FEASIBILITY STUDY OF IMPLEMENTING BALANCE SCORECARD AT

IFFCO, Kandla

FEASIBILITY STUDY OF IMPLEMENTING BALANCE

SCORECARD AT IFFCO, Kandla

A PROJECT REPORT
Submitted by

Sunita Nandwani (09070)

Anushree Pillai (09083)

To
Director (PGDM)
In partial fulfillment of the requirements of

Tolani Institute of Management Studies, Adipur

For the award of degree of

Post Graduate Diploma in Management

Tolani Institute of Management Studies

Adipur- 370205
JULY 2010

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EXECUTIVE SUMMARY

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INDEX

Sr Particulars
No.
1 Introduction to Balanced scorecard

1.1 Literature review

1.2 Introduction to IFFCO

1.3 Vision

1.4 Mission

1.5 Units of IFFCO

2 Objectives of the project

3 Methodology

3.1 Data collection method

4 Findings and Analysis

5 Limitations

6 Conclusion and recommendations

7 Bibliography

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Introduction

In 1992, Kaplan and Norton published an article about the Balanced Scorecard (BSC). At
that time, it was a new approach to strategic management. They recognized some of the
weaknesses and vagueness of previous management approaches. The balanced scorecard
approach provides a clear description as to what companies should measure in order to
'balance' their financial perspectives.

What is the balanced Scorecard?

The Balanced Scorecard is a performance management tool that enables a company to

translate its vision and strategy into a tangible set of performance measures. However, it
is more than a measuring device. The scorecard provides an enterprise view of an
organization’s overall performance by integrating financial measures with other key
performance indicators around customer perspectives, internal business processes, and
organizational growth, learning, and innovation. Kaplan and Norton describe the
innovation of the balanced scorecard as follows: "The balanced scorecard retains
traditional financial measures. But financial measures tell the story of past events, an
adequate story for industrial age companies for which investments in long-term
capabilities and customer relationships were not critical for success. These financial
measures are inadequate, however, for guiding and evaluating the journey that
information age companies must make to create future value through investment in
customers, suppliers, employees, processes, technology, and innovation."

EMERGENCE OF THE BALANCED SCORECARD

The conceptual framework of the Balanced Scorecard was introduced by Kaplan and
Norton (1992, 1993, 1996) for the purpose of designating, evaluating and measuring
factors that drive an organization’s performance.

Historically organizations placed a great deal of emphasis on financial measures

in operating their organizations. According to Kaplan and Norton (1992) reliance on
financial measures in a management system is insufficient, as financial measures are lag
indicators that reflect the outcomes from past actions. The Balanced Scorecard paradigm
retains measures of financial performance and supplements these measures with factors
that drive future financial performance. The Balanced Scorecard is based upon the cause-
and-effect relationships of the financial and non-financial measures derived from the
organization’s strategy. The perspective Kaplan and Norton stress moves from an
emphasis on tangible assets to, and including, an emphasis on intangible assets. They
asserted that intangible assets became the major source of competitive management by
the end of the twentieth century. Consequently, it became necessary to develop strategies

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for managing an organization’s intangible assets. These intangible assets include such
things as customer relationships, innovative products and services, high-quality
responsive operating processes, skills and knowledge of the workforce, the information
technology that supports the workforce, and the organizational climate that encourages
innovation, problem-solving, and improvement.

Kaplan and Norton’s Balanced Scorecard concept seeks to provide managers with
a set of performance metrics balanced between outcome measures and measures of the
drivers of future outcomes (1996 b). It provides a framework for organizing strategic
objectives into four perspectives. In each of the four perspectives quantitative measures
are developed in order to operationalize the model. The four perspectives are as follows:

Financial – The strategy for growth, comparability, and risk viewed from the perspective
of the shareholder.

Customer – The strategy for creating value and differentiation from the perspective of
the customer.

Internal Business Processes – The strategic priorities for various business processes that
create customer and shareholder satisfaction.

Learning and Growth – The priorities to create a climate that supports organizational
change, innovation, and growth.

