Petrochemical Project

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CHAPTER 1 INTRODUCTION
1.1 PETROCHEMICAL INDUSTRY PROFILE

Petrochemicals are chemical products derived from petroleum. Some chemical compounds made from petroleum are also obtained from other fossil fuels such as coal or natural gas, or renewable sources such as corn or sugar cane. Petrochemical has become one of the most important natural resources of modern civilization. In Latin, Petra means Rock and Oleum means Oil, so petroleum is a rock oil? It is a principle source of liquid fuel which is the most important among fossil fuel. Since petroleum is obtained from the earth crust by mining process, it is named mineral oil or crude oil. During the last few years, petroleum industry has undergone tremendous growth because of rubbers, perfumes, plastics, explosives, motor fuel and many other substances are being manufactured from petroleum.
1.1.2 ORIGIN OF PETROLEUM

Petroleum was the formed several years ago from organic matter and marine deposits in anaerobic consideration and present below the earths crust only in certain parts of the world. The vegetable and animal remains inside the earth strata have gradually lost oxygen and nitrogen with consequent increase in the percentage of carbon and hydrogen, fats and carbohydrates have undergone degradation by the action of anaerobic bacteria.
Most theories concerning the origin of petroleum postulate a vegetable organic with a close relation to coal. The theories say that any organic matter may be converted into petroleum under suitable conditions. There is organic matter near shore and in
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marine deposits deficient in oxygen and associated with minerals converted by time and pressure I to time stones, sand stones, dolomites and similar rocks. Petroleum is a complex mixer of hydrocarbon with minor amount of nitrogen, sulphur, minerals and other components. It is practically impossible determine exactly the composition of a particular grade of petroleum. The composition of petroleum various from place to place and from well to well.
Petroleum is a complex mixture of a multitude of constituents with a wide variety of propertied. So, they cannot be directly used for industrial or commercial applications. Therefore crude oil must be worked up in a refinery by suitable process to produce an assortment of products which can be marked according to certain quality requirements. The crude oil is bought to the surface by drilling holes as deep as five miles, are often required to indicate an oil field at ground level, exploration methods have progressed to a highly scientific stage.
The crude oil are usually transported by pipe lines or tankers to the refinery sites or tankers to the refinery sites and stored in big tanks before being processed. The continuous fractional distillation of crude oil in to different useful fractions and the removal of undesirable impurities are called refining or processing of petroleum. The processing structure of a refinery depends on the plant capacity and market requirements of the products to be sold.
1.1.3 PETROLEUM INDUSTRY IN INDIA

The petroleum industry in India stands out as an example of the strides made by the country I its match towards economic self reliance. At the time of independence in 1947, the industry was controlled by international companies. Today, a little over 50 years later, the industry is largely in the public domain with skills and technical knowhow comparable to the highest international standards.
The testimony of its vigor and success during the past five decades is the significant increase in crude oil production from 0.25 to 33 million tons per annum and refining capacity from 0.3 to 103 million metric tons per annum. The consumption of petroleum products had growth 30 times in the last 50 years from 3 million tons during 1948-49 to about 91 million tons in 1998-99. A vast network of over 29000 dealerships has been developed backed by over 400 storage points over the years to serve the people even in the remote and once-inaccessible areas.
A major boost to the oil industry came in pursuance of the industrial policy resolution 1956 that intended to promote growth of the vital factors such as petroleum under the state control. ONGC, which was formed as a directorate in 1955, become a commission in 1956.
Unlike at the time of independence when there was no specialized petroleum bodies or institutions worth mentioning to provide developmental support to the Petroleum Industry I the country. There are today several such institutions such as Indian Petroleum, Oil Industry Directorate, Centre for Oil companies have set up research centers such as the one established by the Indian Oil Corporation in Faridabad which have done pioneering work in formulation of lubricants and greases.
The real growth in exploration and production sector began after the discoveries by Burmah Oil and Natural Gas Commission in 1956 and Oil India ltd in 1959. During the second decade of independence (1957-67) a number of Oil and Gas bearing structures were discovered by ONGC in Gujarat and Assam. Discovery of oil in large quantities in Bombay-High in February 1974 opened up a new vista of oil exploration in offshore areas. During the period 1977-87, exploration effort by ONGC and Oil India corporation yielding discoveries of oil and gas in a number of structures in Bassein, Tapti, KrishnaGodavary-Couvery basins, Cachar ( Assam), Nagaland and Tripura. The indigenous production reached 30 million tons by 1984-85, a self sufficient level of 70% of the country requirements.
1.1.4 GROWTH OF THE PETROLEUM INDUSTRY

In the 50 years since Independence India has witnessed a significant growth in the refining facilities and increase in the number of refineries from one to seventeen now. There has been an increase in the refining capacity from 0.25 million metric tons to about 103 MMT Per Annum. The first decade of independence saw the establishment of 3 coastal refineries by multinational oil companies operating in India at that time, viz., Burma shell, Gesso stanza and Caltex, the first two at Mumbai and third at Visakhapatnam.
The second decade (1957-67) witnessed the setting up of Indian Refineries ltd in 1958, a wholly owned public sector government company, under its banner 3 refineries was set up at Guwahati (Assam), Barauni (Bihar) and Koyalu (Gujarat) essentially to process the indigenous crude discovered in Assam and Gujarat. In addition, one joint sector refinery was set up with the participation of an American company at Cochin, based on important crude.
The next ten year period (1967-77) witnessed the establishment of 2 refinery, one with equity participation from American and Iranian company at Chennai another in the public sector at Haldia by Indian Oil.
In period 1977-87 saw the commissioning of two more refineries in the public sector. The Refinery at Bongaigaon was the first experiment in having an integrated petroleum refinerycum-petrochemicals unit. The other refinery was set at Mathur in 1982. Major expansion of the coastal refineries at Mumbai, Cochin, Chennai and Visakapatnam were also completed during this period. The notable feature of the capacity additions during this decade have been the extensive utilization of the process design capabilities of M/S Engineering India Ltd and installation of secondary processing facilities to increase the production of much required Kerosene, Diesel and LPG.
During the fifth decade (1987-97), a small refinery of 0.5 MMT Per Annum at Nagapatinnam was built in Tamil Nadu. It is based on crude from adjoining fields. In 1996, a 3 MMT Per Annum refinery was built in the joint sector at Mangalore, between HPCL and Indian Rayon. This decade also saw significant expansions to the capabilities of the existing refineries, thereby raising the refineries capacity to about 62 MMT Per Annum. Today, with the setting up of Panipat refinery during 1998-99 and Reliance and Numaligarg refineries in 1999-2000, there are 17 refineries operating in the country, 15 in the public sector, One in the joint sector and one in the private sector, with an installed capacity of 103 MMT Per Annum. This decade also witnessed major policy initiatives in the refineries in the joint sector in which the equity participation of public sector undertaking was envisaged to be 26%, another 26% equity was meant for private sector partner and the balance 48% was to be raised from the public.
Two petrochemical classes are olefins including ethylene and propylene, and aromatics including benzene, toluene and xylene isomers. Oil refineries produce olefins and aromatics by fluid catalytic cracking of petroleum fractions. Chemical plants produce olefins by steam cracking of natural gas liquids like ethane and propane. Aromatics are produced by catalytic reforming of naphtha. Olefins and aromatics are the building blocks for a wide range of materials such as solvents, detergents, and adhesives. Olefins are the basis for polymers and oligomers used in plastics, resins, fibers, elastomers, lubricants, and gels.
Global ethylene and propylene production are ~110 million tonnes and ~65 million tonnes per annum respectively. Aromatics production is ~70 million tonnes. The largest petrochemical industries are located in the USA and Western Europe; however, major growth in new production capacity is in the Middle East and Asia. There is substantial inter-regional petrochemical trade.
Primary petrochemicals are divided into three groups depending on their chemical structure:
Olefins include ethylene, propylene, and butadiene. Ethylene and propylene are important sources of industrial chemicals and plastics products. Butadiene is used in making synthetic rubber.
Aromatics include benzene, toluene, and xylenes. Benzene is a raw material for dyes and synthetic detergents, and benzene and toluene for isocyanides MDI and TDI used in making polyurethanes. Manufacturers use xylenes are used to produce plastics and synthetic fibers.
Synthesis gas is a mixture of carbon monoxide and hydrogen used to make ammonia and methanol. Ammonia is used to make the fertilizer urea and methanol is used as a solvent and chemical intermediate.
1. 1.5 Overview of the Petrochemical Segment:

A petrochemical segments overview indicates that this sector forms a vital category of the chemicals industry. The petrochemical sector is one of the fastest growing sectors in India, growing at 13% yearly.
Petrochemicals are an industry which is highly organized and involves only a handful of companies. In the overview of the petrochemical segments, it is seen that it is highly technology-intensive and demands a great deal of capital investment.
In the segments of petrochemical overview, the distribution is done either through distributors or is given to a company directly in large volumes. Also seen in the overview of the petrochemical segments is that the prices of these products are very volatile and depends totally on the international market. Even though the international prices are not justifiable, the Indian producers are forced to match it.
The main Indian companies in the petrochemical segments are:

In Kolkata the Haldia petrochemical RIL industries Ltd in Mumbai
In Delhi the Gas authority of India Ltd In Mumbai the NOCIL In Mumbai the Indian petrochemical Ltd
The petrochemical segments overview covers the various by products of it. They are:

Synthetic rubber such as poly butadiene and styrene butadiene Polymers such as poly propylene and polystyrene Synthetic fibers such as acrylic fiber and nylon filament Basic chemicals such as ethylene and propylene Intermediates such as acrylonitrile and vinyl chloride
In the overview of the petrochemical segments, the synthetic rubber is used to manufacture footwear, tubes, and tires. The polymer by product in the petrochemical segment overview forms the raw material for plastic. In the overview of the petrochemical segments, the synthetic fibers are the raw materials for the textile industry. The basic chemicals are important by-products of the petrochemical segment overview since they are the building blocks. In the petrochemical segment, the intermediates by product are processed further in order to get chemicals of various kinds.
In the petrochemical segments overview it can be said that this industry has grown considerably but even then there is still room for development. And this growth in the petrochemical segments can be achieved by the determined efforts of the government of India and the petrochemical companies.
The petrochemical industry in India has been one of the fastest growing industries in the country. Since the beginning, the Indian petrochemical industry has shown an enviable rate of growth. This industry also has immense importance in the growth of economy of the country and the growth and development of manufacturing industry as well. It provides the foundation for manufacturing industries like construction, packaging, pharmaceuticals, agriculture, textiles etc.
The Indian petrochemical industry is a highly concentrated one and is oligopolistic in nature. Even a few days back, only four major companies viz. Reliance Industries Ltd (RIL), Indian Petrochemicals Corporation Ltd. (IPCL), Gas Authority of India Ltd. (GAIL) and Haldia Petrochemicals Ltd. (HPL) used to dominate the industry at a large extent. The recent amalgamation of IPCL with RIL has made the industry more concentrated further, as they jointly account for over 70% of country's total petrochemical capacity. However, the scene is a bit different for the downstream petrochemical sector, which is highly fragmented in nature with over 40 companies exist in the market.
1. 1.6 Characteristics of Indian Petrochemical IndustryPetrochemical Industry in India is a cyclical industry. This industry, not only in India but also across the world, is dominated by volatile feedstock prices and sulky demand. India has one of the lowest per capita consumptions of petrochemical products in the world. For example, the per capita consumption of polyester in India lies at 1.4 kg only comparing to 6.6 kg for China and 3.3 kg for the whole world. Similarly, the per capita consumption of polymers is 4 kg in India, whereas the per capita consumption is around 20kgs for the whole world.
1. 1.7 The GrowthThe petrochemical industry in India came into existence during 1970s. The 1980s and 1990s saw some rapid growths for Indian petrochemical industry. The biggest reason for this growth was the high demand for petrochemicals in India, which grew at an annual rate of 13 to 14% since late 90s. It also called for rapid expansion of capacity. The BMI forecast of average annual growth in India over 2007-2011 is 14 to 16%. However, the industry suffered setbacks during 2008 due to surge in the price of crude oil. It will be tough for Indian petrochemical industry to plug the deficit of 5mn TPA of ethylene and 4mn TPA of polymer by 2012 (according to the predictions of the government). The Present Scenario Presently India has three gas-based and three naphtha-based cracker complexes with a combined annual capacity of 2.9 MMT of ethylene. Besides this, there
are also 4 aromatic complexes with a capacity of 2.9 MMT of Xylenes.
The production of 5.06 MMT polymers during FY09 accounted for around 62% of the total production of key petrochemicals. It also achieved 88.5% capacity utilization. The industry also produced 2.52 MMT of synthetic fibers during FY09 with a 73% of capacity utilization.
1. 1.8 Key SegmentsPetrochemical industry is constituted of the following key segments:
Polymers: The demand for polymers saw a growth of 13.4% during 2007, comparing to a demand growth of 5.6% in 2006. According to the prediction of Chemicals and Petrochemicals Manufacturers' Association (CPMA), the demand growth for polymer would further be augmented to over 15% in the coming year.
Polyester Intermediates: The combined production of 5 fiber intermediates (CAN, DMT, Caprolactum, MEG and PTA was 3,417 KT during 2007. Among those, PTA and MEG accounted for 69% and 27% respectively, while the rest were DMT, Caprolactum and CAN.
Aromatics (Paraxylene): The demand for Paraxylene (PX) saw a growth of 18% during 2007. According to the prediction of CPMA, it is expected to grow at the same rate in the coming year as well.
Benzene, Toluene, MX and OX: The demands for Toluene and OX saw a contraction rate of 4% and 10% respectively during 2007. However, Benzene and MX saw a positive growth though.
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1. 1.9 Top Petrochemical Companies in IndiaThough the Indian petrochemical industry is highly dominated by only a few players, however, there are a number of petrochemical companies in India, doing their share of business. Some of the top companies can be listed as below:

Reliance Industries Ltd. Haldia Petrochemicals Ltd. Mangalore Refinery and Petrochemicals Limited Indian Oil Corporation Gas Authority of India Limited National Organic Chemical Industry Ltd. Bongaigaon Refinery and Petrochemicals Ltd. Manali Petrochemical Limited I G Petrochemicals Limited The Andhra Petrochemicals Limited Tamil Nadu Petro products Limited
1. 1.10 SCOPEThe scope of India Petrochemical Industry is potentially huge. With the trend in the global market shifting India can become one of the leaders in this industry on a global basis.
India Petrochemicals industry is an important member of the Indian economy because it fulfills the need of major industries like textiles, telecoms, power, cables, plastics etc.
The competitors in the market are attracted to the India petrochemical industry for its benefits. The per capita consumption of synthetic fibers, synthetic rubber, plastics, and polymers in India is lower than the per capita consumption worldwide. But interestingly, the growth of the petrochemical industry in India in recent times was around 15%
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whereas the growth in the petrochemical industry globally was only 4%. In the future, there is a huge scope for the India petrochemical industry in the global market for petrochemicals and petrochemical-based products. This would make way for the entry of new companies in the market.
This industry is divided into 3 basic petrochemicals such as olefins (ethane, propane, and aromatic compounds such as benzene, toluene, intermediate petrochemicals, end products (polymers), synthetic fibers, and synthetic rubber. As the general trend in the global arena of the petrochemical market has shifted to the Middle East and Asia from the West, India stands a good chance in providing a lucrative market to the world.
In the present scenario, the scope of India petrochemical industry is very good as the government regulations are aligned with the industry and is playing an important part. The regulations have opened the market which is full of scope for the rapid growth of the industry and in turn, the growth of the economy. The supply and demand situations and the pricing views in the industry are also among the factors for growth. With fierce competition in this sector, there is every chance that superb quality products will be produced in order to stay ahead of the competitors.
The encouragement for investment has been another growth factor for the India petrochemical industry. The capacity of different products is in the production, segmentation, and consumption trend of each of the products and so the economies of scale play a very important role in the profit making mechanism of this industry, thereby determining the scope of each of the competitors in the industry.
The major Indian companies in this sector are:

Reliance Industries Limited Gas Authority of India Limited Indian Petrochemicals Corporation Limited Grasim Industries Limited Indo Rama Synthetics Limited.
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1.1.11 GROWTH OF THE PETROCHEMICAL INDUSTRYGrowth of Indias petrochemical industry is playing a major part in the growth of the economy and the development of the manufacturing sector. The petrochemicals industry provides more value addition to the Indian economy than most of the other companies.
Petrochemicals are obtained from different chemical compounds which are byproducts of crude oil refining. Most of them fall may be categorized into hydrocarbons. With the fractional distillation of the crude oil, chemicals like naphtha, kerosene, petroleum gases, ethane, methane, propane, and butane are the primary stocks used in the petrochemical industry for the production of various other chemical compounds.
Presently, the extent of penetration of the petrochemical products in day-to-day use is vast. It actually covers most of the domain of existence such as apparels, accessories, household items, furniture, electronics, construction, housing,
automobiles, medical appliances, packaging, horticulture and agriculture.
The India petrochemical industry originated in the 1970s and entered the arena of the industries of India. This sector was subjected to rapid growth in the period between the 1980s and 1990s. Even today, expectations from this sector are sky-high.
The Indian petrochemical industry for its part is doing very well and has been contributing significantly to the country's GDP for several years now. The India petrochemical industry primarily consists of synthetic rubber i.e. elastomer, yarn of synthetic fiber, synthetic detergent intermediates, performance plastics, plastic processing industry, and polymers.
The Bongaigaon refinery was set up as an experimental one with the capacity of a refinery and a petrochemical unit. The success of this integrated petroleum
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refinery-cum-petrochemicals unit led to a spree of activities in this sector. Many such units were established to boost production capabilities. With the growth of India petrochemical industry, it holds the share of around 20% of the total global producer of petrochemical related products.
In the present scenario, 5 naphtha and 3 gas cracker coordination compounds are in operation with ethane production capability of around 2.6 million tons every year, jointly. Along with this, another 4 aromatic coordination compounds are in operation with a xylene production capability of around 2.1 million tons.
1.1.12 CHALLENGES:
The challenges facing India petrochemical industry provides the industry with better tools which would in turn help the growth of the economy.
India has stably established itself in the core of the international production of petrochemical and petrochemical- related products in the present scenario. With the economic growth cycle slowing down in the United States, the Asian developing nations, especially India, would ideally fortify its stand in the global petrochemical market as a producer of these products. This is one of the major challenges facing India petrochemical industry.
The global economy is a dynamic and ever-growing one in spite of the high cost of energy. This in turn is forging the demand for petrochemicals. The strong growth in demand is not backed by a sufficient supply so the cost is still to come down. Operating rates of major petrochemical product segments are very high presently. In the Indian economy, the petrochemical sector is one of the fastest growing segments which and has a growth rate of around 13% which currently is more than twice the gross domestic product growth. The investments made in the India petrochemical industry are huge which bode well for the growth in this segment.
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There is a steadfast growth in the production activity of the main petrochemicals and as the result, the India petrochemical industry attained self-sufficiency. The dominant part of the India petrochemical industry, the segment consisting of polymers is growing at a superb pace, with the middle class household boosting the consumption.
Following are the challenges facing India petrochemical industry:

High cost of energy and feedstock and the impact on demand The transformation in the kinetics of competition in manufacturing Increase in the cost of project
Problems faced by the India petrochemical industry:
The manufacturing units mostly use obsolete format of technology and are not able produce optimally
There is a necessity for the modernization of equipments Excise duty on synthetic fiber should be rationalized Prevention of reservation on Small Scale Units Plastic waste to be recycled and the littering habits to be discouraged India requires advantage on feedstock, so the import cost has to be brought down The industry should have access to the primary amenities of infrastructure
1.1.13 OPPORTUNITIESThe opportunities for India petrochemical industry are enormous in the present international scenario and India possesses a good potential of becoming a global competitor in this sector. Rapid globalization, changing technology, and modifications in the way business is conducted today, have brought immense changes and enormous opportunities for companies to extend and flourish globally in all kind of industries. Petrochemical and related sectors are no exception to this. The petrochemical industry is a novel industry in
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India but it had played an important role in the country's change from an agrarian based economy to an industrialized one.
There are promising opportunities for India petrochemical Industry, which is expected to grow significantly in the future especially since the per capita consumption of synthetic fiber and plastic in India is much lower in comparison to the global average. The petrochemical industry in India produces more than 20% of the global petrochemical output. The demand facilitators for the petrochemical industry include rapid urbanization, new products introduction, and substitution of products and dynamics of the domestic market.
In order to increase its presence in the global petrochemical industry, India needs to leverage upon the opportunities India Petrochemical Industry. For this, the Indian petrochemical industry needs to:

Enhance competitiveness to stimulate growth Unlock its potential
The Petrochemical industry seeks to gear up its constitutional strengths with the support of the accessibility of skilled human resource, strong technology base, and great leaps of the Indian information technology. The focus is though export oriented and tapping the unexploited potentials. To be successful in the efforts of becoming one of the global players, there is a need of being strong in three dimensions:
To be a true marketer by setting up a customer service which would provide services and solutions
To be a leader in cost by setting up international standards manufacturing units and provide economies of scale
To be a leader in technology with a unique product development capability.
The government of India has provided satisfactory infrastructure to the Indian petrochemical industry. As this industry needs a special kind of infrastructure, it is one of the major areas of development for the government to undertake. With the approval of
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the policy of Investment Regions for the Petroleum, Chemical, and Petrochemical, this has become easier. The infrastructure would act as a gear to the growth of the industry. It would also add the advantage of grabbing the emerging opportunities in the petrochemical sector.
1.1.14 Demand & Future:

Demand and Future of petrochemicals in India is heading towards further growth. The growth statistics of the Indian GDP have been remarkable in the fiscal year 2006-07 which is at 9.4%. The foreign exchange reserves have surged ahead to USD 200 billion to which Petrochemical investments contributed significantly. The demand for petrochemicals has increased and many skeptics have been silenced, considering the recent use of petrochemicals in various sectors of the country. The following are the sectors in which demand and future of petrochemicals are heading towards positive growth:

Healthcare Food preservation Hardware
Transportation Equipments in office
Foreign investments are also being made in the petrochemical industry of India enabling great future prospects in the foreign trade of petrochemicals in India. With the rise in demand for petrochemicals in India, many barriers to the growth of petrochemicals in India have been decreasing during last few years and currently India is keen on investments in foreign technology for the manufacturing of various petrochemical products. Mega chemical hubs are coming up with view to increasing foreign investments in the Indian petrochemicals market. The West Bengal state Government for instance, has worked out a new system for setting up five zones in this sector which is expected to bring in investments amounting to USD 17.4 billion. Other such places include Gujarat, Orissa and Karnataka.
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Currently, the size of the petrochemical industry has an estimated turnover of Rs. 450 billion. The following products are in high demand:

Polyvinyl chloride Polypropylene Synthetic fibers and rubber Jet fuel like, kerosene-fuel type Olefin - ethylene Polyethylene Butadiene Polystyrene
The leaders in this field are Reliance Industries and Indian Petrochemicals Corporation Limited. Both have contributed as much as 65% share in the production of petrochemical crackers. After these, Haldia Petrochemicals and Gas Authority of India deserve to be mentioned. Globally, there is high demand for Indian Petrochemicals and the benefits have been enjoyed by the domestic market since 2004. However, the rising demands for petrochemicals could have been better if the following hindrances could be taken care of:

The pricing of petrochemicals Increase in use of recycled plastic Slow industrial growth of downstream plastic
1.1.15 Price Volatility:

The global petrochemicals industry has been affected by rise in price volatility for years. Prices are less stable and are difficult to predict in recent times. As a matter of fact, the uncertainty in prices of petrochemicals has affected the development of the petrochemicals market of India on a global front.
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The chief reason for such unstable prices is the change in crude oil prices. The market of petrochemicals in India on the global front is fairly large. The foreign pharmaceutical trade is directed towards Middle East and China at large. The large volatility in prices has called for implementation of risk management.
Though price volatility in the petrochemical market is highly unpredictable, there lies a thin glimmer of hope during the spring and winter seasons in India which is due to the constraint of the available supply. Unfortunately, that is just a small ray of hope for the petrochemical markets in the area of the price volatility.
The prices of petrochemicals are subject to the variations in prices of energy commodities, which results in price volatility. The amazing thing about the prices of petrochemical is that previously, they were believed to be based on the prices of the finished goods for which they were used in but now they are sensitive to crude oil prices.
No doubt the size of the petrochemical market is smaller than the oil market and this gives the petrochemical market the edge in increasing individual spot transactions. This further aggravates the situation of price volatility. There is a sense of low transparency in the prices of petrochemicals.
Apart from the effect of prices of oil market, another major reason for price volatility is the global Petrochemical market. China is emerging as a major buyer of Petrochemicals. The industry there is growing rapidly which in turn has contributed to increase in the global demand of petrochemicals.
Interestingly, the middle-east has a major share in the supply of ethylene derivatives. The region accounts for the highest amount of surplus in this regard amounting to 7 million mt. So price volatility is here to stay considering the fact that the petrochemicals market is currently facing a huge boom.
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As such, price volatility has been affected to a certain extent by sophisticated and new buyers. These buyers are demanding more value added products and are keen on the quality, also increasing their contracts at the same time. Suggestions for controlling price volatility have been worked on lately. They include floors, swaps, cost collars, virtual integration, and caps.
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1.2 COMPANY PROFILE
MANGALORE REFINERY AND PETROCHEMICALS LIMITED [MRPL]
AN ISO 9001:2000 AND ISO 14001 CERTIFIED COMPANY
The biggest Mangalore Petrochemicals Plant is known as Mangalore Refinery and Petrochemicals Limited. Mangalore Refinery and Petrochemicals Limited is a subsidiary of Oil and Natural Gas Corporation (ONGC) ONGC Mangalore Refinery and Petrochemicals Limited is located in a beautiful hilly terrain north of Mangalore city. It was set up in Karnataka to meet the growing needs of South India. It was initially set up as Indias first ever Joint Stock Company in the field of refineries which was promoted by Hindustan Petroleum Corporation Limited and Indian Rayon Industries Limited and its associates like Grasim Industries, Hindalco, Indo Gulf Fertilizers which are a part of Aditya Birla Group in 1987. Its an ISO 9001:2000 and ISO 14001 certified company. The unit has a well established infrastructure including a state-of-the-art laboratory for the efficient measurement of product quality. The products are marketed and sold through Hindustan Petroleum Company Limited [HPCL], who has a vast retail outlet network. The refinery project was approved with a debt equity ratio of 4:1 without any form of resource finance from any other institutions.
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The total plant consists of manufacturing facilities which were designed by International consultant of repute under the project management consultation by m/s Toyo Engineering Corporation Japan. Out of the total refining capacity of India, the contribution of Mangalore Refinery and Petrochemicals Limited is 8%. The organization is spread over and area of about 1800Acres with an asset base of over 7000crores.
1.2.1 SHAREHOLDING OF MRPL-ONGC
Company Name ONGC HPCL Resident Individuals Non-R.I Domestics Company Non-D.C GIS & Subsidiaries Banks & Institution Mutual Funds
Percentage of Shares 71.62% 16.95% 8.54% 0.62% 0.71% 0.48% 0.83% 0.20% 0.05%
M.R.P.L is an organization when asset base of over 7000crores.
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1.2.2 Share holding pattern of Mangalore Refinery and Petrochemical LimitedTable No. 2.1 Shareholders Oil and Natural Gas Corporation Limited Hindustan Petroleum Corporation Limited Mutual Funds, Banks and Financial Institutions Individuals / Private bodies Domestic and Non-Domestic Companies 8.31% 1.44% 100.00% Percentage 71.62% 16.95% 1.68%
Chart No. 2.1 Shareholdings of MRPL

