A STUDY ON PERFORMANCE APPRAISAL OF EMPLOYEES WORKING AT GAIL GAS LIMITED , NOIDA(UP)

A Summer Training Project Report Submitted in the partial fulfillment of the requirement for the award of the Degree of Bachelor of Business Administration 2010-2013

Submitted by: RASHI BALIYAN

Under the guidance of: Ms. HIMANI GROVER

BHARATI VIDYAPEETH DEEMED UNIVERSITY INSTITUTE OF MANAGEMENT& RESEARCH, NEW DELHI An ISO 9001:2008 Certified Institute NAAC Re-Accredited Grade A University Ranked In Top 50 B-School in India by Business India Recipient of B-School Leadership Award from Star News

Certificate of Originality

This is to certify that the project report entitled TO STUDY THE PERFORMANCE APPRAISAL OF EMPLOYEES AT GAIL GAS LIMITED, NOIDA(UP) submitted to Bharati Vidyapeeth University in partial fulfillment of the requirement for the award of Bachelor of Business Administration is an original work carried out by Ms. Rashi Baliyan. The matter embodied in this project is a genuine work done by Rashi Baliyan and to the best of my knowledge and belief this project has not been submitted to this University nor to any other University for the fulfillment of the requirement of the course of study.

Himani Grover Assistant Professor

Certificate

This is to certify that the Project entitled TO STUDY THE PERFORMANCE APPRAISAL OF EMPLOYEES AT GAIL GAS LIMITED, NOIDA(UP)` is an academic work done by Rashi Baliyan submitted in the partial fulfillment of the requirement for the award of the Degree of Course from Bharati Vidyapeeth University, New Delhi. It has been completed under the guidance of Ms. Himani Grover (Faculty Guide) and Mr. Ravindra Deshmukh (Corporate Mentor). We are thankful to Gail Gas Limited, Noida(UP) for having allowed our student to undergo project work training. The authenticity of the project work will be examined by the viva examiner which includes data verification, checking duplicity of information etc. and it may be rejected due to non-fulfillment of quality standards set by the institute.

Dr. NITIN NAYAK Director

Acknowledgement

First of all, I would like to thank the Management at GAIL GAS LIMITED for giving me the opportunity to do my two-month project training in their esteemed organization. I am highly obliged to Mr. Ravindra Deshmukh(Sr. Officer, CGM) for granting me to undertake my training at Noida(UP). I express my thanks to all Managers under whose able guidance and direction, I was able to give shape to my training. Their constant review and excellent suggestions throughout the project are highly commendable. My heartfelt thanks go to all the executives who helped me gain knowledge about the actual working and the processes involved in various departments.

Rashi Baliyan

PREFACE

GAIL has formed Subsidiaries and Joint Venture companies for City Gas Distribution and Petrochemicals. GAIL is one of the pioneers to introduce City Gas Projects in India for gas supplies to households, commercial users and for the transport sector by forming Subsidiaries/ Joint Venture Companies. It is my pleasure to present this work after I had finished my training at Gail Gas Limited. This training has expanded my horizon of knowledge in practical as well as theoretical area which is vital for any student in management level studies. Such training promotes a student to boost his potential and the inner qualities and thereby come to know about their reality that how the theoretical knowledge works in actual sense in any working unit. This has indeed proved to be very useful to me. All information given here is to the best of my knowledge and I sincerely apologize if any incorrect data is found.

INDEX
S.NO. 1. Particulars INTRODUCTION 1.Overview of the industry as a whole 2.Profile of the company 3.Problems of the Company 4.Competitors of the company 5.SWOT Analysis of the company 2. RESEARCH METHODOLOGY 1.Statement of problem 2.Objective and scope of study 3.Research Design And Its Types 4.Data Collection method 5.limitation of study CONCEPTUAL DISCUSSION 3. 1.Review of Literature 2.New Development Of Company 4. DATA ANALYSIS PAGE NO.

1.
5.

Data collection sources

2. Sampling technique FINDINGS AND CONCLUSION

BIBLIOGRAPHY

ANNEXURE

CHAPTER 1

INTRODUCTION

OVERVIEW OF INDUSTRY
Overview of Industry Structure
The structure of the natural gas industry has changed dramatically since the mid-1980's. In the past, the structure of the natural gas industry was simple, with limited flexibility and few options for natural gas delivery. Exploration and production companies explored and drilled for natural gas, selling their product at the wellhead to large transportation pipelines. These pipelines transported the natural gas, selling it to local distribution utilities, who in turn distributed and sold that gas to its customers. The prices for which producers could sell natural gas to transportation pipelines was federally regulated, as was the price at which pipelines could sell to local distribution companies. State regulation monitored the price at which local distribution companies could sell natural gas to their customers.

Getting Natural Gas to Market - Prior to Deregulation and Pipeline Unbundling

Thus, the structure of the natural gas industry prior to deregulation and pipeline unbundling was very straightforward. However, with regulation of wellhead prices, as well as assured monopolies for large transportation pipelines and distribution Source: NGSA companies, there was little competition in the marketplace, and incentives to improve service and innovate were few. Regulation of the industry also led to natural gas shortages in the 1970s, and surpluses in the 1980s. The natural gas industry today has changed dramatically, and is much more open to competition and choice. Wellhead prices are no longer regulated; meaning the price of natural gas is dependent on supply and demand interactions. Interstate pipelines no longer take ownership of the natural gas commodity; instead they offer only the transportation component, which is still under federal regulation. LDCs continue to offer bundled products to their customers, although retail unbundling taking place in many states allows the use of their distribution network for the

transportation component alone. End users may purchase natural gas directly from producers or LDCs. One of the primary differences in the current structure of the market is the existence of natural gas marketers. Marketers serve to facilitate the movement of natural gas from the producer to the end user. Essentially, marketers can serve as a middle-man between any two parties, and can offer either bundled or unbundled service to its customers. Thus, in the structure mentioned above, marketers may be present between any two parties to facilitate the sale or purchase of natural gas, and can also contract for transportation and storage. Marketers may own the natural gas being transferred, or may simply facilitate its transportation and storage. Essentially, a myriad of different ownership pathways exist for natural gas to proceed from producer to end user.

Simplified Structure of Industry after Pipeline Unbundling

The diagram shows a simplified representation of the structure of the natural gas industry after pipeline ownership unbundling pathway and of the wellhead gas may price be deregulation. It is important to note that the actual significantly more complicated, as the marketer to other marketers or LDCs. The regulatory environment of the day has a dramatic effect on shaping the structure of the industry. The actions of the federal government and its related agencies and departments can also have a significant impact on the structure and functioning of the natural gas industry. Source: NGSA

or the LDC are not the final users. Either of these two entities may sell directly to the end user, or

Industry Makeup
Now that the basic structure of the natural gas industry has been discussed, it is possible to examine the business characteristics and relevant statistics of each industry segment.

An excellent source for statistics and information on the natural gas industry and its various sectors is the Energy Information Administration (EIA). The EIA was created in 1977 as the statistical arm of the Department of Energy, charged with developing energy data and analyses that help to enhance the understanding of the energy industry. Below are some statistics (based on EIA data for the year 2007) on the makeup of the natural gas industry. Follow the links to view the most up to date information on each sector:

Producers - There are over 6,300 producers of natural gas in the United States. These
companies range from large integrated producers with worldwide operations and interests in all segments of the oil and gas industry, to small one or two person operations that may only have partial interest in a single well. The largest integrated production companies are termed 'Majors', of which there are 21 active in the United States.

Processing - There are over 530 natural gas processing plants in the United States,
which were responsible for processing almost 15 trillion cubic feet of natural gas and extracting over 630 million barrels of natural gas liquids in 2006.

Pipelines - There are about 160 pipeline companies in the United States, operating over
300,000 miles of pipe. Of this, 180,000 miles consist of interstate pipelines. This pipeline capacity is capable of transporting over 148 Billion cubic feet (Bcf) of gas per day from producing regions to consuming regions.

Storage - There are about 123 natural gas storage operators in the United States, which
control approximately 400 underground storage facilities. These facilities have a storage

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capacity of 4,059 Bcf of natural gas, and an average daily deliverability of 85 Bcf per day. The EIA maintains a weekly storage survey, monitoring the injection and withdrawal of stored natural gas. This survey gives a good indication of the status of the natural gas market, measuring the natural gas that is extracted or stored at any one time in response to the demand for natural gas.

Marketing - The status of the natural gas marketing segment of the industry is
constantly changing, as companies enter and exit from the industry quite frequently. As of 2000, there were over 260 companies involved in the marketing of natural gas. In this same year, about 80 percent of all the natural gas supplied and consumed in North America passed through the hands of natural gas marketers. The volume of non-physical natural gas that passes through the hands of marketers is very large, and can be much greater than the actual physical volume consumed. This is an indication of vibrant, transparent commodity markets for natural gas. For instance, in 1998, it is estimated that for every thousand cubic feet of natural gas consumed, about 2.7 thousand cubic feet passed through natural gas marketers.

Local Distribution Companies - There are about 1,200 natural gas distribution
companies in the U.S., with ownership of over 1.2 million miles of distribution pipe. While many of these companies maintain monopoly status over their distribution region, many states are currently in the process of offering consumer choice options with respect to their natural gas distribution`

Natural Gas Market Overview

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The nature of the natural gas market is similar to other competitive commodity markets: prices reflect the ability of supply to meet demand at any one time. The economics of producing natural gas are relatively straightforward. Like any other commodity, the price of natural gas is large a function of demand and the supply of the product.

