingot- Blooming Mill route 106

 Sustenance/De-bottlenecking of existing facilities to overcome present constraints  Capacity of the plant will increase in hot metal at 2.40 MTPA, Crude Steel at 2.20 MTPA and Saleable Steel at 2.12 MTPA Broad facilities: Plant is equipped with CO-BF-BOF process of steel making. New facilities have been added after the last modernization in nineties – two new rebuilt coke oven batteries, CDI in Blast Furnaces, three Ladle Furnaces, one Bloom caster, one bloom-cum-round caster and a new Medium Structural Mill. Plant is poised for crude steel production almost 100% through concast route. Unique feature of this plant is its Wheel & Axle Plant for making forged wheels and axles catering to Indian Railways. Wheels are tested in International Test House and found of higher standard. Over the years plant has developed various types of wheels as per the need of Railways. DSP is certified under the ISO 9001: 2008 standard of Quality Management System (QMS), ISO 14001: 2004 standard of Environment Management System (EMS), OHSAS 18001: 2007, SA 8000: 2008, ISO 27001:2013 Information Security Management System (ISMS) and ISO 50001:2011 Energy management System. The plant is performing beyond its rated capacities consistently and the production and TE parameters are at best ever levels. However, the plant requires investment for long term sustainability in order to reduce cost of production and to become competitive. Location: Situated at a distance of 158 km from Calcutta, its geographical location is defined as 230 27' North and 880 29' East. It is situated on the banks of the Damodar river. The Grand Trunk Road and the main Calcutta-Delhi railway line pass through Durgapur. Township: The Durgapur Steel Plant Township is spread over a sprawling 40 sq. kms and has more than 25,000 dwelling units. And it has housing facilities for the employees of DSP, ASP and other business associates. The other amenities include schools, both primary and secondary, a 640 bed hospital with modern medical facilities, the picturesque park, a number of cultural centres, a stadium with a sitting capacity of 15,000, etc. Contribution to the region's development: Over the years, DSP has contributed in a major way which has produced social, environmental and economic benefits to the communities in which it operates. CSR projects are carried out in and steel townships and other close locations in the areas of education, providing medical and health care facilities, village development, access to water facilities, infrastructural development, environment conservation, women empowerment, assistance to people with disabilities, 107

sustainable income generation, through self-help groups, promotion of sports, art, culture etc. Durgapur Steel Plant is also playing major role in encouraging and developing small- scale industries in the region.  IISCO Steel Plant The Indian Iron & Steel Company (IISCO), a SAIL subsidiary, was amalgamated with SAIL on 16th February 2006 and renamed IISCO Steel Plant (ISP). This full-fledged integrated steel plant is one of India’s oldest. Established as an industrial enterprise in 1918, IISCO produced iron from an open-top blast furnace at Hirapur (later to be called Burnpur) in West Bengal for the first time in 1922. The plant was progressively upgraded to a capacity for production of 4.26 lakh tonnes of saleable steel and 2.54 lakh tonnes of pig iron annually. The plant manufactures a range of products, over some of which it holds exclusive market dominance. Iron & steel produced by it has been acknowledged as being of the finest quality. After undergoing a modernization-cum-expansion programme, the crude steel capacity of the plant has been raised to 2.5 million tonnes per year. Location: Situated at a distance of about 200 kms from Kolkata in Burnpur on the banks of the perennial Damodar river in West Bengal, ISP is well connected by both South Eastern and Eastern Railways and National Highway 2. Its proximity to Kolkata and Haldia ports is an additional strength. History: IISCO held the proud distinction of being the owner of India’s “oldest unit producing pig iron by modern methods” at Kulti on the banks of river Barakar near Hirapur. An open-top blast furnace set up in 1870 by a company known as Bengal Iron Works Co. (BIW) founded by James Erskine pioneered production of iron in India in 1875. The same unit at Kulti also pioneered steel production in India through small open- hearth furnaces in 1904-06. BIW was absorbed by IISCO in 1936 and steel making started as a regular measure in 1939. Another company named Steel Corporation of Bengal (SCOB), incorporated in 1937, was also amalgamated with IISCO in 1952. SCOB’s Napuria Works and IISCO’s Hirapur Works in unison came to be known as the Burnpur Works of IISCO. The Burnpur Works underwent two overlapping expansion in 1953 and 1955, increasing its production capacity to 1 million tonnes of ingot steel and 0.8 million tonnes of saleable steel. As the flagship business enterprise of Martin Burn House, IISCO had acquired iron ore mines at Gua and Chiria in what is today’s Jharkhand state and collieries in Chasnalla and Jitpur (also in Jharkhand) and Ramnagore (in Bengal). These captive sources of high quality raw materials gave IISCO a major competitive edge and enabled it to establish a prestigious reputation in domestic and 108

