Malabar Cements Performance Appraisal

Major Project Report 2012
CHAPTER: 1 INTRODUCTION
MESCE Department of Management Science
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1.1 Introduction to the study

The study was undertaken to know the employees perception regarding the effectiveness of performance appraisal system at Malabar cements ltd. It consists of the systematic evaluation of employees with respect to his/her performance on the job and potential for development. Perception according to Kotler (1997) is the process through which people in choosing, organizing and interpreting information in order to form a meaningful picture of the world. According to Gibson (1996) is the process of person perception in understanding the environment that involves organizing and interpretation as stimuli in a psychological experience.
The performance evaluation (performance appraisal) is a key factor in order to develop an organization effectively and efficiently. Individual performance appraisal is very beneficial for the growth dynamics of the organization as a whole. Performance appraisal is the process of evaluating how well employees perform their jobs when compared to a set of standards, and then communicating that information to those employees (Mathis and Jackson, 2000).
Cement Industry in India is on a roll at the moment. Driven by a booming real estate sector, global demand and increased activity in infrastructure development such as state and national highways, the cement industry has witnessed tremendous growth. Production capacity has gone up and top cement companies of the world are to enter the Indian market, there by sparking off a spate of mergers and acquisitions. Indian cement industry is currently ranked second in the world Malabar Cements Ltd. Is a flagship company of the Government of Kerala. The company was incorporated on August 11, 1978 and commenced production on April 24, 1984. This industrial unit has a capital outlay of Rs.680 million. The factory is rated to produce 4.2 lakh tones cements per annum. The company meets about 10 % of total cement consumption in Kerala. The company moves with a work force of over 1000 dedicated and highly skilled personnel. Malabar Cements have the state of the art, dry process technology for manufacture of super quality cement, quality much above the national standard.
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1.2 Need for the study

The study was conducted at Malabar cements Ltd, to understand the employees perception regarding the effectiveness of performance appraisal system. The purpose of this study is to find out how far the employees are perceived with the existing performance appraisal provided by the Malabar cements and also tries to find out if the performance appraisal system provided is sufficient enough to improve their performance level.
1.3 Objectives of the study

Primary objective To study the employees perception regarding the effectiveness of performance appraisal system. Secondary objectives To identify the employees expectation from the performance appraisal system To evaluate the managerial attributes about their managers To study employees perception regarding the present performance appraisal system
1.4 Problem statement

For any organization, employees are the main party to receive more concentration so that the business organization has a successful future. Here the management of Malabar Cements suspects that there lies some sort of defects in their performance appraisal methods followed by the organization.
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CHAPTER: 2 INDUSTRY PROFILE
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1. INTRODUCTION
The cement industry is one of the main beneficiaries of the infrastructure boom. With robust demand and adequate supply, the industry has bright future. The Indian Cement Industry with total capacity of 165 million tones is the second largest after China. Cement industry is dominated by 20 companies who account for over 70% of the market. Individually no company accounts for over 12% of the market. The major players like L&T and ACC have been quiet successful in narrowing the gap between demand and supply. Private housing sector is the major consumer of cement (53%) followed by the government infrastructure sector. Similarly northern and southern region consume around 20%-30% cement while the central and western region are consuming only 18%-16%.India is the 2nd largest cement producer in world after china .Right from laying concrete bricks of economy to waving fly overs cement industry has shown and shows a great future. The overall outlook for the industry shows significant growth on the back of robust demand from housing construction, Phase-II of NHDP (National Highway Development Project) and other infrastructure development projects. Domestic demand for cement has been increasing at a fast pace in India. Cement consumption in India is forecasted to grow by over 22% by 2009-10 from 2007- 08.Among the states, Maharashtra has the highest share in consumption at 12.18%,followed by Uttar Pradesh, In production terms, Andhra Pradesh is leading with 14.72% of total production followed by Rajasthan. Cement production grew at the rate of 9.1 per cent during 2006-07 over the previous fiscal's total production of 147.8 mt (million tons). Due to rising demand of cement the sales volume of cement companies are also increasing & companies reporting higher production, higher sales and higher profits. The net profit growth rate of cement firms was 85%. Cement industry has contributed around 8% to the economic development of India. Outsiders (foreign players) eyeing India as a major market to invest in the form of either merger or FDI (Foreign Direct Investment). Cement industry has a long way to go as Indian economy is poised to grow because of being on verge of development. The company continues to emphasize on reduction of costs through enhanced productivity, reduction in energy costs and logistics expenses. The cement sector is expected to witness growth in line with the economic growth because of the strong co-relation with GDP. Future drivers of cement demand growth in India would be the road and housing projects. As per the Working Group report on Cement Industry for the formulation of the 11th Plan, the cement demand is likely to grow at MESCE Department of Management Science Page 5
Major Project Report 2012 11.5 per cent per annum during the 11th Plan and cement production and capacity by the end of the 11th Plan are estimated to be 269 million tones and 298 million tones, respectively, with capacity utilization of 90 per cent. Despite the growth of Indian cement industry India lags behind the per capita production. Supply for cement is expected to remain tight which, in turn, will push up prices of cement by more than 50%. The most important factor for better prices is consolidation of the industry. It has just begun and we will see more consolidation in the coming years. Other budget measures such as cut in import duty from 12.5 per cent to nil etc. are all intended to cut costs and boost availability of cement. Sadly the adverse effects of global slowdown have not speared this industry too. Demand is sluggish, the government is keeping an eagle eye on prizes, domestic coal and pet coke, prizes have increased sharply and utilizations rates are down. The numbers coming out are a reflection of grim times. ACC the countrys largest cement company thats controlled by Swiss giant HOLCIM, registered 2% fall in august sales. It is the biggest fall since Feb 2007. Production fell by 5%. To stand against the problematic situation, government as well as cement industry has taken some steps. Companies are focusing on cost of transportation. One of the strategy is to decrease dependence on road & opt for sea logistics as that can cut transportation cost by 30- 50 %. Some plants are adopting futuristic plan such as setting up captive power plant, moving closer to the customers by creating clicker, crushing, and capacity in key markets, to be more customer centric to generate better revenue. India should push for stricter regulations of market place as to control the prices of big companies and prevent them from forming cartels and exchanging information. To fight with the high inflation, government wants to import more cement from Pakistan .However cement prizes are not very much high as other items but still they are increasing. And the reason of high prize is surging cost of raw material and transportation cost. Apart from this government also discussed with cement industry not to have increase in prizes and keep consumer interest in mind. Now the question arise in front of the government is whether the demand by the government is possible to increase through expenditure on infrastructure or not according to the current state of economy when so many crises are going on or how the government allocation of US$ 3.23 billion for the National Highway Development, Project will keep the demand for cement alive? And to what extent the prizes of cement should be increase so that consumer cant affect. Cement industry in India has MESCE Department of Management Science Page 6
Major Project Report 2012 also made tremendous strides in technological up gradation and assimilation of latest technology. Presently, 93 per cent of the total capacity in the industry is based on modern and environmentfriendly dry process technology. The induction of advanced technology has helped the industry immensely to conserve energy and fuel and to save materials substantially. Indian cement industry has also acquired technical capability to produce different types of cement like Ordinary Portland Cement (OPC), Portland Pozzolana Cement (PPC), Portland Blast Furnace Slag Cement (PBFS), Oil Well Cement, Rapid Hardening Portland Cement, Sulphate Resisting Portland Cement, White Cement etc. Some of the major clusters of cement industry in India are: Satna (Madhya Pradesh), Chandrapur (Maharashtra), Gulbarga (Karnataka), Yerranguntla (Andhra Pradesh), Nalgonda (Andhra Pradesh), Bilaspur (Chattisgarh), and Chandoria (Rajasthan).
2. CURRENT SCENARIO
The Indian cement industry is the second largest producer of quality cement, which meets global standards. The cement industry comprises 130 large cement plants and more than 300 mini cement plants. The industry's capacity at the end of the year reached 188.97 million tons which was 166.73 million tons at the end of the year 2006-07. Cement production during April to March 2007-08 was 168.31 million tons as compared to 155.66 million tons during the same period for the year 2006- 07.Despatches were 167.67 million tons during April to March 200708 whereas 155.26 during the same period. During April-March 2007-08, cement export was 3.65 million tons as compared to 5.89 during the same period. Cement industry in India is currently going through a consolidation phase. Some examples of consolidation in the Indian cement industry are: Gujarat Ambuja taking a stake of 14 per cent in ACC, and taking over DLF Cements and Modi Cement; ACC taking over IDCOL; India Cement taking over Raasi Cement and Sri Vishnu Cement; and Grasim's acquisition of the cement business of L&T, Indian Rayon's cement division, and Sri Digvijay Cements. Foreign cement companies are also picking up stakes in large Indian cement companies. Swiss cement major Holcim has picked up 14.8 per cent of the promoters' stake in Gujarat Ambuja Cements (GACL). Holcim's acquisition has led to the emergence of two major groups in the Indian cement industry, the Holcim-ACC-Gujarat Ambuja Cements combine and the Aditya Birla group through Grasim Industries and Ultratech Cement. Lafarge, the French cement major has acquired the cement plants of Raymond and MESCE Department of Management Science Page 7
Major Project Report 2012 Tisco. Italy based Italcementi has acquired a stake in the K.K. Birla promoted Zuari Industries' cement plant in Andhra Pradesh, and German cement company Heidelberg Cement has entered into an equal joint-venture agreement with S P Lohia Group controlled Indo- Rama Cement.
3. PROCESS TECHNOLOGY
While adding fresh capacities, the cement manufacturers are very conscious of the technology used. In cement production, raw materials preparation involves primary and secondary crushing of the quarried material, drying the material (for use in the dry process) or undertaking a further raw grinding through either wet or dry processes, and blending the materials. Clinker production is the most energy intensive step, accounting for about 80% of the energy used in cement Production. Produced by burning a mixture of materials, mainly limestone, silicon oxides, aluminum, and iron oxides, clinker is made by one of two production processes: wet or dry; these terms refer to the grinding processes although other configurations and mixed forms (semi-wet, semi-dry) exist for both types. In the dry process, the raw materials are ground, mixed, and fed into the kiln in their dry state. In the wet process, the crushed and proportioned materials are ground with water, mixed, and fed into the kiln in the form of slurry. Different types of cement that are produced in India are: Ordinary Portland cement (OPC): OPC, popularly known as grey cement, has 95 per cent clinker and 5 per cent gypsum and other materials. It accounts for 70 per cent of the total consumption. Portland Pozzolana Cement (PPC): PPC has 80 per cent clinker, 15 per cent pozzolana and 5 per cent gypsum and accounts for 18 per cent of the total cement consumption. It is manufactured because it uses fly ash/burnt clay/coal waste as the main ingredient. White Cement: White cement is basically OPC - clinker using fuel oil (instead of coal) with iron oxide content below 0.4 per cent to ensure whiteness. A special cooling technique is used in its production. It is used to enhance aesthetic value in tiles and flooring. White cement is much more expensive than grey cement. Portland Blast Furnace Slag Cement (PBFSC): MESCE Department of Management Science Page 8
Major Project Report 2012 PBFSC consists of 45 per cent clinker, 50 per cent blast furnace slag and 5 per cent gypsum and accounts for 10 per cent of the total cement consumed. It has a heat of hydration even lower than PPC and is generally used in the construction of dams and similar massive constructions. Specialized Cement: Oil Well Cement is made from clinker with special additives to prevent any porosity. Rapid Hardening Portland cement: Rapid Hardening Portland Cement is similar to OPC, except that it is ground much finer, so that on casting, the compressible strength increases rapidly. Water Proof Cement: Water Proof Cement is similar to OPC, with a small portion of calcium stearate or nonsaponifibale oil to impart waterproofing properties.
4. PROCEDURE
The main raw materials used in the cement manufacturing process are limestone, sand, shale, clay, and iron ore. The main material, limestone, is usually mined on site while the other minor materials may be mined either on site or in nearby quarries. Another source of raw materials is industrial by-products. The use of byproduct materials to replace natural raw materials is a key element in achieving sustainable development.
Raw Material Preparation
Mining of limestone requires the use of drilling and blasting techniques. The blasting techniques use the latest technology to insure vibration, dust, and noise emissions are kept at a minimum. Blasting produces materials in a wide range of sizes from approximately 1.5 meters in diameter to small particles less than a few millimeters in diameter. Material is loaded at the blasting face into trucks for transportation to the crushing plant. Through a series of crushers and screens, the limestone is reduced to a size less than 100 mm and stored until required. Depending on size, the minor materials (sand, shale, clay, and iron ore) may or may not be crushed before being stored in separate areas until required. Raw Grinding MESCE Department of Management Science Page 9
In the wet process, each raw material is proportioned to meet a desired chemical composition and fed to a rotating ball mill with water. The raw materials are ground to a size where the majority of the materials are less than 75 microns. Materials exiting the mill are called "slurry" and have flow ability characteristics. This slurry is pumped to blending tanks and homogenized to insure the chemical composition of the slurry is correct. Following the homogenization process, the slurry is stored in tanks until required. In the dry process, each raw material is proportioned to meet a desired chemical composition and fed to either a rotating ball mill or vertical roller mill. The raw materials are dried with waste process gases and ground to a size where the majority of the materials are less than 75 microns. The dry materials exiting either type of mill are called "kiln feed". The kiln feed is pneumatically blended to insure the chemical composition of the kiln feed is well homogenized and then stored in silos until required.
Preprocessing
Whether the process is wet or dry, the same chemical reactions take place. Basic chemical reactions are: evaporating all moisture, claiming the limestone to produce free calcium oxide, and reacting the calcium oxide with the minor materials (sand, shale, clay, and iron). This results in a final black, nodular product known as "clinker" which has the desired hydraulic properties. In the wet process, the slurry is fed to a rotary kiln, which can be from 3.0 m to 5.0 m in diameter and from 120.0 m to 165.0 m in length. The rotary kiln is made of steel and lined with special refractory materials to protect it from the high process temperatures. Process temperatures can reach as high as 1450oC during the clinker making process. In the dry process, kiln feed is fed to a preheated tower, which can be as high as 150.0 meters. Material from the preheated tower is discharged to a rotary kiln with can have the same diameter as a wet process kiln but the length is much shorter at approximately 45.0 m. The preheated tower and rotary kiln are made of steel and lined with special refractory materials to protect it from the high process temperatures. Regardless of the process, the rotary kiln is fired with an intense flame, produced by burning coal, coke, oil, gas or waste fuels. Preheated towers can be equipped with firing as well. The rotary kiln discharges the red-hot clinker under the intense flame into a clinker cooler. The clinker cooler recovers heat from the clinker and returns the heat to the preprocessing system MESCE Department of Management Science Page 10
Major Project Report 2012 thus reducing fuel consumption and improving energy efficiency. Clinker leaving the clinker cooler is at a temperature conducive to being handled on standard conveying equipment.
Finish Grinding and Distribution
The black, nodular clinker is stored on site in silos or clinker domes until needed for cement production. Clinker, gypsum, and other process additions are ground together in ball mills to form the final cement products. Fineness of the final products, amount of gypsum added, and the amount of process additions added are all varied to develop a desired performance in each of the final cement products. Each cement product is stored in an individual bulk silo until needed by the customer. Bulk cement can be distributed in bulk by truck, rail, or water depending on the customer's needs. Cement can also be packaged with or without color addition and distributed by truck or rail.
5. DEMAND & SUPPLY