1% 1% 8%
NON-R.
1% 0%
ONGC
0%
0%
HPCL RESIDENT INDIVIDUALS
17%
DOMESTIC COPM NON-D.C GIC & SUBSID. BANKS MUTUALS FUNDS
72%
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1.2.3 BACKGROUND
Before acquisition by ONGC in March 2003, MRPL was a joint venture Oil Refinery promoted by M/s Hindustan Petroleum Corporation Limited (HPCL), a public sector company and M/s IRIL & associates (AV Birla Group). MRPL was set up in 1988 with the initial processing capacity of 3.0 Million Metric tones per annum that was later expanded to the present capacity of 9.69 Million Metric tones per annum.
The Refinery was conceived to maximize middle distillates, with capability to process light to heavy and sour to sweet Crudes with 24 to 46 API gravity. On 28th March 2003, ONGC acquired the total shareholding of A.V. Birla Group and further infused equity capital of Rs.600 crores thus making MRPL a majority held subsidiary of ONGC. The lenders also agreed to the Debt Restructuring Package (DRP) proposed by ONGC, which included, initial, conversion up to Rs 365 crores of their loans into equity. Subsequently, ONGC has acquired equity allotted to the lenders pursuant to DRP raising ONGCs holding in MRPL to 71.62 percent.
MRPL, located in a beautiful hilly terrain north of Mangalore city, is a State of Art Grassroot Refinery at Mangalore and is a subsidiary of ONGC. The Refinery has got a versatile design with high flexibility to process Crudes of various API and with high degree of Automation.
MRPL has a design capacity to process 9.69 million metric tonnes per annum and is the only Refinery in India to have 2 Hydrocrackers producing Premium Diesel (High Cetane). It is also the only Refinery in India to have 2 CCRs producing Unleaded Petrol of High Octane.
MRPL has high standards in refining and environment protection matched by its commitments to society. MRPL has also developed a Green Belt around the entire Refinery with plant species specially selected to blend with the local flora.
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The Mangalore Plant is dedicated to improving its supply of petrochemicals, efficient technical support, maintaining quality in its products, and facilitating wider distribution. MRPL is one of the medium sized ventures in the petrochemical sector. Striving to live up to the standards of major petrochemical plants like RIL, and IPCL, Mangalore Refinery and Petrochemicals Limited is aiming to increase its supply.
Mangalore Refinery and Petrochemicals Limited being the biggest Mangalore Petrochemicals Plant, is looking forward to increasing the per capita consumption of petrochemicals, equipping the petrochemical plant with latest technology.
Currently, it is setting up a plant which would deal in aroma based goods. The name of the plant is linear alkyl Benzene (LAB) plant. The plant is also popular for its energy conservation measures. The latest endeavors in this field have been enlisted below:

Sulphur recovery unit incinerator: Using amine flash column hydrocarbon vapors Refinery drives: Using variable speed drives LPG recovering: Hydrocracker unit stabilizer revamp Crude Unit-2: Advances Process control Compressor maintenance: Interconnecting Hydrocracker stabilizers
Mangalore Refinery and Petrochemicals Limited have a 3% share in equity. ONGC has a major participation in the equity which is 46%, and the rest are shared by banks and financial institutions. MRPL being a subsidiary of ONGC has a smaller participation in equity. As such, the new petrochemical based aroma plant is estimated to be worth Rs. 4852 crores.
The aromatics petrochemical complex is proposed to be set up by 2010 and is going to be a part of the Naphtha stream of Mangalore Refinery and Petrochemicals Limited - yet another great step towards revolutionizing the Mangalore Petrochemicals Plant.
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VISION To be a world class Refining and Petrochemicals Company, with a strong emphasis on Productivity, Customer Satisfaction, Safety, Health and Environment Management Corporate Social Responsibility and Care for Employees. MISSION Sustain leadership in energy conservation, efficiency, productivity and innovation. Capitalize on emerging opportunities in the domestic and International market. Strive to meet customers requirements to their satisfaction. Maintain global standards in health, safety and environmental norms with a strong commitment towards community welfare. Continuing focus on employee welfare and employee relations. Imbibe highest standards of business ethics and values. Sustained enhancement in shareholders value.
QUALITY COMMITMENT MRPL-ONGC ensures stringent quality checks by testing maximum number of samples as compared to the refinery not a single product goes out of the refinery without laboratory certification act the product meet Bharat-1 and Euro-2 norms also other BIS standards.
QUALITY CONTROL Quality control laboratory is established under technical services department. the main objective of the laboratory is to provide analytical assistance to all units, round the clock in addition to produce certification. it is responsible for exercising a strict
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control over the quality of the product manufactured and dispatched. the activities of laboratory are as fallow. Intermediate sample analysis from all the processing units. Utility units, water treatment plant sample, plant and instrument air sample and nitrogen sample. Waste water treatment plant and treated effluent samples. Plant bulk chemical analysis. Scale and deposit sample analysis. Research and development. Investigation and failure analysis.
SOCIAL COMMITTED As a organization committed to the discharge of its responsibilities we have to create a community development. The community development activities based on the needs of the neighboring communities. The community development, medical and educational activities in nearby village. Besides infrastructure needs such as roads, playground, bus shelter etc. are built in the village.
HELTH AND SAFETY POLICY It is the policy of the company that every reasonable effort shall be made to ensure that all employee have a safe healthy place to work and that the surrounding environment. The prevention of all accidents particularly those involving personnel injury or damage to property is recognized as well as to avoid hardship and suffering. It is the duty of all and at all levels to promote and maintain safety in the operation and maintenance of all plant and equipment.
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SAFETY: Safety 1st is our motto. MRPL-ONGC is the convener of the Mangalore chapter of the national safety council. Safety and housekeeping committees regularly review the plant safety. One of the best equipped live fires fighting ground is used for training all staff. Mock fire drill and on sight emergency plan.
GREEN BELT MRPL-ONGC has also developed a green belt around the entire factory. The plant species has been specially selected to blend with the local floor. Some of the species are expected to act as Bio-Indicator. Till date more than 118000 sampling have been planted.
WASTE WATER TREATMENT The waste water treatment plant installed treats refinery waste water containing sulphide, phenol, ammonia Oil etc. So as to get treated water limits of Karnataka State Pollution Control Board (KSPCB). The treatment consists of Oil separation chemical treatment, biological treatment, filtration the treated waste water is discharged into the sea at the distance of 900m and depth of 6.5m MRPL-ONGC is recycling about 70% of the treated waste water to cooling tower. MRPL-ONGC is 1of the few refineries in the world which rescues the treated waste water continuously. ENVIORNMENT POLICY Company wants to achieve and sustain excellence in the petroleum refining by producing quality product in an Eco-Friendly environment by adopting sound efficient
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technology. It also promotes environment responsibility and propagates the policy among al the employees and promotes GREEN BELT
SPORTS, ENVIRONMENT AND OTHER ACTIVITIES Conducting public awareness programs in environment, fire fighting and safety awareness in the surrounding village. Providing assistance for beach cleaning. Organizing event like cricket events under PSPB. Providing a teacher for the special school for the mentally challenged kids.
WELFARE MEASURES AND FACILITY The company hires professionals and technology to under its activity to attract and retain competent hand, attractive compensation package is formulated, consisting of not only salary/wages, but also various other competent apart from statutory provident fund. The major components are house rent allowance for those who are not staying in company township, conveyance, reimbursement, uniform allowance, education allowance, medical reimbursement leave travel assistance etc. Depending on the requirement, merit and experience of the incumbent, they are placed in suitable grades. Perquisites applicable to the grade are provided to the employee. Wearing safety helmet and safety shoes within the plant battery and safety shoes with in plant battery limits is a prerequisite to go to work. This is provided by the company. To meet the heaves rains that is there usually for four month in a year. Rainy wear such as rain-coats and gum-boots are provided to employees as per eligibility. Accident insurance covers, round the clock, under units any losses that may be incurred due to any employment injury or otherwise of the employees. Hospitalization insurance cover not
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only under writes the medical expenses due to hospitalization of the employees but also the dependents of the employees. Employees benevolent fund extends financial support when chronic or prolonged illness, strikes an employee. The company contributes as that of the member every month, apart from the initial 1time corpus grant of one lacks. The following are some other facilities which are given by MRPL-ONGC:-
Vehicle purchase/loan scheme. Long service emblem. Transfer entitlements Superannuation benefits Gratuity Furniture purchase scheme Benevolent fund Festival advance Marriage gift Laptop desktop computer facility provided at the residence of employees etc.
1.2.4 ACTIVITIES-
MRPL has been established to carry out the objectives specified in the Memorandum & Articles of Association of the Company. The main activities of MRPL are refining of crude oil and producing and marketing value added petroleum and petrochemical products. The major products produced from the refinery are LPG, Naphtha, Motor Spirit (Petrol), Reformate, Kerosene, Aviation Turbine Fuel, High Speed Diesel (HSD), Fuel Oil, Bitumen (Bulk and packed), Sulphur.
MRPL does its business operation within the objectives specified in the Memorandum & Articles of Association in a most fair and transparent manner. MRPL
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also endeavors to protect interest of its stakeholders as well as to maximize the value of the shareholders. The Atmospheric, Vacuum Distillation Units and Naphtha Splitter Unit designed by M/s Engineers India Ltd., are heat integrated, using Pinch Technology to achieve high-energy efficiency, thereby reducing Fuel Oil consumption and in turn reducing air emissions.
The Hydro cracker Units produce high quality Sulphur free Diesel and ATF. The Plant is designed for 100 percent conversion of low value Vacuum Gas Oils to lighter, low Sulphur valuable products.
MRPL Oil Jetties are located inside the NMPT (New Mangalore Port Trust). There are 6 lines running from Refinery to coastal terminal out of which four are White Oil lines and 2 are Black Oil lines. Out of 2 Black Oil lines one is a Crude receipt line of 36 diameter and other one is used for Furnace oil/ LSHS service. From coastal terminal hook up is taken for supplying products to IOCL and BPCL. There are 5 Oil Jetties inside the NMPT. J-10 and J-11 are with MRPL, J-9 is with IOCL and J-12 is a multi-user Jetty. As of now we have not berthed our vessels at multi-user Jetty but hook is also available for that Jetty. We can berth Crude vessel only at J-10 and 11. At virtual Jetty we can load MS, HSD and FO. In each Jetty we have six marine loading arms at J-10/11 out of which 4 are for Black Oils and two are for White Oils. Out of 4 Black Oil-loading arms all four can be used for crude unloading but only 2 loading arms can be used for loading.
QUALITY POLICY
MRPL implemented Quality Management System (QMS) as per ISO 9000:1994 standards from December 1999 and after obtaining its first accreditation. Later in January 2003, MRPL upgraded its QMS to ISO 9001:2000 standards and was accredited on March 13, 2003 by TUV Rhineland. This accreditation is an important milestone in the Companys continuous quest for excellence in quality and total customer satisfaction. This certifies that the production system and quality of the Refinery products has been established in conformance with international standards.
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QMS is diligently followed throughout the Refinery (wherever applicable). Having definite quality objectives, continual improvement projects, conducting regular corrective actions and preventive action sessions have helped to achieve improvements in the system. Internal audits for individual departments, management review meetings, awareness programmes for employees, collection and review of customer feedback and customer meet programmes are other steps to confirm to standards.
1.2.5 INFRASTRUCTURE FACILITIES:
General Black topping of village roads.

Construction of Bus shelter at Bala Village Construction of Culvert at Kuthethur Village Construction of Road at Kalavar Village Construction of Samudaya Bhavana at Bala Village Desilting of major storm water drains in the villages and in the Mangalore Corporation area.
Education: MRPL School continues to get grant of about Rs. 1.5 Million per the company and about 65% of the children are from the neighboring places.
annum from
Up gradation of rural school in the Fishermen village of Panambur and other neighboring schools.
Donation of furniture and computers to Schools. Donation of pressure cookers to various schools for Midday Meal programme. Scholarships to Students 31 Schools covering 190 Students.
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Health: Running a free Primary Health Centre at the Rehabilitation colony in Chellairu Village.

Donation of Ambulance to the Red Cross Society at Mangalore. Conducting Artificial Limb Camp and providing free artificial limbs to the physically challenged.
Free Medical and Eye camps. Providing medical facilities at for the neighboring community at MRPL hospital. Helping in Malaria, Polio and Filarial eradication programmes of District Health Department.
Drinking Water Facility: Providing financial assistance to the Rajiv Gandhi Drinking Water Project, which provides drinking water facility to a group of 10 villages.

Providing drinking water facility at Permude village. Providing approx. 5 kms. water pipeline to take water from Kaikamba to the Project Displaced Rehabilitation Colony.
Digging Bore wells in Villages.
1.2.6 ORGANISATION GRADE STRUCTURE Chairman, Managing Director and Directors E8 (M1) Group General Manager E8 (M2) General Managers E7 (M3) Dy. Gen. Managers E6 Chief Manager E5 (M4) Sr. Managers E4 (M5) - Managers E3 (M6) Dy. Managers E2 (M7) Sr. Executive, Sr. Engineers E1 (M8) Executive, Engineers
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1.2.7 REFINERY MANUFACTURING UNITS Crude distillation unit (CDU) Vacuum distillation unit Naphtha Splitter unit Bitumen plant Visbreaker unit Hydro cracker unit Kerosene merox LPG merox Hydrogen Reformer (PSA) Catalytic Reformer (CCR) Sulphur Recovery unit (SRU) Sour water Stripper Unit single stage / two stage Offsite / pipeline / utility Cooling water unit HW captive power plant Waste water treatment plant (WWTP) GOHDS (ISOM) Mix xylene
1.2.8 DEPARTMENT AND STRUCTURE