foreign markets. It also became the first Indian blue chip company to have its shares traded at the London Stock Exchange. The Burnpur Works of IISCO reached its pinnacle of performance during the 1960s and produced more than a million tonnes of ingot steel. Despite growth plans, however, a combination of factors drove the company into stagnation and decline, resulting in lack of investment for technology upgradation to meet emerging market competition. IISCO was nationalized in 1972 and became a wholly- owned subsidiary of SAIL in 1979. Brief Description - Special Steel Plants  Alloy Steels Plant In order to make India self-reliant in alloy & special steels production, ASP was set up in January 1965 under Hindustan Steel Limited, now SAIL. Consultant for ASP was M/s MN Dastur & Co. Technology knowhow was from M/s Atlas Steels, Canada. Major equipment supplier was JASCON - a Japanese Consortium, while the Reheating Furnaces were supplied by Amco, Canada and Heat Treatment Furnaces supplied by Wellman Incandescent. ASP is located at Durgapur in Burdwan district of West Bengal around 175 KM from Kolkata, along the Howrah-Delhi Main Railway line & Grand Trunk Road (National Highway-2). It is spread over an area of around 4.67 Sq. KM (467.22 Hectare). ASP has been selected as the site where the world's 2nd largest commercial iron nugget making plant of 0.5 MT capacity based on ITmk3 technology will be set up by SAIL-Kobe Iron India Pvt. Ltd. (SKIIPL), a 50:50 Joint Venture Company formed by SAIL with M/s Kobe Steel, Japan. ASP has a diverse product portfolio of over 400 grades catering to critical end-use by strategic sectors like, Defence, Railways, Automobiles, Power Plants, Heavy Engineering & Manufacturing Indutries, including Steel Plants. ASP's product basket includes Carbon Constructional Steels, Alloy Constructional Steels (Ni bearing, Cr-Mo bearing & Cr-Ni-Mo bearing), Case Hardening Steels, Die Blocks, Creep Resistant Steels, Spring Steels & High Mn Steels (Hadfield). ASP manufactures high impact resistant steels (armour grade steels) for Defence application and special steels for Naval application. ASP also manufactures Stainless Steels (Austenitic, Ferritic & Martensitic), including colouring of stainless steel plates for decorative applications.  Salem Steel Plant Salem Steel Plant, a special steels unit of Steel Authority of India Ltd, pioneered the supply of wider width stainless steel sheets / coils in India. The plant can produce 109

austenitic, ferritic, martensitic & low-nickel stainless steel in the form of coils & sheets with an installed capacity of 70,000 tonnes / year in Cold Rolling Mill & 3,64,000 tonnes / year in Hot Rolling Mill. Its steel melting shop can produce 1,80,000 tonnes of slabs per annum. In addition, the plant has country's first top-of-the-line stainless steel blanking facility with a capacity of 3,600 tonnes / year of coin blanks & utility blanks / circles. SSP has revolutionized application of stainless steel in India both in conventional and unconventional areas. High-tech industries like atomic power stations prefer ‘Salem Stainless’. It is also chosen in industrial sectors like dairy and food processing, chemical and fertilizer, heavy engineering, railways, automobile, bulk solid handling, power, etc. The building and architecture segment, which is growing at a rapid pace, sees ‘Salem Stainless’ as the most dependable companion. SSP undertakes turnkey projects like fabrication and supply of stainless steel tubes, pipes for sugar and chemical industry and for water pipelines. Under conversion scheme, value added products like kitchen & tableware and doorframes are manufactured and supplied in bulk to corporates. SSP has also developed new applications of its products viz. LPG tanks for automobiles, stainless steel ceiling fans, exhaust fans, corrugated sheets, water tanks, etc. In architecture, building and construction, the prestigious structures where ‘Salem Stainless’ was chosen include the Parliament House Library Complex, New Delhi, the world’s tallest Petronas Twin-Towers, Malaysia and the retractable roofing at Melbourne Tennis Stadium, Australia. The coaches of the high-speed Jan Shatabdi Express trains are furnished with modular railmarts and sub-pantries made entirely of Salem Stainless. Korean blue resin coated corrugated curved roofing of the Koparkhairance Railway Station in Navi Mumbai is a trend setter for railways in India.  Visvesvaraya Iron and Steel Plant Visvesvaraya Iron and Steel Plant (VISL) is a pioneer in production of high quality alloy & special steels and pig iron. Steel is produced through BF-BOF-LRF-VD route. The facilities include vacuum degassing, vacuum oxygen decarburization, ladle refining furnaces, ingot teeming, continuous casting, 1600 Tonnes-hydraulic-high-speed forging press, a fully automatic horizontal long forging machine with high programmable Logic Controller system for a semi-automatic and automatic mode of operation. VISL has an installed capacity of 2,16,000 tonnes of hot metal and 98,280 tonnes of alloy & special steels. VISL has received the ISO / TS 16949: 2009 certificate for steel production through rolled and forged routes and pig iron production. 110