The demand drivers for the cement sector continue to be housing, infrastructure and commercial construction, etc. We expect the proportion of infrastructure in total demand to improve further in future, as the thrust on infrastructure development is on the rise. During April-November 2007, cement demand grew by 10 per cent year on- year (y-o-y) propelled by the growth witnessed in end user segments such as housing, infrastructure etc. CRISIL Research expects demand to remain strong and grow by over 12 per cent in the next 2 years. Cement demand is expected to outstrip supply for the next year and a half as no major capacities are coming on stream, thus providing enough flexibility to cement manufacturers to further hike the prices. Today, cement from Andhra is going all over India, including Assam, Meghalaya, Jharkhand, Orissa, West Bengal, Chattisgarh, Gujarat and Maharashtra. More cement is likely to flow into Tamil Nadu from the state in view of cut in sales tax. Any further increase in demand in the South India will benefit the cement industry here. Cement movement from Gujarat to Mumbai is also coming down due to exports while cement movement from Orissa into Andhra has stopped and, in fact, cement is flowing into Orissa as well. Earlier in 2006-07, the housing sector alone consumed 65 per cent of the total domestic consumption. With the launch of several MESCE Department of Management Science Page 11
Major Project Report 2012 infrastructure projects, the housing consumption may come down to 55 per cent as the infrastructure and other sectors are expected to move up to 45 per cent from the present 35 per cent. Still, the main sector of consumption continues to be housing, including commercial space, occupying more than 60 per cent. The current demand in the state for 2005- 06 is expected to cross 15 million tons (11.5 million tons). We expect the demand here to go past the 17.5-million mark in 2006-07 in view of irrigation and infrastructure projects being taken up in the state. Weaker sections housing, construction of public toilets, schools in rural areas apart from several private and public infrastructure projects will also give tremendous boost to the cement consumption in the state. Most importantly, irrigation projects, worth nearly Rs 1 lakh crore, will trigger unprecedented demand for the next 5-7 years. Cement consumptions are as follows:
6. DEMAND DRIVERS
Indian cement demand skewed towards housing The demand from the housing sector is ~53% of the total Indian cement demand. There are fears of a slowdown in the demand from the housing sector due to a drop in real estate prices in the country. The worry is that builders may postpone construction of new buildings if the property prices were to correct. Infrastructure to give demand a big boost Our analysis shows that Infrastructure should be the biggest growth driver for cement demand in the country. If we were to look only at order books of the top eight construction and manufacturing equipment companies in India, we find that their combined order book has virtually doubled over the last two years from INR1,000bn (USD25bn) to INR1,950bn (USD48.75bn) for completion over the next 24-30 months.
7. COST
Over the past five years, cost of cement production has grown at a CAGR of 8.4%. Also, the producers have been able to pass on the hike in cost to consumers on the back of increased demand. Average realizations have increased from Rs. 1,880 per ton in FY 03 to Rs. 3,133 per tons in FY 07, at a CAGR of 13.6%, which has been reflected in higher profit margins of the MESCE Department of Management Science Page 12
Major Project Report 2012 industry. To reduce the cost of production, the industry has focused on captive power generation. Proportion of cement production through captive power route has increased over the years. Also, cement movement by rail has increased over the years. Freight and energy costs are also increasing; however, in the current market scenario, manufacturers have the flexibility to pass on the increase in costs to end consumers. Let us have a look at the cost factors affecting the cement industry
Capacity Utilization: Since the industry operates on fixed cost, higher the capacity sold, the wider the cost distributed on the same base. But one should also keep in mind, that there have been instances wherein despite a healthy capacity utilization, margins have fallen due to lower realizations. Power: The cement industry is energy intensive in nature and thus power costs form the most critical cost component in cement manufacturing (about 30% to total expenses). Most of the companies resort to captive power plants in order to reduce power costs, as this source is cheaper and results in uninterrupted supply of power. Therefore, higher the captive power consumption of the company, the better it is for the company. Freight: Since cement is a bulk commodity, transporting is a costly affair (over 15%). Companies, which have plants located closer to the markets as well as to the source of raw materials have an advantage over their peers, as this leads to lower freight costs. Also, plants located in coastal belts find it much cheaper to transport cement by the sea route in order to cater to the coastal markets such as Mumbai and the states of Gujarat and Tamil Nadu. On account of sufficient reserves of raw materials such as limestone and gypsum, the raw material costs are generally lower than freight and power costs in the cement industry. Excise duties imposed by the government and labor wages are among the other important cost components involved in the manufacturing of cement. Operating margins: The company should have a consistent record of outperforming its peers on the operational performance front i.e. it should have higher operating margins than its competitors in the industry. Factors such as captive power plants, effective capacity utilization results in higher MESCE Department of Management Science Page 13
Major Project Report 2012 operating margins and therefore these factors should be looked into. Since cement is a regional play on account of its high freight costs, the company should not have all its plants concentrated in one region. It should have a geographical spread so that adverse market conditions in one region can be mitigated by high growth in the other region
8. Government Policies
Government policies have affected the growth of cement plants in India in various stages. The control on cement for a long time and then partial decontrol and then total decontrol has contributed to the gradual opening up of the market for cement producers. The stages of growth of the cement industry can be best described in the following stages: Price and Distribution Controls (1940-1981) During the Second World War, cement was declared as an essential commodity under the Defense of India Rules and was brought under price and distribution controls which resulted in sluggish growth. The installed capacity reached only 27.9 MT by the year 1980-81. Partial Decontrol (1982-1988) In February 1982, partial decontrol was announced. Under this scheme, levy cement quota was fixed for the units and the balance could be sold in the open market. This resulted in extensive modernization and expansion drive, which can be seen from the increase in the installed capacity to 59MT in 1988-89 in comparison with the figure of a mere 27.9MT in 1980-81, an increase of almost 111%. Total Decontrol (1989) In the year 1989, total decontrol of the cement industry was announced. By decontrolling the cement industry, the government relaxed the forces of demand and supply. In the next two years, the industry enjoyed a boom in sales and profits. By 1992, the pace of overall economic liberalization had peaked; ironically, however, the economy slipped into recession taking the cement industry down with it. For 1992-93, the industry remained stagnant with no addition to existing capacity. Government Controls The prices that primarily control the price of cement are coal, power tariffs, railway, freight and royalty on limestone. Interestingly, all of these prices are controlled by government MESCE Department of Management Science Page 14
9. REQUIREMENTS
Coal The consumption of coal in a typically dry process system ranges from 20-25% of clinker production. This means for per ton clinker produced 0.20-0.25 ton of coal is consumed. This contributes 35-40% of the production cost. The cement industry consumes about 10mn tons of coal annually. Since coalfields like BCCL supply a poor quality of coal, NCL and CCL the industry has to blend high-grade coal with it. The Indian coal has a low calorific value (3,5004,000 kcal/kg) with ash content as high as 25-30% compared to imported coal of high calorific value (7,000-8,000 kcal/kg) with low ash content 6-7%. Lignite is also used as a fuel by blending it with coal. However this process is not very common. Electricity Cement industry consumes about 5.5bn units of electricity annually while one ton of cement approximately requires 120-130 units of electricity. Power tariffs vary according to the location of the plant and on the production process. The state governments supply this input and hence plants in different states shall have different power tariffs. Another major hindrance to the industry is severe power cuts. Most of the cement producing states like AP, MP experience power cuts to the tune of 25-30% every year causing substantial production loss. Infrastructure To reduce uncertainty relating to power, most of the leading companies like ACC, Indian Rayon, and Grasim rely on captive power plants. A few companies are also considering powergenerating windmills. Limestone This constitutes the largest bulk in terms of input to cement. For producing one ton of cement, approximately 1.6 ton of limestone is required. Therefore, the cement plant location is determined by the location of limestone mines. The major cash outflow takes place in way of royalty payment to the central government and cess on royalties levied by the state government. The total limestone deposit in the country is estimated to be 90 billion tons. AP has the largest share -- 34%, Karnataka 13%, Gujarat 13%, M.P 8%, and Rajasthan 6.5%. The plants near the limestone deposit pay less transportation cost than others. MESCE Department of Management Science Page 15
Transportation Cement is mostly packed in paper bags now. It is then transported either by rail or road. Road transportation beyond 200 kms is not economical therefore about 55% cement is being moved by the railways. There is also the problem of inadequate availability of wagons especially on western railways and southeastern railways. Under this scenario, manufacturers are looking for sea routes, this being not only cheap but also reducing the losses in transit. Today, 70% of the cement movement worldwide is by sea compared to 1% in India. However, the scenario is changing with most of the big players like L&T, ACC and Grasim having set up their bulk terminals. Infrastructure for Future The consumption of cement is determined by factors influencing the level of housing and industrial construction, irrigation projects, and roads and laying of water supply and drainage pipes etc. The level and growth of GDP and its sectoral composition, capital formation, development expenditure, growth in population, level of urbanization, etc, in turn, determine these factors. But the domestic demand for cement is mainly from the housing activities and infrastructure development. The government paved the way for the entry of the private sector in road projects. It has amended the National Highway Act to allow private toll collection and identified projects, bridges, expressways and big passes for private construction. The budget gave substantial incentives to private sector construction companies. Ongoing liberalization will lead to an increase in industrial activities and infrastructure development. So it is hoped that Indian cement industry shall boom again in near future. Incentives in States Most state governments, in order to attract investments in their respective states, offer fiscal incentives in the form of sales tax exemptions/deferrals. In some states, this applies only to intrastate sales, like Madhya Pradesh and Rajasthan. States like Haryana offer a freeze on power tariff for 5 years, while Gujarat offers exemption from electric duty. Installed Capacity India is the worlds second largest cement producing country after China. The industry is characterized by a high degree of fragmentation that has created intense competitive pressure on
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Major Project Report 2012 price realizations. Spread across the length and breadth of the country, there are 120 large plants belonging to 56 companies with an installed capacity of around 135mn tons as on March 2002.
10. OPPORTUNITIES, THREATS, RISKS AND CONCERNS