The Four Perspectives of the Balanced Scorecard

1. Financial: Historically, this measure has been the cornerstone of performance

measurement. The bottom-line is a good indicator of whether the organisation’s
policy and strategy and properly implemented and executed, and contributing to
the bottom line. Some traditional financial measures include: operating income
and return-on-capital-employed or economic added value. Alternative financial
objectives can be rapid sales growth or generation of cash flow.
2. Customer : This element focuses on the ability of the organisation to provide
quality goods and services, the effectiveness of their delivery, and overall
customer service and satisfaction. But the customer perspective should also
include specific measures of the value propositions that the company will deliver
to customers in targeted segments. The customer perspective identifies the target
customer and market segments for each business unit. The segment-specific
drivers of core customer outcomes represent those factors that are critical for
customers to switch to or remain loyal to their suppliers. For example, customers
could value short lead times and on-time delivery, or possibly a constant stream of
innovative products and services. The customer perspective enables business unit
managers to articulate the customer and market-based strategy that will deliver
superior future financial returns. Common indicators of customer performance
include market share, customer satisfaction and customer retention figures.
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3. Internal Business Processes : This element captures on the internal business

results that lead to financial success and satisfied customers. Organisations must
identify the key business processes at which they must excel and monitor them to
ensure that outcomes will be satisfactory. Internal business processes are the
mechanisms through which performance expectations are achieved.

4. Learning and Growth: This element assesses employee ability and the quality of
information systems, and the effects of organisational alignment in supporting
accomplishment of organisational goals. Processes will only succeed if adequately
skilled and motivated employees, supplied with accurate and timely information,
are driving them. In order to survive, the enterprise must reinvent itself to fit ever-
evolving markets. Learning and growth measures identify the infrastructure most
appropriate to the firm. They are derived from human resources, organisational
systems and procedures. Traditional learning and growth measures may
encompass: employee satisfaction, retention and skills; information systems
performance; and organisational procedures’ calibration with employee
incentives.

Cause-and-effect relationships

The Balanced Scorecard relies on the concept of Strategy developed by Michael Porter.
Porter argues that the essence of formulating a competitive strategy lies in relating a
company to the competitive forces in the industry in which it competes. The scorecard
translates the vision and strategy of a business unit into objectives and measures in four
different areas: the financial, customer, internal business process and learning and growth
perspective. The financial perspective identifies how the company wishes to be viewed

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by its shareholders. The customer perspective determines how the company wishes to be
viewed by its customers. The internal business process perspective describes the business
processes at which the company has to be particularly adept in order to satisfy its
shareholders and customers. The organizational learning and growth perspective involves
the changes and improvements which the company needs to realize if it is to make its
vision come true. A strategy is a set of hypotheses about cause and effect. The
measurement system should make the relationships (hypotheses) among objectives (and
measures) in the various perspectives explicit, so that they can be managed and validated.
The chain of cause and effect should pervade all four perspectives of a BSC. For
example, the strategy of an engineering company could be to perform consultancy
besides the regular work because it provides a higher return. Return-on-capital-employed
(ROCE) may be a scorecard measure in the financial perspective. The driver of this
measure could be expanded sales to new and existing customers as a result of a high
degree of loyalty among those customers. Thus, new customers and customer loyalty is
included on the scorecard in the customer perspective because it is expected to have a
strong influence on ROCE. A market analysis may have revealed that there is a need for
consultancy.

In this case, providing consultancy is expected to lead to new customers and higher
customer loyalty, which, in turn, is expected to lead to higher financial performance and
so new customers, customer loyalty and consultancy (which could be measured by the
number of consultancy projects that has been carried out) are incorporated into the
customer perspective of the scorecard.

The process continues by asking which internal processes for the engineering company
are necessary in order to practice consultancy. To achieve this, the business may need
new quality consultancy products. The new products must first be developed and
afterwards tested on quality. Developed consultancy products and process quality on
consultancy products are factors that could be scorecard measures in the internal
perspective. The engineering company can develop consultancy products by training its
operating employees in the required skills. If the company also engages experienced
consultants, this will shorten the development time of the consultancy products. These
experienced consultants can act as mentor for the trained employees. Experienced
consultants and trained employees for consultancy are objectives that would be
candidates for the learning and growth perspective. Now the entire chain of cause-and-
effect relationships can be established as a vertical vector through the four BSC
perspectives

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Key performance indicators

Metrics used in the BSC are typically called Key Performance Indicators (KPIs) because
they measure how well the organization performs against predefined goals and targets.
There are two major types of KPIs: leading and lagging indicators. Leading indicators
measure activities that have a significant effect on future performance, whereas lagging
indicators, such as most financial metrics, measure the output of past activity. Leading
indicators are powerful measures because it gives managers more time to influence the
outcome.