Natural Gas Volatility and Price Levels at Henry Hub When demand for gas is rising, and prices rise accordingly, producers will respond by increasing their exploration and production capabilities. As a consequence, production will over time tend to increase to match the stronger demand. However, unlike many products, where production can be increased and sustained in a matter of hours or days, increases in natural gas production involve much longer lead times. It takes time to acquire leases, secure required government permits, do exploratory seismic work, drill wells and connect wells to pipelines; this can take as little as 6 months, and in some cases up to ten years. There is also uncertainty about the geologic productivity of existing wells and planned new wells. Existing wells will naturally decline at some point of their productive life and the production profile over time is not known with certainty. Thus, it takes time to adjust supplies in the face of increasing demand and rising prices. The supply response to prices was demonstrated emphatically following the winter of 2000-2001 as producers substantially increased production investments and activities in response to higher prices. Likewise higher prices (and the U.S. recession) also reduced demand for natural gas. The supply and demand responses led to a new equilibrium in 2002 between supply and demand at market clearing prices far below the 2000-2001 peak.

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In an environment of falling gas prices, the converse will be true. Producers will respond to lower natural gas prices over time by reducing their expenditures for new exploration and production. Production decline in existing wells will decrease productive capacity. At the same time, the lower prices will increase the demand for natural gas. This, in turn, will ultimately result in upward pressure on gas prices. This relationship between changes in the price of natural gas and variations in the supply of and demand for natural gas is sometimes referred to as the "natural gas market cycle." Source: NGSA

In the short term, and in relation to existing producing wells, the supply of natural gas is relatively inelastic in response to changes in the price of natural gas. Contrary to some views, producers do not routinely shut in wells when natural gas prices are low. There are several economic drivers that provide an incentive for producers to continue producing even in the face of lower prices.

First, if production is halted from a natural gas well it may not be possible to restore the well's production due to reservoir and wellbore characteristics.

Second, the net present value of recapturing production in the future may be negative relative to producing the gas today -- i.e., it may be better to produce gas today than to wait until the future to produce the gas. If a producer chooses not to operate a well, the lost production cannot be recovered the next month but is instead is deferred potentially years in the future. There are no guarantees that the prices for gas in the future are going to be higher than prices today.

Third, some gas is produced in association with oil, and in order to stop the flow of natural gas, the oil production must be stopped as well, which may not be economic.

Finally, a producer may be financially or contractually bound to produce specific volumes of natural gas.

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Producers and consumers react rationally to changes in prices. Fluctuations in gas prices and production levels are a normal response of the competitive and liquid North America gas market. While the price of the natural gas commodity fluctuates, it is this inherent volatility that provides the signals (and incentives) to both suppliers and consumers to ensure a constant move towards supply and demand equality.

COMPANY PROFILE

GAIL (India) Limited is Indias flagship Natural gas company, integrating all aspects of the natural gas value chain ( including exploration, production, processing, transmission distribution and marketing) and its related services. GAIL is also expanding its business to become a player in international market. The company dominates the gas sector, transporting 95% of the total piped gas. It also operates seven plants to process natural gas into LPG, apart from having a small presence in the petrochemicals and oil and gas exploration sectors. Company has expanded its operations into gas processing , petrochemicals, LPG transmission and telecommunications. It has also expanded its presence in power and liquefied natural gas re-gasification. Company has set up Gas Technology institute near Delhi. This institute is fully functional with well equipped laboratories for research and development related mainly to the gas sector. It would pursue joint R&D projects in India and abroad in association with oil and gas companies, research institutions and universities. The company was previously known as Gas Authority Of India Limited. It insignias principal gas transmission and marketing company. It was set up by the Govt. of India on August 1984 to create gas sector infrastructure. GAIL India is the countrys largest gas transmission company and handled 82 million standard cubic meters per day (mmscmd) out of 111 mmscmd of gas supplies in FY08. The company has a pipeline network of 7000 kms in place. Its pipeline is the

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lifeline for major gas consumers from the power and fertilizer sectors. GAIL is a significant player in downstream petrochemicals business with a production capacity of 410,000 tons per annum. It is also an early mover in city gas distribution with 8 joint ventures and a wholly owned subsidiary, GAIL Gas, is being incorporated. The company has plans to enter into more than 230 cities. GAIL is listed by Forbes as one of the worlds 2000 largest public companies in 2010. GAIL commissioned the 2800 km HaziraVijaipur-Jagdishpur(HVJ) pipeline in 1991. During 1991-93 three LPG plants were constructed and some regional pipelines acquired, enabling GAIL to begin its gas transportation in various parts of India. GAIL began its city gas distribution in New Delhi in 1997 by setting up nine compressed natural gas (CNG) stations. In 1999, GAIL set up northern Indias only petrochemical at Pata.

VISION
Be a leading company in natural gas and beyond with global focus, committed to customer care, value creation for all stake holders and environment responsibility.

MISSION
Accelerating and optimizing the effective and economic use of natural gas and its fractions to the benefits of national economy.

Business description in brief

Currently, the business set up is as such 1. 7 LPG gas processing units to produce 1.2 MMTPA of LPG and other hydrocarbons.

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2. 1,922 km of LPG transmission pipeline network with a capacity to transport 3.8 MMTPA of LPG. 3. 13,000 km of OFC network offering highly dependable bandwidth for telecom service provider. 4. 6,700 km of natural gas high pressure trunk pipeline with a capacity to carry 148 MMSCMD of natural gas across the country. 5. 27 oil and gas exploration blocks and 3 coal bed methane blocks. 6. Joint ventures company in transport sector. 7. GAIL has been entrusted with the responsibility of reviving the LNG terminal at Dabhol as well as sourcing LNG. Delhi, Mumbai, Kanpur, Agra, Pune for supplying

Piped Natural Gas(PNG) to households and commercial users and CNG to

Market share in India

Leader in Gas Transmission: It enjoys the market share in India of 85% of the natural gas market 88% in gas transmission 15% of petrochemical consumption

The company enjoys a market share of 88% in the natural gas and LPG Transmission. Currently it has huge trunk pipeline of the length of around 5,400 Kms across various regions in India. The capacity of the pipeline is to carry 130 mmscmd of natural gas of which it carried 77mmscmd of natural gas. Significant contribution arrives from the HVJ pipeline with the length of 2,800 km and carrying capacity of around 60 mmscmd. 2,800 km long Hazira Vijaipur - Jagdishpur (HVJ) pipeline and 610 km Dahej-Vijaipur pipeline (DVPL) cater to all the gas based power plants, fertilizer plants, and industries along the entire WestNorth corridor of India.

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Source-integrated energy policy

Revenue generated from various sectors

The exploration business has an advantage of high margins. In spite of that the revenues are bound to increase with exploration being added to the portfolio. The transmission and petrochemical business is bound to benefit from the exploration venture due to vertical integration. The polymer production capacity of Pata has increased from 3, 10,000 TPA to 4, 10,000 TPA by addition of new cracker furnace and a new polymer unit. Petrochemical is one of the major thrust areas of your Company and is contributing significantly in the profitability of the Company.

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The business of the GAIL is divided in the six segments named as Gas transmission, Gas trading, LPG transmission, Petrochemicals, Liquid HC and unallocated sector. The revenue for gas transmission segment increased by 4% in comparison to 2006-07, similarly for the Gas trading sector it increased by 8%. LPG segment seen a growth of 12 % while the petrochemicals sector saw growth of 18%, Unallocated sector saw the highest growth of 76% followed by Liquid HC of 33%.This shows the success path of company.

Subsidiaries and Joint ventures

Company has been the pioneer for City Gas Projects in India. With natural gas emerging as the fuel of choice in the country, Company believes that the next decade will belong to the city gas. It was the first Company to introduce City Gas Projects in India for supplies to households, commercial users and for the transport sector by forming Joint Venture Companies.

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Subsidiaries are as follow:

GAIL Gas limited

Company has formed a wholly owned subsidiary named GAIL Gas Limited for implementing City Gas Projects and CNG corridor in the country. The subsidiary company will act as a vehicle for bidding for laying pipeline infrastructure in the country.

GAIL Global (Singapore) Limited

Company has a wholly owned subsidiary, namely, GAIL Global (Singapore) Pte. Ltd. to manage investments abroad. Company is looking for further business opportunities through this subsidiary company.

Brahmaputra Cracker and Polymer Limited

Company has 70% equity share with Oil India Limited (OIL), Numaligarh Refinery Limited (NRL), and Govt. of Assam, each having 10% equity share. The authorized capital of the company is Rs. 1,200 Crores. A Feedstock Supply Agreement has been signed between Brahmaputra Cracker and Polymer Limited (BCPL), and all the three suppliers viz., Oil and Natural Gas Company Limited, Oil India Limited and Numaligarh Refinery Limited. Financial closure for the project is likely to be completed during the year 2008-09.