The cement industry is going through its boom period with full capacity utilization. Powered by the GDP growth of 8-9%, the annual demand for cement in the country continues to grow at 810%. As per NCAER study, under high growth scenario, the demand for cement (including exports) is expected to increase to 244.82 million tons by 2010-11. As per the study, the demand is expected to be much higher at 311.37 million tons, if the optimistic projections of the road and the housing sectors are met. The industry has responded to this with substantial new capacity announcements. The materialization of these capacities, however, is likely to be delayed due to a number of factors including timely delivery of equipment and construction of the plant due to the heavy order book position of the suppliers. It is expected that demand growth will outstrip supply till the materialization of such new capacities. However, the current high level of international crude prices and its impact on the domestic prices of petroleum products is likely to make a dent in the profitability but its impact will have to be seen depending upon the ability of the economy to pass on such cost increase to the consumer. While the freight cost could be optimized on the imported coal through usage of companys own ships for part of the quantity, the international prices of imported coal and its volatility together with the strengthening of the dollar against rupee could derail this. This could impact the delivery prices of imported coal and also the cost of production. The Government has taken steps to increase the availability of indigenous coal for its expanded capacity across various plants which can mitigate the impact of such high cost of imported coal for the plants located near the coal fields in India. The Governments continuing efforts to rein in cement prices by freeing imports and banning exports could artificially disable the normal market price mechanisms for determining the price. The rise in the price of cement is because of the gap of demand & supply in the market. The demand for cement is much higher than its actual supply. But with the production maximization, which can be encountered in next few year, this gap may narrow down, that may ensure the market to be in equilibrium. Decreasing per capita consumption doesnt affect the total consumption for the cement. It means the infrastructure; contacted housing is using the bulk of the production. In spite of High price of MESCE Department of Management Science Page 17
Major Project Report 2012 the product, the hick of demand because of the increasing rate of infrastructural development. Domestic price of cement is rising as well as the imported cement price is lowering. So altogether the supply of the cement, which is affordable, will increase. This may in decrease the gap between supply and demand. Major Demand was from the housing sector, which may shift to infrastructure as lots of infrastructural development processes has already being taken up & due to the increased price, housing segment started showing a slowdown.
11. Main Companies in India

Associated Cement Companies Ltd (ACCL) Associated Cement Companies Ltd manufactures ordinary Portland cement, composite cement and special cement and has begun offering its marketing expertise and distribution facilities to other producers in cement and related areas. It has twelve manufacturing plants located throughout the country with exports to SAARC nations. The company plans capital expenditure through expansion of existing units and/or through acquisitions. Non-core assets are to be divested to release locked up capital. It is also expected to actively pursue overseas project engineering and consultancy services. Birla Corporation Ltd. Birla Corp's product portfolio includes acetylene gas, auto trim parts, casting, cement, jute goods, yarn, calcium carbide etc. The cement division has an installed capacity of 4.78 million metric tons and produced 4.77 million metric tons of cement in 2003- 04. The company has two plants in Madhya Pradesh and Rajasthan and one each in West Bengal and Uttar Pradesh and holds a market share of 4.1 per cent. It manufactures Ordinary Portland cement (OPC), Portland pozzolana cement; fly ashbased PPC, Low-alkali Portland cement, Portland slag cement, low heat cement and sulphate resistant cement. Large quantities of its cement are exported to Nepal and Bangladesh. Going forward, the company is setting up its captive power plant to remain Cost competitive. Century Textiles and Industries Ltd (CTIL) The product portfolio of CTIL includes textiles, rayon, cement, pulp & paper, shipping, property & land development, builders and floriculture. Cement is the largest division of CTIL and contributes to over 40 per cent of the company's revenues. The company has an installed capacity MESCE Department of Management Science Page 18
Major Project Report 2012 of 4.7 million tons with a total cement production of 5.43 million tons in 2003-04. CTIL has four plants that manufacture cement, one in Chhattisgarh, two in Madhya Pradesh and one in Maharashtra. Going forward, the company has scripted a three-pronged strategy closing down its shipping business, continuing with its chemicals and adhesive division, and focusing on cement, rayon and paper as its long term business plan. Grasim-UltraTech Cemco Grasim's product profile includes viscose staple fibre (VSF), grey cement, white cement, sponge iron, chemicals and textiles. With the acquisition of Ultra Tech, L&T's cement division in early 2004, Grasim has now become the world's seventh largest cement producer with a combined capacity of 31 million tons. Grasim (with Ultra Tech) held a market share of around 21 per cent in 2003-04. It has plants in Madhya Pradesh, Chhattisgarh, Punjab, Rajasthan, Tamil Nadu and Gujarat among others. The company plans to invest over US$ 9 million in the next two years to augment capacity of its cement and fibre business. Its also plans to focus on its international ventures, ramping up the capacity of Alexandra Carbon Black in Egypt to 1,70,000 tons per annum (from 1, 20,000 tpa) and raising the capacity of the carbon black plant in China from 12,000 tpa to 60,000 tpa. Gujarat Ambuja Cements Ltd (GACL) Gujarat Ambuja Cements Ltd was set up in 1986 with the commencement of commercial production at its 2 million tons plant in Chandrapur, Maharashtra. The group has clinker manufacturing facilities at Himachal Pradesh, Gujarat, Maharashtra, Chhattisgarh, Punjab and Rajasthan. The company has a market share of around 10 per cent, with a strong foothold in the northern and western markets. Its total sales aggregated US$ 526 million with a capacity of 12.6 million tons in 2003-04. Gujarat Ambuja is India's largest cement exporter and one of the most cost efficient firms. GACL has a 14.45 per cent stake in ACC, making it the second largest cement group in the country, after Grasim-UltraTech Cemco. The company has free cash flows that it is likely to use to grow inorganically. The company is scouting for a capacity of around two million tons in the northern and western markets. It has also earmarked around US$ 195-220 million for acquisitions India Cements India Cements is the largest cement producer in southern India with a total capacity of 8.81 million tons and plants in Andhra Pradesh and Tamil Nadu. The company has a market share of MESCE Department of Management Science Page 19
Major Project Report 2012 5.4 per cent with a total cement production of 6.36 million tons in 2003-04. Its product portfolio includes ordinary Portland cement and blended cement. The company has limited its business activity to cement, though it has a marginal exposure to the shipping business. The company plans to reduce its manpower significantly and exit non-core businesses to turnaround its fortune. It also expects the export market to open up, with the Gulf emerging as a major importer. Jaiprakash Associates Limited Jaiprakash Industries, now known as Jaiprakash Associates Limited (JAL) is part of the Jaypee group with businesses in civil engineering, hospitality, cement, hydropower, design consultancy and IT. It has an annual capacity of 4.6 million tons with plants located in Rewa & Bela (Madhya Pradesh) and Sadva Khurd (Uttar Pradesh). The company has a market share of 3.8 per cent with the cement division contributing US$ 172 million to revenue in 2003-04. The company is upgrading its capacity to 6.5 million tons through the modernizing of the existing units and the commissioning of a new grinding unit at Tanda (Uttar Pradesh) with an investment of US$ 163 million. Jaiprakash Associates has decided to concentrate on its core business of construction and engineering and leave its cement plant to its subsidiary Jaypee Rewa Cement Ltd. The company manufactures a wide range of world class cement of OPC grades 33, 43, 53, IRST-40 and special blends of pozzolana cement. JK Synthetics JK Synthetics, a Singhania Group company, started manufacturing nylon at Kota in 1962. Subsequently, it diversified into PSY/PFY, nylon tyre-cord, cement (in 1975), acrylic and white cement (in 1984). The company has a market share of 2.7 per cent. JK Synthetics Limited is restructuring its business divisions into two separate entities- JK Cements and JK Synthetics. After the restructuring, it will be left with a cement plant at Nimbahera in Rajasthan, with a capacity of 3.26 million metric tons and manufacturing white cement. Madras Cements Madras Cements Ltd is one of the oldest cement companies in the southern region and is a part of the Ramco group. The company is engaged in cement, clinker, dolomite, dry mortar mix, limestone; ready mix cements (RMC) and units generated from windmills. The company has three plants in Tamil Nadu, one in Andhra Pradesh and a mini cement plant in Karnataka. It has a total capacity of 5.47 million tons annually and holds a market share of 3.1 per cent. Madras Cements plans to expand by putting up RMC plants. As Karnataka is a promising market, the MESCE Department of Management Science Page 20
Major Project Report 2012 company is further expanding its capacity from the present 1.5 million tons to 3.4 million tons through an investment of US$ 9 million. Holcim Holcim, earlier known as Holderbank, has a cement production capacity of 141.9 million tons. It is a key player in aggregates, concrete and construction related services. It has a strong market presence in over 70 countries and is a market leader in South America and in a number of European and overseas markets. Holcim entered India by means of a long-term strategic alliance with Gujarat Ambuja Cements Ltd (GACL). The alliance aims to strengthen their clinker and cement trading activities in South Asia, the Middle East and the region adjoining the Indian Ocean. Holcim also intends to use India as an additional base for its IT operations, R&D projects as well as a procurement sourcing hub to generate additional synergies and value for the group. Italcementi Group The Italecementi group is one of the largest producers and distributors of cement with 60 cement plants, 547 concrete batching units and 155 quarries spread across 19 countries in Europe, Asia, Africa and North America. Italcementi is present in the Indian markets through a 50:50 joint venture company with Zuari Cements. All initiatives in southern India are routed through the joint venture company, while Italcementi is free to buy deals in its individual capacity in northern India. The joint venture company has a capacity of 3.4 million tons and a market share of 2.1 per cent. Lafarge India Lafarge India Pvt Ltd, a subsidiary of the Lafarge Group, has a total cement capacity of 5 million tons and a clinker capacity of 3 million tons in the country. Lafarge commenced operations in 1999 and currently has a market share of 3.4 per cent. It exports clinker and cement to Bangladesh and Nepal. It produces Portland slag cement, ordinary Portland cement and Portland pozzolana cement. The Indian cement plants are located in Chhattisgarh and Rajasthan. Lafarge Cement has become the largest cement selling firm in the Indian markets of West Bengal, Bihar, Jharkhand and Chhattisgarh.
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SWOT ANALYSIS OF CEMENT INDUSTRY