LITERATURE REVIEW

Conceptual Foundations of the Balanced Scorecard by Robert S. Kaplan

The article was based on a multi-company research project to study performance
measurement in companies whose intangible assets played a central role in value creation
(Nolan Norton Institute, 1991). Norton and David believed that if companies were to
improve the management of their intangible assets, they had to integrate the measurement
of intangible assets into their management systems.
After publication of the 1992 HBR article, several companies quickly adopted the
Balanced Scorecard giving us deeper and broader insights into its power and potential.
During the next 15 years, as it was adopted by thousands of private, public, and nonprofit
enterprises around the world, they extended and broadened the concept into a
management tool for describing, communicating and implementing strategy.

Among these advances are the following:

 Strategy maps of strategic objectives

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 Extending the concept to nonprofit and public sector enterprises 30

 Measurement of strategic readiness of intangible assets

 Role for executive leadership
 Creating synergies through alignment of business and support units to corporate
strategy
 Using communication to create intrinsic motivation
 Deploying extrinsic motivation by aligning employees’ personal objectives and
compensation to strategic objectives
 Linking strategy and operations in a new closed-loop management system
 Creating the office of strategy management

The challenge of implementing the Balanced Scorecard by Beer Molleman

highlighted that though many large companies use a performance measurement system
like the Balanced Scorecard (BSC). However, many small and medium enterprises
(SMEs) do not have a performance measurement system. Companies that start with a
performance measurement system face difficulties with the implementation. This paper
proposes some potential solutions based on their research literature.

Using a Balanced Scorecard in a Nonprofit Organization by Joel Zimmerman Since

its invention in the 1990s, the balanced scorecard has won acceptance as a management
tool in the for-profit sector. Now, nonprofits are becoming familiar with, and trying to
use, balanced scorecards. This white paper explains gives critically important tips about
how to adapt them successfully into the nonprofit world. Basic steps recommended are:

1. Get your Board of Directors and managers educated on the basics and committed to the
effort.

2. Appoint someone on staff to be in charge of creating and maintaining the balanced

scorecard.

3. Depending on your organization’s size, and the knowledge of the person you have
placed in charge, you may need to hire a consultant to assist in this effort.

4. Build your scorecard categories to match what is in your strategic plan. Or, build your
strategic plan around the categories you will use for the scorecard. Or, modify your
existing strategic plan so its matches the scorecard categories.

5. Derive the balanced scorecard measures, metrics, and analytical techniques and
implement them in test mode for two or three months.

6. Use the test experience to improve the balanced scorecard measures and processes.

7. Begin to collect, analyze, report, and archive scorecard measures on a regular (e.g.,
monthly or quarterly) basis.

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For a balanced scorecard, as with all management buzzwords, the devil is in the details.
Balanced scorecard is an easy concept to understand and highly appealing in theory. In
practice, it is a serious challenge to implement correctly. If you can do it, though, the
benefits will be substantial and fully demonstrable.

Implementing A Balanced Scorecard In A Not-For-Profit Organization

In this paper the authors have described how the Balanced Scorecard approach has been
implemented in a ReHabilitation Center. In implementing the Balanced Scorecard
approach, the ReHabilitation Center has placed equal emphasis on the consumer
perspective and the financial perspective. This equal focus is based upon the necessity of
the Center to carry out its primary mission for its consumers (individuals with
developmental disabilities) as well as the necessity to maintain financial stability within
the Center. The emphasis on both of these perspectives has become a necessity in order
for the Center to efficiently and effectively serve its customers.
While the use of the Balanced Scorecard in the long range planning process for the
Center is relatively new, the process has been accepted by the management of the
organization. The challenge ahead for the Center is to continue to develop outcome
measures for the individual departments within the Center and tie these outcome
measures to the strategic objectives of the Center. It is recognized this is an extremely
difficult process as real outcomes are not easily measurable. The formulation of outcome
measures is a continuous development process. It is felt this process will definitely
enhance the efficiency and effectiveness of the ReHabilitation Center in the long run.