Joint Ventures
Avantika Gas Limited (AGL)

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AGL is a Joint Venture of GAIL and Hindustan Petroleum Corporation Limited (HPCL) for implementation of City Gas Projects in the cities of Madhya Pradesh. AGL has started project implementation activities in the city of Indore. Company has 22.5% stake in the Company along with HPCL as equal partner. Bhagyanagar Gas Limited (BGL)

BGL is currently operating three Auto LPG stations in Hyderabadand one AutoLPG station in Tirupathi. It is currently operating six CNG stations in Vijayawada and three CNG stations in Hyderabad. Company has 22.5% stake in the company along with HPCL as equal partner. Central U.P. Gas Limited (CUGL):

CUGL is currently operating five CNG stations in Kanpur, one CNG station in Bareilly and one CNG station in Kanpur is under commissioning. CUGL is building MDPE network for supply of PNG to domestic, commercial and industrial sectors in the city of Kanpur. Company has 22.5% stake in the company along with BPCL as equal partner. Green Gas Limited (GGL):

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GGL is currently operating four CNG stations in Lucknow and three CNG stations in Agra. GGL will also take up project implementation in other cities of Western UP on the basis of gas availability and project viability. Your Company has 22.5% stake in the company along with IOC as equal partner. Indraprastha Gas Limited (IGL)

IGL is supplying piped gas to around 1 Lac domestic, 276 commercial, 16 small industrial consumers and CNG to over 1.35 Lacs vehicles through 153 CNG stations. IGL is catering to worlds largest CNG bus fleet of over 11,000 buses in Delhi. Company has 22.5% stake in the company along with BPCL has equal partner. Mahanagar Gas Limited (MGL)

MGL has set up 128 CNG stations catering to over 1.85 Lacs vehicles spread over Mumbai, Thane, Mira- Bhayandar and Navi-Mumbai areas besides supplying PNG to over 3.40 Lacs domestic, 907 commercial and 36 small industrial consumers. Company has 49.75% stake in the company along with British Gas as equal partner. Maharashtra Natural Gas Limited (MNGL)

MNGL is a Joint Venture of your Company and Bharat Petroleum Corporation Limited (BPCL) for implementation of City Gas Projects in Pune city. MNGL is developing necessary

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infrastructure for supply of CNG and PNG in the city. Company has 22.5% stake in the company along with BPCL as equal partner.

Petronet LNG Limited (PLL)

PLL was formed for setting up of LNG import and regasification facilities. PLL has a long term LNG supply contract with Ras Gas, Qatar for import of 7.5 MMTPA. PLL Dahej terminal is being expanded to 10 MMTPA capacity. Company has 12.50% stake in the company along with BPCL, IOC and ONGC as equal partners. Ratnagiri Gas and Power Private Limited (RGPPL) RGPPL is a Joint Venture Company between your Company, NTPC, Financial Institutions and MSEB. Your Company has 28.33% stake in the company along with NTPC as equal partner. The capacity of the Ratnagiri Gas & Power Station is 2,150 MW. Company has made an investment of Rs. 500Crores and has approved additional equity of Rs.475 Crores to RGPPL, out of the Rs. 475 Crores; an amount of Rs. 92.90 Crores has been paid during the month of May,2008. Tripura Natural Gas Company Limited (TNGCL)

TNGCL is presently supplying gas to 6600 domestic, 104 commercial, 21 industrial consumers and has set up one CNG station in Agartala city. Company has 29% stake in the company.

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Company has approved formation of JV for City Gas Projects in Vadodara with Vadodara Mahanagar Seva Sadan (VMSS) with 26 percent equity, while VMSS will have 24 per cent equity. The balance 50 per cent equity will be held by strategic investors and public. A JV agreement has also been signed with HPCL for city gas projects in Rajasthan.

Business operation

1) Upstream Operation
Overview Every cloud has a silver lining and every adversity hides an opportunity. GAIL'sExploration and Production (E&P) unit was born in just such a scenario. As the Indian Economy opened up around the year 2000, the business environment changed dramatically. For GAIL, liberalization meant competition in core business i.e. midstream and downstream national gas distribution No longer could they rely on statutory support mandating secured sources of Natural Gas. The

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reserves contained in existing contracted fields were fast depleting. Apart from securingsources for Natural Gas, there were other compelling reasons for GAIL to get into E&P: Integration in supply-chainLarge gap in Gas demand and supply National Gas securityBalancing of Business portfolio Global opportunity So that GAIL ventured into E&P in 2001. At the end of 2007-08, it has invested Rs.11.5 billion in this segment. It is involved in oil & gas exploration activities overacreage of 1.7 square km. It has participating interest ranging from 10 to 80 percent in following. 24 domestic blocks 3 overseas blocks 3 CBM GAIL is currently participating in 27 exploration blocks, in Basins such as Mahanadi, Mumbai, Cambay, Assam-Akaran, Tripura Fold Belt and Cauvery. GAIL has partnership in these blocks with various companies such as ONGCL, GSPCL, OIL, Hardy Exploration & Production, Petrogas, JOGPL, Daewoo, OVL, IOCL, Korea Gas Corporation, Hallworthy, BPCL, HPCL and Silver wave. GAIL also has stake in 3 overseas blocks (A-1 and A-3 blocks in Myanmar and Block-56 in Oman).Of these, nine are offshore blocks and eighteen onshore blocks, of which 13 are deep water and 5, are shallow water. Coal Bed Methane (CBM) is stored in coal seams and was generated during the process of coalification. It occurs within these seams either as free gas in fractures or in dissolved form in water. The consortium of GAIL (India) Ltd., Arrow Energy (India) Pty Ltd., EIG Energy Infrastructure Group AB has been awarded 3 CBM Blocks in CBM-III Bidding round. The Tata Power Company is also a consortium partner in two of the awarded blocks. These blocks are in Rajmahal (Jharkhand), Mand Raigarh(Chattisgarh) and Tata Pani Ramkola (Chhattisgarh)

2) Midstream Operation (Petrochemicals)

Overview The company has seven gas LPG processing plant with total capacity of 1.2 mtpa 4plants are situated along the Hazira Vijaipur Jagdishpur pipeline (two at Vijaipur in Madhya Pradesh , one at vaghodia in Gujarat, and one at oriya in Uttar Pradesh , and one each in Lakwa Assam , Usar ,

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Maharashtra an d Gandhinagar Gujarat). The total liquid hydrocarbon production was over 1.348 million tonnes, which included 1.043 MT of LPG 0.156 tm of propane and 0.074 tm of pentane the companys board of director has recently approved them doubling capacity of its pata petrochemical complex in UP to 0.8 mtpa .the installed polymer capacity at pata is 0.41 mta, which will be increased by leveraging existing facility and augmenting them. Company is setting up 280000 tpa petrochemical plant in Assam at an investment of Rs 54.6 billion. It has also signed an agreement with HPCL, OIL, Mittal investment and France total to set up another petrochemical complex and crude oil refinery at Vishakhapatnam in AP.GAIL has a 70% equity stake in Brahmaputra cracker and polymer limited. The other equity partners are OIL, Numaligarh Refinery Limited and the Govt of Assam is having a 10% equity stake`

Pipeline Operation
Interstate pipelines provide open access for shipment of natural gas. Gas enters aninterstate pipeline from gathering systems and from interconnecting pipelines. Beginning at individual wellheads, gathering systems usually consist of smaller diameter pipe operating at lower pressure. Gas conditioning is usually performed to reduce contaminants such as water from gathered gas before it is compressed into the transmission system. Gas leaves the transmission system through deliverypoints to other interstate pipelines, local distribution companies and directly to end users such as industrial facilities and power plants. Local distribution systems deliver gas to residential, commercial and industrial end users. The basic components of an interstate pipeline include steel pipe, valves, and compression, processing and storage facilities. Pipe sizes vary widely with much of the pipe in the 20-inch to 36-inch diameter range and wall thickness of about onequarterto one-half inch. A typical range of operating pressures for a transmission system is 300 to 1440 psig. Powered by natural gas or electricity, compression is one of two types: reciprocating or centrifugal. Processing facilities extract undesirable contaminants (such as hydrogen sulfide and water) and marketable hydrocarbons (such as propane and gasoline). Storage facilities have been developed from depleted oil fields, coal mines, salt domes, aquifers and reefs.These facilities can be used for peak-shaving hourly demands and short-term, as well as, seasonal storage of gas. Much of the gas that is transported

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on interstate pipelines is nominated, that is, scheduled in advance of actual gas flow. Deliveries into local distribution companies that serve weather-sensitive markets, however, cannot be known with absolute certainty. Such demand is met in part with "no-notice" service, which is usually supplied from inventories of the customers' gas, which is stored in the pipeline's storage facilities.

3) Downstream operation
Natural Gas usage in Indian cities has been limited primarily due to the scarcity of supply. However this scenario is undergoing change with several LNG projects/transnational pipelines under implementation, which together with newdomestic Gas finds are expected to shore up the supply deficit in the next few years. Meanwhile the market for city gas distribution is also set to grow at an accelerated pace. The CNG demand got a boost with the Supreme Court directive on pollution reduction in 12 major cities in India. The domestic segment is also expected to grow with the government's intentions to remove the subsidy on LPG cylinders in a phased manner in 3-5 years making piped gas even more economical.

4) Overseas Operation
GAIL has a 10 % equity stake in block A! Ink Myanmar where huge gas reserve hasbeen discovered recently. It also has a 10 % stake in block A3. It has stake in block 56 in Oman. However GAILS share in the blocks has been reduced following: Myanmars national oil company exercising its step in rights to 8.5%. In 2003 -04.GAIL acquired equity stakes in CGD project of fayumgas and shell gas in the Egypt. GAIL has setup a wholly owned subsidiary on Singapore , christened GAIL Global private limited, two undertake overseas investment , the subsidiary a 15% equity stake in the Egyptian national gas company- one of the largest natural gas distributing companies in the private sector in Egypt. The company also has a 50% stake in a JV formed with china gas holding limited to undertake projects in china, India and other countries.