Strengths
The cement industry has much strength to be considered. Cement is, literally, the building block of the construction industry. Almost every building constructed relies on cement for its foundation. The cement business is a $10 billion industry, measured by annual cement shipments. There is also a strong reputation behind the cement industry. Cement is a solid material and consumers rarely have complaints about the product. Regional distribution plants have also made cement widely available to any type of buyer. Weaknesses
The cement industry is not without its drawbacks. The cement industry relies on construction jobs to create a profit. But the cement industry heavily relies on weather. About two-thirds of cement production takes place between May and October. Cement producers often use the winter months to produce and stockpile cement, to meet demand. Another weakness is the cost of transport; the cost of transporting cement is high and this keeps cement from being profitable over long distances. In other words, shipping cement costs more than the profit from selling it. Opportunities
The cement industries have opportunities as well. One such opportunity is the cement industry's efficiency. The cement industry has recently streamlined its production efforts, using dry manufacturing instead of wet, which is heavier and more time-consuming. The cement industry has also invested about $6 billion in expansion efforts to meet unmet cement needs. Projections show that by 2012, the cement industry will have 25 percent more production capabilities. Threats
The nature of the economy has uncovered a number of threats to the cement industry. The cement industry greatly relies on construction. The current economy has lessened the number of construction jobs, which in turn hurts the cement industry. The cement industry controls the majority of the United States market, but not all of it. About 11.5 metric tons of cement are MESCE Department of Management Science Page 22
Major Project Report 2012 imported annually to support the unmet need. If other countries can produce and ship cement for a reduced price, the U.S. cement industry is in danger. The U.S. government is also attempting to regulate the cement industry's waste. The Environmental Protection Agency has introduced regulations for the cement industry to cut down emissions.
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CHAPTER: 3 COMPANY PROFILE
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Company profile
Malabar Cements Limited is a high tech manufacturing company in the public sector, situated in Walayar, palakkad district. Incorporated in the year 1978, the company commenced production in 1984. The company, through its eighteen years of operation, could survive and prosper even during the present era of liberalization and globalization. Since 1996, company started consolidation, modernization and technical up gradation phase to improve upon profitability, cutting production cost, improving the efficiency to face the competitive environment. MCL achieved ISO-9002 certification in November 1996 being the first cement factory in the public sector in the country. The major efforts of the modernization and up gradation fronts are realigning and computerized operation of the kiln system, installation of 2.5MW multi fuel diesel generator, belt bucket elevator etc. company could reduce production cost and inefficiency due to these efforts. The company achieved all time record performance during the year 1999-2000. MCL is the first public sector company to receive the converted national award for energy conservation from NCBM, New Delhi. Malabar cements contribute to the developmental activities of the state by supplying a basic construction material. The presence of Malabar in the market helps to control the cement price to some extent. MCL has the largest dealer network in Kerala for cement sales. Only Malabar cements can reach its cement factory. Fresh without any deterioration in the original strength either due to moisture or humidity, within 12 hrs anywhere in Kerala. Company has systems to educate the consumers usage of cement and provide after sales services. Malabar Cements Limited, a fully owned Government of Kerala undertaking, is the only major integrated cement manufacturing unit in the state. The company was incorporated in 11
th
April 1984 at its walayar plant. The company has a paid up equity of Rs 26 crores and capital outlay of Rs 68 crors. It is rated to produce 4.2 lakh tons of cement per annum at its walayar plant. As part of expansion program, it has commissioned a 2.0 lakh tons clinker gridding unit at cherthala of MCL is 6.2 lakh tones. This ISO 9001:2000 company meets about 10 % of total cement consumption in Kerala.
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The customers
Malabar Cements Ltd marketing has always the customer centered, consumer satisfaction wowed in product quality and after sales services. Not only that super quality is build in to the produce through very sophisticated computerized process control system the dedicated and dynamic quality control system the this superior product features are consistently maintained.
Objectives of MCL
1. To manufacture and supply quality cement at reasonable prices by making an optimum profit 2. To ensure fair dealings with customers 3. To provide employment opportunity for the public
Quality policy
The employee of MCL commits to comply with all requirements to continually improve the effectiveness of the quality management system and arrives. 1. To identify various groups of customer served by him 2. To understand their respective needs and desires either stated or implied 3. To ensure best possible quality in products and services 4. To meet and exceed their expectations
Credentials
Company could win several awards in the field of energy conservation, pollution control and safety. The company has received the following awards 1. State award for the best performance in energy conservation 1995 from the state electricity inspectors 2. Second place among large scale industries in making substantial and sustained effort in pollution control in 1996 from Kerala pollution control board
Competitors
MESCE Department of Management Science Page 26
Major Project Report 2012 The main competitor of Malabar cements are sankar, corometal, L&T, ACC, RAASI, Chettinad and others
MCL ORGANISATIONAL STRUCTURE chairman
MD
GM
GM(E) CE(M)
GM(M)
GM(TS)
CC
FM
MM
OM
HR
PDN
PRCSE
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MD-Managing Director GM-General Manager GM (E)-General Manager (ENG) CE (M)-Chief engineer (MECH) GM (M)-General Manager (Mins) CC-Chief chemist GM (TS)-General Manager (tech service) FM-finance MM-marketing OM-operations HR-human resource PDN-production PURCSE-purchase Product profile
Malabar Cements is simony for super quality, claim thousands of their customers spread throughout the state. In Malabar cements, product improvement is not a onetime strategy for boosting sales on the product life cycle theory. It is quest of excellence. Perfecting the product quality is everybodys concern here. Our distinction begins with scientifically selecting the best raw material for clinker. Stringent quality control is exercised in relending raw materials, clinkerisation. Clinker gridding, and finally into cement packaging.
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Malabar super
Malabar super is fabulous in every sense: super in strength, wonderful in work ability, incredible in aging, implausible in durability, and fantastic in strength gain. An AMAZING performer! Tests carried out by bureau of Indian standards have established unshakeable credentials of Malabar super. Super strength accelerated setting time and fine finish. Malabar super is superior in strength to ordinary 43 grade cement. It attains the 28 days strength required as per IS just in 7 days time. Not only that, the strength attained in 28 days time is about 50% more than the IS specification. The amazing strength of Malabar super arises out of its unequalled particle fineness, 33% more than the IS specification and consistency in composition, more possible by computerized process control system
Product characteristics
Malabar super offers better setting characteristics prolonged initial set and short final set timings; providing more time for concrete mixing and placing, and less time for keeping the concrete undistributed, free from movement and vibration, the property engineers and mansions relish to have, in the cement they work with. Malabar super is finer when compared to normal OPC, meaning rate of hydrogen and rate of strength gain is best
Benefits
Malabar super superiors setting properties, quick early strength gain, and higher finished strength, gives at least 10% cement reduction in volume batching. By designing the mix, reduction in cement requirement can go beyond 30% under good production and placement practices. Malabar super is therefore economical
Malabar classic
Malabar classic offers better setting properties delayed initial set and early final set offering better working time and reduced observation time, it is a superior class of its own among cements
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Major Project Report 2012 The structures achieve excellent dimensional stability with the heat resistant properties of Malabar classic. It also reduces heat generation during hydration, making it a better workable finished product absolutely reliable. The extra fineness welded into it allows Malabar classic better coverage and finish in wall and roof plastering. This in turn, reduces paint consumption.
Product characteristics
The cement most suited to the south Indian climate proudly invented by us, through in house studies and continues researchers in product improvement a way of life in MCL. An outcome of this is Malabar classic. With scientifically proportioned sand and coarse aggregates, the most cohesive mix possible with Malabar classic, will avoid the otherwise in the rent drawbacks of concrete segregation and bleeding. The fly ash interweaved with Malabar classic makes it sulphate resistant; a basic property, that cement should posses, for constructions and structures in sea co and in alkaline waters. Malabar classic is best suited to resist alkali aggregate reaction, a defect eventually resulting in excessive cracks and subsequent unserviceability of structures.
Benefits
The extra fineness welded in to it allows Malabar classic better coverage and finish in wall and roof plastering. This in turn reduces the paint consumption, with its superior strength properties, it is economical to use Malabar classic. 10% cement is normally guaranteed. Using a design mix gain can go up to 30%
Malabar aiswarya
Malabar aiswarya brings prosperity in many ways. It increases the life of your structures by safeguarding against sulphate attack. Aiswarya offers high quality at reduced price. Aiswarya generates less heat of hydration, reduces the formation of getting cracks. This product is best studied for constructions in soil and water with excess alkali metals, sulphates, alumina, iron and acidic waters. To obtain the best quality cement, only glassy granulated slag is used for product manufacturing. With very low magnesium oxide content this provides shape stability for concrete structures.
Major players
MESCE Department of Management Science Page 30
Major Project Report 2012 The major players in the current sector are: Ultratech cement Century cement Madras cement ACC Gujarat Abuja cement limited Grasim industries India cements limited Jaiprakash associates JK cements Lafarge Heidelberg cement
Vision
MCL industrial units have a capital outlay of Rs. 69 cores. The factory is rated to produce Rs 4.2 lakh tones cement per annum (24000 bags per day). The company meets about 10% of the total cement consumption of Kerala and the company will reach near 13% of total consumption by 2010 and the company will achieve self sufficient its own power supply.
Mission
Achieving prosperity through quality In a society where there is steep erosion of value and at time when relationship are getting strain day by day. MCL a well run public sector company of the state, committed to the society nurtures a corporate theme of building values strengthening relationship which also relevant to its products.
Ownership pattern
MCL is fully owned by the government of Kerala. Initially there were some loans taken by the company, which is fully repaid now. Government share capital currently is 2500 87 lakhs. MESCE Department of Management Science Page 31
Major Project Report 2012 At the end of 2005-06 the company has working capital of Rs 107 lakhs from different banks of the company.
Human resource department

According to jucins human resource refers to a whole consisting of interrelated, interdependent and interacting, psychological, sociological, and ethical components. Thus human resource represents the quantitative and qualitative measurement of workforce required in an organization. (Department structure)
Managers (P&A)
1) Supervision and guidance to the officers in P&A department on respective matters 2) Formulation of policies and strategies in connection with all matters related to P&A All matters related to personnel, industrial relations, labor welfare, and advertisement, health, legal, security, and statutory regulations related to P&A department of the including plant, mines, CGU and other officers Malabar cements ltd has a large but dedicated and skilled workforce. The personnel/human resource department is the big at the same time important department of the company. The department is headed by MPA (manager personnel & administration). The department performs the following functions Recruitment Training & development Wage & salary administration Promotion Performance appraisal Canteen administration Welfare activities Safety activities Page 32
Major Project Report 2012 In MCL human resource are classified into two main categories. They are 1) Management staff Executives Officers
2) Management staff 3) Staff workers The company has an efficient and enthusiastic human resource team. This is the only public sector company in Kerala where there have been no strikes or lockouts since its inception. The fact remains a testimonial to the brilliance of the human resource department.
Procurement of human resource Recruitment

Recruitment is the process of searching for employees and stimulating and encouraging them to apply for jobs in an organization. In MCL non management staff and management staffs are recruited through advertisements, internet and employee exchanges.
Selection
Selection is a process of choosing the most suitable person out of all applicants. The purpose of selection is to pick up the right person for right job. No organization can achieve its goals without selecting the right people.
Selection process
Test
Interview
Physical examination MESCE Department of Management Science Page 33
Employment
Final approval In MCL tests are conducted only when the number of applicants is proportionately more. Medical examination is compulsory before induction
Interview
The interview board consists of Government nominee Subject expert Personnel & administrative manager Managing director Only after the acknowledgement of all the interview board members the applicant gets selected
Placement
Once the candidate is employed there is probation period of 1 year during which his/her performance is assessed quarterly. Based on the performance employee is made permanent.
Training and development