Brief Description - Ferro Alloy Plant  Chandrapur Ferro Alloy Plant Chandrapur Ferro Alloy Plant, (CFP) erstwhile Maharashtra Elektrosmelt Ltd. (MEL) has became a Unit of SAIL w.e.f. 12/7/2011. Chandrapur Ferro Alloy Plant is the only Public Sector Unit engaged in production of Manganese based Ferro Alloys in the Country. Location: The plant is situated amongst picturesque surroundings at Chandrapur (Maharashtra). It is located 166 km away from Nagpur on Delhi-Chennai rail route and is well connected by rail & road to the major cities of India. CFP has an installed capacity of 1,00,000 TPY Ferro Manganese. The product range of CFP includes High Carbon Ferro Manganese, Silico Manganese and Medium/Low Carbon Ferro Manganese. The Plant is accredited with Quality Assurance Certificate ISO 9001:2008. CFP's major production facilities include two nos. of 33 MVA Submerged Electric Arc Furnaces for the production of ferro alloys, two nos. Manganese Ore Sintering Plants, Furnace gas based Power Plant, Mechanized Crushing and Screening System for Ferro Alloys and 1 MVA Electric Arc Furnace for the production of MC/LC Ferro Manganese with Lime Calcination and Manganese Ore Roasting Unit. Brief Description – Central Units  Raw Materials Division (RMD) SAIL is India’s second largest Iron Ore Producer the captive mines – mainly in central and eastern India – today meet 100% of the steel plants’ requirements of iron ore. To meet enhanced iron ore requirements SAIL set-up its Raw Materials Division (RMD) headquarters in Kolkata in1989, bringing all the captive mines of the company under its ambit, barring those belonging to Bhilai Steel Plant (Rajhara - Dalli Iron Ore Mines and Nandini –Hirri Limestone-Dolomite Mines in the State of Chattisgarh) and Visveswaraya Iron and Steel Plant for logistical reason. The Major Mines of SAIL are: Kiriburu Iron Ore Mines (KIOM) in Jharkhad; Meghahatuburu Iron Ore Mines (MIOM) in Jharkhad; Bolani Iron Ore Mines (BOM) in Odisha; Barsua Iron Ore Mines (BIM) in Odisha; Manoharpur (Chiria) Iron Ore Mines (MIOM) in Jharkhand; Gua Iron Ore Mines (GOM) in Jharkhad; Dalli-Rajhara Iron Ore Mines in Chhattisgarh; Nandini Limestone Mines in Chhattisgarh; Kuteshwar Limestone Mines in Madhya Pradesh; Bhawanathpur & Tulsidamar (Dolomite) Mines in Jharkhand; Hirri Dolomite Mines in Chhattisgarh 111

 Colliries Division SAIL-Collieries Division has three Operating Colleries out of which two are in Jharkhand and one in West Bengal; namely: 1. Chasnally Colliery, Jharkhand (both Opencast and Underground) 2. Jitpur Colliery, Jharkhand (Underground) 3. Ramnagora Colliery, West Bengal (both Opencast and Underground) The coking coal required for making steel is being beneficiated at Coal Preparation Plant (Washery) located at Chasnalla. The beneficiated products being produced are dispatched to SAIL plants for end use in steel making and by-product that is Boiler Coal for Power Plants. In view of the modernization and expansion of SAIL, there are three upcoming projects viz. Parbatpur (Jharkhand), Sitanala (Jharkhand0 and Tasra Project (Jharkhand) to keep pace with the growing demand of coal for our steel plants.  Central Coal Supply Organization (CCSO) Situated at Dhanbad in Jharkhand, the Central Coal Supply Organization (CCSO) of the Operations Directorate, SAIL is entrusted with the crucial task of arranging around 14,000 tonnes each of indigenous coking coal and power grade coal daily for steel plants.  Central Marketing Organization (CMO) Central Marketing Organization (CMO), one of the largest marketing network in the country, markets mild steel products from the four integrated steel plants of SAIL. The CMO headquarters is at Kolkata and the Commercial Directorate is located at New Delhi. A nation-wide network of regional offices, sales offices and several strategically placed warehouses is further supplemented by consignment agents and authorized dealers to meet the demands of the smallest customers in the remotest corners of the country. CMO maintains its aggressive marketing efforts in order to retain market leadership by meeting customer requirements and evolving strategies to increase sales. In order to strengthen the marketing approach and initiate product and segment specialization, CMO has been reorganized on the basis of long and flat products. Likewise, Key Account Management process (KAM) has been implemented in CMO to provide better service, quality and tailor made products to Key Customers through a single window. This is being followed up by the Customers Satisfaction Index (CSI) to increase responsiveness to customer needs. International Trade Division (ITD) of CMO manages exports of mild steel products and maintains close liaison with buyers abroad. ITD has been successful in making SAIL steel, a familiar name, across the continents. SAIL’s reputation as a producer of quality steel products has been established in as many as 70 countries around 112