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CHALLENGES FACED BY GAIL

The changes in the business environment and the exposure to the global markets have led to various complexities like, taxation, statutory compliances, have become a major challenge for the top management of any company In order to reduce the time for decision making, the adoption of the international best practices through BPR has also become a challenge. The technology boom and its adoption in the business, say ERP, is also a major challenge. The employees of the company are its greatest assets and the biggest challenge is to retain and train them for better efficiency. Today PSU are required to run on commercial lines but at the same time they are under obligation to fulfill the responsibilities towards the society. Customers is the king and to satisfy him is the primary goal of any commercial organization. With the growing awareness among the customers for better quality for money, the total quality revolution is a need of the hour. A company has 2 options- it may ignore the parivartan taking place in the commercial world or be proactive in facing the challenges thrown upon it. But sitting like a frog in a closed well does not solve the problems for any commercial organization having profit as its motive. We therefore need to be alive to the challenges and face them head on because there are new entrants in the markets and extra efforts need to be made for retaining the market share and to improve the bottom line of the company.

STEPS TAKEN BY GAIL TO COPE UP THE CHALLENGES

Draft Pipeline policy GAIL uses Natural Gas for the production of LPG and petrochemicals and currently paying the market price for internal consumption of the gas. The cost of production has gone up and GAIL

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is looking for various areas for cost reduction.All out efforts are being made for increasing its volume share in the market.

Regulatory Environment
The Petroleum & NG regulatory Board bill is expected to be passed in the winter session of the parliament. GAIL has made representations to the govt. that for better utilization of the scare resources of the country a national As per the draft pipeline policy, the company that has the gas has the rights to market and transmit the same to the consumers on a common carrier principle. Therefore GAIL is taking proactive action for identifying the potential reliable customers at one end and looking for availability of gas either through its own E&P efforts like Myanmar and as LNG from global suppliers of gas like from Oman, Malaysia, Australia, Qatar, Iran etc. GAIL has a track record of completing the projects without any time and cost overruns, however, GAIL is not complacent and is constantly upgrading its skills in project management.

Pricing policy
APM has been dismantled in the gas sector and situation of near monopoly of GAIL is a thing of past . New entrants are making their presence felt in this sector and GAIL needs to keep the costs under control to be competitive in terms of prices and transmission tariffs.

Gas grid is required to be managed by a national company like GAIL. The country cannot afford to have multiple pipelines by various operators and keep them under utilized. Representations have also been made for exempting GAIL from bearing the LPG and Kerosene subsidy burden. To monitor the developments in this area a separate cell has also been created in GAIL.

Unbundling Process
For the unbundling of the gas sector there are 3 steps accounting separation, physical separation and legal separation. GAIL has taken an advanced step by separating its accounts for the trading and transmission activities of gas. As and when there is a requirement from the regulator, action would be taken for the physical and the legal separation.

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BLUE SKY PROJECT

After the completion of first mega cross county HVJ Pipeline, GAIL considered City Gas Projects as one of the important business segment. Realizing the importance of environmental and economical benefits of using natural gas as an alternative fuel for vehicles, GAIL had set up a pilot project in 1992-93 to introduce CNG in Delhi, Mumbai and Vadodara along with the Piped Natural Gas for domestic, commercial and industrial usage. GAIL identified following 22 major cities across the country for formation of state wise JVCs for implementation of Blue Sky Project : Mumbai, Delhi, Agra, Kanpur, Lucknow, Pune, Ahmedabad, Sholapur, Hyderabad, Bangalore, Chennai, Kolkata, Rajahmundry, Vijayawada, Allahabad, Jhansi, Mathura, Gwalior, Indore, Ujjain, Kota, Kochi. The approximate project cost for a city is about Rs. 500 crores. On an energy equivalent basis, natural gas costs an average of 68% less than petrol and about 38% cheaper than diesel in Delhi. Natural gas, is a clean-burning fuel that reduces vehicle maintenance such as extended interval of oil change and standard spark plugs last longer. Natural gas, unlike liquid fuels, cannot be siphoned from a vehicle. Fuel theft is an on-going concern of commercial operators, using Petrol and Diesel. Generally, the price of Piped Natural Gas is linked to the alternative fuel available in that segment with a price benefit of minimum 10%. The main reason for price discount is to encourage the usage of Piped Natural Gas. The proactive initiative under CSR, to set up Air Pollution Related Disease Diagnostic Centres (APRDDCs) in the above mentioned 22 cities has been successfully accomplished. APRDC is a new concept in the area of health care related to air pollution to provide diagnostic facilities and treatment to people who are unable to afford even baseline investigations for the diagnosis of respiratory diseases. As we know, our country has more than 80% people who cannot get treatment in big hospitals on chargeable basis, this initiative of set up in Govt. hospitals, will benefit to the needy who can avail treatment in case of acute emergencies for survival. APRDC would also work as R&D for the development of facilities for diagnosing suspended particles, which are known to cause various heart diseases and the levels of these particles at present are at alarming level in the environment. GAIL would ensure that the hospitals in which, these equipment are installed will not only take care of the equipment but also provide service to the humanity.

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GOVERNMENT PROGRAMMES

SUPPORT

IN

THE

IMPLEMENTATION

OF

GAIL identifies social welfare programmes in consultation with the local/statutory/social groups like Gram Panchayat, Revenues offices, Collectorates, State Authority, District hospitals/CMOs, Headmasters/Principals of the local school. The approved activities are implemented by the respective work centres through NGOs/local authorities. At present, GAIL is not getting any direct support from the government for CSR activities. However, while implementing these programmes, a few challenges faced are elaborated below:

Under its Community Development activity, GAIL adopted three villages in Haryana. In the initial year womenfolk were reluctant to undertake vocational training in beauty culture, stitching, tailoring nutrition etc. Lot of efforts were made to convince the women to participate in the development activities with the result that after the completion of three years majority of the women were trained in one or the other activity, thus, achieving the desired target of empowerment Under the Drinking water/sanitation activity, GAIL planned to install water tanks in the drought prone areas of Rajasthan for eradicating the water problems. The women had to travel long distances to fetch drinking water. In the initial phase, the project had a lot of problems like supplying the potable water, laying of pipeline, site for installing the water tanks, etc. However, the project was successfully accomplished with the support of local persons and the state authorities. Under the healthcare activities, family planning camps were to be organized in the interior villages of Pata, District Auraiya. Though the programme was of the national agenda, people were hesitant to attend the Govt. camps. But when GAIL organized the camps, they came forward and the programme became a grand success.

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CORPORATE SOCIAL RESPONSIBILITY OF

GAIL

GAIL has set high standards of discharging corporate social responsibilities and earmarks 1% of profit after tax of the previous financial year for CSR programmes. These funds are channelised towards economic, environmental and social upliftment of communities in and around our work centres. A major education initiative called e-Shiksha has been launched for villages at our plants at Pata in UP and Vijaipur in MP. A GAIL Charitable and Education Trust has been created with a fund of Rs. 20 crores to award financial support on merit cum means basis to school going children as well as professionals. The initiatives taken by the company focuses on competitiveness to meet the new challenges posed by dynamic business environment and include a number of e-initiatives for increasing business process efficiency and development of manpower. The stakeholders are apprised of our CSR activities by various communications, like, GAIL website, Annual Reports and Right to Information Act.

Key Players Analyzed

Oil India Ltd., Oil and Natural Gas Commission, Indian Oil Corporation, Hindustan Petroleum Corporation Ltd., Bharat Petroleum Corporation Ltd., Gas Authority of India Ltd., and Reliance Industries Ltd

Pipeline Growth Hinges On Gas Sector Reforms

Latest data on eight core infrastructure sectors show that fall in natural gas output pulled down overall growth in these sectors. Heres a peep in to the dynamics of natural gas industry in India and its impact on gas pipeline industry.

Production
A large part of gas demand in India was unmet until April 2009 when Reliance Industries Ltd started production from its Krishna-Godavari basin. This resulted in a 47% surge in overall gas output in the country. Previously, it was mainly state-owned Oil and Natural Gas Corporation Ltd and Gail (India) Ltd that supplied to the Indian market. Initially, output by Reliance Industries at the KGD6 basin was expected to go up to 80 million metric standard cubic meter per day (mmscmd). But it peaked at 60 mmscmd and fell below 50

31

mmscmd because of technical issues, the company claims. Reliance said the reservoir turned out to be different from what initial surveys had shown. Reliance Industries has roped in BP as a joint venture partner to acquire 30% stake in Reliances 21 oil and gas blocks, including D-6, for $7.2 billion. Reliance expects BPs expertise in the sector will help boost output. However, it claims that ramp-up in production will take two to three years. Due to lower availability of gas in the country, imports of liquefied natural gas surged in the current financial year. Imports of gas in June soared 62.5% while it rose 39.5% during the quarter on a year-on-year basis. Global demand for natural gas has risen sharply. Demand for LNG from Japan surged as 80% of its nuclear power capacity is not functional after the Fukushima nuclear disaster. Thus, nuclear plants in that country are using natural gas as an alternate fuel. This has resulted in a surge in Asian spot LNG prices up to $17 per mmbtu. Bank of America-Merrill Lynch in its report estimates that price may rise to $25 per mmbtu, in a worst case, if all reactors shut down. It must be noted that cost of imported natural gas is as high as $14 per mmbtu compared with $4.2 a unit supplied by Reliance Industries. Prices of gas supplied by the company will be renewed in 2014. At that time, a ramp-up in capacity is sure to help Reliance boost its revenues and profitability.