According to ISO it is mandatory that every employee should be trained for a stipulated man hours. Training is two types Internal training It is a house training which is given by MCL to its employees and it broadly covers safety aspects, operations, emergency institutions etc. External training
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Major Project Report 2012 In external training the employee is trained by an outside institution regarding new technology which is to be introduced in the plant. It is given when it is found necessary. Performance appraisal and promotion Both management and non management staffs are appraised for their performance and promotions are given on the basis of their appraisal reports.
Working hours
Workers must work 8hrs/day. There are three shifts for the factory workers. First shift -6am to 2 pm Second shift -2 pm to 10 pm Third shift -10 pm to 6 pm
The working time will be rotated for each worker, so that every worker should work for all the three shifts. There are 25 working days in a month. Working time for office staff is 8.30 am to 5 pm.
Compensation
MCL pays compensation to the employees in exchange for their valuable contribution to the organization. All permanent employees of MCL should be included in group personnel accidental insurance. An employee will get compensation either due to Death inside the company Death during his journey to the company
A welfare fund board is functioning in MCL in which every employee should be a member. The fund provides a certain amount to the diseased persons family Rs 2500 for the funeral expense of the employee and a lump sum amount to his family and also job to his dependents.
Wage payment
Employees of MCL are categorized into two namely MESCE Department of Management Science Page 35
Major Project Report 2012 Managerial Non managerial
For non managers employee wages are decided by the central wage board. During every 5 years it will be revised. For managerial employees the pay scale relates to the Kerala government scale of payments.
Incentives
Incentives are decided by the recognized union and company. MCL follows production cum profit linked incentives to regular employees.
Leave
For every 20 days of work the employee will get 1 day leave 12 sick leave 12 casual leave Every 4 th Saturday of the month will be holiday for to the office staffs
Bonus
Every person is eligible for minimum bonus as per the payment of bonus act. Bonus percentage will be demand at government level.
Employee grievances
MCL employees have every freedom approach the welfare officer to redress their grievances. On close talk with the employees there it was found that the employees had opinion about the management and they even said that the management never hesitate in giving away their duties and rights, and even looked into fulfilling better welfare schemes.
Personal records
A personal record of all the employees is kept in MCL from their joining date up to their date of retirement. Separate files of each employee are kept in MCL.
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Fringe benefits
Workers enjoy ESI hospital facility. The company has a dispensary in the employee township. Workers are given 2 pairs of shoes and uniforms every year. Rain coats are provided
Recreation facility
MCL also providers recreational facilities to its employees such a club facilities, sports and cultural activities.
Trade union
There are three registered trade unions in MCLINTUC (Indian national trade union), CITU (central Indian trade union) and STU. The representatives of these trade unions will have the membership in committee, safety committee, canteen committee etc
Labor welfare activities

Statutory welfare measures Welfare activities taken by MCL for its laborers are Facilities for storing and drying cloth Facilities for sitting rest room First aid appliances Canteen to its workers at subsidized rate
Voluntary welfare measures

Purified drinking water Health centre Safety measures Medical centre Rest rooms are provided to the labors
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Major Project Report 2012 Library Recreation club Cooperative society Ambulance Accommodation facilities Annual gifts
Existence of welfare committees

Various welfare committees exist in the MCL of which the representatives of the recognized unions will be a member. The various welfare committees are Works committee Canteen committee Safety committee Labor welfare committee
Welfare facilities for the mine employees

Educational facility to the children of employees Financial help for the construction of house Financial advisers are given to the employees regarding obtaining of loan Canteen facility to the mine employees
Allowances
The various allowances are Dust allowances Union allowances Medical allowances
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Industrial relations
A good employee employer relation is important to the smooth functioning of an organization. Industrial relations mean not only the complex relation between the trade union and the management but also refer to the general way of relationships normally obtaining between employees and employers.
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CHAPTER: 4 LITERATURE REVIEW
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Major Project Report 2012 A study on Employees perspectives regarding performance appraisal and reward philosophy in insurance sector in Haryana was conducted by Neeraja & Aman (2005). This paper talks about the employees perspectives regarding performance appraisal and reward philosophy and the effect of demographic variables on it. The sample is selected on the basis of convenient sampling method. This study based on the hypothesis that demographic variables and employees opinion are independent of each other. This paper analysis the data by using factor analysis, reliability test and chi-square test. The basic premise of the paper is concentrated on the fact that performance pay jobs that reward productive characteristics of workers have a more competitive pay structure than other factors. They analyzed that compensation in performance pay jobs is more closely tied to both measured and unmeasured productive characteristics of workers. The study on merit based performance appraisal & productivity: do employees perceive the connection was conducted by Gerald T Gabris & Kenneth Mitchell (1985). The article reports the findings of a study of the Biloxi, Mississippi, merit bonus pay plan. It compares employees at different levels in the organizational hierarchy with regard to their perceptions of whether the new system has increased their individual or group productivity. Findings indicate that employee reaction to the system varies. Proximity to the system and how its fairness and effectiveness. Top-level managers, who relate to the system primarily from a policy standpoint, were the biggest supporters of the merit pay plan. Middle managers, who bore the brunt of implementation, were the system's most severe critics. First-line rank and file employees, the recipients of the bonuses, were mixed in their reactions. Thus it appears that whether employees perceive merit pay as a direct stimulus to their productivity is not a black and white issue. Many apparently do not perceive a connection between merit pay and productivity. The study on Perceived Fairness of Performance Appraisals in the Federal Government was conducted by Seok Eun Kim & Dian Rubianty (2000). Studies suggest that the success of the performance appraisal system may depend on how to manage employees perceptions of its fairness, not the system per se. using the 2005 Merit Principles Survey, this study tests the efficacy of perceived fairness of performance appraisals as a key determinant of intrinsic motivation. The purpose of this article is twofold: (a) to identify factors of perceived fairness of performance appraisal and (b) to assess the differential impact of each factor of perceived MESCE Department of Management Science Page 41
Major Project Report 2012 fairness of performance appraisal on intrinsic motivation. An exploratory factor analysis generated three separate but interrelated notions of perceived fairness variables: distributive, procedural, and interactional fairness. Using these three perceived fairness variables, a hierarchical regression analysis was performed. The results showed that although all three perceived fairness variables positively associated with intrinsic motivation, they accounted for only 5% of variance in prediction. When control variables were added, only perceived procedural fairness appeared to positively affect intrinsic motivation. The results raise the question of the role of performance appraisals as a motivational tool for performance improvement. Nonetheless, managing perceived procedural fairness may still be a useful lever for enhancing intrinsic motivation. The study on Employee perceptions of performance appraisals: a comparative study on Indian banks was conducted by Shrivastava a & Purang P (2011). Performance appraisal is the most critical human resource practice and an indispensable part of every organization; however, the practice continues to generate dissatisfaction among employees and is often viewed as unfair and ineffective. Indian banking sector is one of the biggest and fastest growing financial service sectors. The post-liberalization era has witnessed significant changes in the structure and operations of banks operating in India. Arrival of new private and foreign banks has given a cause to public sector banks to be more competitive, effective and innovative in their approach. Past researches have compared public and private sector banks and have indicated that new private sector banks are outscoring public sector banks in terms of technical and economic efficiency parameters. However, no study could be found that compared public and private banks in India on fairness perceptions of performance appraisal system. Therefore, this research studied the differences between public and private sector banks with respect to perception of fairness of the performance appraisal system and performance appraisal satisfaction. Perception of fairness of the performance appraisal system has been studied through nine factors. The study used independent samples t-test and qualitative analysis to study the mean differences between the two banks. Results indicated that private sector bank employees perceive greater fairness and satisfaction with their performance appraisal system as compared to public sector bank employees
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Major Project Report 2012 The study on Employees Perceptions about the Effectiveness of Performance Appraisals: The Case of Pakistan was conducted by Muhammad Kashif Saeed and Nosheen Shahbaz (2011). The current research investigates employees perceptions about the outcomes of performance appraisal and aims to identify the factors which can harm the successful implementation of performance appraisal. The sample of 120 employees at managerial level was selected on the basis of simple random sampling technique from the plastic furniture manufacturing organizations located in the province of Punjab in Pakistan. The findings suggest that the employees are aware of the useful outcomes of the performance appraisal but they lack knowledge in implementing an effective performance appraisal system. A significant difference in perceptions regarding the outcomes of performance appraisal was found among the respondents. The study will help policy makers in designing effective performance management systems for their organizations by minimizing the perceived risks and detriments to effective implementation of performance management systems. The study on Multi-Source Performance Appraisals: Employee Perceptions of Fairness was conducted by Linda deLeon and Ann J. Ewen (1997). Performance appraisal is crucial to effective human resource management, but there is evidence that current processes are not very effective This study reports on experience with a relatively new appraisal system in the operations office of a large federal agency The method, multi-source assessment (MSA, or "360 Feedback") utilizes ratings from peers, direct-reports, the supervisor, and the employee Comparison of survey results from before and after implementation of MSA found significant improvement in employee perceptions of the fairness and effectiveness of appraisals, particularly among protected classes The implications of these findings and suggestions for future research are discussed. The study on An expert witness perspective on performance appraisal in universities and colleges was conducted by John Simmons (2002). Effective performance management of professionals in knowledge based organizations has particular significance, but is an under researched area in the literature. Universities and colleges are knowledge based organizations especially dependent on the expertise, commitment and innovation of their staff. The paper analyses performance appraisal systems in universities and colleges with particular emphasis on staff perspectives and expectations. A brief history of performance appraisal in HE and FE is provided and related to issues of power, accountability and control. Academic staff from two MESCE Department of Management Science Page 43
Major Project Report 2012 business schools, together with a national sample of those teaching performance appraisals within CIPD professional programmers, was constituted as an expert witness group and their views sought on performance appraisal in their institutions. These data are used to develop a philosophy of performance appraisal for academic institutions, to assess the acceptability of particular performance criteria to academic staff, and to highlight the importance of staff involvement in appraisal system design. The study on Performance appraisal fairness perceptions in supervisory and non- supervisory employees: a case of civil servants in district dera Ismail khan, Pakistan was conducted by Malik Ikramullah (2000). Research suggests that employees role and level in organization influence reactions towards performance appraisal system (PAS). The present study investigates fairness perceptions of PAS among supervisory (appraisers/appraises) and non-supervisory employees (appraises) in the civil service of Pakistan. Data was collected from civil servants working in the two departments in far flung district Dera Ismail Khan, Khyber Pakhtunkhwa. Ttest of significance was performed to test the hypothesis in of the study. The results revealed that there was significant difference of fairness perceptions among supervisory and non supervisory employees working in the two public sector departments. And supervisory employees perceive the system fairer as compared to non-supervisory employees. In the article we discuss literature of organizational justice and fairness of PASs. Subsequently, we discuss methods, limitations and directions for future research in the PAS of the civil service. The study on employee perceptions of performance appraisal fairness in two organizations was conducted by Evans, Elaine M.; McShane, Steven L (1988). Studied the characteristics comprising the appraisal process from the employees' perspective and how those characteristics related to employee perceptions of performance appraisal fairness. Based upon factor analysis of survey data from a total of 397 management and professional employees in 2 large Canadian organizations, 6 characteristics were found to comprise the appraisal process: appraiser's knowledge of the employee's job and performance, opportunity for employee participation, establishment of specific and relevant job goals, discussion of employee development goals, discussion of company and department goals, and feedback on results. The relative importance of these characteristics to overall appraisal fairness ratings was different in the 2 companies. The favorableness of the most recent appraisal was associated with the employee's belief in the
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Major Project Report 2012 overall fairness of the appraisal process in both companies. (French abstract) (PsycINFO Database Record (c) 2010 APA, all rights reserved). The study on Relationship between Perceived Fairness in Performance Appraisal and Ocb; Mediating Role of Organizational Commitment was conducted by Ishfaq Ahmed1, Muhammad Ramzan2, Saher Khushi Mohammad3, Talat Islam3 (2011). Performance appraisal is a key element of management practices. Performance appraisal plays an important role for continuous improvement. Lot of researchers has worked on performance appraisal from both employee and organizations point of view. This study is aimed to find out the relationship between perceived fairness in performance appraisal and organizational citizenship behavior considering the mediation effect of organizational commitment. For the study 318 employees of banking sector were randomly selected. Questionnaire was used for data collection. Findings of the study indicate that there is significant and positive relationship between perceived fairness in performance appraisal and OCB while organizational commitment mediates this relationship. The study on perceived fairness of and satisfaction with employee performance appraisal was conducted by marie burns walsh (2003). Employee performance appraisal is one of the most commonly used management tools in the United States. Over 90 percent of large organizations including 75 percent of state employment systems require some type of annual performance appraisal (seldon, ingraham & jacobson, 2001). Performance appraisal is one of the most widely researched areas in industrial/organizational psychology (murphy & Cleveland, 1993). However, the traditional research agenda has done little to improve the usefulness of performance appraisal as a managerial tool. Recent research has moved away from studies of rater accuracy and psychometric measures to themes of employee reactions towards performance appraisal as indicators of system satisfaction and efficacy. Employee perception of fairness of performance appraisal has been studied as a significant factor in employee acceptance and satisfaction of performance appraisal. This study investigated employee reactions to fairness of and satisfaction with an existing performance appraisal system utilizing a hypothesized four-factor model (Greenberg, 1993) of organizational justice as the theoretical basis. The underlying hypothesis was that the conceptualized four-factor model, which differentiated between the constructs of interactional and procedural justice, would best represent the underlying factor structure of the MESCE Department of Management Science Page 45
Major Project Report 2012 data. Data were obtained via a survey questionnaire from 440 participants from two organizations that were part of a large public employment system. Ten multi-item scales x representing four factors of organizational justice and performance appraisal fairness and three scales indicating satisfaction were included. The findings of the study indicated that respondents perceived the performance appraisal system was to be fair as indicated by their agreement with 9 of the 10 scales used to measure reactions to fairness. The respondents also indicated their relative satisfaction with their most recent performance appraisal rating and with their supervisor. Less satisfaction (although not dissatisfaction) was indicated with the performance appraisal system overall. The conceptualized four-factor model was not found to represent the underlying factor structure substantially better than alternative plausible three-factor models. the best fit threefactor model, however, provided some support for the differentiation between procedural and interactional organizational justice factors, which is a distinction that has been debated in the organizational justice literature. The study on employees perception of the problems and practices of employee performance evaluation: a case study of awash international bank (aib) was conducted by zelalem bayisa (2000). This project is designed to assess the perception of employees towards the practices and problems of performance evaluation in awash international bank to this end; the study has the objective to assess the perception of employees towards the problems and practices of performance evaluation. on the basis of data collected through questionnaires and interview which are founded on the theoretical assessment of related literatures; i have tried to unearth some of the real problems of appraisals based on the opinion of the rates in that particular organization. The questionnaire was distributed to 80 employees of the bank working in four branches: bole, head office, stadium and art kilo branches in which only 65 were fully completed and returned. The questionnaire was distributed to the employees on the basis of convenience sampling based on the willingness and cooperation of the respondents. The data collected were analyzed using spss software. On the basis of the data obtained from the respondents, the study identified the lack of transparency both during the evaluation and after evaluation as its major findings. Almost all the participants vented out that they are not allowed to see the result of their ratings. As a result, they do not have a confidence on the appropriateness of the evaluation to make crucial human resource decisions. The lack of clarity of performance evaluation criteria and the subjectivity involved in the evaluation which resulted in role ambiguity and frustration MESCE Department of Management Science Page 46
Major Project Report 2012 viii among the employees were identified to be the other problem of performance appraisal in awash international bank (aib). On the other hand, the subjective nature of the standards against which the performance of employees are judged lead raters to manipulate the evaluation for their own personal agendas. The universal purpose of performance evolutions across the board were also common problems in the system. The performance evaluation forms do not reflect the performance of the employees as they can be irrelevant for some jobs. In this regard, it was identified that raters evaluate the performance of employees on the basis of recent behaviors. Based on the findings of the study. The study on The Perception of the Employees toward the Outcomes and Detriments of Performance Appraisal System was conducted by Mert, Ibrahim Sani (2011). Although performance appraisal is one of the most important functions of human resources management, it cannot be said that the organizations have obtained the full benefit from performance appraisal system as they expected. Lack of enough investigation about employees perception toward the effectiveness of the performance appraisal system can be mentioned as one of the reasons. The perception of employees toward the effectiveness of performance appraisal system helps human resources employees and researchers to obtain the benefit expected from performance appraisal system. Therefore, the employees perception of the outcomes and detriments of an effective performance appraisal system were investigated in this research. According to the findings of the study, the perceptions of employees toward the performance appraisal system have an effect on their thoughts of their own appraisals. Besides, it was determined that women perceive the performance appraisal system as more effective than men and the employees who work as a manager have a more sensitive perception toward the detriments of performance appraisal systems than who do not. It is thought that, the findings of this research may be beneficial to both the researchers who study performance appraisal and human resources employees to evaluate the effectiveness of performance appraisal systems. The study on Boswell, Wendy R. and Boudreau, John W. , "Employee Attitudinal Effects of Perceived Performance Appraisal Use" was conducted by Boswell, Wendy R. and Boudreau, John W. (1997). This research investigates how employee perceptions of performance appraisal use relate to employee satisfaction with the performance appraisal and with the appraiserthe employees immediate supervisor. Employee perceptions that appraisals were used for MESCE Department of Management Science Page 47
Major Project Report 2012 development positively associated with both attitudinal variables, after controlling for justice perceptions, performance, and demographics. Perceptions of PA use for evaluation did not show a significant relationship with either employee attitude. Implications of these findings are discussed. The study on Managers' theories of subordinates: A cross-cultural examination of manager perceptions of motivation and appraisal of performance was conducted by Iyengar, Sheena S., De Voe, Sanford E. (2004). A cross-cultural study involving managers and employees of a global organization in North America, Asia and Latin America researched on managers perception of their employee's motivation and which kind of motivation according to them related better with performance appraisal of the employee. While North American managers perceived their employees to be extrinsically motivated and considered intrinsic motivation to be better related with performance appraisal, Latin American managers perceived their employees to be intrinsically motivated and considered extrinsic motivation to be better related with performance appraisal. Asian managers perceived their employees to be both extrinsically and intrinsically motivated and both kinds of motivations related with performance appraisal. In contrast, the employees reported to be more intrinsically motivation. The study on Linking strategic HRM, performance management and organizational effectiveness: perceptions of managers in Singapore was conducted by Pauline &alan Nankervis (2011). Strategic human resource management (SHRM) theory is predicated on the assumption that effective human resource management (HRM) processes have the capacity to contribute significantly to organizational effectiveness, expressed in terms of productivity, flexibility, effectiveness, efficiency, return on investment, competitiveness, and ultimately, profitability. Earlier research studies have explored the overall value-adding potential of HRM processes as a whole. Few have focused on the links between strategic HRM, performance management systems and organizational effectiveness, and even fewer have examined these relationships in Southeast Asia. This paper addresses this gap in the literature by examining the perceptions of a split sample of senior managers in Singapore. It reveals an interesting gap between their rhetoric and the realities of their performance management systems, and suggests future research directions.
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Theoretical background
Performance appraisal system is one of the oldest and most universal practices of management. It is widely used technique to evaluate the people. Formal appraisal of an individuals performance began in china in 221-265 AD. Later on in 1883, the New York City civil service in USA introduced formal appraisal program shortly before the World War 1. US Army adopted the man to man rating system evaluating military personal. In India the formal appraisal system started after World War 2 nd. In the early fifties performance appraisal technique was called merit rating and to use for technical, managerial, and professional personal.
Meaning
It is the process of evaluating the performance and qualification of employee in terms of the requirements of the job for which he is employed, for the purpose of administration, including placement, selection for promotion providing financial rewards and other actions. Performance appraisal is the process of evaluating personnel job performance and his potential for development. Appraisal is the valuation of work, quality or merit. In the organization context, performance appraisal is an evaluation of personnel by superiors or other who are familiar.
Definitions
According to Scot, clothier and spreigal.Performance appraisal is a process of evaluating an employees performance of a job in terms of its requirements. Edwin B Flippo defines, performance appraisal system is the systematic, periodic and so far as humanly possible, an impartial training of an employees excellence in matters pretaing to his potentialities for a job.
Features of performance appraisal