The departments at MRPL can be classified into two categories on the basis of nature of work discharged. They are: I. Technical Department II. Non Technical Department The other departments classified under these departments are : I. Technical Department o Operation Department o Production, Planning and control department. o Maintenance -Electrical - Mechanical - Instrumental o Information system o Laboratory o Fire and safety office
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o Documentation centre o Power plant o Hydrogen plant o Hydro cracker unit o Oil movement and storage o Distillation plant Vaccum distillation Crude distillation
II.
Non Technical Department
o Personnel and administration department. o Finance Department o Material Department 1.2.9 MAIN DEPARTMENTS Human Resource Department Marketing Department Materials Management Vigilance Department Purchase Department Finance Department Information Systems Technical Department Operations Department Fire and Safety Technical Services
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CHAPTER 2
2.1 PRODUCT PROFILE
MANUFACTURING FACILITIES
MRPL has the unique distinction in India of having two hydro crackers and two CCR units, which produce high quality fuels.
1. Crude & Vacuum distillation unit:The atmospheric and vacuum distillation units and Naphtha splitter unit designed by EIL are heat integrated to achieve high energy efficiency there by reducing fuel oil consumption and in turn reducing air emissions.
2. Hydro cracker unit: (Technology: UOP, USA): The hydro cracker unit in India and first in southern part of India produces high quality sulphur free diesel, Kerosene and ATF. The plant is designed for 100% conversion of heavy low value gas oils to lighter and valuable products. Diesel from hydro cracker unit has a high cetane number, which facilitates.
3. Visbreaker Unit: Shell soaker Visbreaker technology under the license of ABB lummus of Holland has been adopted to upgrade heavy vacuum residue to Naphtha and gas oil. This is the first unit in India to have vacuum flash column, producing vacuum gas oil, which is used for supplementing the feedstock to hydro cracker unit.
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4. CCR Plat forming unit: A state of the art unit, the continuous catalytic regeneration type plat forming unit (CCR) produces leadfree, high octane motor spirit (petrol). Hydrogen produced as a by-product, is used in the hydro cracker unit.
5. Merox (Technology: UOP, USA): LPG and Kerosene Merox units covert mercaptons to disulphide. Reformat with RON 110 is also exported for production of premium grade petrol and also for extraction of P-xylene, a high value aromatic component used in the production of PTA and polyester.
6. Hydrogen: The hydrogen plant designed by M/s. KTI, Holland produce hydrogen by steam reforming of Naphtha Hydrogen purity of 99.9% is achieved through Pressure Swing Adsorption (PSA) unit the technology for which is given by UOP.
7. Bitumen: This unit employs the highly efficient Bitumen process given by M/s. Porner of Austria to produce paving grade asphalt.
8. Power Plant: Keeping in view the power situation in the district, MRPL as installed a 112.5 MW power plant to meet its entire power requirements, through five turbo generator of 22.5MW each. There are seven boilers of 140Mt/Hr capacity each.
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9. Sulphur recovery unit: The unit was licensed by KTI Italy and produces 99.9% purity sulphur using the most modern and sophisticated selectox process. There are three sulphur units to meet and produce the above said grade sulphur with a capacity of 100 tones for each of unit.
10.
Reformer Splitter Unit: In order to meet the stringent specification of benzene content in motor gasoline, reformer splitter unit is installed. The unit employs simple distillation process to remove the benzene from the motor gasoline to the specified levels.
11.
Gas Oil Hydro Desulphuriser unit: (GOHDS) This plant is designed to process high sulphur diesel stream from cdu-1 and cdu2 to meet the sulphur spec of diesel 25% sulphur) as stipulated by the government of India.
2.2 PRODUCT PROFILE OF MRPL:
LPG: Liquefied petroleum Gas. Liquefied petroleum gas (also called LPG, GPL, LP Gas, or auto gas) is a flammable mixture of hydrocarbon gases used as a fuel in heating appliances and vehicles, and increasingly replacing chlorofluorocarbons as an aerosol propellant and a refrigerant to reduce damage to the ozone layer. Varieties of LPG bought and sold include mixes that are primarily propane, mixes that are primarily butane, and the more common, mixes including both propane C3H8 (60%) and butane C4H10 (40%), depending on the season in winter more propane, in summer more butane. Propylene and butylenes are usually also present in small
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concentration. A powerful odorant, ethanethiol, is added so that leaks can be detected easily. The international standard is EN 589. In the United States, thiophene or amyl mercaptan are also approved odorants. LPG is a low-carbon-emitting hydrocarbon fuel available in rural areas, emitting 81% of the CO2 per kWh produced by oil, 70% of that of coal, and less than 50% of that emitted by coal-generated electricity distributed via the grid. Being a mix of propane and butane, LPG emits less carbon per joule than butane but more carbon per joule than propane. As a low-carbon, low-polluting fossil fuel, LPG is recognized by governments around the world for the contribution it can make towards improved indoor and outdoor air quality and reduced greenhouse gas emissions. LPG is widely available and can be used for hundreds of commercial and domestic applications. LPG is also used alongside renewable technologies, as well as with decentralized electricity generation (Combined heat and power systems See Uses - Rural heating) to help reduce carbon emissions on a local level. NAPHTHA: Used in Fertilizers and Petro Chemical Industries. Naphtha normally refers to a number of different flammable liquid mixtures of hydrocarbons, i.e. a distillation product from petroleum or coal tar boiling in a certain range and containing certain hydrocarbons. It is a broad term covering the lightest and most volatile fraction of the liquid hydrocarbons in petroleum. In petroleum engineering, full range naphtha is defined as the fraction of hydrocarbons in petroleum boiling between 30C and 200C. It consists of a complex mixture of hydrocarbon molecules generally having between 5 and 12 carbon atoms. It typically constitutes 15-30% of crude oil, by weight. Light naphtha is the fraction boiling between 30C and 90C and consists of molecules with 5-6 carbon atoms. Heavy naphtha boils between 90C and 200C and consists of molecules with 6-12 carbons.
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Naphtha is used primarily as feedstock for producing high octane gasoline (via the catalytic reforming process). It is also used in the petrochemical industry for producing olefins in steam crackers and in the chemical industry for solvent (cleaning) applications. Common products made with it include lighter fluid, fuel for camp stoves, and some cleaning solvents.
MOTOR SPIRIT: Generally known as Petrol which is 100% free from lead. Gasoline or petrol is a petroleum-derived liquid mixture which is primarily used as a fuel in internal combustion engines. It is also used as a solvent, mainly known for its ability to dilute paints. It consists mostly of aliphatic hydrocarbons obtained by the fractional distillation of petroleum, enhanced with iso-octane or the aromatic hydrocarbons toluene and benzene to increase its octane rating. Small quantities of various additives are common, for purposes such as tuning engine performance or reducing harmful exhaust emissions. Some mixtures also contain significant quantities of ethanol as a partial alternative fuel. Most current or former Commonwealth countries use the term petrol, abbreviated from petroleum spirit. The term mogas, short for motor gasoline, is used to distinguish automobile fuel from aviation gasoline, or avgas. In British English, gasoline can refer to a different petroleum derivative historically used in lamps, but this usage is relatively uncommon. AVIATION TURBINE FUEL [ATF]: It is used as Fuel in domestic aircrafts and defence aircrafts. Aviation fuel is a specialized type of petroleum-based fuel used to power aircraft. It is generally of a higher quality than fuels used in less critical applications such as heating or road transport, and often contains additives to reduce the risk of icing or explosion due to high temperatures, amongst other properties.
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Most aviation fuels available for aircraft are kinds of petroleum spirit used in engines with spark plugs i.e. piston engines and fuel for jet turbine engines which is also used in diesel aircraft engines. Alcohol, alcohol mixtures and other alternative fuels may be used experimentally but are not generally available. Avgas is sold in much lower volumes, but too many more individual aircraft, whereas Jet fuel is sold in high volumes to large aircraft operated typically by airlines, military and large corporate aircraft. HIGH SPEED DIESEL [HSD]: This is used in all heavy vehicle trucks, tankers, railways etc. Normal diesel fuel as used in, say, heavy road transport, has a very finite rate of burning when ignited in a cylinder, thus the speed it can impart continuing pressure on a descending piston is also limited. The smaller "high speed" diesel motors use a more volatile blend, and do not run the very high compression levels of heavy diesel engines. Thus they can rotate faster. KEROSENE: It is used as a fuel. Kerosene, sometimes spelled kerosine in scientific and industrial usage,[1] also known as paraffin in UK and South Africa, is a combustible hydrocarbon liquid. The name is derived from Greek keros. The word Kerosene was registered as a trademark by Abraham Gesner in 1854 and for several years only the North American Gas Light Company and the Downer were allowed to call their lamp oil kerosene. It eventually became a generalized trademark. Kerosene is widely used to power jet-engine aircraft (jet fuel) and some rockets, but is also commonly used as a heating fuel and for fire toys FUEL OIL: This is basically used in Furnace and Boilers. Fuel oil is a fraction obtained from petroleum distillation, either as a distillate or a residue. Broadly speaking, fuel oil is any liquid petroleum product that is burned in a furnace or boiler for the generation of heat or used in an engine for the generation of power, except oils having a flash point of
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approximately 40 C (104 F) and oils burned in cotton or wool-wick burners. In this sense, diesel is a type of fuel oil. Fuel oil is made of long hydrocarbon chains, particularly alkanes, cycloalkanes and aromatics. The term fuel oil is also used in a stricter sense to refer only to the heaviest commercial fuel that can be obtained from crude oil, heavier than gasoline and naphtha. BITUMEN: MRPL produce different grades of Bitumen which is used for laying roads highways and airport runways. Bitumen is a mixture of organic liquids that are highly viscous, black, sticky, entirely soluble in carbon disulfide, and composed primarily of highly condensed polycyclic aromatic hydrocarbons. Naturally occurring or crude bitumen is a sticky, tar-like form of petroleum which is so thick and heavy that it must be heated or diluted before it will flow. At room temperature, it has a consistency much like cold molasses.[1] Refined bitumen is the residual (bottom) fraction obtained by fractional distillation of crude oil. It is the heaviest fraction and the one with the highest boiling point, boiling at 525 C (977 F). SULPHUR: Trucks directly dispatch this from Sulphur recovery unit. Sulphur is the chemical element that has the atomic number 16. It is denoted with the symbol S. It is an abundant, multivalent non-metal. Sulfur, in its native form, is a bright yellow crystalline solid. In nature, it can be found as the pure element and as sulfide and sulfate minerals. It is an essential element for life and is found in two amino acids: cysteine and methionine. Its commercial uses are primarily in fertilizers, but it is also widely used in black gunpowder, matches, insecticides and fungicides. Elemental sulfur crystals are commonly sought after by mineral collectors for their brightly colored polyhedron shapes. In nonscientific contexts, it can also be referred to as brimstone.
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3. FINANCIAL ANALYSIS OF MRPL. 3.1. Leverage Ratios (Capital Structure)

3.1.1 Debt Equity RatioThe Debt Equity Ratio is the relative proportion of long term debt and shareholders equity. Table: 3.1 Year Long Term Debt(in Rs million) Shareholders equity (in Rs million) Debt Equity Ratio (in Rs million)
2005 2006 2007 2008 2009
34665.33 3307.72 19688 19468 19868
21636.33 23953.39 37567.96 37829.43 49670
1.60 1.38 0.7 0.5 0.4
Interpretation The ideal Debt Equity Ratio is 2:1. As such if the debt is less than 2 times the equity, the logical conclusion is that the financial structure of the concern is sound and so the stake/risk of long term of creditors is relatively less. On the other hand, if the debt is more than two times the equity, the conclusion is that the financial structure of the concern is weak and so the stake/risk of long term of creditors is relatively high.
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3.1.2 Debt to Asset Ratio-
The Debt to Asset Ratio is the proportion of total debt to total assets.
Table: 3.2 Year Total Debt(in Rs million) 2005 2006 2007 2008 2009 24665.33 32072.72 23683.07 20580.68 19868 Total Assets(in Rs million) 82762.44 83011.38 88501.21 37829.43 40729 Debt to Asset Ratios (in Rs million) 0.42 0.40 0.27 0.54 0.18
Interpretation The above chart indicates that there is increase in the debt to asset ratio in the year 2005-0.42, in 2006-0.40 and in the year 2007-0.27, but again it has increased to 0.54 in 2008. But has reduced to 0.18 in 2009. The main reason being the Phase III project begun during this year.
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3.2. Profitability Ratios

Profitability Ratios related to Sales: 3.2.1 Gross Profit MarginIt shows the gap between revenue trading and trading costs. It indicates the amount of Gross Profit for every Rs. 100 of sales. Table: 3.3 Year Gross Profit(in Rs million) 2005 2006 2007 2008 2009 17183.90 14075.04 15847 20470 21509 185083.35 249675.40 284646 325751 382438 Sales(in Rs million) Gross Profit Margin(in Rs million) 9.28 5.64 5.6 6.3 5.6
Interpretation The actual gross profit is compared with the gross profit ratio of the previous year and those of the other concern carrying on similar business. If the actual gross profit ratio is higher, it is an indicator of good results. On the other hand, if the actual gross profit ratio is too low, it is an indicator of poor results.
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3.2.2 Operating Profit RatioIt shows the operational efficiency of the firm. Lower operating ratio shows the higher operating profit and vice versa.
Operating Profit Ratio= Earnings before income tax 100 Sales Table: 3.4 Year EBIT(in Rs million) Sales(in Rs million) Operating Profit Ratios (in Rs million) 2005 2006 2007 2008 2009 16904.93 8103.50 13034.81 18815.37 18105.56 185083.35 249675.40 286331.40 325751.28 382438 9.13 3.25 4.55 5.78 4.73
InterpretationThe ideal Operating Profit Ratio is 10%. So an Operating Profit Ratio of 10% or more is an indicator of the operating efficiency of business. An Operating Profit Ratio of less than 10% is an indicator of the operating inefficiency of business. The above data shows that the Operating Profit Ratio was 9.13 in 2005. In the year 2006 it has reduced to 3.25 and again increased to 4.55 and 5.78 in 2007 and 2008. And during 2009 it again deteriorated to 4.73.
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3.3 Ratios:-
3.3.1 Earnings per share