Demand Scenario
Demand for gas in India mainly comes from power, fertiliser and refineries. Assuming a surge in production from the KG basin, a number of gas-based power plants were planned.

Given the fall in domestic production, what does it mean for gas transmission industry?
The two gas transmission companies in India include Gail and Gujarat State Petroleum Ltd (GSPL). India began LNG imports in 2004 with Petronet LNG starting imports at its Dahej terminal in Gujarat under long- term contract with Ras Gas of Qatar. Another LNG import terminal was commissioned by Shell and Total at Hazira in Gujarat during the same year.

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In anticipation of a strong demand for natural gas from user industries and slow growth expected in domestic gas production, LNG imports are expected to rise in coming years. As a result, companies are investing heavily in LNG terminals that are used to store and re-gasify imported LNG.

SWOT ANALYSIS
Strengths: are as follow
GAIL (India) LIMITED is the countrys largest gas transmission company inIndia with 88% market share. Through that Gail acts as a single gas transmission company, and taking the leverage through this dominance. 1. GAIL (India) LIMITED currently owns and operates around 58% of the totalonshore pipeline network, which shows its potency. 2. GAIL is present in complete value chain of Gas business, through transmission, gas processing to marketing. 3. Gail (India) has signed a technology license agreement with Mitsui Chemicalsfor a second high-density polyethylene (hdPE) plant at its Pata petrochemicalcomplex in Uttar Pradesh, India. 4. Vertical integration in complete Gas business leading to cost reduction. 5. GAIL is dominating player in natural gas trading. Through 85% market shareGail is showing its control in the market. 6. Major petrochemicals involvement is also showing its strength. 7. Strong Revenue Growth (turnover of Rs. 18,008 Crores in FY 2007-08, a 12%increase, as against Net Sales of Rs. 16,047 Crores in the previous year) 8. GAIL is Going global in exploration business, company is growing in all itsbusiness segmentsControls gas transmission infrastructure for example: Pipe lines. Share of LNG import projects and strong and Diversified Asset Portfolio

Weakness:

33

The biggest problem which is faced by GAIL is High Subsidy burden whichis reducing LPG realization. As a PSUGail has to accept all rules and regulation of government. 1. There is no tax benefit with respect to Section 80IA since Demerger isdelayed.

2. GAIL

has less visibility over the contracts for new expansions in transmission

business.Gail has very limited financial or operational freedom as a government undertaking. Cost and efficiency disadvantages 1. Lack of upstream gas exposure 2. Limited Exposure to Global Markets 3. Weak Capital Returns

Opportunities:

1. GAIL

finds huge gas in KG and Mahanadi basin increasing the availability ofnatural

gas.Petrochemical industry expected to grow at CAGR of 17% over a period of 3years. This growth need petrochemicals capacity expansion. 2. The overall gas production is set to double within 3 to 4 years thus demandmeeting the supply .This may result in government deregulating the naturalgas prices. 3. Leveraging pipelines for Telecom.

4. Entering into exploration business, which is going to boost the realization.

5. Potential for efficiency gains 6. Transmission system upgrading/expansion 7. Strong domestic energy demand growth. 8. Increasing Demand for LNG 9. Expanding Indian Natural Gas Market

Threats:

34

1. Rise in natural gas prices can lead to reduction in margin in petrochemicalbusiness. The main problem is that the price of gas is regulated by thegovernment. 2. Domestic marketing makes the company subject to threat of subsidy burdenand pricing policies of petroleum ministry.

3. Petrochemical prices may go down in the next two years on account of capacity additions
in the industries. 4. Rising investment requirement for new upcoming project. 5. Changes in national energy policy. 6. Intense Domestic Competition 7. Shift to Alternative Sources of Energy like hydro energy, nuclear energy, windenergy, thermal energy. 8. Fluctuation in Gas and Petrochemical Prices

35

CHAPTER 2 RESEARCH METHODOLOGY

36

STATEMENT OF THE PROBLEM The research intends to study the different approaches of appraisals adopted by Companies involved in gas sector and employee attitude, employee Satisfaction and industrial morale. It also analyses the most commonly occurring errors within performance appraisal methods and to understand the level of effectiveness of 360 appraisal in the industry. NEED AND IMPORTANCE OF THE STUDY This study is conducted with respect to understanding the different appraisal systems conducted in the gas industry and their effects thereafter in the same. Due to time and resourceconstraints, the study was restricted to the gas industry in GAIL(India) Limited, NOIDA Region

OBJECTIVES OF THE STUDY The objective of my study of performance appraisal in GAIL( India) Limited is: 1. To study the appraisal system of GAIL and evaluate its benefits in the context of GAIL. 2. To study the effectiveness of the existing system of performance appraisal at GAIL. 3. To study whether performance appraisal actually functions of the company. 4. To study the effect of performance appraisal on the relation of employee and his superiors. 5. To determine whether performance appraisal system really provides an opportunity to the employees for self reflection and individual goal settings. helps the employees to

understand their own strengths and weakness with respect to their role and

37

SCOPE OF STUDY The present study intends to provide an integrated picture of the level of employment attitude towards performance appraisal system in GAIL(India) Limited. The study was conducted in GAIL(India) Limited, Noida, in different departments. The study covers the feedback from different employees of GAIL (India) Limited, Noida towards the performance appraisal system of the firm. LIMITATIONS OF THE STUDY The biggest limitation of my study was the 2 months time period of internship which was not enough to understand performance appraisal of a company. Another limitation of this study was I have made this project on GAIL (India) Limited. In such a small period, getting the views and opinions of the interviewees (employees) was a difficult task. DATACOLLECTION SOURCES: Research work was done from two sources: 1. Primary data

2. Secondary data Primary data: It was collected by questionnaire and interview in the organization. The questionnaire comprised of closed and attitude questions. The opinion on existing performance appraisal and their affectivity were collected through questionnaire which was circulated to all the employees at all levels and the results have been analyzed on the basis of agree and disagree. The methodology for collection of data also included interviews and discussion with the top management of the organization. Secondary data: It was collected by reviewing different literatures, from published books, management journals, articles published by other researchers on 360 degree appraisal.

38

Sampling The total sample size for this project was 50 employees at GAIL. The information collected through above methods have been tabulated, analyzed and interpreted. Finally, an overall assessment of the top management; supervisory staff has been made towards improving the effectiveness of the organization. TYPES OF RESEARCH The present project is Descriptive in nature. It is done to portray accurately the

characteristics of a particular individual situation or a group. The major purpose of the descriptive research is the description of the state of affairs as it exist at resent. The main characteristics of this method are that the researcher has no control over the variables; he can only report what has happened or what is happening. SAMPLING TECHNIQUE The sampling technique adopted for the study is Non- Probability Sampling Technique according to the convenience of the researcher. A questionnaire was administered to employees of GAIL infohub of different

Departments like Finance Department, HR Department, Business Information System Department, O& M Department . SAMPLE SIZE Data is collected using a sample of 50 employees of GAIL infohub. SAMPLE DESCRIPTION

39

The sample mainly consist of data from the primary sources that are utilized for the purpose of this study. This is done by means of administrating questionnaire to employees in different departments. Secondary data like company journals, newsletters, records etc., were also relied on for retrieving further information.

INSTRUMENTAL TECHNIQUE Questionnaire ACTUAL COLLECTION OF DATA Both secondary and primary sources of data are utilized for the purpose of this study. Primary data is collected by means of administering a questionnaire to the employees of GAIL infohub of different Departments like Finance Department, HR Department, G.P.C.T Department, Business Operation System Department and Gailtel Department. Secondary data is collected from various records, manuals and other sources of HR Department.

40

CHAPTER 3 CONCEPTUAL DISCUSSION

41

Literature survey and details on Performance Management System

Performance appraisal is a formal structured system of measuring and evaluating an employees job related behaviors and outcomes to discover how and why the employee is presently performing on the job and how the employee can perform more effectively in the future so that the employee organization and society all benefit According to Flippo performance appraisal is the systematic, periodic and an impartial rating of an employees excellence in the matters pertaining to his present job and his potential for a better job." The work performance of the subordinate is examined and discussed in the form of periodic interview with a structured formal interaction between a subordinate and supervisor to identify weaknesses and strengths of the subordinate as well as opportunities for improvement and skills development. The performance of each and every individual employee plays a major role to achieve organization goals and to sustain its growth in the present competitive world. The employees performance should assess continuously to make their contribution to higher extend.

Objectives of Performance Management System

To review the performance of the employees over a given period of time. To judge the gap between the actual and the desired performance. To help the management in exercising organizational control and provides feedback to - the Employees regarding their past performance. To help strengthening the relationship and communication between superior and Subordinates, management and employees. To diagnose the strengths and weaknesses of the individuals so as to identify the training and development needs of the future, it also helps to reduce the grievances of the employees

42

Provide information to assist in the other personal decisions in the organization. Provide clarity of the expectations and responsibilities of the functions to be performedby the employees. It helps to judge the effectiveness of the other human resource functions of the organization such as recruitment, selection, training and development.