1. Performance appraisal is a continuous process which consist of a series of steps 2. It is the systematic examination of an employees strength and weakness in terms of the job 3. It is arranged periodically according to a definite plan MESCE Department of Management Science Page 49
Major Project Report 2012 4. The main purpose of performance appraisal is to secure information necessary for making objective and correct decision on employees, it is an impartial rating of an employees excellence
Objectives of performance appraisal system

1. Salary increases Normally salary increases of an employee depend on how he is performing his work. There is a direct contact between the employee and the one who makes decision about salary increase. This may disclose how well an employee is performing and how much he should be compensated. 2. Promotion Most of the organizations often use a combination of merit and seniority for promotion. Performance appraisal discloses how an employee is working in his present job and what his strong and weak points are. In the light of these it can be decided whether he can be promoted to the next year 3. Training and development Performance appraisal systems try to identify the strength and weakness of employees on his present job. This information can be used for devising training and development programs appropriate for overcoming weakness of employees. 4. Feedback Performance appraisal provides feedback to employees about their performance. It tells them where they stand. A person can work better when he knows how he is working, how his efforts are contributing to the achievement of the organizational objectives. 5. Pressure on employees Performance appraisal puts a sort of pressure on employees for better performance. If the employees are conscious that they are being appraised in respect of certain factors and their future largely depends on such appraisal, they tend to have positive and acceptable behavior in this respect. Thus, appraisal can work automatically are control device. MESCE Department of Management Science Page 50
Process of performance appraisal

1. Determining the objectives 2. Establishing the performance standards 3. Communicating the standards 4. Measurement of performance 5. Comparing the actual with standards 6. Discussion 7. Take corrective action Determining the objectives It is the first step of performance appraisal. The objective of performance appraisal is determined. It may be evaluate the actual performance of the individual on the job or to determine the potential of individual on the job. Establishing the performance standards The job related standard is set up for appraising the performance of employees. Job performance standards are the work requirements that are expected from an employee on a particular job. This output may be physical nature such as output, sales, revenue etc. if work performance cannot be measured in qualitative terms. The standard may includes mans performance, honesty, reliability, job knowledge, cooperative, initiative, leadership, learning ability, judgment, sense of responsibility, communication etc. these standard should be mentioned in the appraisal form. Communicating the standards After determining the standard of performance, it must be communicated to employee. By knowing the performance standards, employees are able to know what is expected from them. It should also communicate to evaluators and employees. Measuring the performance It is the next stage of the performance appraisal process. The actual performance of employees must be measured. Performance measurement techniques are used for these purposes. Personal observation, written reports, face to face interaction is the way to gather information related to MESCE Department of Management Science Page 51
Major Project Report 2012 performance. Performance appraisal methods one used for evaluating and measuring performance standards. Comparing the actual performance with standards It is the next step in the process. After measuring the performance, it should be compared with performance standards and deviations are to be found. Discussion The results of the appraisal are then communicated to the employees. The deviations and reasons are analyzed and discussed with the employees. The discussion will enable employees to know the strength and weakness of his own. By knowing this, he tries to improve the performance. Take corrective action By way of conducting discussion with the employees, the steps required for improving performance can be assessed and corrective action can be taken. Coaching, training, counseling etc can be conducted to improve the performance of employees.
Methods of performance appraisal