the globe. Notable among them are Japan, Egypt, UK, Italy, Russia, Sri Lanka, Bangladesh, Taiwan, Myanmar and Nepal. Transport & Shipping Division (T&S) of CMO performs the important functions of ensuring proper dispatch of export material and timely imports of raw materials to keep the SAIL plants going.  SAIL Consultancy Division (SAILCON) SAIL, during its existence of over four decades, has acquired a high level of expertise and vast experience in building, operating and maintaining a chain of integrated and mini steel plants and associated facilities encompassing diverse technologies, equipment and product-mix. The knowledge thus gained led to the formation of a consultancy and services marketing division – SAIL. Consultancy Division (SAILCON), based in New Delhi, to provide a wide range of services to the iron & steel and other industries in India and abroad. SAILCON is a single window, for clients spread over the world, providing design, engineering, technical, management and training consultancy and services available from different SAIL plants and units. It is an ISO 9001:2000 certified organization equipped to render quality services from concept to commissioning. In addition to successful completion of a number of assignments in India, SAILCON has satisfied clients in Egypt, Saudi Arabia, Iran, Qatar, Bangladesh, Oman, Philippines, Nepal, Taiwan and Thailand.  Research & Development Centre for Iron & Steel (RDCIS) The Research & Development Centre for Iron & Steel (RDCIS) at Ranchi is the corporate R&D unit of SAIL. Set up in 1972, the Centre has ISO 9001 certification to its credit. It undertakes R&D projects in diverse realms of Iron & Steel Technology under the categories of Basic Scientific Research, Plant Performance Improvement, Investigation & Consultancy Assignments, Equipment & Instrument Design and Major Technology Development. RDCIS has more than 300 dedicated and competent scientists and engineers and its laboratory is equipped with around 300 sophisticated diagnostic research equipment and 5 pilot plant facilities. RDCIS provides customers with prompt, innovative and cost-effective R&D solutions; develop and commercialize improved processes and products; continually enhance the capability of its human resources to emerge as a centre of excellence. The major efforts are directed towards cost reduction, quality improvement and value-addition to products of SAIL plants and providing application engineering support to SAIL’s products at customers’ end. RDCIS along with steel plants has recently taken initiatives to develop special steel products utilizing the modernized production facilities at steel plants. 113

 SAIL Safety Organization (SSO) SAIL Safety Organization (SSO), a Corporate Unit set up in 1988 at Ranchi, monitors and guides the Safety Promotional, Fire and Occupational Health Services activities undertaken at different Steel Plants/ Units/ Mines/ Stockyards. To accomplish the above mentioned functions, SSO formulates and prepares appropriate safety policies, procedures, systems, action plans, guidelines etc. and follows up for their implementation and thereby helps in providing accident free work environment. Consistent efforts are also being made by SSO for competence building in the area of safety management through HRD interventions covering heads of shops, line managers, safety personnel & trade union leaders. A multi-disciplinary Safety Engineering Department exists in each of the steel plants and mines to look after their safety needs. The emphasis is now on Systematic Approach to Safety Management. SSO is managing the Secretariat of the Joint Committee of Safety. Health & Environment in the Steel Industry (JCSSI), a bipartite forum which addresses steel plant’s safety, health & environment issues with active involvement of management and central & plant level trade unions and provides guidelines to the member organizations like SAIL, TISCO, RINL, HSCL, Dastur Co., etc. on promoting safety, occupational health and pollution control measures.  Centre for Engineering & Technology (CET) Centre for Engineering & Technology (CET), an ISO 9001 certified organization, is the design, engineering & consultancy unit of SAIL. It has its Head Office at Ranchi, Sub Centres at Bhilai, Durgapur, Rourkela, Bokaro and an IPSS Secretariat at New Delhi for the formulation of Interplant Standards for Steel Industry. As a ‘solution provider for all project needs’, CET has been rendering a complete range of services not only to the steel plants under SAIL but also to various clients other than SAIL – both within and outside the country. The range of services includes conceptualization, project evaluation & appraisal, project consultancy, design & engineering and project management in the areas of iron and steel making. Apart from this, CET has been providing its services in the related areas like mine planning and development, infrastructural development, industrial piping, industrial warehousing, material handling system, industrial pollution control and environment management systems, water supply and sanitation, town planning, power projects, etc. CET represents a reservoir of technical & managerial expertise inherited over four decades of Indian Steel Industry. It has kept pace with changing times and made continuous efforts for updating skills of engineers through planned HRD programmes, collaborative arrangements with academia and other 114