The profit available to ordinary share holders thus shareholders are represented by net profit after taxes and preference dividend.
Net profit available to equity share holders Earnings per share= ---------------------------------------------------------No. of equity shares outstanding
Table: 3.5 Net profit available Year to equity shareholders(Rs in millions) 2005 2006 2007 2008 2009 8797.58 3716.15 5255.23 12722.28 11919.72 1752.60 1752.62 1752.62 1752.64 1752.90 5.02 2.12 3.00 7.26 6.8 No of equity shares outstanding Earnings per shares
Inference: More the earning per share the better is performance and the prospectors of the company higher earnings per share suggest the profitability of more cash dividend or b onus share and raises in the market price of the share.
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3.3.2 Dividend per Share: DPS is the net distributed profit belonging to the shareholders dividend by the number of organization ordinary shares outstanding.
Table: 3.6 Dividend paid to Equity Year Shareholder(Rs. in millions) 2005 2006 2007 2008 2009 1752.61 1227.03 1402.32 2103.48 2103.48 1752.61 1752.62 1752.62 1752.64 1752.90 No of Equity Share Outstanding(Rs. in millions) Dividend Per Share (Rs. in millions) 1.00 0.20 0.80 1.20 1.20
Inference: In 2004 the company did not pay dividend to the Equity Shareholders, in 2005 dividend per share was rupee 1. In 2007 dividend per share was 0.80 and in the year 2008 and 2009 rupee 1.20.
3.3.3 Dividend Payout Ratio: D/P Ratio can be found out by dividing the DPS by EPS. Thus Dividend per Share Dividend Payout Ratio= --------------------------------------- *100 Earnings Per Share
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Table: 3.7 EPS(Rs. in. millions) 5.02 2.12 3.00 7.26 6.8 0.20 0.33 0.27 0.16 17.64 Dividend Payout Ratio
Year 2005 2006 2007 2008 2009
DPS(Rs. in millions) 1.00 0.70 0.80 1.20 1.20
Inference: A low payout ratio suggests that there is good chance of appreciation in the price of share. On the other hand, a high payout ratio suggests that a chance of price in the share is dim. As such, an investor who is interested in the appreciation in the price of share would invest in the share of company having low payout. It indicates the proportion of earning available to Equity Shareholder when this ratio is deducted from 100, it will give the percentage of profit retained. The above data shows that there is more investment opportunity in the firm; it retains most of its earnings. This will raise the share value of the firm in the market instead of going for fresh issue or raising loan retain earning is one of the best source of finance.
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3.3.4 Dividend Yield Ratio:
The Earning Yield may be defined as the ratio of earning per share to market value per ordinary share. It is calculated as follow:
Dividend per Share Dividend Yield Ratio= ------------------------------------- *100 Market Price Per Share
Table: 3.8 Dividend Yield Ratio (Rs. In. millions) 10.56 4.99 8.86 9.29 17.64
Year
DPS(Rs. In. millions) 5.02 2.12 3.00 7.12 1.20
EPS(Rs. In. millions) 47.33 42.50 33.85 78.85 6.8
2005 2006 2007 2008 2009
Inference: The actual Dividend Yield Ratio of company is question should be compared with the Dividend Yield Ratio of the other similar concern. If the dividend yield ratio of the company in questions is more than that of other similar companies. It is an indication of
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the investors that it is worth investing the share of the company in question. On the other hand if the dividends yield ratio of the company in question is less than that of other similar companies. It is suggest to the investor that the share of the company in question or not attractive.
3.3.5 Price Earnings Ratio: P/E ratio is closely related to the earning price ratio. It is calculated as follow:
Market price of share Price Earnings Ratio = -----------------------------------------Earnings Per Share
Table: 3.9 Market price of Year Share (Rs. In. millions) 2005 2006 2007 2008 2009 47.55 42.50 33.85 78.10 68.5 5.02 2.12 3.00 7.26 6.8 Price Earnings Ratio(Rs. In. millions) 9.47 20.05 11.28 10.76 10.07
EPS (Rs. In. millions)
Inference: The higher price earnings ratio, the better are the chance of appreciation. In the Market Price of Shares a measure for determining the value of share. It is also used to
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measure the Rate of Return expected by Investor. Above table shows that in the year 2007 the Price Earnings Ratio was 11.28 and it was decreases to 10.76 in the year 2008.
CHAPTER 4 RESEARCH METHODOLOGY
4.1 STATEMENT OF THE PROBLEM

In the current system, there is no provision for fixing of goals and the key performance areas in advance. There is no direction or guideposts for the employee to follow and perform throughout the year. In the current system, the review is held on an annual basis. Therefore, the evaluation is done at the end of the year, the expected levels of performance are known only at the end of the year. Reward in the existing system is in the form of promotions. This brings the promotional policy into picture. This is a major problem. The existing policy clearly specifies a minimum performance rating and time period for the appraisee to qualify for promotions. All the employees who qualify are given promotions subject to vacancies at higher levels. In lower levels, the promotions are time bound. It does not make any performance distinctions and rewards superior and inferior alike. This kills motivation of the employees, who have performed exceedingly well, to maintain the same level of performance. The self-appraisal forms that are given to the employees fils to ask them to state the conditions under which they performed. There is no provision for employees to state about facilitating and hindering factors that had a bearing on their performance. It is not possible to get a truly objective picture of performance without consideration of these factors.
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Another area of concern is the presence of only superior appraisal. This has pitfalls like favoritism, victimization coming into the appraisal process. In such a case, a situation arises where the appraisee is evaluated not only on the basis of his job related performance but also on his relations with his superiors. In such a case, the judicious distribution of awards, which is one of the main objectives of the performance appraisal, is affected. Again, it is not mandatory on the part of the appraisers to show the final rating and the recommendations to the appraisee. Now, a situation might arise where some appraisers show the ratings and some dont. This could lead to straining of relationship between the appraisee and the appraiser, if the appraiser of a particular appraisee does not show the final rating and recommendations while that of another appraisee does. This leaves a room for suspicion in the mind of employee, who is not shown his final rating. Another area of concern is that the system does not accept a normal statistical distribution in terms of performance. In the existing system, there is no check mechanism that ensures the appraisers are not too lenient or play safe. There is a possibility that all appraisees get the same rating irrespective of performance. This may happen when the appraiser rates everyone excellent, just to gain the subordinates goodwill. This also could be dangerous to the motivational levels of the appraisees who have performed well.
4.2 INTRODUCTION TO THE STUDY

An organizations goal can be achieved only when people put their best efforts how to ascertain whether an employee has shown his or her best performance on given job? The answer is performance appraisal it has been said the process of reviewing employees performance of the whole organisation in turn is managed monitoring the performance of the organisation is a vital process, since it is the only through the realization of at least an adequate performance that the organisation can hope to achieve its objectives and continue to survive and develop.
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Performance appraisal is essential to understand and improve the employees performance. In fact, performance appraisal is the basis for HRD. It is viewed that performance appraisal is useful to decide upon employee promotion/ transfer, salary determination and the like. But the recent developments in human resources management indicate that performance appraisal is the basis for employees development. Performance appraisal indicates the level of desired performance level, level of actual performance and the gap between these two. This gap should be bridged through human resources development techniques like training, executive development etc. Performance appraisal is a method of evaluating the behavior of employees in the work spot, normally including both the quantitative and qualitative aspects of job performance. Performance here refers to the degree of accomplishment of the tasks that make up an individuals job. It indicates how well an individual is fulfilling the job demands. Often the term is confused with effort, but performance is always measured in terms of results and not efforts.
4.2.1THE APPRAISAL PROCESS

1. The first step in the appraisal performance process is the determination of standard of performance based on the organizational objectives & job descriptions. 2. The next step of performance appraisal is the measurement of employees performance against the pre-determined goal & standards. 3. The next step is the actual process of measurement. Performance appraisal has to be a continuous process & feedback should be given to the employee at regular intervals. 4. The next step is the very critical step & involves communicating the result of the appraisal to the employee concerned. 5. Once appraisal is finalized after discussing it with the employees, it have to be put effective use.
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4.2.2PERFORMANCE APPRAISAL METHODS

1. Management by objective or goal setting. 2. Graphic rating scale. 3. Work standard approach. 4. Essay appraisal. 5. Critical incidence method. 6. Forced choice rating method. 7. Point allocation method. 8. Ranking method. 9. Check list. 10. Behavioral anchored rating scale.(BARS) 11. 360 degree performance appraisal. 12. Team appraisal. 13. Balanced scorecard method.
1) MANAGEMENT BY OBJECTIVE (MBO) The main aspect of MBO is clear & well defined goals, a definite time span to achieve the goals, action plan & finally, timely & constructive feedback. It is also called a goal setting approach; MBO is more commonly used for managers & professionals. 2) GRAPHIC RATING SCALE This method of appraisal requires the rater to rate the employee on factors like quantity & quality of work, job knowledge, dependability, punctuality, attendance etc. This method is also used for performance appraisal of employees. They check their employees daily by using this method. 3) WORK STANDARD APPROACH
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This method of appraisal is more suitable in a manufacturing scenario, where the goals are pre determined work standard. These work standards can be set based on the average output of a typical employee in the organization or by bench marking against the work standard of a competitor in a similar business. 4) ESSAY APPRAISAL In the essay appraisal method, the appraiser prepares a document describing the performance of the employees. Questions or guidelines are provider to the appraiser based on which analyses & describes the employees performance. 5) CRITICAL INCIDENT METHOD In this method of performance appraisal, the appraiser makes a note of all the critical incident that reflect the performance & behavior of the employee during the appraisal period. These are recoded as & when they occur & can demonstrate either positive or negative traits or performance. 6) FORCED CHOICE RATING METHOD In this method the appraiser is required to assign ranks to different attributes are all seemingly positive, but have different weights which are unknown to the appraiser. Once the employees attributes are ranked the human resource department applies the weights & arrives at a score which is the final appraisal score. 7) POINT ALLOCATION METHOD In this method of appraisal, the appraiser has to allocate points to different members in his team. He has at disposal , a specific number of points which he has to distribute among his team members, based on their performance during the appraisal period. 8) RANKINNG METHOD There are three commonly used methods of ranking namely alternation, paired comparison & forced distribution. The first two methods are used when there are only a few employees to be ranked, whereas forced distribution method is used in large companies which have thousands of employees.
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9) CHECKLIST In this method the rater has to respond yes or no to a set of questions which assess the employees performance & behavior. Normally weights are attached to each of these questions based on which the final appraisal score of the employee is calculated. 10) BEHAVIOR ANCHORED RATING SYSTEM (BARS) BARS concentrates on the behavioral traits demonstrated by the employees instead of his actual performance. Some of the other methods like graphic rating scale & checklist also measure the behavior based on the assumption that desirable behavior result in effective performance. 11) 360 DEGREE PERFORMANCE APPRAISALS A 360 degree appraisal system aims at a comprehensive & objective appraisal of employee performance. In a 360 degree appraisal system the employees performance is evaluated by his supervisor, his peers, his internal external customers, his internal external suppliers & his subordinates. This system reduces the subjectivity of a traditional supervisor appraisal. 12) TEAM APPRAISAL In the new economy era, where team work is essential for any venture to succeed, team appraisal has emerged as one of the best tool for the performance management. In the team appraisal method the individual team member evaluate their colleagues in the team & provide feedback. 13) BALANCED SCORECARD The balanced scorecard as a method of measuring performance channelizes the efforts of people to achieve organizational goals. The implementation of balanced scorecard involve formulating a strategy & deciding what each employee needs to do to achieve the objectives based on strategy.
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4.2.3 PERFORMANCE APPRAISAL AT MRPL Performance appraisal as a tool was introduced in MRPL by the end of the year 1996. Given below are the features of the Performance appraisal system for the management cadre at MRPL. Source of appraisal is the traditional superior appraisal. The reporting officer is the immediate supervisor and reviewing officer is the boss of the immediate supervisor. The key performance areas are not usually fixed in advance. They are identified at the end of the year. The identification is through discussions between the appraisers and the appraisee. The appraisee is assessed against managerial traits. The traits are common to all grades of employees. Weightage is given to performance against key performance areas as well as the management traits while assessing the performance of the appraisee. Performance is also rated. Here a behaviorally anchored rating scale used. The rating scale is used. The rating scale is 5 point rating scale. The reward in the existing system is in terms of promotion to the next grade and annual increments. There are no financial incentives schemes like performance related pay in the system. Performance appraisal is the major factor governing the promotional and annual increment decisions in addition to experience in the relevant scale and qualification. Explanation of ratings with regards to each trait, objectives and process of appraisal are given in separate annexure. Performance review is been done on an annual basis. Its done at the end of the performance appraisal period. The system has self- appraisal where the appraise assesses his performance against the Key Performance Areas (KPAs). However, appraisee isnt allowed to rate his performance.
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Training needs are identified in the system for both on the job and behavioral training. The training needs identified for every individual are fed in the Human Resources Information System (HRIS). The training needs are then compiled and a training calendar is drawn. On the basis of this calendar the training programs are organized.
4.3 SCOPE OF THE STUDY The study is conducted to measure the level of performance among the employees at MRPL. The study covers mainly the three departments namely Personnel department, marketing department, finance department. The findings of the study are applied to whole of the organization. A study on performance appraisal prevailing in the industry will help us to know the peace prevailing in the organization which is conducive to the normal functioning.
4.4 LITERATURE REVIEW
4.4.1 Performance Appraisal

A key input for the development and recognition of the importance of Performance Management has been the more competitive environment with which organizations now operate. With market globalization and increased competition increasingly from 3rd world countries, organizations became increasing pressure to increase productivity and reduced costs. During the 1980s,a more holistic view was adopted considering all the influences on Performance with a shift from simply performance measurements of outcomes to a more sophisticated performance management approach, developing a more strategic HRM approach to resource management (Marchington & Wilkinson, 2005) linking the aims of the organization to performance of the individual. Performance Management is a structured method of review which aims to link together individual goals, departmental purposes and organizational objectives. In this there is a clear strategic link between employee behaviour and the performance of the organization. A useful definition of performance management was provided by Verweire and Van Den Berghe (2004) as a comprehensive management process framing the
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continuous improvement journey by ensuring that everyone understands where the organization is and where the organization needs to go to meet stakeholders needs. The overall aim of Performance Management is to establish a high performance culture. In this, employees would visualize as part of their function the requirement to continually assist in improving the performance of the organization. They will also perceive that they can influence important aspects of overall performance. This was described by Horton and Farnham (1999) as a process of maximizing the value added through the Performance Management such that the initial costs are exceeded by the subsequent benefits. To achieve this, individuals and teams take responsibility for the continuous improvement of the business developing their own skills and effectiveness (Armstrong, 2006). By harnessing and developing the potential of the individual, the organization will be best placed to achieve the strategic goals. The principles of performance management have been summarized as follows (Information Data Services, 1997): 1. Translates corporate goals into individual team, department and divisional goals. 2. It helps to clarify corporate goals. 3. Its a continuous and evolutionary process in which performance improves over time. 4. It relies on consensus and corporation. 5. It creates a shared understanding of what is required to improve performance and how this will be achieved. 6. It encourages self management of individual performance. 7. it requires a management style which is open and honest and encourages two way communication between superiors and subordinates. 8. It requires continuous feedback. 9. It should apply to all staff. 10. It shouldnt primarily be concerned with linking performance to finance.
These again point towards the development of the individual to become high performers who will help achieve the strategic aims of the organization. Employees are therefore the most important economic factor in achieving corporate aims of the organization (Armstrong, 2006). But the development of employees or performance
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management in general isnt a one of occurrence. The most important message is that an effective performance management is a continuous cycle. The diagram below which is based on the model proposed by Deming (1986), demonstrates one example of performance management cycle. Most performance management cycles are similar in that they link together strategy and planning with employees monitoring as well in reinforcing performance standards (Marchington & Wilkinson, 2007). The Deming cycle links the various elements of management process into a continuous process. The different elements can be analyzed as follows: a. Plan is agreeing the objectives and competence requirements for the organization. Thisll identify the behavioral requirements, objectives and performance plans, and will also enhance the knowledge and skills of the employees. b. act is the actual carrying out of the work to achieve the objectives. c. Monitor is the process of continually checking on progress towards the desired objectives and responding to new demands. d. Review is holding regular meetings to stock take and asses the progress and take action where required for completing the cycle by moving into the planning stage
Source: http://derekstockley.com.au/h-performance-management.html (Armstrong & Baron, 2007). Thus, performance management is hence considered as a process and not a single event. As Demings model shows, it operates as a continuous cycle. The corporate strategic goals provide the starting point followed by agreement on performance and development leading to the drawing up of plans between individuals
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and managers with continuous monitoring and feedback supported by formal reviews (CIPD, 2008).
4.4.2 Are Managers Mean? By Derek Stockley.