There is no single effective method of performance appraisal. Each organization has its own performance appraisal methods and techniques are used for evaluating performance. It can be classified into two categories: 1. Traditional method 2. Modern method Traditional methods includes 1. Ranking method 2. Paired comparison method 3. Grading method 4. Graphic scale 5. Check list MESCE Department of Management Science Page 52
Major Project Report 2012 6. Forced distribution method 7. Critical method 8. Field review 9. Confidential report 10. Group appraisal 11. Self appraisal Modern methods includes 1. Assessment center 2. Human resource accounting 3. Behavioral anchored rating scales 4. MBO 5. 360 degree method Traditional method 1. Ranking method It is very simple and easy method of judging the work of employees in a group. Ranks are assigned in order of their performance. The workers differ in their performance. The best performer is ranked first and the worst worker is ranked last. Under this method employees are rated on overall basis with reference to their job performance. This method has certain limitations, there is the chance of personnel bias, and it does not indicate how much a person is better or worse than other. 2. Paired comparison method Each person is compared with other person in pairs at one time, only one trait is considered. The number of times of an employee is judged better than the others determine the rank. For example, there are five employees A, B, C, D, and E. employee A performance is compared with B performance and decision is taken whose performance is better. Then A performance is compared with C,D, and E in order. The number of comparison is to be made is determined by applying the following formula N (N-1)/2. Where N is the persons to be compared B, C, D and E is compared likewise. The result of these comparisons is tabulated and a rank is assigned to each MESCE Department of Management Science Page 53
Major Project Report 2012 employee. The paired comparison method gives a more reliable result rather than ranking method. 3. Grading method Under this method certain categories of abilities are defined in advance. Categories of abilities are excellent, very good, average, poor, very poor, outstanding, satisfactory etc. the actual performance is compared with these categories of abilities and the person is allocated a grade with best describes performance. 4 check list method A check list is statement on the traits of the employee and his or her job is prepared in two columns viz, YES column and NO column. The appraiser rater is required to read the statement and put tick mark in YES column, if the statement is positive and in NO column if the statement is negative. After ticking of each item, the rater forwards the list to human resource department. Actual evaluation is done by human resource department. The HR departments assign certain points to each YES ticked. The total score is arrived by adding the points assigned to YES. When points are allotted to the check list the techniques become a weighted check list. 5. Forced choice method The rate is given a series of statement about an employee. These statements are arranged and the rater indicates which statement is most descriptive of the employee. Here the rate is forced to select statement is most or least descriptive of the employee. 6. Forced distribution method Rating scales are used in this method also. As per this method the appraise or rater is required to distribute his rating on the rating scale. It is done in the form of a normal frequency curve. The purpose is to eliminate the raters bias of central tendency. It is simple and easy to follow. 7. Critical incidents method The supervisor records the employees behavior during critical events may be good or bad. The rating is done on the basis of employees positive or negative behavior during these events. E.g., MESCE Department of Management Science Page 54
Major Project Report 2012 sudden breakdown of machinery, here the supervisor exams how employees reacted and behaved. One of the advantage of this method is the evaluation is done on the basis of actual job behavior. It also reduces bias, if the supervisor records incidents throughout the rating period. 8. Field review method An officer of human resource department revise employees records and holds interviews with the rate and his or her supervisor. The officer who is the interview preparers questions and is asked. The supervisors answers questions about subordinates level of performance, his work in progress, his strength and weakness; promotional potential etc. the officer takes detailed notes of the interview. These notes are approved by the supervisor and placed in employees service records. As per this system, the rate is required to fill appraisal form. The rates bias is considerably reduced. Field review method is useful when comparable in formations are needed from employees in different units. 9. Confidential reports Confidential records are mainly used in government organizations. The immediate supervisor prepares confidential report of his subordinates. It covers attendance, initiative, technical ability of reasoning, responsibility, leadership quality, self impressions etc. this system is highly secretive and confidential. 10. Self appraisal method Self appraisal involves appraising an employee himself in terms of either how he has performed in the review period. It helps to improves communication between superior and subordinate. Self appraisal creates self awareness in an employee. Modern methods 1. Assessment centers This method was first developed in USA & UK in 1943. An assessment center is a central location where a group of employees come together and work on an assignment for two or three days which should have performed on a higher post. It is evaluated by trained observatory. The
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Major Project Report 2012 evaluators or observatory evaluates all employees both individually and collectively by using simulation techniques like role playing, business games, computer simulation etc. 2. Human resource accounting method This method is in transitional stage. Human resource is considered as valuable asset on an organization. The performance is judged in terms of cost and contribution of employees. Cost of human resource includes expenditure incurred on human resource planning, recruitment, selection, orientation, placement etc. Contribution is measured in terms of money. Difference between cost and contribution shows the performance of the employees. 3. Behavioral anchored rating scales (BARS) It is sometimes called behavioral expectation scales. This method is a combination of graphic rating scales, and critical incident method. BARS are scales which represent a range of descriptive statements of behavior of employees. It is the comparison of actual behavior with expected behavior. The rating under BARS method is done by experts. This formatted performance appraisal is based on making rates on behaviors or sets of indicators to determine the effectiveness or ineffectiveness of working performance. 4 Management by objectives (MBO) MBO is a method of performance appraisal in which managers or employers set a list of objectives and make assessments on their performance on a regular basis, and finally make rewards based on the results achieved. This method mostly cares about the results achieved (goals) but not to the way how employees can fulfill them. 5.360 degree method 360 degree feedback, also known as 'multi-rater feedback', is the most comprehensive appraisal where the feedback about the employees performance comes from all the sources that come in contact with the employee on his job.
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Essential requirements of an effective performance appraisal

1. Confidence and mutual trust 2. Definite objectives 3. Well defined performance standards 4. Training 5. Feedback and participation 6. Review and appeal 7. Size of the organization
Limitations of performance appraisal

The limitations of performance appraisal is as follows 1. Halo effect In this case the superior appraises the person on certain positive qualities only. The negative traits are not considered. Such an appraisal will not give a true picture about the employee. And in some cases employees who do not deserve promotions may get it. 2. Horn effect In this case only the negative qualities of the employee are considered and based on this appraisal is done. This again will not help the organization because such appraisal may not present a true picture about the employee. 3. Central tendency In this case the superior gives an appraisal by giving central values. This prevents a really talented employee from getting promotions he deserves and some employees who do not deserve anything may get promotion. 4. Leniency and strictness
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Major Project Report 2012 Some bosses are lenient in grading their employees while some are very strict. Employee who really deserves promotions may lose the opportunity due to strict bosses while those who may not deserve may get benefits due to lenient boss. 5. Spillover effect In this case the employee is judged +vely or vely by the boss depending upon the past performance. Therefore although the employee may have improved performance, he may still not get the benefit. 6. Fear of losing subordinates and spoiling relations Many bosses do not wish to spoil their relations with their subordinates. Therefore when they appraise the employee they may end up giving higher grades which are not required. This is an injustice to really deserving employees.
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CHAPTER: 5 RESEARCH METHODOLOGY
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5.1 Research methodology

The methodology followed for conducting the study includes the specification of research design, sample design, questionnaire design, data collection and statistical tools used for analyzing the collected data.
5.2 Type of the study

The research design used for this study is the descriptive type. Descriptive research studies are those studies which are concerned with describing the characteristics of a particular individual or a group. In descriptive research, it deals with everything that can be counted and studied. The research must have an impact to the employees for their work
5.3 Population
The total element of the universe from which sample is selected for the purpose of study is known as population. Here the population constitutes the total number of employees in Malabar cements
5.4 Sampling unit

The study was conducted among the employees in Malabar Cements, Walayar.
5.5 Sampling size

All the items consideration in any field of inquiry constitutes a universe of population. In this research, only a few items are selected to form the population for our study purpose. The items selected constitute what is technically called a sample. Here sample size is 100 employees from the total population.
5.6 Sampling method

Sampling method used for this study is convenience sampling. When population elements are selected for inclusion in the sample based on the ease of access, it can be called convenience sampling.
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5.7 Type of data and sources

The data source: Primary and Secondary 5.8 PRIMARY DATA: Primary data is the first hand data collected from the EMPLOYEES. It collects through questionnaire. The method used for data collection was questionnaire method. The questionnaire is a structured one, using a close ended questionnaire for our research study.
Questionnaire survey method was adopted for completing the data collection in this research.
5.9 SECONDARY DATA: The data has been collected from companys profile, journals, websites, Reference book and past record.
5.10 Tools for data collection

Questionnaire Method
Tools for analysis Simple percentage analysis

The percentage refers to the special kind of ratio. Percentage is used in making comparisons between two or more series data. Percentage can also be used to compare the relative teams, the distribution of two or more series data. The easy and simplicity calculating the general understanding of its purpose and the universal application of the personal static have made it, most widely and standardized tool in researchers. The percent really need everything to a common base and there by meaningful comparison to be made with the data. The percentage analysis is calculated by dividing number of respondents with total population of sample Percentage analysis= Number of respondents Total number of population MESCE Department of Management Science Page 61
Major Project Report 2012 Central tendency
A measure of central tendency is a single value that attempts to describe a set of data by identifying the central position within that set of data. As such, measures of central tendency are sometimes called measures of central location. They are also classed as summary statistics. The mean (often called the average) is most likely the measure of central tendency. The mean, median and mode are all valid measures of central tendency but, under different conditions, some measures of central tendency become more appropriate to use than others Mean (Arithmetic) The mean (or average) is the most popular and well known measure of central tendency. It can be used with both discrete and continuous data, although its use is most often with continuous data. The mean is equal to the sum of all the values in the data set divided by the number of values in the data set. So, if we have n values in a data set and they have values x 1, x2, ..., xn, then the sample mean, usually denoted by (pronounced x bar), is:
This formula is usually written in a slightly different manner using the Greek capitol letter, , pronounced "sigma", which means "sum of...":
Ranking method
A method of handling data which has the same observed frequency occurring at two or more consecutive ranks; it consists of assigning the average of the ranks as the rank for the common frequency.
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Major Project Report 2012 5.11 LIMITATION OF THE STUDY

Some of them did not fill the questionnaire due to lack of time Some of the employees didnt respond in a positive manner Most of the employees feared to disclose the fact
The questionnaire contained mostly multiple-choice questions; therefore many Respondents may not have given a proper thought before answering the questions. Most respondents might be influenced by their peers in answering the questions.
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CHAPTER: 6 DATA ANALYSIS AND INTERPRETATION
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DATA ANALYSIS AND INTERPRETATIONS

The data collected from the various respondents through questionnaire were tabulated and analyzed to find their perception regarding the effectiveness of performance appraisal system. This chapter discusses the major findings from the study.
A) GenderTable no 1 Gender Males Female Total No: of respondents 92 8 100 % of respondents 92 8 100
Chart no 1
No: of respondents
120 100 80 60 40 20 0 Males Female Total No of respondents
Interpretation:From the above table and graph, it is found that majority of the employees are male (92%) and only 8% are female. It is inferred that most of the employees employed there in the organization are males.
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B) Marital status
Table no 2
Marital status Married Unmarried Total
No: of respondents 83 17 100
% of respondents 87 13 100
Chart no 2
No: of respondents
120 100 80 60 40 20 0 Married Unmarried Total No of respondents
Interpretation:From the above table and graph, it was found that majority of the respondents are married (83%) and only 17% are unmarried. It is inferred that most of the respondents are married.
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C) Work shifts
Table no 3
Services Day shift Night shift Rotation shift General shift Total
No: of respondents 38 8 46 8 100
Percentage 38 8 46 8 100
Chart no 3
NO:OF RESPONDENTS
120 100 80 60 40 20 0 NO.OF RESPONDENTS
Interpretation:From the above table and graph, it can be seen that majority of the respondents (46%) work in rotation shift, 38% of the respondents work in day shift and only 8% of respondents are work in night shift and general shift. It is inferred that most of the employees work on rotation shifts in the organization.
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D) Year of Experience
Table no 4
Services
No: of respondents
Percentage
8 Less than 3 3-5 years More than 5 Total
0 92 100
92 100
Chart no 4
120 100 80 60 40 20 0 Less than 3 3-5 years More than 5 Total No: of respondents
Interpretation:From the above table and graph, it can be seen that majority of the respondents (92%) have more than 3 years of experiences. only 8 % of respondents have less than 3 year of experience. It is inferred that most of the respondents have better work experience in the present company.
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1. The awareness about the performance appraisal system

Table no 5 Opinion Yes No Total No: of respondents 100 0 100 Percentage 100 0 100
Chart no 5
NO:OF RESPONDENTS
120 100 80 60 40 20 0 YES NO TOTAL NO.OF RESPONDENTS
Interpretation:From the above table and graph, it can be seen that all the respondents (100%) are aware about the performance appraisal system in the organization.
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2. The main purpose of performance appraisal

Table no 6
Opinion Wage determination For promotion Improve performance Others Total
No: Of respondents 0 34 66 0 100
Chart no 6
NO: OF RESPONDENTS
120 100 80 60 40 20 0
NO.OF RESPONDENTS
Interpretation:From the above table and graph, it can be seen that majority (66%) of the respondents favored towards improve performance and 34% respondents favored for promotion. It is inferred that most of the respondents are considering that performance appraisal purpose is for improving the performance of employees.
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3. The main factors for evaluating the performance appraisal