professional organisations of repute and acquiring up-to-date hardwares & softwares for engineering work.  Management Training Institute (MTI) This apex training institute for management training in SAIL was set up in 1962 in Ranchi to fulfil the managerial development needs of senior executives of the company and thereby act as a catalyst for achieving organizational goals. It is one of the first management training centres to be set up in the corporate sector in India. The Management Training Institute (MTI) assesses the training needs of senior executives, designs and executes need-based training programmes and disseminates modern management thinking through its publications. It is involved in preparing trainer manuals, case studies, exercises and business games. It also undertakes management research for diagnosing organizational issues. MTI designs company-wide HRD interventions, organizes senior level management workshops and conducts problem solving workshops for middle level executives. It also undertakes consultancy services in the area of management, organization development and HRD within India and abroad. MTI also offers some selected programmes to executives of other organizations. In recent past it has conducted programmes for MMTC, NALCO and TISCO. MTI, as a corporate institute, monitors the overall progress of training activities in SAIL. It organizes regular training audits using documented training standards. It conducts network meetings for selected and important programmes. These steps are taken to ensure quality in training activities and continuous improvement.  Environment Management Division (EMD) The Environment Management Division (EMD) is a corporate unit monitoring and facilitating the environment management and pollution control activities in the SAIL plants and units. This division, set up in 1988, has its headquarters in Kolkata.  Growth Division (GD) Growth Division (GD) functions as a nodal agency for manufacture and supply of various spare parts and equipment to the SAIL Plants by utilizing available in-house facilities and vendor base. GD functions focus on effective utilization of the engineering shops in the steel plants. It has its headquarters in Kolkata.  Transport & Shipping (T&S) Transport & Shipping Division ensures timely import of key inputs of steel making and efficient dispatch of steel exports. It has its headquarters in Kolkata. 115

3.1.4 Vision, Credo & Core Values of SAIL Vision To be a respected world-class corporation and the leader in India steel business in quality productivity, profitability and customer satisfaction. Vision 2025: Long term strategic plan to steer the company towards a target of 50 million tonnes of hot metal production, thereby meeting the strategic objectives of maintaining a leadership position in the Indian steel sector and a position amongst the top steel companies globally. Credo  We build lasting relationships with customers based on trust and mutual benefit.  We uphold highest ethical standards in conduct of our business.  We create and nurture a culture that supports flexibility, learning and is proactive to change.  We chart a challenging career for employees with opportunities for advancement and rewards.  We value the opportunity and responsibility to make a meaningful difference in people’s lives. Core Values  Customer Satisfaction (Customer comes first every time): Customer satisfaction is the first priority of every employee and the purpose of every job. We do not compromise this value because we believe that this alone can enable us to achieve the vision of attaining market leadership.  Concern for people (Talent of our people is our greatest asset): We believe that developing competence and commitment of our people for enhancing their contribution; is important for achieving customer satisfaction and thereby the prosperity of the company and of the employees.  Consistent Profitability (Consistent profitability is essential for growth): We believe that consistent and significant profitability must be the essential outcome of all our activities. This is necessary for modernization, growth and market leadership.  Commitment to excellence (SAIL does it better): We are committed to harnessing the full potential of all our resources through creativity, continuous improvement and 116

teamwork. We believe that this is important for making SAIL the best organization so that our customers, employees and shareholders have a sense of pride.  Living by these Core Values is the way we define success for our company and for our people. “Every SAIL Employee is a World Class Leader & Brand Ambassador of the Company. SAIL is poise to make its mark globally with its world class products from its modernized and expanded facilities.” 3.1.5 Policies of SAIL Human Resource Policy SAIL Personnel Directorate shall ensure competent and committed team engaged in building a culture of learning to achieve excellence in performance and employee satisfaction through innovation and continual improvement. Quality Policy We shall build and sustain a world-class organization, where quality is the hallmark of every process and activity. With the involvement and dedication of our human resource, we are committed to achieve satisfaction of all our stakeholders, through innovation and continual improvement. Safety Policy Steel Authority of India Limited (SAIL) is committed to:  Safety of its employees and the people associated with it including those living in the neighbourhood of its plants, mines and units.  Pursue safety efforts in a sustained and consistent way by establishing safety goals, demanding accountability for safety performance and providing resources to make safety programmes work. Guiding Principles:  Excellence in health & safety supports excellent business results.  All accidents can and must be prevented.  All employees are responsible and accountable for maintaining safety standards.  Safety standards to be incorporated in all work procedures.  Imparting training to create safety consciousness and to work safely to be a key element of safety programmes.  Safety to be enhanced through participative committees and other fora. 117

 Comprehensive and regular audit of the safety performance, to be conducted.  All work practices & procedures to be in consonance with statutory Rules and Regulations on Safety. Corporate Environment Policy We, the Steel Authority of India Limited (SAIL), manufacture various products of iron and steel. The company owns and operates five integrated steel plants at Bhilai, Durgapur, Rourkela, Bokaro and Burnpur and three special steels plants at Salem, Durgapur and Bhadravati along with captive mines for iron ore, limestone, dolomite and coal and has a subsidiary, MEL at Chandrapur. We also have an extensive marketing network spread across the length and breadth of the country. SAIL reaffirms its commitment to contributing towards a clean and sustainable environment and continually enhancing its environmental performance as an integral part of its business philosophy and values. Towards this commitment, we shall:  Integrate sound environmental management practices in all our activities.  Conduct our operations in an environmentally responsible manner to comply with applicable legal and other requirements related to its environmental aspects and strive to go beyond.  Progressively adopt cleaner and energy efficient technologies.  Minimize waste greenery in and around our plants and mines.  Strive for continual improvement in our environmental performance by setting challenging targets, measuring progress, taking corrective action and communicating environmental information to all concerned.  Enhance environmental awareness amongst employees working for an on behalf of us and the general populace around plants and mines.  Encourage our business associates to adopt a similar approach for environmental protection. CSR Policy (Objective)  Create value for the stakeholders & society that are fundamentally linked to SAIL’s Core Business Strategies and operations through the services, conduct & initiatives for their sustainable development.  Enhance value creation for the community in which it operates by identifying with the hamlet and foster goodwill from those living along the periphery towards the Company by enhancing the quality of life of people in the direct impact zone.  Support the community by assisting the underprivileged. 118