The Business School Strategy: Continuous Improvement by Implementing the

Balanced Scorecard
Charles J. Pineno The current environment demands increasing accountability from
business schools especially those schools seeking AACSB accreditation. The proposed
framework centered on the Balanced Scorecard approach offers an alternative for
developing and implementing a strategic performance management system in a business
school.

Best Practice for Implementing the Balanced Scorecard By Yasar Jarrar and
Mohamed Zairi Measurement is not an end in itself, but a tool for more effective
management. The results of performance measurement will tell you what happened, not
why it happened, or what to do about it. In order for an organization to make effective
use of the results of performance assessment, it must be able to make the transition from
assessment to management. It must also be able to anticipate needed changes in the
strategic direction of the organization, and have a methodology in place for effecting
strategic change. Successful accomplishment of these two tasks represents the foundation
of good performance management. Both of these tasks can be greatly facilitated by use of
the Balanced Scorecard. In other words, besides simply assessing performance, the
Balanced Scorecard provides a structured framework for performance management.

Introduction to Industry

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FERTILIZER INDUSTRY IN INDIA

The fertilizer industry in India consists of three major players: The Government
owned Public Sector Undertakings, Co-operative Societies like IFFCO, KRIBHCO and
units from Private Sectors. There are about 33 major producers producing NPK fertilizers
in the country at present. The fertilizer industry of India had made constructive use of the
fertilizer provided by the Government of India, to ensure that the country achieved
reasonable self-sufficiency in food grains production. The fertilizer industry has
organized itself through Fertilizer Association of India (FCI) to co-ordinate with the
Government of India to achieve the macro-economic objectives related to agricultural
sectors and to provide other services.

Introduction of IFFCO

3 November 1967: Indian Farmers Fertilizer Cooperative Limited (IFFCO) was set up at
the initiative of the farmers. It soon emerged as a role model for cooperatives. IFFCO is
registered under the Multi-State Cooperative Societies Act 1984, which was amended in
2002. Beginning with a membership of 57 societies, it has grown to around 40,000, as on
31 March 2008. The initial equity capital of Rs 6 lakh has jumped to Rs 423.93 crore. A
pioneer in this field, IFFCO’s growth reflects its belief in the strength of the farmer.
Several prestigious awards stand testimony to the fact that IFFCO is driven by its values
and the dedication of its people. This is an organization that believes in fair play and has
always followed transparent and professional practices in corporate governance. Over 40
years ago, the Government and the farming community came together with a single
objective: to empower lives. Thus was born IFFCO, the world’s largest Fertilizer
cooperative.

IFFCO’s mission is to enable Indian farmers to prosper through the timely supply of
reliable, high quality fertilizers and farm inputs and services in an environmentally
sustainable manner and to undertake activities to improve their welfare. This is the
success story of an organization that has the vision to grow; it is a story that has been
scripted with the best intentions— to benefit the farmer and to spread smiles across the
nation.
Indian Farmers Fertilizer Cooperative Limited (IFFCO) is a multi-state cooperative
society engaged in production and distribution of chemical fertilizers. Registered on
3.11.1967, the Society commissioned its first two plants at Kalol and Kandla in Gujarat
in 1975 for production of Urea and NPK/DAP, respectively. It expanded its production
facilities in 1981 by commissioning two additional streams of phosphatic fertilizers at
Kandla and a new urea plant at Phulpur. Another gas-based plant was commissioned in
1988 at Aonla, Uttar Pradesh. In the year 2005, IFFCO took over the Phosphoric Acid,
Sulphuric Acid and NPK/DAP plant of M/s Oswals Ltd, Paradeep.

Further, during the period 1996 to 1999, the installed capacity of all the three
ammonia/urea plants at Aonla, Kalol and Phulpur was doubled by expanding. The
capacity was raised from 16.2 lakh tons to 32.2 lakh tons. The Kandla unit was also
expanded and the new plant was commissioned on 5th August, 1999. The annual capacity

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of NPK/DAP was increased from 9 lakh tons to 16 lakh tons of bulk fertilizer or 3.09
lakh tons to 5.61 lakh tons of P2O5 output.