Table no 7 Opinion Job knowledge Quality of work Output Work related skill Total No: of respondents 11 34 20 35 100 Percentage 11 34 20 35 100
Chart no 7
NO: OF RESPONDENTS
Interpretation:From the above table and graph it is seen that majority (35%) of the respondents are considering work related skill, 34% of respondents are considering quality of work, 20% of respondents are considering output and only 11% of respondents are said job knowledge. It is inferred that most of the respondents consider quality of work for the evaluation of their performance.
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4. The evaluation periods

Table no 8
Opinion Quarterly Half yearly Yearly Other Total
No: of respondents 25 25 50 0 100
Chart no 8
NO.OF RESPONDENTS
120 100 80 60 40 20 0 Quarterly Half yearly Yearly other Total NO.OF RESPONDENTS
Interpretation:From the above table and graph it is be seen that majority (50%) of the respondents preferred yearly based evaluation and 25% of respondents preferred quarterly and half yearly. It is inferred that majority of the respondents expect yearly based evaluation.
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5. Your choice of appraiser

Table No 9
Appraiser Department head Immediate superior Hr department Others Total
No: of respondents 80 9
Percentage 80 9
11 0 100
11 0 100
Chart no 9
NO: OF RESPONDENTS
Interpretation:From the above table and graph it is seen that majority (80%) of the respondents prefer department head, 11% of the respondents prefer human resource department and only 9% of respondents prefer immediate superior as their appraiser. It is inferred that most of the respondents prefer to have department head as their appraiser.
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6. Satisfaction level of present appraisal system

Table no 10 Opinion Highly satisfied Satisfied Neutral Dissatisfied Highly dissatisfied Total No: of respondents 10 70 20 0 0 100 Percentage 10 70 20 0 0 100
Chart no 10
NO: OF RESPONDENTS
Interpretation:From the above table and graph, it can be seen that, 10% of the respondents are highly satisfied with the present appraisal system, 70% of the respondents are satisfied and 20% of the respondents are neutral opinion. It is inferred that most of the respondents are satisfied with the present appraisal system in the organization.
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7. The method of performance appraisal system is being followed by the organization

Table no 11 Methods Self method Ranking method Grading method Others Total 33 32 0 100 33 32 0 100 No: of respondents appraisal 35 Percentage 35
Chart no 11
NO: OF RESPONDENTS
120 100 80 60 40 20 0 Self Ranking Grading appraisal method method method Others Total NO.OF RESPONDENTS
Interpretation:From the above table and graph, it can be seen that majority (35%) of the respondents viewed that the organization followed self appraisal method, 33% of respondents experienced ranking method and 32% of the respondents experienced grading method. It is inferred that the majority of the respondents had experienced self appraisal method.
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8. Adopting any new method for performance appraisal

Chart no 12
NO: OF RESPONDENTS
120 100 80 60 40 20 0 YES NO TOTAL NO.OF RESPONDENTS
Interpretation:From the above table and graph, it can be seen that majority (78%) of the respondents wants new method and 22% of the respondents are do not expect any change. It is inferred that most of the respondents are in need of new method for performance appraisal.
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Major Project Report 2012 9. Preferred method Table no 13 Methods MBO 720 degree method 360 degree method Others Total No: of respondents 6 70 2 0 78 Percentage 6 70 2 0 78
Chart no 13
NO: OF RESPONDENTS
90 80 70 60 50 40 30 20 10 0 MBO 720 degree method 360 degree method Others Total
NO.OF RESPONDENTS
Interpretation:From the above table and graph, it can be seen that majority (70%) of the respondents prefer 720 degree method,6% of respondents prefer MBO and only 2% of respondents prefer 360 degree method. It is inferred that most of the respondents prefer to have 720 degree method for evaluating their performance.
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10.Satisfaction level of overall performance from the last one year

Table no 14 Opinion Highly satisfied Satisfied Neutral Dissatisfied Highly dissatisfied Total No: of respondents 11 89 0 0 0 100 Percentage 11 89 0 0 0 100
Chart no 14
NO: OF RESPONDENTS
Interpretation:From the above table and graph, it can be seen that 11% of the respondents are highly satisfied and 89% of respondents are satisfied. It is inferred that most of the respondents are satisfied with their overall performance in the last year.
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11.The performance appraisal system is too time-consuming

Chart no 15
No: of respondents
120 100 80 60 40 20 0 Yes No total No of respondents
Interpretation:From the above table and graph it can be seen that all of the employees agree that the present appraisal system is not time consuming.
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12.The performance process does support our values/cultural change

Chart no 16
No: of respondents
Interpretation:From the above table and graph it can be seen that all respondents agree with the statement that the organization supports the values and culture for evaluating performance appraisal
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13.The performance appraisal helps in

Table no 17 Opinion Evaluation of employees Promotion of employees Job satisfaction of employees Employee motivation Total Chart no 17 No: of respondents 16 17 0 67 100 Percentage 16 17 0 67 100
No: of respondents
120 100 80 60 40 20 0
No of respondents
Interpretation:From the above table and graph it can be seen that majority (67%) of the respondents agreed with employee motivation, 17 % of respondents with promotion of employees, 16 % of respondents with the evaluation of employees as the reason for which performance appraisal is being done. It is inferred that the performance appraisal is done for the employee motivation.
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14. The
performance appraisal gives constructive criticism in a friendly
and positive manner

Chart no 18
No: of respondents
Interpretation:From the above table and graph it can be seen that majority (67%) of the respondents gave positive criticism regarding performance appraisal and 33% of respondents responded in a negative manner. It is inferred that majority of the respondents are having a positive opinion towards performance appraisal.
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15.Number of training programs attended

Table no 19 Opinion One Two Three More than three Total No: of respondents 8 10 0 82 100 Percentage 8 10 0 82 100
Chart no 19
No: of respondents
120 100 80 60 40 20 0 One Two Three More than three total No of respondents
Interpretation:From the above table and graph can be seen that majority (82%) of the respondents have attended more than three,10% of respondents attended two and only 8% respondents attended one training programme. It is inferred that most of the respondents have attended more than three training programmes.
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16.Type of training given for better performance in your job

Table no 20
Opinion On the job training Off the job training Total Chart no 20
No: of respondents 63 37 100
Percentage 63 37 100
No: of respondents
120 100 80 60 40 20 0 On the job training Of the job training Total No of respondents
Interpretation:From the above table and graph it can be seen that majority (63%) of the respondents prefer on the job training method and 37% of respondents prefer off the job training. It is inferred that most of the respondents prefer on-the-job training for the better performance.
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17. What do you expect from a Performance appraisal Table no 21 Particulars Salary administration and benefits Determination of promotion or transfer Decision on layoff Assistance objectives Guideline for training plan
468 23.23 17.57
Rank
294 233 148
Percentage
14.59 11.56 7.34 25.67
in
achieving
goals
and 517
An insight into your strengths and 354 weakness Total Chart no 21 2014
100
Rank
Salary administration and benefits Determination of promotion or transfer Decision on layoff Assistance in achieving goals and objectives
Interpretation:From the above table and graph, the majority (25.67) of the respondents are expected from the performance appraisal assistance in achieving goals and objective. It is inferred that most of the respondents consider performance appraisal as assistance in achieving goals and objectives.
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18. The evaluation of managerial attributes about their managers

Table no 22 Attributes Job knowledge Planning, organizing, & controlling Communication Creativity Cost consciousness Developing subordinates Relationship Leadership Judgment Rank
495 466 448 439 485 444 488 468 487
Percentage
10.59 9.97 9.59 9.40 10.38 9.50 10.44 10.02 10.42 9.63
Potential for handling higher level 450 responsibility Total Chart no 22 4670
100
Rank
Job knowledge Planning, organizing, & controlling Communication Creativity Cost consciousness Developing subordinates
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Interpretation:From the above table and graph majority (10.59%) of the managers have good job knowledge (the level of knowledge in regards to all phases of his/her work including knowledge of latest trends and development in the area and the ability to put them to use) and the lowest rate for the creativity (ability and interest in developing and putting into practice new and beneficial ideas or improvements) aspect. The managers skill from top to bottom is as follows (on the basis of employees perception)
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
Job knowledge Relationship Judgment Cost consciousness Leadership Planning, organizing, and controlling Potential for handling higher level responsibility Communication Developing subordinates Creativity
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19. The employees perception regarding the present performance appraisal
system
Table no 23 Factors Strongly agree Agree Neutral Disagree Strongly disagree Chart no 23 Mean value 5 4 3 2 1
Mean value
Strongly agree Agree Neutral Disagree Strongly disagree
Interpretation:From the above table and graph the respondents strongly agree with the present appraisal system. The present appraisal system is fully effective and respondents are satisfied with the system followed by the organization.
Page 88
CHAPTER: 7 FINDINGS, SUGGESTIONS, CONCLUSION
Page 89
Findings
70% of employees are satisfied with the present appraisal system followed by the organization. Majority of the employees are male, married and have more than 5 years of experience. 82% of the employees have attended more than three training programmes. All of them are aware about the performance appraisal system followed in the organization. 66% of employees agree that the main purpose of performance appraisal is to improve their performance. 35% of employees view that the main factor for considering the evaluation of performance appraisal is work related aspects. 50% of employees prefer evaluation is done annually. 80% of the respondents prefer to have department head as their appraiser. 67% of employees agree that the performance appraisal helps for employee motivation. 63% of employees agree that on-the-job training methods are helping them in better performance. 55% of employees agree that good relationship between superiors and the subordinates is being maintained in the work premise.
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Suggestions
Management may include more number of female employees. Management may implement new performance appraisal methods like 720 degree performance appraisal method, if required in the future. Management may provide off-the-job training method like sensitivity training to enhance better performance. There should be training sessions to improve team building aspects. There should be proper pre-performance and post performance counselling given to employees. In the beginning of the year itself, employee must know the performance standards on which his/her performance will be judged at end of year. Overtime should be considered at the time of performance appraisal as it would motivate the employees to perform better for longer hours. Performance appraisal should be done at regular intervals rather than doing them annually. Performance appraisal should be done by expert professionals.
Page 91
Conclusion
This study was done to provide Malabar Cements a full insight into the employees perception regarding the effectiveness of performance appraisal system in the organization. After conducting a deep study it was found that majority of the employees are of the view that the companys present appraisal system is effective as far as the present methods used are concerned. Also the employees got benefitted through performance appraisal, as the results are used for promotion. The employees suggest that there should be pre-performance and post performance counseling mechanism to be introduced in the organization.
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Major Project Report 2012

MESCE Department of Management Science

Major Project Report 2012

1.1 Introduction to the study

MESCE Department of Management Science

Major Project Report 2012

1.2 Need for the study

1.3 Objectives of the study

1.4 Problem statement

MESCE Department of Management Science

Major Project Report 2012

CHAPTER: 2 INDUSTRY PROFILE

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Major Project Report 2012

Raw Material Preparation

Major Project Report 2012

Finish Grinding and Distribution

5. DEMAND & SUPPLY

Major Project Report 2012

Major Project Report 2012

MESCE Department of Management Science

10. OPPORTUNITIES, THREATS, RISKS AND CONCERNS

11. Main Companies in India

MESCE Department of Management Science

Major Project Report 2012

SWOT ANALYSIS OF CEMENT INDUSTRY

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Major Project Report 2012

CHAPTER: 3 COMPANY PROFILE

MESCE Department of Management Science

Major Project Report 2012

MESCE Department of Management Science

Major Project Report 2012

MCL ORGANISATIONAL STRUCTURE chairman

MESCE Department of Management Science

Major Project Report 2012

MESCE Department of Management Science

Major Project Report 2012

MESCE Department of Management Science

Human resource department

MESCE Department of Management Science

Procurement of human resource Recruitment

Physical examination MESCE Department of Management Science Page 33

Major Project Report 2012

Training and development

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Major Project Report 2012 Managerial Non managerial

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Major Project Report 2012

Labor welfare activities

Voluntary welfare measures

MESCE Department of Management Science

Existence of welfare committees

Welfare facilities for the mine employees

MESCE Department of Management Science

Major Project Report 2012

MESCE Department of Management Science

Major Project Report 2012

CHAPTER: 4 LITERATURE REVIEW

MESCE Department of Management Science

MESCE Department of Management Science

MESCE Department of Management Science

MESCE Department of Management Science