 Carry out developmental initiatives in order to meet the calls of the present without compromising the ability of further to meet its needs.  Support local populace by building the image of SAIL as patron of diverse pastoral sports, arts and culture.  To operate in a socially, environmentally and economically responsible manner, so as to succeed by seeking social license. Sustainable Development Policy SAIL recognizes that its business activities have direct and indirect impact on the environment and society. SAIL is committed to continuously promote Sustainable Development encompassing environment, societal and economic aspects related to the business activities. The guiding principles are as follows:  Affirm its commitment to contributing towards a clean and sustainable environment and continually enhancing its environment related performance as an integral part of its business philosophy and values.  Strive to integrate the business values in an ethical and transparent manner to demonstrate its commitment to sustainable development and to meet the interests of its stakeholders.  Create a positive footprint within the society to make a meaningful difference in the lives of people by continually aligning its initiatives to the goals for sustainable development.  Regularly interact with stakeholders to assess and achieve sustainability associated with its business activities, through constructive dialogue.  Maintain commitment to business and people for quality, health and safety in every aspect. 3.1.6 Ownership and Management The Government of India owns about 75% of SAIL’s equity and retains voting control of the Company. However, SAIL, by virtue of its Maharatna status, enjoys significant operational and financial autonomy. Mr. P.K Singh is the current chairman of SAIL. Prior to this, P.K Singh took over as the Chief Executive Officer (CEO) of Durgapur Steel Plant in 2012. Earlier in July 2015, he was given the additional charge of CEO of IISCO Steel Plant, Burnpur (West Bengal). An alumnus of IIT-Roorkee, he started his career in SAIL at its Bokaro Steel Plant in 1980. Singh also worked in IISCO Steel Plant, Durgapur Steel Plant, Bokaro Steel Plant and Bhilai Steel Plant. 119

3.1.7 Directorates at Corporate Office and SAIL Board Directorate of Corporate Office: The main function of the Corporate Office is to integrate the functioning of Plants/Units to improve synergy of the total operations of SAIL. This is achieved through various directorates of the corporate office. The corporate office is an overall policy-making body responsible for providing all the necessary help and support to the units for implementing the policies of the company by coordinating with the various organizations and Government departments. SAIL Board: The SAIL Board comprises of Functional Directors, Managing Directors, two Government Directors & eight Independent Directors and is headed by Chairman, SAIL. It enables SAIL to perform the following general functions at the corporate level:  Long term strategic planning for the Company  Policy formulation in consultation with plant personnel. Getting agreed action plans for implementation of the policies and ensuring their fulfillment. Achieving clarity and organizational commitment on objectives, goals and plans of action.  Developing norms of performance in every functional area and ensuring commitment  of progressively improved norms.  Ensuring smooth and efficient operations and achievement of optimal performance of existing resources. Ensuring fulfillment of targets and orderly growth of the Company. Organizational development to maximize efficiency of the company.  Reviewing performance of each unit with respect to target and suggesting corrective action where necessary.  Achievement of well-coordinated functioning of different plants: improving interplant interactions, dissemination of knowledge and achieving synergy in Company’s operations.  Centralized control of Finance, Sales, Purchase/ Import of inputs.  Capital investment decisions beyond power delegated to plant MDs.  Coordination with all external agencies, Central and State Governments Ministries, Railways, suppliers etc. in order to improve overall company operations.  Development of an efficient and well-designed data bank and MIS at all levels within the organization to assist in problem identification and resolution.  Projection of corporate image of the Company through media to the public in general. An organization structure cannot remain static. It has to change with the changing perceptions of the organization’s role and the new thrusts sought to be given for its development. Similarly, at the plants also, the organization structure has been changing. 120