VISION
Retain dominant position in Indian Fertilizer Sector, improving its position further by
achieving sustainable and viable growth through excellence in all its activities and
gearing itself to fulfill the diverse expectations to stake holders, customers, employees
and society.

Vision 2015
 Installing ammonia and urea plants and acquiring fertiliser units
 Meeting feedstock requirements
 Generating power
 Producing and marketing micro-nutrients, seeds, bio-fertilizers and pesticides
 Value-addition to agri-products and marketing
 Offering IT-enabled services

MISSION
 To provide to farmers high quality fertilizer in right time and in adequate quantity
with an objective to increase crop productivity

 To make plants energy efficient and continually review various scheme to

converse an energy

 Commitment to health, safety, environment and forestry development to enrich

the quality of community life

 Commitment to social responsibility to strong social fabric

 To institutionalize core value and create a culture of team building, empowerment

and innovation which would help in incremental growth of employees and enable
achievement of strategic objectives

 Building a value driven organization with an improved and responsive customer

focus. A true commitment to transparency, accountability and integrity in
principle and practice

 To acquire, assimilate and adopt reliable efficient and cost effective technology
and sourcing raw materials of production of phosphatic fertilizers at economical
cost by entering into joint venture outside India

 To ensure growth in core and non-core sector

 A true cooperative society committed for fostering cooperative movement in the

Country

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 Emerging a dynamic organization, focusing on strategic strengths, seizing

opportunities for generating and building upon path success, enhancing earning to
maximize share holders value.

UNITS OF IFFCO
Kandla

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Phulpur

Kalol

Aonla

Paradeep

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IFFCO’s KANDLA PLANT

IFFCO’s Kandla plant is located on the western bank of Kandla creek adjacent to Kandla
Port Trust oil Jetties.

The plant produces NPK/DAP complex phosphatic fertilizers of various grades, namely
NPK grades 10:26:26, 12:32:16 & DAP 18:46:00 in terms of N:P2O5:K2O.

The plant, originally consisting of only 2 streams A&B and related facilities was
designed & erected by M/s Dorr Oliver Inc. USA at a cost of Rs. 30 crores with an annual
licensed capacity of 1,27,000 MT P2O5. The plant was commissioned on 26th Nov. 1974
and commercial production declared on 1st Jan, 1975.

With increased demand for complex fertilizers, the capacity was doubled by addition of
two more streams C & D designed & erected by HDO at a cost of Rs. 28.80 crores.
Licensed capacity was increased from 1.27.000 MT P2O5 per annum to 2,60,000 MT
P2O5 per annum. The expanded unit was commissioned on 4th June 1981 and the
commercial production was started from 6th Sept. 1981. Subsequently due to
introduction of production of DAP grade, the total capacity increase to 3.09,000 MT per
annum of P2O5.

IFFCO went in for expansion of their unit at Kandla in 1996-97. Kandla phase-II
NPK/DAP project conceptualized the setting up of two additional E & F streams for
manufacture of the same grades of NPK/DAP fertilizers with an annual production
capacity of 2,10,700 MTPA thus increasing the total capacity from 3,09,000 MTPA of
P2O5 to 5,19,700 MTPA of P2O5. The actual cost of the project was Rs. 205.30 crores
against a budgeted cost of Rs. 212.20 crores.

The main consultant for the NPK/DAP plant was M/s Hindustan Dorr Oliver, Mumbai
with the pipe reactor technology obtained from process licensor M/s Grande paroisse,
France. The construction of E&F streams was completed 77 days ahead of schedule. The
E & F streams were commissioned on 10th June 1999 & 9th July 1999 respectively and
the commercial production started from 5th August ,1999.

Production & Operation Department

The following fertilizers are manufactured at IFFCO – Kandla:

Product N:P2O5:K2O

NPK GR 1 10:26:26
NPK GR 2 12:32:16
DAP 18:46:00

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These products are distributed all over the country through IFFCO’s marketing and state
cooperative marketing network.
Product Capacity Technology
P2O5 9,10,000 Four streams (A,B,C & D) based on TVA slurry granulation
process.