The sources of performance appraisal are

Manager and Supervisor Appraisal Self-Appraisal Subordinate Appraisal Peer Appraisal and Team Appraisal Customer Appraisal

What is Performance Management?

There are few comprehensive definitions of Performance Management. HM Treasury describe Performance Management as Managing the Performance of an organization or individual. Whilst this is not a precise definition grounded in literature it demonstrates the breadth of performance management and hence the difficulties in defining its scope, activities and practices. It demonstrates that performance management is concerned with the management of performance throughout the organization and as a result is a multidisciplinary activity. Further, in their Glossary of Performance Terms the Improvement Development Agency further suggest that it involves you understanding and acting on performance issues at each level of your organization, from individuals, teams and directorates, through to the organization it-self. As well as involving performance measurement, systems and processes, performance management is about managing people and the way people within an organization operate and work together. Issues such as leadership, decision making, involving others, motivation, encouraging innovation, and risk taking are just as important to bring about improvement

43

This definition further demonstrates the breadth of the subject highlighting some of the activities involved in managing performance, requiring a range of different skills and functional approaches. This provides challenges of terminology when we discuss the subject. Academic research in particular tend to be undertaken in functional subject areas and often within organizations managers sit in functions and take a functional perspective on the subject of performance. Despite this the clear multidisciplinary, the field of performance management has developed from diverse origins. Different measurement and management techniques and approaches have developed independently. Financial and particularly management accounting have been concerned with measuring and controlling the financial performance of organizations, operations have been concerned with shop floor performance often focusing on improving throughput and efficiency whether that be from a manufacturing or a service perspective, strategy have been concerned with developing plans to deliver future objectives (including planned performance) and personnel (or HR) have been concerned with managing the performance of people. It is relatively recently that performance management from these desperate disciplines has begun to converge and recognize the need for integration into a multidisciplinary approach to managing performance. The management discipline which most often associates itself with the term is in Human Resources, performance management is often associated with the management of the performance of people. However even in the HR field best practice emphasizes the contribution of people to the achievement of organizational performance.

Approaches to performance management

Performance management and measurement are closely associated with the rise of interest in Management by Objectives (MBO) from the 1950s onwards. MBO involves senior managers setting indicators and targets in relation to desired outcomes but allowing local managers the autonomy to innovate to achieve these. However, more contemporary authors suggest that performance measurement is often used to insert more rigid controls over organisational processes to standardize delivery and improve efficiency. Integrating performance measurement with organizational learning provides an opportunity to learn lessons from previous de-livery, confirming or denying underlying assumptions which act as a guide to action. Performance

44

measurement in the public sector has been implemented generally in the context of increasing privatization of public services and as a mechanism to ensure that contractors or public sector arms length delivery organizations act in the ways that the purchaser of services would want. Other prominent objectives underpinning performance measurement in the public sector relate to the potential to use performance data to aid public and political accountability. Performance measurement systems take different types of performance indicators and attempt to link them together, particularly to show the relationship be-tween inputs (the resources devoted to a particular issue), outputs (the immediate results of activity, such as the number of interventions completed) and outcomes (the ultimate effects of interventions).

Performance measurement systems

I. Balanced Score Cards II. Performance Prisms.

Balance Score Cards

Performance measurement does though have some acknowledged problems; notably the diversion of resources into data collection and measurement as opposed to delivery and so called perverse incentives where individual or organizational behavior is diverted away from the ultimate objectives of the organization. Performance measurement in Public Employment Services The role of the PES is to facilitate the bringing together of the supply and demand for labour, through both passiveandactivemeasures. Research on the use of performance measurement in PES suggests that it is widely used but that there have been many instances of common problems including perverse incentives to encourage creaming and parking behavior where easy to place clients are prioritized over those requiring more help and who are arguably a more appropriate focus for PES attention. There is also a concern in the literature to avoid incentivizing PES and their contractors to promote short-term rather than long-term outcomes, with some suggesting that longer-term measures of the sustainability and/or quality of employment gained as a result of PES interventions are needed to address this concern. The last decade has also seen a number of different initiatives in Europe to compare performance, for instance through the European PES Benchmarking Project.

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- The work of Kaplan and Norton (1992); and Keegan et al. (1989) emphasizes the fact that the set of measures used by an organization has to provide a "balanced" picture of the business. The set of measures should reflect financial and non-financial measures; internal and external measures; and efficiency and effectiveness measures. - The populated framework of measures should provide a succinct overview of the organizations performance. For example, the simplicity and intuitive logic of the Balanced Score-card has been a major contributor to its widespread adoption as it is easily understood by users and applied to their organization. - Each framework demonstrates the need for organizations to implement a set of performance measures that is multi dimensional. This reflects the need to measure all the areas of performance that are important to the organizations success. However there is no consensus over what the dimensions of performance are. The EFQM model provides the broadest indication of dimensions of performance to be measured. - The Performance Measurement Matrix (PMM) provides comprehensiveness. It is possible to map all possible measures of an organizations performance onto the framework and identify where there are omissions or where there is a need for greater focus. However, the PMM provides little indication of the different dimensions of performance that should be measured. - The Tableau de Bord, along with the work of Bititci et al. (1998), explicitly demonstrates the fact that performance measures should be integrated both across the organizations functions and through its hierarchy, encouraging congruence of goals and actions.

Evolution of the Scorecard Concept

By far the most well known and accepted approach to organizational performance management is the Balanced Scorecard. Although when first introduced in 1992 it was promoted as a performance measurement sys-tem, the Balanced Scorecard has evolved somewhat. That evolution highlights some important issues regarding the management of organizational performance. Originally the Balanced Scorecard prompted users to identify an equal number of measures in each of four perspectives: Financial perspective; Customer perspective; internal perspective; Innovation and Learning perspective. This demonstrated the need to balance

46

financial and non-financial measures; internal and external measures; leading and lagging measures; and short and long-term measures. The approach encouraged managers to overcome the shortcomings of traditional financial measurement and ensuring that managers dont take a narrow view of performance based on too few measures.

Performance PRISM
Designing performance measurement systems is all about deciding which measures to select, and just as importantly, which measures to ignore. The principle behind the Performance Prism is that the number of measures should be limited to give clarity to what the organization is trying to achieve. Therefore The Performance Prism approach helps to build a stakeholder focused measurement and management system by answering a number of key questions: 1. Stakeholder satisfaction .Who are our key stakeholders and what do they want and need? 2. Stakeholder contribution. What do we want and need from our stakeholders on a reciprocal basis? 3. Strategies. What strategies do we need to put in place to satisfy these twin sets of wants and needs? 4. Processes. What processes do we need to put in place to enable us to execute our strategies? 5. Capabilities. What capabilities do we need to put in place to allow us to operate and improve these processes?

It should be noted that the Performance Prism is not a prescriptive measurement framework. Instead, the Performance Prism is a tool which can be used by management teams to influence their thinking about what the key questions are that they want to address when seeking to design their performance measures and measurement systems, and so manage their business. This approach it is argued, would satisfy both the resource-based theory of the firm (i.e. what resources form the firm) and the resource dependency view (i.e. what resources are critical to obtain). By using this approach organizations can explicitly link the processes that they undertake to the wants and needs of their stakeholders. At this level it is possible to make

47

decision about priori-ties and objectives for individual activities and processes, and understand how actions at that level will affect stakeholders and their satisfaction. As management systems are de-signed to support the achievement of the organizations strategy it is important that when the organizations strategy changes so do the measures used to assess whether it is being executed. So regardless of the framework used to develop the original measures, over time these should change to reflect the organisations changing circumstances and hence a measurement and management system should always be bespoke to reflect the strategy being pursued. The performance measurement revolution has prompted many organizations to implement new performance measurement and management systems, often at considerable expense. However, unlike the environment in which organizations operate, many such initiatives appear to be static. Senge (1992) argues that, in today's complex business world, organizations must be able to learn how to cope with continuous change in order to be successful.

Processes and Systems for Managing Performance

It is common to see performance reports used by Executives which consist of tables of data or limited visualizations of data which provide little insight into the actual performance situation or action that is required to improve. In the field of quality management, the Demming Cycle (sometimes known as the Shewhart or PDCA Cycle) is a well established improvement methodology which incorporates four stages Plan, Do, Check, Act. Primarily the Deeming cycle is applied to individual processes however its constituent phases lie at the heart of performance management as they integrate planning, action and monitoring of performance to ensure continuous improvement and the achievement of objectives. Furthermore the deeming Cycle is all about learning learning in a systematic way what works and what does not Extension of the deeming cycle principles to organizational level performance management can bring problems be problematic. It has become increasingly difficult to convert the large amounts of data available into meaningful information. Managers today complain of drowning in data while thirsting for information. Organizations seem to be generating data at a much faster rate than any manager can master, and in parallel to that, the useful life of that data is collapsing. One of the most enduring traits of the information age is that we have focused too much on mastering transaction data and not enough on turning it into

48

information and knowledge that can lead to business results. If the skills and knowledge of executives is to be fully exploited then the performance review process should focus their attention on dis-cussing the issues raised by the performance measures and the actions necessary to meet organizational objectives, rather than trying to interpret what the measures actually say. Furthermore, Marchand et al highlight the need to integrate IT, people and practices to deliver insights and business results. This can be achieved by focusing on reporting insights to executives rather than performance data in practice this means: 1. Restructuring meetings based on the objectives of the organization. 2. Focusing the agenda on the key performance outcomes represented on the organizations strategy map. The agenda should be a series of key questions for each of the key objectives i.e. Is the objective being achieved? and If not why not? 3. Analysis and interpretation of data should be dealt with by specialists in these tasks (the role of Performance Analysts) who identify what insights performance data provides. 4. Performance analysts should be responsible for analyzing performance measurement data presenting to executives the answers to the questions (backed up by analyzed data) rather than providing the raw data itself. Analysis includes identification of the root causes of performance issues and analysts are encouraged to propose possible future actions based on their analysis. This enables the executives to focus their attention on discussing the issues raised and the actions necessary to meet organizational objectives. 5. Communities of Practice to enable analysts to learn from each other, enabling improvement of analysis skills. They allow learning about best ways of communicating to the key decision makers, visualization of messages and telling the story of the organizations performance. 6. Meetings should change from discussing performance data to identifying and agreeing future actions. Because this is a more effective use of time, board meetings can be more efficient. They should be supported by an issues management process that ensures actions are prioritized based on importance and that actions are completed as and when necessary.