3.1.8 Operations As of 31-Mar-2017, SAIL has 83,136 employees, as compared to 170,368 (as of 31-Mar-2002). There has been a continuous reduction of headcount over the past few years due to enhanced productivity and rationalized manpower. The total requirement of its main raw material, iron ore, is met through its captive mines. To meet its growing requirement, capacities of existing iron ore mines are being expanded and new iron ore mines are being developed. In addition, new iron ore deposits in the states of Rajasthan, Chhattisgarh, Madhya Pradesh, Maharashtra, Odisha and Karnataka are being explored. Around 20% of its coking coal requirements are met from domestic sources, the remaining through imports. For improving coking coal security, the Company is also making efforts for development of new coking coal blocks at Tasra and Sitanalla. SAIL produced 18.14 Million Tonne of Hot Metal, 17.42 Million Tonne of Crude Steel and 17.33 Million Tonnes of Saleable Steel during the FY 2016-17 3.2 Rourkela Steel Plant – At A Glance 3.2.1 Brief Overview Rourkela Steel Plant (RSP), in Rourkela, Odisha is the first integrated steel plant in the public sector in India. It was set up with West German collaboration with an installed capacity of 1 million tonnes in the 1960s. It is operated by Steel Authority of India. German metallurgical firms Mannesmann, Krupp, Demag, Siemens and Austrian company Voestalpine provided machinery and consultancy to the plant among others. 121

Rourkela Steel Plant was the first steel plant in Asia to use the LD (Linz-Donawitz) process of steel-making. On 3 February 1959, then president Rajendra Prasad inaugurated RSP’s first blast furnace named 'Parvati' when the company was known as Hindustan Steel Limited (HSL). Subsequently, the RSP became a unit of the Steel Authority of India Ltd (SAIL). Rourkela Steel Plant is located in the north-western tip of Odisha and at the heart of a rich mineral belt. Being situated on the Howrah-Mumbai rail mainline, Rourkela is very well connected with most of the important cities of India. The nearby airports are Ranchi (173 km), Bhubaneswar (378 km) and Kolkata (413 km). Rourkela also has an airstrip maintained by RSP. After RSP was set up with the help of German collaboration, subsequently, its steelmaking capacity was enhanced to 2 million tonnes and added many units to the facility. A pipe plant and special plate plant were set up during the 1970s for production of ERW pipes and steel plates for defense requirements. NSPCL, a joint venture company of NTPC Limited and SAIL, set up a captive power plant of 120 MW capacity to be self- sufficient. Rourkela Steel Plant undertook a modernization program in 1988 with an outlay of INR 4500 crores. This revamped the process of supply of raw materials, new oxygen plant, improved techniques in blast furnaces, selling of dolomite plant, cast house, slag granulation plant, supply of raw materials sintering plants and coal handling plants among others. Following the modernization RSP became the first SAIL plant to have adopted continuous casting route for all its hot metal production. It is also the first Indian steel plant to have adopted external desulfurization of hot metal by the calcium carbide injection process. 3.2.2 Modernization and Expansion of Rourkela Steel Plant Recently, a `12,000-crore modernization and expansion project at the Rourkela Steel Plant was dedicated to the Nation by Prime minister Narendra Modi on 1 April 2015. RSP presently has the capacity to produce 4.5 million tonnes of hot metal, 4.2 million tonnes of crude steel and 3.9 million tonnes of saleable steel. The capacity of Rourkela Steel Plant (RSP) is expected to rise to 10.8 MTPA by 2025. Ashwini Kumar took over as Chief Executive Officer of Rourkela Steel Plant (RSP) in 2016. Rourkela Steel Plant (RSP) has many firsts to its credit. It is the first plant in Asia to adopt the energy-efficient LD process of steel making and the first integrated steel plant of SAIL which adopted the cost-effective and quality-centered continuous casting route to process 122

100% of steel produced. The plant has also, for the first time in India, had adopted external desulphurization of hot metal by calcium carbide injection process. RSP is one of the unique units under the SAIL umbrella with a wide variety of special purpose steels. Prime Minister Narendra Modi speaking at a public meeting after opening the 4.5 MT expansion of the Rourkela Steel Plant, April 2015. Steel Authority of India plans to invest for its capacity expansion in its major plants. So Rourkela Steel Plant’s modernization and expansion project was on process. Some of the major milestones in RSP are as follows:  1964: The Fertilizer Plant was set up in the year 1964 with a view to utilizing the residue of the steel plant and the re-utilization of the chemicals.  1970: Pipe Plant and Special Plate Plant was set up for production of pipes and steel plates for defense requirements.  1988: The modernization of RSP was begun for producing qualitative materials and establishing its importance in the world market.  1998: The modernization program with an outlay of INR 4500 crores.  2003: Visit of His Excellency Dr. A. P. J. Abdul Kalam, the then Hon’ble President of India to RSP (15-May-2003)  2008: Foundation Stone laying of the Modernization and Expansion programme (04 January 2008) 123