‘N’ 3,51,540 Two streams (E & F) based on AZF Pipe Reactor

The Kandla unit has its production in two phases:

Phase 1 (Streams A,B,C,D)
Phase 2 (Streams E & F)

Process Description of KANDLA Phase-1

KANDLA phase 1 consists of four identical streams with common raw material, product
handling, product storage and bagging facilities. The manufacturing is taking place with
conventional granulation process which consists of ammonization of slurry formed with
1:4 mole ratios with the help of vertical agitated vessel known as PN tank. About 70% of
total requirement end into tank and 30% of it feed as a scrubbing medium to bring
nutrient back to the system. The exothermic reaction taken place between ammonia and
phosphoric acid which become slurry containing about 18-20% of water which feed in
granulator if any further ammonization is needed can be satisfied with the help of extra
supply of ammonia or urea. Here mole ratio maintains is about of 1:80 along with
addition of raw material mainly available according to grade to be produced .The addition
of Potash, filler and recycle material is carried out at this stage only. The granulator
discharge is having about 2.5% of moisture which is send further for drying operation
The discharge is of dryer getting dried with the help of co- current flow of hot air
resulting from combustion of furnace oil. The dried material discharge is elevated with
the bucket type elevator and feed it to double deck vibrating screen. The screen separate
oversize and undersize products. The oversize product further crushed in pulverizes and
sent to the granulator. The amount of product is taken at cooler where temperature is
bringing down with the help counter current flow of air. The discharge from cooler over
common product conveyor which carries product from all steams to storage silos. Steam
is generated at boiler plant. Steam is used for flushing pipelines, vessels and slurry
nozzle of granulator.

The scrubbing system is distributed in four areas. Fumes scrubber, Dryer scrubber, cooler
scrubber and dust scrubber. Scrubbing is carried out by circulating dilute phosphoric acid
termed as scrubber effluent. Dust scrubber collects nutrient from various areas like
elevator, conveyor, and pulverizes. Unreacted ammonia is collected from granulator
which is scrubbed with liquor and liquor is further sent to the vessel. Each scrubber is
provided with a fan for creating the required draft. The scrubbed gases are let out into the
atmosphere through a common stack.

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2 C.) Production Process :-

Basic Operation Process NPK -1 Plant

Hot Air is passed

2 D.) Manufacturing Process Description :-

List of devices :
 PN Tank
 Slurry Pump
 Granulator
 Dryer
 Primary Elevator
 Screen Drug Feeder
 Vibrating Screen
 Fines Conveyor
 Secondary Elevator.

Process :
 In the PN tank , Phosphoric acid, Ammonia acid and Scrubber liker are added.
 With the help of Agistator, all three are mixed up.
 The slurry pump pushes the mixture forward into the granulator.
 In granulator the atmospheric temperature is about 15-20 %.
 While passing out through the granulator the liquid mixture comes in form of
GRANULES.
 When the granules are passed in the dryer, the temperature in increased through
passing HOT AIR.
 Through primary elevator, the granules pass into the Screen Drug Feeder.
 Different size of granules vibrate on the vibrating screen and he granules which
are of 1.4 mm pass through the product and then to bagging plant.
 Rest of larger / smaller size moves to the conveyor in which again the raw
materials are mixed and the whole process is repeated, as they pass through
secondary elevator into the PN tank.

Process Description of KANDLA phase-2

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KANDLA phase-2 consists of two steams E and F. Here process of slurry formation
taken place in pipe reactor which is installed in granulator so here no need of PN tank.
The feed from granulator send to the dryer same process obtain in the process description
of phase 1. The recycle system is same which is described in phase 1. The off gases from
dryer and cooler first passed through cyclones and then it passes through wet scrubbing.
The off gases from the granulator are first scrubbed in an inclined venture scrubber
followed by a wet scrubber and a cyclonic spray tower. The exit gases from both dryer
and granulator further sent to tail gas scrubber for maximum recovery of ammonia .Dust
scrubber is also provided to collect a very small particles based on cyclone and wet
scrubbing system. The scrubbing medium is weak phosphoric acid which is later
consumed in DPR and GPR.

Inventory Management

The usual level of inventory varies widely in two categories viz imported and
indigenous items. The level in case of imported items varies from 18 - 24 months. This
is due to the fact that it comprises of both lead time for import formalities as well as
suppliers lead time to deliver the material at Users point. For indigenous goods, we have
two sub-categories of items:

1. Non-stock items &

2. Stock items.

Non Stock Items:

The non-stock items are tailor made and hence their procurement time is long.
These items are generally costly and difficult to stock. These items are generally
procured by users themselves.