Many employees seem to think that they are. In training sessions over the last twenty years, in both the public and private sectors alike, I have received some comments criticizing managers for being uncaring, inconsiderate, and bombastic or the like. Comments on participant training evaluation forms have included comments like "this training should be compulsory for all managers". Such comments show that employees believe that managers need to develop their interpersonal and leadership skills. They also indicate concerns about the way employees feel they are managed. When such concerns are discussed with participants, a better picture emerges. Often some clarification is required. Sometimes misunderstandings have occurred. Unfortunately, this does not negate the impact of negative feelings in the first place. Perception is different to reality, but it is perception that guides feelings. If employees have a perception which is negative, then morale and performance will suffer.
The first thing is to be very conscious of how statements and actions may be perceived. Managerial actions must match the rhetoric. Employees look for the behaviour that supports the words. Many people can quote examples of managers talking about the importance of customer service whilst simultaneously slashing operating budgets. This mismatch between the rhetoric and actions constantly undermines the attempts made by organisations to bring about cultural change. Secondly, any consultant will tell you that the most frequently mentioned problem in most organisations is communication. Communication flow throughout the organisation is essential. Communication channels need to be adjusted for the more fluid organisational structures and the new technologies. Thirdly, managers need to pay constant attention to the people issues, particularly in environments of change. Most people do not like change being forced on them. Some are used to change. Some welcome it, particularly if they play a role in determining and implementing it. The emphasis nowadays on increased participation in the workplace is
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partly a reflection of the environment of constant change. We need participation to reduce the stress change causes. One of the key issues now is increased workload across all organisational levels. Increased workload has arisen because of restructuring, downsizing, increased responsibilities etc. A real difficulty is determining whether a person has too much work, or alternatively, is inefficient or ineffective. People can innocently confuse "busyness" with efficiency or effectiveness. It is important to review activities and processes to assess their importance and contribution. Morale and organisation culture may also be a factor. One important factor is workload associated with the planning and implementation of change. Often change activities have to be run in parallel with existing systems. For example, the old payroll system still needs to be run whilst the planning, development, testing and implementation of a new computer payroll system over a six month period is carried out. The need to develop a new payroll system is not a good enough reason to stop paying people for six months! This change will place a heavy responsibility and workload on the payroll officer. Additional staff support may be required or maybe it is possible to carry the additional workload for six months. The additional work generated by change is often the key factor in workload discussions. Workload increases caused by change activities can be justified in the short term, particularly if the change brings better processes and increased efficiency. Incremental change is particularly stress free i.e. make a change, reap the benefits and increased productivity, which then frees time for more change activity, which when implemented, then frees more time for change, etc. This approach keeps the workload at a very manageable level. If however, the changes come frequently and constantly, with little respite from normal day to day requirements, then workload can become unmanageable. If this continues, both the employee and the organisation suffer. These matters require constant attention, as the damage may be hidden. For example, if customer service levels deteriorate, it may be some time before impacts start to manifest themselves in performance indicators. As another example of the importance of people, research into organisational
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performance in the United States and elsewhere is now starting to question the merits of corporate downsizing and the 'slash and burn' restructuring. Loyalty and trust are being increasingly recognised as important elements if long-term performance is to be achieved. All these examples highlight the need for organizations to be diligent in the management of people. Changes have caused issues. Sometimes many issues have to be responded to. All responses should include consideration of the human element. People need to be assured that their interests and concerns are constantly being addressed. And by the way, it is good, sound business practice too.
4.4.3 Effective Performance Appraisal. By Andrew E. Schwartz

To many managers, performance appraisals are nothing more than a tedious chore. As a result, these managers overlook the problem-solving power of a properly conducted appraisal. Other managers view employee reviews as a test of their own supervisory capabilities; they often become fearful that they will not measure up in their employees eyes. Stress, anxiety, and fear often accompany performance appraisals both for the employee being reviewed and for the supervisor conducting the appraisal. The end result of all these negative and ambivalent feelings is an employee review which is incomplete, sloppy, and ultimately ineffective. The simple truth is that by underestimating the inherent power of performance appraisals, many managers are neglecting a major aspect of their management roles. Understanding these feelings, overcoming them and administering effective appraisals are important to the success of any manager. Many times, managers do not take full advantage of performance appraisals simply because they are unaware of the appraisals overall role in management. It is important to understand why performance appraisals are necessary to job situations: All employees need periodic discussions with their supervisors to determine the effectiveness of their performance. In addition, appraisals help supervisors insure that their own goals are being met. Moreover, it is crucial for the evaluator to fully comprehend both the positive and
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negative effects of performance-appraisals. Discovering a step-by-step method to developing feasible performance appraisal strategies can help clarify appraisal situations for managers by adjusting their perspectives on the true importance of performance reviews. Only then can the appraisal be utilized effectively in problem-solving.
The First Step: Preparation: Preparation is the first step to any successful performance appraisal. Both the appraiser and the employee must participate in this preparation. Each participant must decide on specific instancespositive and negativethat are reflective of the employees performance. Each must also plan to discuss specific accomplishments and how these accomplishments may be built upon in the future. All appraisals must include each partys impressions of the workers personal development (and what changes, if any, need to be made). In addition, changes may be required in the work environment, in shifts or in arrangements between the employee and other workers to accomplish future performance goals.
Setting the Scene: The next step is the actual meeting during which a discussion takes place between the supervisor and employee. The discussion needs to take place in the supervisors work area. During the appraisal both players need to feel equal. Although most appraisals take place while seated at the supervisors, many mangers find it beneficial to sit facing the employee without a desk or barrier. This seating arrangement encourages a more relaxed atmosphere, one that often is welcomed and creates more open communication by both parties.
Getting the Point Across: At the beginning of the discussion, the supervisor needs to always begin by defining exactly what will be covered and in what manner. (Nothing is worse than a misunderstanding of intention in a performance appraisal situation). Any misunderstandings will only create obstacles and conflicts in the relationship that supervisors may have previously worked to break down. Furthermore, any misunderstanding may cause one or both parties to become distracted-a possible problem for any conversation, it is especially disrupting during an evaluation: Marks boss Jane
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told him that she wanted to discuss his organization of the companys accounts payable system. Both prepared privately by listing Marks achievements and future goals. When they met, Jane began by first discussing that the flow of work through accounts payable is smoother than before. Then she abruptly changed the subject, listing serious system abuse changes, Mark (understandably) became confused and upset. Jane should have invoked a more serious tone and perhaps given an overall review of the accounts payable system (instead of breaking the review into two parts). An issue that needs to always be discussed, aside from work performance, is personal growth and development. It is important for the supervisor to listen for both the emotional and logical content of an employees responses. Also, after each point the employee makes, the supervisor needs to summarize and give feedback. The evaluator must also evaluate any points he or she does not understand. Only the speaker knows what he or she is feeling, and a supervisors attempt at understanding will make the employee feel that the supervisor is really listening. Listen and Learn: Active listening is the supervisors primary role in an employees self-appraisal. When the employee has completed his or her self-appraisal, the supervisor needs to respond in a constructive, positive manner-mentioning first the agreeable points, then the disagreeable points. During this discourse, it is important that the supervisor be non-judgmental and supportive. Even if the supervisor disagrees with a point the employee made, the supervisor needs to not to be overpowering. (Doing so will only cause defensiveness, a barrier to be avoided at all costs). When discussing what is considered an employees poor performance, the employee must be encouraged to work with management to solve the problem. Positioning such problem solving in we or our frames of reference (instead of to you) invites the employee to feel as if the supervisor is on his or her side. Finally, set specific goals to be reviewed again within a specified period of time.
Defining Performance Problems: Often, appraisals do not follow such a clear-cut path: Frequently, supervisors have trouble defining a problem with a employees performance. Such nebulous problems can include not working independently, a lack of enthusiasm or
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repeated mistakes. How can a manager you accomplish what needs to be done without having to direct such employees every step of the way? Why do some employees really care about their jobs while others do only what they are told (and then only if their supervisor stands over them)?
4.4.4 What is the point of Performance Appraisal? By Robert Bacal M.A

Robert Bacal is a noted author, keynote speaker, and management consultant. His most recent books include Performance Management - A Briefcase Book, and The Complete Idiot's Guide To Managing Difficult Employees.
Probably the most misused and abused and disused management tool in history is the performance appraisal. It's the strangest thing. Ask any manager or human resources person whether they think performance appraisal is an important thing to do, they are almost unanymous. "Of course it is", is the common response. If you ask why it's important, they will tell you and tell you and tell you.
The odd thing is that they often don't get done, and managers, supervisors and employees hate the darned things. Human resource professionals spend a lot of time whipping people into doing them, while managers look for a variety of reasons to delay and delay.
It's uncomfortable to do performance appraisals. But why is it uncomfortable? Because people undertake them for the wrong reasons and wrong perspective, which ends up putting the manager and the employee on different "sides". Appraisals are used for determining pay increases, who gets let go, who gets promoted. Often they are used to focus on what people have done wrong.
The most important purpose or goal of the appraisal is to improve performance in the future...and not just for the employee. Managers can get valuable
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information from employees to help them make employee's jobs more productive. Work units and organizations can identify problems that interfere with everyone's work. If we shift from affixing blame, to identifying barriers to performance we begin to remove the fear and dread people have about these "appraisals". When we focus on the present and the future, we change our focus to what's been to what can be better tomorrow. An appraisal that works involves a number of things, but first and foremost is the process of identifying what has gotten in the way of better performance (regardless of the level of performance), and how manager and employee can work together in the future, to improve it. It's really that simple. When managers put away the "blaming stick" in appraisals and move to a cooperative, dialogue approach, the whole process can become more comfortable and effective. Because, it puts the manager and employee on the same side, and working towards the same goals, getting better and better. Sure, we do use appraisals for a number of reasons but if we are going to get real value out of the time and energy we put into them, we have to look at the process in a more constructive way. And, bottom line, that's making performance better.
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4.5 OBJECTIVE OF THE STUDY
To study the existing performance appraisal system in Mangalore Refinery and Petro-Chemicals Limited. To know the perception of the employees regarding the existing appraisal system in the company. To identify the role of performance appraisal in enhancing employees effectiveness and role clarity. To measure job performance that will facilitate ongoing coaching and development of the employee. To study the procedures undergone during process of performance appraisal. To study the relationship between employee and employer relationship. To study the methods of appraisal and rating scale.
4.6 METHODOLOGY OF THE RESEARCH Type of research: This study would be descriptive research since fact-finding enquiries such as survey would be used for a definite purpose, which is evaluating the Performance Appraisal System. As a result, in my opinion, Descriptive Research would be the best option. Research Design: To arrive at a meaningful sample, the list of employees in all Management and non management grade shall be taken. A sample is a smaller representation of the large whole. In this sampling method I have made use of systematic random sampling method. After careful observation I have selected employees (appraisees)
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on random basis to give equal chance to the respondents who belong to different departments. Further 53 employers (appraisers) of the organization were interviewed through questionnaire. The entire sample possesses more than 2 years of experience at MRPL. Data Collection: The data required for the purpose of the study will be collected through Primary and Secondary data. i. Primary data: a. In order to find out the Performance Appraisal System in MRPL a Questionnaire is proposed to be developed. The investigator shall be meeting each individual of the sample and explain to him contents of the questionnaire to get the right information from the respondents. b. Observation and Interviews to identify the perception of employees towards various aspects of Performance Appraisal System in the organization. ii. Secondary data: The secondary data will be computed through Performance Appraisal System Reports, Human Resource Information System, Performance Appraisal Manuals, Company Procedures, journals, and books related to the topic. Analysis of data: The data collected through questionnaire will then be tabulated and analyzed by using statistical package and methods such as SPSS and percentage, pie diagram, and line diagrams respectively. Limitations of the Study: Every study has its limitations due to the unpredictable environment that it is conducted by the researcher may have control over his aspect of the study but has to
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depend on his universe and sample for the study. Within a limited time period a lot of information had to be collected. Due to time constraint and hectic schedule of MRPL employees, occasionally I found difficulty in interaction with employees. Organization being very large an effort was made to do the tasks effectively and efficiently but more detailed study could have done by having large sample size. Employees delayed in submitting the feedback form so it effected the time in compiling and analyzing data for findings and suggestions. Many questions were responded as Cannot Say due to the subjectivity of the topic and some information was not revealed due to certain reasons like being confidential in nature, as a result those questionnaires were of new use in my report.
Some respondents felt hesitated to express their opinion in front of us. Hence attaining accurate result is not possible.
As the top management employees are very busy and time conscious, it was not possible to meet them personally and to have discussion with them.
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CHAPTER 5 DATA ANALYSIS 5.1 Analysis of the questionnaire:

A questionnaire was conducted at Mangalore Refinery and Petrochemical Limited. However, I out of the 120 questionnaires prepared. Only 60 could be distributed and only 53 questionnaires were properly answered by the respondents. There were many problems like employees being absent, they were prre-occupied and so on another problem was that our access was restricted to only a few buildings and not to the whole premises for safety as well as security reasons. Time constraint was also on our hands.
Table 5.1 Sex Male Female Total Percent 50.9 49.1 100.0
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Chart 5.1
From the above graph, its clear that above 40% of the employees at Mangalore Refinery and Petrochemical Limited are at the age group of 30 29 Years. Following with 24.53% in the age group of 40 49 and 20.75% above the age group of 50 years.
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Table 5.2 Education Qualification Valid Percent Diploma Graduate Post Graduate Technical Professional Total Chart 5.2 7.5 15.1 41.5 24.5 11.3 100.0
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From the above graph, its evidently clear that a majority of the population in Mangalore Refinery and Petrochemical Limited are Post Graduates in one or the other discipline. Followed by Technical Graduate Professional and Diploma
Table 5.3 (1) Valid Percent technical Clerical Supervisory administrative Total 28.3 11.3 18.9 41.5 100.0
Table 5.3 (2) Job Type Clerk DGM (FN) DGM (MR) Dy Mngr1 Engineer Exc Jun Off Valid Percent 3.7 1.9 1.9 1.9 18.5 9.3 1.9 Jun Offr Manager Nil Officer Sen Exc Sen Mgr Sen Off Sen Offr 3.7 9.3 1.9 24.1 5.6 1.9 3.7 1.9
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Sen. Off Sr. Exec
1.9 1.9
Tech Total
1.9 100.0
Chart 5.3 (1) & (2)
Here we come to know that majority of the population are Administrative in nature. Followed by Technical, Supervisory and Clerical respectively. Apart from this, we also come to know that a majority of the employees are permanent in nature
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Table 5.4 (1)
Table 5.4 (2)
Salary Per Month below 20000 21000-30000 31000-40000 41000-50000 above 50000 Total
Percent 15.1 24.5 49.1 9.4 1.9 100.0
Experience below 5 years 5-10years 10-15years above 15years Total
Percent 26.4 24.5 45.3 3.8 100.0
Chart 5.4 (1) & (2)
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From the above graph, we come to know that 48.15% of the employees earn about Rs. 31000 - Rs. 40000 and 44.44% of the employees have an experience of 10 15 years.
Q. How is the appraisal usually conducted in your organization? Table 5.5 Appraisal Forman appraisal Informal appraisal Combination Never conducted Total
Chart 5.5
Percent 56.6 30.2 9.4 3.8 100.0
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From the above graph, its clear that a majority, i.e. 56.6% of the employees have undergone Formal Appraisal, followed by 39.19% with Informal and 9.43% with a combination of both. However the 3.77% who said that Performance Appraisal has never been conducted may have been Contract Workers, who work in MRPL for a limited period of time and then move on to another organization.
Q. Do you feel that prior information is provided if employees ratings are below a certain
level? Table5.6 Particulars Strongly Agree Agree No Opinion Disagree Strongly Disagree Percent 22.2 46.3 11.1 13.0 5.6
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Particulars Strongly Agree Agree No Opinion Disagree Strongly Disagree Total Chart 5.6
Percent 22.2 46.3 11.1 13.0 5.6 100.0
From this Pie Chart we can safely say that 46.30% have received prior information regarding their performance prior to Performance appraisal.
Q. Is performance is the root cause for promotion? Table 5.7
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Particulars Strongly Agree Agree No Opinion Disagree Strongly Disagree Total

Chart 5.7
Percent 22.2 57.4 7.4 7.4 3.7 100.0
From this Histogram, we can say that approximately 59%% of the employees at MRPL strongly believe that Performance Appraisal is the root cause for their promotion followed by 22.2% who believe that.
Q. Individual feedback should be provided after the appraisal? Table 5.8

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Particulars Strongly Agree Agree No Opinion Disagree Strongly Disagree Total

Chart 5.8
Percent 27.8 46.3 14.8 7.4 1.9 100.0
In this situation, 27.8% believe that individual feedback should be provided after that appraisal. After enquiring with the employees, all have stated that this would help them to better their performance for future developments.
Q. The management helps to provide an atmosphere where all are encouraged for teamwork and comradeship?
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Table 5.9 Particulars Strongly Agree Agree No Opinion Disagree Percent 30.19 47.17 13.21 3.77
Strongly Disagree 5.66 Total