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A systematic process for using performance measurement to check whether strategy is being implemented and whether performance is improving in line with strategic objectives as described represent a process of single-loop strategic learning. Target setting and milestone setting have also been stressed as a critical for the effectiveness of performance management and management. Guidelines regarding the identification and selection of these elements seem to be insufficient in the SPM literature. Kaplan and Norton (1996), for example, only recommend the use of stretch targets. Ahn (2001) proposes that the interdependencies between the measures should be taken into account when quantifying the values of the targets to be attained each year. There is little evidence in relation to the use of targets across broad multidimensional perspectives of performance.

Methods of PMS
There are two types:Traditional Method:1. Straight ranking method 2. Man-to-Man comparison 3. Paired comparison 4. Grading 5. Graphic rating 6. Checklist 7. Free essay

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Modern Method:1.MBO 2.360 Degree Appraisal 3. Human asset accounting Method 4. Behaviorally anchored rating method

MODERN 1. MBO

METHOD

Management by Objectives (MBO) is a process of agreeing upon objectives within an organization so that management and employees agree to the objectives and under-stand what they are in the organization. The essence of MBO is participative goal setting, choosing course of actions and decision making. An important part of the MBO is the measurement and the comparison of the employees actual performance with the standards set. Ideally, when employees themselves have been involved with the goal setting and the choosing the course of action to be followed by them, they are more likely to fulfill their responsibilities.

2.360 DEGREE APPRAISAL

360-degree feedback, also known as multi-rater feedback, multisource feedback, or multisource assessment Performance-appraisal data collected from 'all around' an employee his or her peers, subordinates, supervisors, and some-times, from internal and external customers. Its main objective usually is to assess training and development needs and to provide competence-related information for succession planningnot promotion or pay increase.

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The results from 360-degree feedback are often used by the person receiving the feedback to plan training and development. Results are also used by some organizations in making administrative decisions, such as pay or promotion. When this is the case, the 360 assessment is for evaluation purposes, and is sometimes called a "360-degree review." 3. BEHAVIOURALLY ANCHORED RATING SCALE BARS Behaviorally Anchored Rating scales is a method that combines elements of the traditional rating scales and critical incidents methods. In order to construct BARS seven steps are followed as mentioned below: Examples of effective and ineffective behavior related to job are collected from people with knowledge of job. These behaviors are converted in to performance dimensions. A group of participants will be asked to reclassify the incidents. At this stage the incidents for which there is not 75% agreement are discarded as being too subjective. Then the above mentioned incidents are rated from one to nine on a scale. Finally about six to seven incidents for each performance dimensions- will be used as BARS. This is by far the best method used for a performance appraisal.

4. HUMAN ASSET ACCOUNTING METHOD

The HAAM refers to activity devoted to attaching money estimates to the value of a firms internal human organization and its external customer goodwill. The current value of a firms human organization can be appraised by periodic measurements of Key causal &Intervening enterprise Key causal variables 1.Organization's management policies

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2.Business leadership 3. Strategies 4. Skills and behaviors 5. Decisions Intervening enterprise variables 1. Loyalties 2. Attitudes 3. Motivations 4. Communication 5.Decision making

TRADITIONAL

METHOD

1. STRAIGHT RANKING METHOD This is the most commonly used category rating method. The appraiser checks the appropriate place on the scale for each task listed.it is giving a rank to a person on his job performance against that of another member of a competitive group by placing him as number one or two or three in total group. It is a merit based rating. 2. PAIRED COMPARISON METHOD Each employees every trait is compared with all others in pairs one at a time using the same scale for performance. The numbers of times each individual is compared with another is recorded in a paper .These numbers yield the rank order of the entire group.It makes judgment easier than ordinary ranking method. It is not suitable when group is large.

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3. GRADING METHOD The rater considers certain features such as analytical ability, selfexpression,job knowledge, leadership etc. and marks them accordingly to a scale. The actual performance is then compared with these grades and he is allocated the grade which best describes his performance. 4. GRAPHIC OR LINEAR RATING The factors included in this rating system are Employee Characteristics & Employee Contribution. Employee Characteristics are:Initiative Leadership Dependability Attitude Enthusiasm Loyalty Creative ability Emotional ability Decisiveness Employee Contribution:1. Quantity and quality of work 2. The responsibility assumed 3. Specific goals achieved

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4. Regularity of attendance 5. Versatility etc. These traits are evaluated to a continuous scale.

5. FORCED CHOICE DISTRIBUTION METHOD It was evolved after a great deal of research conducted for the military services during World War II . It attempts to correct a raters tendency to give consistently high or low ratings to all the employees. E.g.-The employee is a) Is punctual and careful b) Is a hard worker and co-operative c) Is dishonest and disloyal d) Is disinterested in work. The rater is asked to indicate which of the four phrases are most and least descriptive of the employee. 6. CHECKLIST METHOD Under this a rater does not evaluate employee performance, he supplies reports about is and the final rating is done by the personal department. A series of questions are presented concerning an employee and checks to indicate if the answer to a question about an employee is positive or negative. E.g.:1. Is the employee really interested in his job? Yes/no

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2. Does he show uniform behavior to all? Yes/no It is difficult to assemble, analyses, and weigh a number of statements about employee characteristics and contribution.

7. FREE EASSAY METHOD Under this method, the supervisor makes a free form, open-ended appraisal of the employee in his own words and puts down his impression about the employee. No attempt is made to evaluate the employee in quantitative manner. DRAWBACKS Its a subjective evaluation No common criteria for evaluation Supervisor is required to devote considerable time and thought. 8. GROUP APPRAISAL METHOD Under this method, employees are rated by a group. It consists their supervisor and three or four other supervisors who have some knowledge of their performance. Group discusses the standards and rate accordingly .

Using measurement to challenge strategy double loop learning

In addition it is possible to use performance management to challenge whether the followed being applied is appropriate. Organizations such as Sears and the anonymous company in the study by the Institute of Employment Studies have used statistical analysis of performance measurement data to challenge whether the strategy being followed is leading to the desired outcomes. This enables double-loop strategic learning to be applied by challenging the assumptions that underpin the strategy of the organization. The Strategy Map forms a hypothesis

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of the drivers of performance. Gathering and analyzing performance measurement data to enables testing of this hypothesis, enabling executives to make informed decisions about whether the assumptions underpinning the strategy are valid and whether the strategy needs to be changed.

Overcoming the Barriers to Performance Management

Implementation factors
Authors highlight the importance of approaching the implementation of performance management from a change management perspective (e.g. Bourne et al, 2002; Kaplan and Nor-ton, 2001; Kasurinen, 2002; McCunn, 1998). In this sense, factors such as the following are crucial for an effective SPM implementation. Top manager agreement, commitment and leadership - start with a clear agreement at the top on the strategy, goals, measures and the performance targets to be implemented. Managers participation and accountability- having the agreement, commitment and leadership at the top is insufficient if it does not go along with having the agreement, commitment and leadership of the rest of the management team. Furthermore, the involvement of employees is also crucial. Inviting managers and employees to assist on the development of the system facilitates their buy-in, and enhances their trust, understanding, and ownership of the performance measures It is also important to involve the Human Resources and the Information System functions. It is essential that managers become accountable for the performance being managed Training and education -employees at all levels need to learn the principles of the system, its measures, tools and procedures . Individuals can distort the information system by smoothing, biasing, focusing, gaming, filtering, "illegal acts so it is important to train and educate individuals on how to engage rather than bypass the causes of dysfunctional behaviors. Communication and feedback - The factor communication is one of the most cited in the literature. When most authors stress its importance, they tend to focus on the reported feed-back of measurement results to the employees. Even so, there are other aspects related to

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communication that can affect the effectiveness of performance management. The change management literature highlights the relevance of verbal and non-verbal communication (e.g. presentations, manuals, conversations, newsletters, reports, etc.) used to clarify all aspects related to the measures, in particular and performance management in general; and to facilitate the buyin from the people in the organization.