Stock Items:

Stock items are mostly everyday items & generally available off the shelf. These
items are usually not very costly ( C class).
For non-stock indigenous items, we have to keep inventory worth of 9 months where as
for stock items; the inventory to be maintained is worth of 6 months.

Inventory:

This is a quantum of Raw Materials for Production i.e. spares, components & all other
general items required for maintenance and services. This covers the total number of
items held in Stores which is around 28996 Nos. (as on March, 2007).

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These items have been categorized as:

1. Stock items: 759 items. 2. Non Stock items: 28237 items.

Lead Time:

In simplified terms lead time is the time taken to procure the material. It commences
from the time indent is raised & lasts till the material is received in Stores, inspected,
binned and ready for issue to the indentor/user.

At Kandla the lead time is base on the following:

1. MPR preparation and documentation: 5 days.
2. Enquiry: 25 days.
3. Processing time: 20 days.
4. Order to party: 10 days.
5. Party’s delivery time: 30 days.
90 days.

Finance & Accounts Department

Sections of Finance & Accounts Department

1. Financial Concurrence Section:

This Section is divided in two Subsections. They are as follow:
a) Purchase Orders
b) Work Orders

2. Raw Material Section:

This Section includes three subsections. They are as follow:
a) Raw Material Accounting
b) Customs clearance
c) Excise clearance and Chemicals / Utility Payments etc.

3. Insurance Payment & Accounting Section

4. Fixed Assets Section
5. Books Section
6. Pay Roll Section
7. Packing Materials Section
8. Miscellaneous Section
9. Cash & Bank Section
10. Purchase Bills payable Section

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Human Resource Management

Personnel

Legal/IR Welfare

HUMAN Public Relation

RESOURCE
MANAGEMENT
Public Relation Administration
Administration
Hindi Cell Hindi Cell
Time Office Hindi Cell Time Office
Time Office

Estate Estate

PERFORMANCE APPRAISAL

Performance Appraisal is the systematic evaluation of the individual with respect to

his/her performance on the job & his/her potential development. The performance being
measured against such factors as job knowledge, quality & quantity of output, job
performance, leadership abilities, supervision, dependability, co-operation, discipline,
health & potential for development.

Objective of Performance Appraisal

 To effect promotions based on competence & performance

 To assess the training & development need of employees

 To help considering employees suitability for different types of assignments,

transfer & placement.

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 To let the employee know where they stand insofar as their performance is
concerned and to assist them with constructive criticism & guidance for the purpose of
their development.

Performance Appraisal in IFFCO

For the different Grades there are different appraisal forms.

1. Performance Appraisal form for Grades H2 and below

2. Performance Appraisal form for Grades H1and above

In applying and using the appraisal system it will have three phases:

 Reporting
 Evaluation
 Follow-up

The rating of the employees should be done annually at one time. The first page of the
appraisal format is to be filled by the Personnel Department and passed on to the
Appraising Officer by 1st week of April who will give his rating by 10th April and send it
to the Reviewing Officer and from him to the Accepting Officer. The Accepting Officer
after recording his observation on the appraisal of the employee will send the report
Personnel Department latest by the end of April.

The instruction provided in the appraisal form to be carefully gone through by individual
appraiser bearing in mind that the rater will be rated eventually.

 In case of disagreement among the Appraising and Reviewing Officer, the

Accepting Officer should hold discussions with all of them and finalize rating.

 In case performance of the employee is Below Average or excellent, same shall

be communicated by Personnel Department to M.D after the appraisal is accepted
by the Competent Authority.

Objective(s)

Primary objective: To understanding the requirement of implementing BSC at IFFCO

Secondary objective: Comparing traditional PMS tools with BSC and its effectiveness

Rationale for selecting this topic: As BSC is acknowledged as effectives PMS tool, we
would like to study the possibility of implementing the same in a co-operative
manufacturing unit like IFFCO.

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Methodology

Data collection methods

Primary data:
Review of existing PMS at IFFCO
Interviews of Executives at IFFCO

Secondary data:
Study of Vision/Mission statement of company
Research Papers
Company’s website
Published materials
Company’s manual and reports

Findings and analysis:

Limitations:

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