Chart 5.9
100.0
Here, approximately 47%of the employees believe that the management in MRPL push for teamwork within the organization. Followed by 30% who stand by it. This is really good as it would involve interaction among the employees and finishing off the work faster. Q. Does your Superior appreciate you when you do a good job?
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Table 5.10 Particulars Yes No Total Chart 5.10 Percent 74.51 25.49 100.0
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Q. If YES, the appreciation/reward in terms of Bonus, Promotion, Vacation Packages, Certification and Perks? Table 5.11 Particulars 1. Bonus 2. Promotion 3.Vacation Packager 4. Certification 5. Perks Total Chart 5.11 Percent 13.2 32.1 3.8 47.2 3.8 100.0
From this, we can safely say that majority of the reward for a good work by an employee is through Certification. This is the best method as too much expenditure isnt incurred and its helpful to an employee in case he gets a better offer in another company.
85
Q. The appraiser rates my performance based on Personal Observation, Colleagues Opinion, Personal Interaction, Departmental Heads, or Clients Interaction.? Table 5.12 Particulars Strongly Agree Agree No Opinion Disagree Strongly Disagree Total Table 5.13 Particulars Strongly Agree Agree No Opinion Disagree Strongly Disagree Total Percent 9.4 49.1 24.5 7.5 9.4 100.0 Percent 28.3 52.8 11.3 3.8 3.8 100.0
86
Table 5.14 Particulars Strongly Agree Agree No Opinion Disagree Strongly Disagree Total Percent 15.1 43.4 28.3 9.4 3.8 100.0
Table 5.16 Particulars Strongly Agree Agree No Opinion Disagree Strongly Disagree Total Percentage 17.0 56.6 13.2 7.5 5.7 100.0
87
Chart 5.12, 5.13, 5.14, 5.15 & 5.16
From the above graph, its clear that the employees at MRPL believe that their performance is being rated on the above mentioned basis equally.
88 Q. Are you rated on your competencies such as Knowledge, Problem Solving,
Communication Skills, Software Tools, Teamwork, Flexibility and Decision Making ability? Table 5.17 Particulars Strongly Agree Agree No Opinion Strongly Disagree Total Percent 26.4 52.8 17.0 3.8 100.0
Chart 5.17
Here, 51.85% of the employees believe that they are rated based on their knowledge.
89
Table 5.18
Here, 55.56% of the employees believe that they are rated based on their Problem Solving skills.
90
Table 5.19 Particulars Strongly Agree Agree No Opinion Disagree Strongly Disagree Total Chart 5.19 Percent 13.2 50.9 32.1 1.9 1.9 100.0
Here, 50% of the employees believe that they are rated based on their Communication Skills.
91
Here, 43% of the employees believe that they are rated based on their Software Skills.
92
Here, 42% of the employees believe that they are rated based on their capacity to perform in a team.
93
Chart 5.22
Here, 55% of the employees believe that they are rated based on their flexibility to perform in any situation given to them by the management or organization.
94
Here, 44% of the employees believe that they are rated based on their capacity to make effective decisions in their job.
95
Q. In your opinion, should there be some incentives based on the individual and group performance?
Table 5.24 Particulars Yes No Total Percent 65.38 34.62 100.0
Chart 5.24
In this graph, majority of the employees, i.e. 65% agree that there should be some kind of incentives based on individual / group performance. As of now, no such incentives exist in MRPL.
96
Q. Are you provided with the genuine feedbacks? Table 5.25 Particulars Most Likely Likely No Opinion Unlikely Never Total Percent 22.6 54.7 11.3 7.5 3.8 100.0
Chart 5.25
Here, 55% believe that the feedback that they receive is genuine in nature, followed by 23% who have some doubt.
97
Q. Do you find appraisal counseling beneficial for future developments? Table 5.26 Particulars Strongly Agree Agree No Opinion Disagree Strongly Disagree Total Chart 5.26 Percent 35.8 54.7 3.8 1.9 3.8 100.0
Here, 55% believe that appraisal counseling is beneficial for their future developments. However, as of now, no such appraisal counseling exists in the organization.
98
Q. Do you think management take a serious note of training requirements shown in the appraisal?
Table 5.27 Particulars Yes No Total Chart 5.27 Percent 62.3 35.8 100.0
62% of the employees at MRPL believe that the management takes serious note of the Training Requirements shown in the appraisal followed by 36% who oppose this fact.
99
Q. Do you want the system of 360 degree appraisal in which you can appraise your superior? Table 5.28 Particulars Strongly Agree Agree No Opinion Strongly Disagree Total Chart 5.28 Percent 32.1 50.9 9.4 7.5 100.0
Here, a majority of the employees believe in 360 of Performance Appraisal and they would like to appraise their employees.
100
Q. Do you think your appraisal form reflects your true performance? Table 5.29 Particulars Most Likely Likely No Opinion Never Total Chart 5.29 Percent 26.4 52.8 17.0 3.8 100.0
Here, approximately 53% believe that the appraisal form reflects their true performance.
101
Q. Do you think you have sufficient control over your work environment? Table 5.30 Particulars Strongly Agree Agree No Opinion Disagree Strongly Disagree Total Chart 5.30 Percent 24.5 50.9 17.0 1.9 5.7 100.0
Here approximately 70% of the total population believes that they have sufficient control over their work environment.
102
CHAPTER 6 FINDINGS
6.1 MAJOR FINDINGS
1. The appraisal process provides them an opportunity for development and growth. 2. The management helps to provide an atmosphere where all are encouraged for comradeship and teamwork. 3. Appreciation is provided for the job done well, mostly in the form of a certification. 4. The appraisers are generally aware about their subordinates and their talents and potential. 5. Most of the raters have the ability to give constructive criticism in a friendly, firm and positive manner. 6. Employees are being rated on their knowledge and skills. And decision making ability. 7. MRPL has maintained a fair relationship between the Top Level, Middle Level, and Bottom Level management. 8. The study reveals that majority of the employees belongs to the age group between 30 years - 39 years. This shows that the workforce in MRPL is young, energetic as well as experienced. 9. MRPLs appraisal system is being strongly considered as an effective instrument for helping the employees to grow and develop in an organizational setup by 60% of the respondents. 10. The employees of this organization are being motivated through the feedback of performance appraisal system. 11. The study reveals that 50 percent of the respondents strongly agree that self appraisal system helps towards self monitoring oneself.
103
12. It is found that around 70 percent of respondents convey that promotion is not purely based on performance appraisal of an employee even other factors such as handling situations and job experience etc. 13. Majority of the respondents have strongly conveyed that appraisal systems helps in identifying those areas in which they are lacking and gives an opportunity to improve for the better performance. 14. Appraisal data are being used by the HRD department as an important mechanism designed and utilized for the all-round development and growth of employee in the organizations, also to evaluate whether employees at various level perform their assigned jobs as per norms. 15. The salary decisions are based on Performance Appraisal ratings of an employee. If the ratings are good then they are been promoted or given some incentives. The most common being certification. 16. The appraisal system defines rating scale clearly. 17. The appraisal results are kept partly confidential by appraiser that means the rating are not shown to appraisee. So there is a need to bring in openers and results need to be communicated in a positive approach. 18. MRPL provides good working environments to its employees.
104
CHAPTER 7 SUGGESTIONS AND CONCLUSIONS
7.1 SUGGESTIONS:
The performance appraisal system of MRPL is of good quality. On the basis of the analysis of responses and findings I have reached to some conclusions. So taking them into consideration few steps may be considered to strengthen the performance appraisal system.
1. The system should be made more transparent. This can be achieved by creating awareness among the employees regarding each and every aspect of the appraisal process. They should be made aware about the standards and the criterions for evaluation. Further they should be shown the appraisal result.
2. The appraiser and appraisee should sit together and then the appraiser should rate the appraisee for his performance and should state the reason for the same. This will increase the level of transparency and the employee will feel satisfied as he will have an opportunity to respond at that very moment itself.
3. The genuine feedback should be provided to the employees. So that they may be in a position to know where they stand exactly. So that they can identify their performance gaps and prepare accordingly for the future.
4. The general belief among employees is that the relations with the superior affect the evaluation process. This is not good as this creates a sense of favoritism in the organization. No doubt one should be in pleasing terms with the superior but that should not affect the evaluation at all. For this the raters should always consider the performance as the only measure for the evaluation.
105
5. The raters should take note of the critical performance incidents of an individual so that at the end of the year it should not be that only the recent performances are given more weightage.
6. Raters should consider the specific requirements of the people to do the job. They should help them out by providing necessary skill set to do the job more efficiently. They should set the goals as per the potential and caliber of the individual.
7. Employees should have the opportunity to respond to the appraisal result. For this individual feedback should be provided.
8. Management should take serious note of the training requirements shown by the individual in the appraisal sheet. Training plays a vital role in the development of an individual and helps improve the performance.
9. Some incentives should be introduced on the performances basis. This thing creates a sense of healthy competition among employees which boost up the growth of the individual as well as the organization.
Again, the frequency of appraisals should be increased for employees who have got a poor / below average rating in their last appraisal and adequate counseling should be given so that the employees improve gradually and this will make sure that the company has better work force and that will help in the long run.
Creating new avenues such as full-fledge Projects, Corporate Planning, Marketing, New technology selection etc., departments, which do not exist today, at least in recognizable strength.
Creating more posts at intermediate managerial levels such as Additional Senior Manager, Additional General Manager etc.
106
This is because of the promotional policy of the company where every person who qualifies is rewarded, without much distinction between an excellent and an ordinary performer.
This will not only cause a problem for management of the organization in the long run, but also a drop in the motivation and morale of the employees. Now this problem can be countered by modifying the promotional policy of the organization.
The organization can go for one time financial benefit system. This is because as per the promotional policy, the promotions into some of the cadres the promotions are dependent on vacancy. A situation is prevalent in the company where the employees are not getting promotions, in spite of being qualified and eligible to get one, because of the non-availability of one vacancy. In this case, the employees do not get reward except the usual annual increment. Employees may be given financial incentives, such as higher basic, different perks, such as loans etc. for the higher scale, travel status of higher rank etc., if they have performed exceedingly well even though they might not be promoted to the higher cadre due to lack of vacancies.
Poor rating or below average rating must be supported with proofs or documents and such a rating can be given only after adequate counseling. For such employees intermediate appraisals should be conducted and this can be done once in 6 months and the progress of such employees should be monitored carefully.
As pointed out earlier in the report, many times, it does happen that promotions are stopped because of lack of vacancies and in such cases when the employee performs above expectations, management must see to it that he gets the
recognition for his services. It can be in the form of some prize such as best employee award. This can be a very good motivator for an employee who performs well and not only that, such awards also bring out the best from other employees and give a competitive edge to the whole organization.
107
7.2 CONCLUSION
Performance Appraisal forms the backbone of performance management. Any organization, to progress a head needs to look into performance appraisal as a major growth indicator. Performance appraisals can transform an organization into a highly competing and a world-class unit as it deals with the employees, who run the organization, for this reason the H.R.D. department plays a vital role in any organization. The project undertaken solely aimed at making the performance appraisal system more efficient and more meaningful. One must understand that there is nothing called as a perfect performance appraisal system and there can never be one. It is impossible to do a project work on performance appraisal, without touching some sensitive and foremost important, issues like safety measures, promotions, medical facilities, since the latter is an output of the appraisal only. Many employees in fact closely interlink the two. Hence some of the suggestions do touch upon the promotion issue, though not in an exhaustive way. At the end of the whole study on the performance appraisal system in MRPL, I have come up with suggestions, which may kindly be looked into. Although it cannot be predicted as to how far the suggestions will go in making the performance appraisal effective, but I sincerely feel that it could be of some help to the grey areas discussed in the earlier report. The success and acceptability of the some can be gauged only on implementation. Since the suggestions have been formulated on the basis of feed back of the survey conducted at the organization. I sincerely hope the changes suggested should be acceptable to the employees and the management.
108
BIBLIOGRAPHY
1. Rao T.V. HRD Audit, Evaluating the Human Resource function for Business improvement ; Response Books ( A division of Sage Publications) New Delhi/ Thousand Oaks / London. 2. Udai Pareek & Rao T.V. Designing & Managing Human Resource Systems ; Oxford & IBH Publishing Co.. Pvt Ltd. 3. Basava K.D., Human Resource Development; Vidya Vahini Prakashan, Hubli. 4. Rao T. V., Appraising & Developing Managerial Performance ; Excel Books, T.V. Rao Learning Systems Pvt. Ltd. 5. Rao V.S.P., Managing People; Excel Books Pvt. Ltd., New Delhi 110 028. 6. Dick Grote, The complete guide to Performance Appraisal ; Amacom American Management Association 1601 Broadway, New York, NY 100 19. 7. Gary Latham P. and Wexley, Kenneth N., Increasing Productivity through Performance Appraisal, Addison Wesley Publishing Company, California.
Websites:
http://www.businessballs.com/performanceappraisals.htm Last accessed on 09/08/2010 http://business.mapsofindia.com/india-petroleum-industry/ Last accessed on 09/08/2010 http://derekstockley.com.au/a-human-resources.html Last accessed on 09/08/2010 http://www.moneycontrol.com/financials/mangalorerefinerypetrochemicals/cashflow/MRP Last accessed on 10/08/2010 http://derekstockley.com.au/h-performance-management.html Last accessed on 10/08/2010
109
http://derekstockley.com.au/a-hr-issues.html Last accessed on 18/08/2010 http://www.moneycontrol.com/financials/mangalorerefinerypetrochemicals/ratios/ MRP Last accessed on 19/08/2010
http://performance-appraisals.org/Bacalsappraisalarticles/ Last accessed on 19/08/2010 http://www.jobseekersadvice.com/career_advice/articles/performance_appraisal.h tm Last accessed on 21/08/2010
http://www.moneycontrol.com/financials/mangalorerefinerypetrochemicals/profit -loss Last accessed on 25/08/2010
http://derekstockley.com.au/performance-management-articles.html Last accessed on 29/08/2010 http://work911.com/performance/particles/perfpoint.htm Last accessed on 02/09/2010 http://www.readysetpresent.com/products/articles/performanceappraisals.htm Last accessed on 15/09/2010 http://www.oppapers.com/subjects/review-of-literature-of-performance-appraisalproject-page1.html Last accessed on 15/09/2010
http://www.allbusiness.com/management/584817-1.html Last accessed on 15/09/2010 http://chesterrep.openrepository.com/cdr/handle/10034/76114 Last accessed on 15/09/2010 http://www.assignmentsplus.com Last accessed on 15/09/2010 www.profilematchassessments.com Last accessed on 15/09/2010
110
http://www.moneycontrol.com/financials/mangalorerefinerypetrochemicals/balan ce-sheet/MRP Last accessed on 20/09/2010
http://www.mrpl.co.in/htmlfiles/HS-policy.htm Last accessed on 20/09/2010 http://en.wikipedia.org/wiki/Mangalore_Refinery_and_Petrochemicals_Limited Last accessed on 20/09/2010 http://business.mapsofindia.com/india-company/mrpl.html Last accessed on 20/09/2010
111
ANNEXURE
Questionnaire on the topic PERFORMANCE APPRAISAL with reference to MRPL
Respected Sir/ Madam
I Saihl Peter Aranha, student of St. Aloysius College doing my 1st Year (II Sem.), M.B.A course, will be carrying out an Internship Project as a part of MBA curriculum. I therefore kindly request you to furnish the required information as per the questionnaire that would benefit me greatly. I declare that the information provided by you will be kept confidential and solely used for my academic purpose only.
Thank You Yours faithfully Saihl Peter Aranha
112
Personal details 1. Age 20-29 30-39 40-49 () () ()
Above 50 ( )
2. Sex
Male
()
Female ( )
3. Marital status
Married ( ) Unmarried ( )
4. Educational Qualification Diploma ( ) Graduate ( ) Post Graduate ( ) Technical ( ) Professional ( )
5. Designation:
6. Name of the department:
8. Type of job
Technical ( ) Clerical ( ) Supervisory ( ) Administrative ( )
9. Name of the job
Permanent ( ) Temporary ( ) Contract ( )
113
10. Salary per month
below 20000 ( ) 21000-30000 ( ) 31000-40000 ( ) 41000-50000 ( ) Above 50000( )
11. Year of experience
below 5 5- 10 years 10-15 years Above 15 years
Please answer the following questions according to your opinion.
Q1.Please place a mark on the scale below to indicate how you would chacterize your relationship with the organization?
Unsatisfactory [___] [___] [___] [___] [___] satisfactory Unproductive [___] [___] [___] [___] [___] productive Uncooperative [___] [___] [___] [___] [___] cooperative
Q2. How the appraisal is usually conducted in your organization? Formal appraisal Informal appraisal Combination Never conducted ( ) ( ) ( ) ( )
114
Q3. Do you feel that Prior information is provided if employees ratings are below a certain level? Strongly Agree ( ) Agree No Opinion Disagree Strongly Disagree ( ) ( ) ( ) ( )
Q4. Is Performance a root cause for promotion? Strongly Agree ( ) Agree No Opinion Disagree Strongly Disagree ( ) ( ) ( ) ( )
Q5. Individual feedback should be provided after the appraisal?
Strongly Agree Agree No Opinion Disagree Strongly Disagree
( ) ( ) ( ) ( ) ( )
Q6. The management helps to provide an atmosphere where all are encouraged for teamwork and comradeship.
Strongly Agree Agree No Opinion Disagree Strongly Disagree
( ) ( ) ( ) ( ) ( )
115
Q7. My Superior appreciates me when I do a good job.
Yes ( )
No ( )
Q8. If YES, the appreciation/reward in terms of the following (tick as many as possible) a. Bonus b. Promotion c. Vacation Packages d. Certification e. Perks f. Any other, please specify:____________
Q9. The appraiser rates my performance based on the following situations. Strongly Agree Agree Dont Know Disagree Strongly Disagree a. Personal Observation b. Colleagues opinion c. Personal Interaction d. Departmental heads e. Client interactions ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )
Q10. The employees are provided with the opportunity to respond to the feedback of the appraisal.
Every time Occasionally Optionally Never
( ) ( ) ( ) ( )
116
Q11. Are you rated on your competencies? Strongly Agree Agree Dont Know Disagree Strongly Disagree Knowledge Problem solving Communication skills Use of software Tools Teamwork Flexibility Decision making ability. ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )
Q12. In your opinion, should there be some incentives based on the individual and group performance?
Yes
No
Q13. Are you provided with the genuine feedbacks?
Most Likely Likely No Opinion Unlikely Never
( ) ( ) ( ) ( ) ( )
117
Q14. Do you find appraisal counseling beneficial for future developments? Strongly Agree Agree No Opinion Disagree Strongly Disagree ( ) ( ) ( ) ( ) ( )
Q15. Do you think management take a serious note of training requirements shown in the appraisal?
Yes
No
Q16. Do you want the system of 360 degree appraisal in which you can appraise your superior? Strongly Agree Agree No Opinion Disagree Strongly Disagree ( ) ( ) ( ) ( ) ( )
Q17. Do you think your appraisal form reflects your true performance? Most Likely Likely No Opinion Unlikely Never ( ) ( ) ( ) ( ) ( )
118
Q18. Do you think you have sufficient control over your work environment? Strongly Agree Agree No Opinion Disagree Strongly Disagree ( ) ( ) ( ) ( ) ( )
Thank you for your time and patience. With warm regards. Saihl Peter Aranha
119
BALANCE SHEET OF MANGALORE REFINERY AND PETROCHEMICAL LIMITED FOR THE YEARS 2004 - 2009 Mangalore Refinery and Petrochemicals Balance Sheet Mar '05 ...Rs. in crores... Mar '06 Mar '07 Mar '08 Mar '09
SOURCES OF FUNDS
Total Share Capital
1,761.80
1,761.80
1,761.80
1,761.82
1,761.83
Equity Share Capital
1,752.61
1,752.62
1,752.62
1,752.64
1,752.65
Share Application Money
Preference Share Capital
9.19
9.19
9.19
9.19
9.19
Reserves
401.83
633.54
994.99
2,021.12
2,967.57
Revaluation Reserves
120
Net worth
2,163.63
2,395.34
2,756.79
3,782.94
4,729.40
Secured Loans
893.44
579.71
437.82
350.2
238.94
Unsecured Loans
2,573.10
2,727.56
1,930.48
1,707.86
1,747.86
Total Debt
3,466.54
3,307.27
2,368.30
2,058.06
1,986.80
Total Liabilities
5,630.17 Mar 05 6,740.19 2,335.35 4,404.84 77.98 0 1,911.62 960.8 7.52 2,879.94 1,785.49
5,702.61 Mar 06 6,779.36 2,683.49 4,095.87 409.23 27.28 1,890.70 1,153.02 3.19 3,046.91 1,448.72
5,125.09 Mar 07 7,297.80 3,036.38 4,261.42 98.71 27.28 2,498.27 1,194.87 6.12 3,699.26 902.14
5,841.00 Mar 08 7,371.61 3,398.81 3,972.80 133.67 645.14 3,624.30 2,204.70 12.32 5,841.32 1,378.41
6,716.20 Mar 09 7,415.88 3,766.14 3,649.74 414.95 642.89 1,890.43 1,286.98 15.37 3,192.78 2,569.95
APPLICATION OF FUNDS Gross Block Less: Accumulated Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances
121
Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses
1.64 4,667.07 0 3,271.31 278.95 3,550.26 1,116.81 30.53
2 4,497.63 0 3,144.92 182.47 3,327.39 1,170.24 0
126.78 4,728.18 0 3,808.96 181.53 3,990.49 737.69 0
394.34 7,614.07 0 5,506.68 1,017.98 6,524.66 1,089.41 0
1,755.75 7,518.48 0 3,902.06 1,607.81 5,509.87 2,008.61 0
Total Assets
5,630.16
5,702.62
5,125.10
5,841.02
6,716.19
Contingent Liabilities Book Value (Rs)
796.98 12.29
861.53 13.61
669.59 15.67
746.67 21.53
5,739.54 26.93

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1

1.1 PETROCHEMICAL INDUSTRY PROFILE

1.1.2 ORIGIN OF PETROLEUM

St. Aloysius Institute of Management and Information Technology

1.1.3 PETROLEUM INDUSTRY IN INDIA

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

1.1.4 GROWTH OF THE PETROLEUM INDUSTRY

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

1. 1.5 Overview of the Petrochemical Segment:

The main Indian companies in the petrochemical segments are:

In Kolkata the Haldia petrochemical RIL industries Ltd in Mumbai

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

are also 4 aromatic complexes with a capacity of 2.9 MMT of Xylenes.

1. 1.8 Key SegmentsPetrochemical industry is constituted of the following key segments:

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

The major Indian companies in this sector are:

St. Aloysius Institute of Management and Information Technology

automobiles, medical appliances, packaging, horticulture and agriculture.

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

Following are the challenges facing India petrochemical industry:

Problems faced by the India petrochemical industry:

St. Aloysius Institute of Management and Information Technology

Enhance competitiveness to stimulate growth Unlock its potential

To be a leader in technology with a unique product development capability.

St. Aloysius Institute of Management and Information Technology

1.1.14 Demand & Future:

Healthcare Food preservation Hardware

Transportation Equipments in office

St. Aloysius Institute of Management and Information Technology

1.1.15 Price Volatility:

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

1.2 COMPANY PROFILE

MANGALORE REFINERY AND PETROCHEMICALS LIMITED [MRPL]

AN ISO 9001:2000 AND ISO 14001 CERTIFIED COMPANY

St. Aloysius Institute of Management and Information Technology

1.2.1 SHAREHOLDING OF MRPL-ONGC

M.R.P.L is an organization when asset base of over 7000crores.

St. Aloysius Institute of Management and Information Technology

Chart No. 2.1 Shareholdings of MRPL

HPCL RESIDENT INDIVIDUALS

DOMESTIC COPM NON-D.C GIC & SUBSID. BANKS MUTUALS FUNDS

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

St. Aloysius Institute of Management and Information Technology

1.2.5 INFRASTRUCTURE FACILITIES:

General Black topping of village roads.

St. Aloysius Institute of Management and Information Technology

Digging Bore wells in Villages.

1.2.8 DEPARTMENT AND STRUCTURE

St. Aloysius Institute of Management and Information Technology

Non Technical Department