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CHAPTER 4
DATA ANALYSIS AND INTERPRETATION

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The data is collected through survey, books, reports, newspapers and internet. The survey is conducted among the employees of GAIL. The data collected by the researcher is tabulated and analyzed in such a way to make interpretations. Q 1. In GAIL (India) Ltd. PMS process strikes a balance between organizational and employees goals? Level of satisfaction strongly agree Agree Disagree strongly disagree no. of employees 15 10 10 15 percentage 30 20 20 30

INTERPRETATION It can be clearly interpreted from here that most of employees believes that PMS strikes a balance between org. And employees goal because when an employees performance is appraised , he performs his upcoming duties very well , when he puts his firm dedication in work , he basically contributes in achievement of org goals effectively. Q 2 .Are meaningful and time bound goals are carved out in Key Result Areas? Level of satisfaction Strongly agree Agree Disagree Strongly disagree no. of employees 5 10 20 15 percentage 10 20 40 30

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INTERPRETATION In this case most of employees are disagreeing org. performance. Q 3. Is the Performance Appraisal System in the company is bias free and fair? Level of satisfaction Strongly agree Agree Disagree Strongly disagree no. of employees 30 10 5 5 percentage 60 20 10 10 as it is a govt. org and there is no such

condition for time bound goal. Even if work is delayed by 2 -3 days, it hardly effects the

INTERPRETATION

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In this point employees are strongly agreeing as they get fair salary and promotion and are treated fairly in the org. Q4. Do you feel that there is any communication barrier b/w employees and management? Level of satisfaction Strongly agree Agree Disagree Strongly disagree No. of employees 30 10 5 5 percentage 60 20 10 10

INTERPRETATION It simply implies that there is no communication barrier b/w employees and its management as there are separate departments of marketing, finance etc and there are grievance cells also for handling problems of employees. Q5. Does PMS helps employees in developing their skills and improving their performance? Level of satisfaction Strongly agree Agree Disagree Strongly disagree No. of employees 20 10 10 10 percentage 40 20 20 20

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INTERPRETATON Employees are strongly agreeing with this point as when they are motivated or appraised, the next time they use to perform their task in a more innovative way which helps in developing their skills. Q6. Some employees get undue favoritism/benefit of their closeness to their superiors? Level of satisfaction Strongly agree Agree Disagree Strongly disagree no. of employees 25 16 5 4 percentage 50 32 10 8

INTERPRETATION

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Employees are highly agreeing in this point because even though the org. is treating every employee fairly but if we talk about the upper mgmt. authorities then they show favoritism to some colleagues. Q7. PMS system provides role clarity and direction to employees in terms of their work. Level of satisfaction Strongly agree Agree Disagree Strongly disagree no. of employee 20 17 10 3 percentage 40 34 20 6

INTERPRETION Employees agree with this point as PMS motivates them with their goal clarity and encourages them to perform better effectively and efficiently.

Q8. PMS is a good mechanism for training needs identification of an employee.

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Level of satisfaction Strongly agree Agree Disagree Strongly disagree

no. of employees 35 10 3 2

percentage 70 20 6 4

INTERPRETATION PMS helps an employee in identifying his/her versa. strengths and weakness. It helps the

management to know whether the employee is requiring more training in work and vice-

Q 9. Do you think that The Electronic PMS is more effective than the Manual PMS? Level of satisfaction Yes No no. of employees 30 20 percentage 60 40

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INTERPRETATION Employees are quite satisfied with their work and management prefers electronic PMS more than manual PMS as E-PMS is time saving and once data is feeded electronically it can be used for a long time. Q 10.An open and frank system at company leads to the liberal distribution of high ratings.

Level of satisfaction Strongly agree Agree Disagree Strongly disagree

no. of employees 38 7 4 1

percentage 76 14 8 2

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INTERPRETATION Employees strongly believes that if appraiser system in an org. is open and frank then they know their weaknesses in better way and will work on them to improve it as well as to achieve desired motives. Friendly atmosphere is necessary for the growth of the company.

Q 11.As GAIL is a gas company so, are the safety arrangements proper for the workers working in manufacturing units? Level of satisfaction Strongly agree Agree Disagree Strongly disagree No. of employees 10 30 3 7 percentage 20 60 6 14

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INTERPRETATION Labor workers as well as employees of GAIL are in safe environment. Fire extinguishers and fire alarms have been fitted at many places in manufacturing plants and in company to ensure safety of employees.

Q 12.Are you satisfied with the recreational facilities at the company?

Level of satisfaction Yes No

no. of employees 47 3

percentage 94 6

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INTERPRETATION Canteen and rest rooms, medical rooms are there within the company for the employees. Besides this the company also provide day meals(lunch) and evening snacks to all employees. So, employees are satisfied with these facilities.

Q 13.Individual and team performance are appropriately recognized and rewarded.

Level of satisfaction Strongly agree Agree Disagree Strongly disagree

no. of employees 35 5 8 2

percentage 70 10 16 4

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INTERPRETATION Individual as well as team performance are highly recognized in the organization. If a task is given to a team and if they perform well then they are being given extra incentives for that. On the other hand, if an individual employee performs well then sometimes his name is recommended for promotion.

Q 14. Do you think that even small firms should also have PMS ?Comment. Here most employees , said that definitely small firms should also have PMS because all of them agree with this thing that any organization whether it is small or big needs to motivate its employees if it wants to succeed in market and an org. cannot motivate its employees without knowing their performance level. Hence, performance appraisal system should be given prior importance in an organization.

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CONCLUSION
In the analysis we come to know about the effectiveness of the PMS system in GAIL. Also some of the major challenges this system is facing in its functioning. The various parameters are taken to check the effectiveness of the PMS mechanism. 1. In parameters like transparency, effectiveness of the electronic version of PMS, training needs identification the employees of GAIL responded positively. This shows that the system

2. Maintain a good effectiveness in these parameters. Though there is still some scope for
improvement in transparency as the lower level employees respond that they need to know more about the PMS mechanism. So, a training program can be designed for the employees who are new in the company. 3. But there is also a place for concern in some of the parameters like biasness, after appraisal handling of the feedback and counseling and link with the rewards. At lower level employees the problem of biasness is more felt by the employees. 4. In suggestions of the employees appraiser training is strongly recommended. The logic be-hind this is that a trained appraiser would be able to handle the complexities of the appraisal system; also the feedback handling especially of negative feedback handing can be managed successfully. 5. The quarter review is considered to be a solution of most of the problems like performance planning and a timely action over the feedback of the appraisers, and if somebody requires any training he can be availed of it. In the next quarter he can take benefit of his training. 6. Most of the employee recommended the 360 Degree Feedback as a solution to the prevalent problem of biasness. But till the current PMS system will not become a mature mechanism which also depends on the employees, a 360 degree feedback cannot be implemented. If it is applied drastically then it would have very bad repercussions.

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As the performance appraisal system in GAIL is well designed it needs only to get modified according to the changing times without changing its basic structure. Being a PSU also there are some confinements over it.

ANNEXURE

Questionnaire

On

The

Effectiveness

of

PERFORMANCE

MANAGEMENT SYSTEM AT GAIL GAS LIMITED, NOIDA

Dear Sir/Madam, For the completion of my project its important to have the general information about the company which can be derived from, one to one interaction and with the help of the questionnaire. Since this is to be used for the purpose of analysis only and information collected would be strictly confidential. NAME WORKING SINCE QUALIFICATION FUNCTONS

Q 1. In GAIL (India) Ltd. PMS process strikes a balance between organizational and employees goals? Q 2 .Are meaningful and time bound goals are carved out in Key Result Areas? Q 3. Is the Performance Appraisal System in the company is bias free and fair? Q4. Do you feel that there is any communication barrier b/w employees and

management? Q5. Does PMS helps employees in developing their skills and improving their performance? Q6. Some employees get undue favoritism/benefit of their closeness to their superiors? Q7. PMS system provides role clarity and direction to employees in terms of their work.

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Q8. PMS is a good mechanism for training needs identification of an employee. Q 9. Do you think that The Electronic PMS is more effective than the Manual PMS? Q 10.An open and frank system at company leads to the liberal distribution of high ratings. Q 11.As GAIL is a gas company so, are the safety arrangements proper for the workers working in manufacturing units? Q 12.Are you satisfied with the recreational facilities at the company? Q 13.Individual and team performance are appropriately recognized and rewarded. Q 14. Do you think that even small firms should also have PMS ?Comment. Thanks for precious time.

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BIBLIOGRAPHY

RESEARCH PAPERS

1. HM Treasury( 1986)- Managing the Performance of an organization or individual

www.hm-treasury.gov.uk/d/hutton_fairpay_review.pdf 2. Kaplan and Norton (1992)- Scorecard concept www.docstoc.com/docs/14840736/performance-appraisal 3. Bititci et al. (1998)- Performance Management and performance prism books.google.com ... Human Resources & Personnel Management

WEBSITES: 1. http://www.gailgas.com/- Company ventures 15/05/2012 2. www.slideshare.net/hemanthcrpatna/performance-appraisal-h-r-project Performance overview and structure , subsidiaries and joint

appraisal, its objectives and need in an organisation- 21/05/2012

3.

www.managementstudyguide.com/performance-appraisal.htm 360o performance appraisal,

performance prism- 1/05/2012 4. http://www.gail.nic.in/final_site/index.html Challenges faced by gail, measures taken to overcome barriers- 1/05/2012

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5. en.wikipedia.org/wiki/Performance_appraisal Performance appraisal methods, balance scorecards- 13/06/2012 6. www.citehr.com Human Resource Section Research methodology, literature review on performance management system- 23/06/2012

BOOKS: Author- Dessler, Gary (1993), Human Resources Management (2nd edition) - performance appraisal, traditional and modern methods of appraisal Author- Becker, Brian (1985), The HR Score Card (2nd edition)-balance score card, understanding performance management system

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