 2009: RSP celebrates Golden Jubilee of its Hot Metal production (03 February 2009)  2010: RSP-SAIL plans for its capacity expansion in its existing 2.2 MT to 4.5 MT of production.  2013: Rourkela Steel Plant unveiled the country’s largest blast furnace named “DURGA” having a useful volume of 4060 cubic metres with a production capacity of 8000 tons hot metal per day, thus increasing its production capacity from 2.2 MT to 4.5 MT.  2015: Rourkela Steel Plant has set up 1 MW solar photovoltaic (PV) power generation unit inside the plant premises at a cost of Rs 6.68 crore, is expected to generate minimum 1.479 million units of solar energy per annum. It is also installing other facilities for production of green energy. Two 5 KW rooftop solar PV power generation systems have already been installed and seven more such systems are in the pipeline. RSP is also in the process of setting up a 15 MW hydro power project on the downstream of Mandira Dam in collaboration with GEDCOL. Rourkela Steel Plant has completed a massive modernization and expansion programme, that is truly historic. With this the Steel Plant has doubled its capacity and augmented it to the level of 4.5 MTPA (Million Tonne per Annum) of Hot Metal from the previous level of 2 MTPA. The Crude Steel making capacity has simultaneously increased from the level of 1.9 MTPA to 4.2 MTPA and production of Saleable Steel is all set to zoom from the level of 1.671 MTPA to 3.99 MTPA. It is worth mentioning here that, apart from increasing the volume the other benefits envisaged from this phase of modernization and expansion are increased economy of scale, enlarged customer base, enhanced quality, reduced cost of production, better market compatibility, improved labour productivity, stricter adherence to environment norms and superior Techno economics. Some of the key new units are as follows:  Ore Bedding and Blending Plant The Raw Material circuit of the Ore Bedding and Blending Plant Phase-II commissioned and inaugurated by Chairman, SAIL on 11th August. The augmentation facilities include:  Receiving, unloading, reclaiming and finally transporting of raw materials required for Blast Furnce5. 124

 Base mix preparation for the New Sintering Complex  Transportation of Flue dust, Mill scale etc.  Transportation of crushed fuel and flux for trimming addition to the new Sinter Unit  Conveyor line for transportation of Calcining Plant grade limestone and dolomite to consuming units  Automatic sampling system  Coke Oven Battery # 6: The battery is top charged, compound twin flue, under jet, regenerative heating with partial recirculation of waste gases. The 7-metre-tall battery of 67 ovens has been installed to produce run of oven Coke (Dry) of 0.768 MT/Year. The Computerized Heating Control System (COHC) has been installed for the battery operation for the process management system to improve reduction in environmental emission, improve coke quality & productivity. A coal tower of 4000ton useful capacity for storing coal, Leak Proof Doors, Water Sealed AP Covers, HPLA (High Pressure Ammonical Liquor Aspiration), Door & Frame cleaner, High Pressure Water Jet door cleaner, Land based Pushing Emission Control (PEC) System and Effluent Disposal and Coke Dry Cooling Plant (CDCP) have been provided for efficient environment management. Some important components of the package are:  New Coke Dry Cooling Plant: The principle of coke dry quenching is based on cooling of hot coke with inert gas circulating in close loop between the chamber of hot coke and the waste heat Boiler. Apart from ensuring environment friendly operation, the CDCP is also designed to enhance the coke quality.  New Coal Handling Plant: The new Coal Handling Plant can hold 15 days’ stock of Coking Coal for COB #6 (@ 3500 T/day) and CDI Coal of 10 days’ stock @ 1500 T/day). There are 24 Nos. of RCC silos for stocking of Coking Coal and for CDI Coal, 6 Nos of RCC silos, each of capacity 2500 Tons.  New Coal Chemical Department: The new CCD has been installed to process coke oven gas generated from the new Coke Oven Battery # 6. This cleans the raw coke oven gas by removing Tar, Ammonia, Hydrogen, Sulphur, Sulphide and Naphthalene. The coke oven gas is 125

being cooled finally to 3000 C at the outlet of final gas cooler. There are Naphthalene Washer and Benzole Scrubber to have clean coke oven gas for use of the Plant.  Sintering Unit # 3 The new single strand Sinter Unit has an effective suction area of 360 m³ and an annual production capacity of 3.70 MT of gross sinter with sinter productivity of 1.3 T/m² /hr. The output stack emission is less than 50 mg/Nm³, by making the unit an environment friendly unit. The sintering Unit is being provided with Eirich type mixer and noduliser instead of the conventional mixing & balling drum. A circular cooler has been installed for sinter cooling. Another new feature is pneumatic conveying of ESP dust, as a part of which the ESP dust will be charged to the sinter raw mix bed after passing through an Eirich type Granulator. The Eirich type Mixer, Noduliser & Granulator have been installed for the first time in SAIL Plants.  Blast Furnace # 5 One of the biggest Blast Furnaces of the country, the new Blast Furnace # 5 with a useful volume of 4060 Cubic metres is designed for a production capacity of 2.8 MTPA with a daily hot metal production of 7924 T (avg.). The Furnace operates at high intensification level and for a campaign life of 20 years. Equipped with modern features such as pulverized coal injection system, cast house fume extraction system, cast house slag granulation system, top gas recovery turbines of 14 MW capacity, Twin material bin BLT system, Waste Heat Recovery System, Plate/Stave Coolers and Conveyor Belt Charging System, this Blast Furnace has Level II Automation. 126