Project Report... Deepika

PROJECT REPORT ON
“Effectiveness of Performance Appraisal in ONGC”
Submitted in partial fulfillment of MBA
Under the supervision of Submitted by

Mr. Amit Minz Deepika Singh
Dy.Manager (HR), ONGC Ltd. MBA 3
Deepika Singh
GEU Dehradun Page 1
Graphic Era University
(Deemed University)
DehraDun,Uttarakhand
“Effectiveness of Performance Appraisal in ONGC”
Summer Internship Report

Internship Report submitted as a partial requirement for the
award of the two year
Master of Business Administration Programme
MBA 2012-14
Submitted To : Submitted By :
Dr.Rashmi Tripathi Deepika Singh
Asst. Professor MBA 3 sem
FACULTY OF MANAGEMENT STUDIES
Deepika Singh
GEU Dehradun Page 2
SELF CERTIFICATE
I hereby certify that I, Deepika Singha student of MBA 2012-2014 batch of Graphic Era
University DehraDun have successfully completed my Corporate Internship with Oil and
Natural Gas Corporation Limited (ONGC), in the month of July, 2013 . This is also to certify that
this report is an original product and no unfair means like copying etc have been used for its
completion.
Name: Deepika Singh

Signature:
Deepika Singh
GEU Dehradun Page 3
ACKNOWLEDGMENT
With warm regards, I would like to thank Mr. Amit Minz , Dy.Manager , ONGC ,my guide who
guided me throughtout in preparing my project and helped me to learn and experience the
corporate work, without whose guidance and support this project would not have been possible.
This Project deals with the ‘Effectiveness of Performance Appraisal in ONGC’ and I have
focused upon the executives from E0-E6.
I owe my special thanks to Dr Rashmi Tripathi my mentor who guided me in the very initial days
and helped me at each step.
Deepika Singh
Deepika Singh
GEU Dehradun Page 4
Table of Contents
Sr.No. Topic Page No
1 Executive Summary Page 5
2 Introduction & Objectives Page 6,7
3 Company’s Profile Page 8 – 12
4 Industry Analysis Page 13 – 21
5 Financial Analysis Page 22 – 31
6 Research Project Page 32 – 70
7 Conclusion Page 71 – 72
8 Recommendation Page 73 – 75
9 Limitation Page 76 – 77
10 Key Learning Page 78
Deepika Singh
GEU Dehradun Page 5
EXECUTIVE SUMMARY
Oil and Natural Gas Corporation Limited (ONGC) is engaged in the business of Oil exploration
and drilling of crude oil and natural gas and is the world’s second biggest exploration and
production Company. ONGC owns and operates in more than 11000 kilometers of pipelines in
India, including nearly 3200 kilometers of subsea pipelines. The company contributes more than
78% of India’s oil and gas production
Today ONGC is the flagship company of India and making this possible is a dedicated team of
nearly 40000 professionals who toil round the clock. It is this toil which amply reflects in the
performance figures and aspiration of ONGC’ians. The Company has adapted progressive
policies in scientific planning, acquisition, utilization, training and mo tivation of the
team. At ONGC everybody matters, every soul counts.
ONGC has a unique distinction of being a company with in-house service capabilities in all the
activity areas of exploration and production of oil & gas and related oil field services.
Needless to emphasize, this was made possible by the men & women behind the machine. Over
18,000 experienced and technically competent executives mostly scientists and
engineers from distinguished Universities/Institutions of India and abroad form the core of our
manpower.
This report concentrates on the study of the performance appraisal system being
practiced in ONGC and to check its effectiveness and further to suggest and recommend any
possible ways to improve and strengthen its PMS.
Deepika Singh
GEU Dehradun Page 6
INTRODUCTION
The role of HR is very crucial in any organization.”HR Mantra” is changing continuously in
most of the private sector companies yearning for better performance of its employees. On the
other hand, public sector enterprises in India are characterized by the resistance to change and
reformation. Since inception of planning in India, a system of mixed economy was introduced to
materialize the speedier process of industrialization in the country. Both the public & private
sectors were assigned responsibilities to play their effective roles in the development of the
economy.
However, the PSUs were entrusted with greater responsibility mainly because of the expectation
that public sector as an engine of growth will help achieve commanding heights of the India’s
economy. The poor performance of PSUs has been criticized across the nation, even globally and
the very existence of such organizations is being questioned.
Performance Appraisal in PSUs has therefore been considered necessary to assess their level of
efficiency for its further improvement with a view to ensure the increased level of profitability.
It’s in fact a difficult task to develop suitable indicators for measurement of performance in
PSUs.
As part of ONGC’s Vision & Mission statement, the HR policy was aimed to “Foster a culture of
trust, openness and mutual concern to make working a stimulating and challenging experience
for our people”. In a performance appraisal system, general characteristics such as “leadership,
public acceptance, attitude towards people, appearance and grooming, personal conduct, outlook
on life, ethical habits, resourcefulness, capacity for growth, mental alertness, loyalty to
organization” are susceptible to partiality and to the personal taste, whim, or fancy of the
evaluator” as well as “patently subjective in form and obviously susceptible to completely
subjective treatment” by those conducting the appraisals. ONGC as an organization emphasizes a
lot on Performance Appraisal of its employees. With the objective of improving employee’s
performance and fostering a culture that promotes enhancement of employee’s productivity
qualitatively as well as quantitatively; ONGC has even introduced e-PAR in 2008.
Deepika Singh
GEU Dehradun Page 7
The current form of Performance Appraisal practice being used is a four tier system of appraisal.
Every employee lists his/her KRAs/KPIs annually and forwards it to their respective appraiser.
In such a milieu I felt the need to study Performance Appraisal in ONGC and make an attempt to
know the viewpoints of employees about the current system. Another thing which I was
inquisitive about was whether the employees in a PSU are open to the idea of 360-degree
Appraisal or not. Through this summer training project, I’ve tried to measure the effectiveness of
the current form of Performance Appraisal in ONGC, the satisfaction and awareness among the
employees and their willingness to accept an appraisal system whereby their performance is
gauged not only by their boss but by their peers and subordinates as well.
Deepika Singh
GEU Dehradun Page 8
COMPANY PROFILE
Oil And Natural Gas Corporation (ONGC) a Maharatna Company is an Indian state owned Oil
and Gas Company. It is one of the largest Asia based oil and Gas exploration and Production
companies and produces around 77% of India’s Crude oil that is 30% of the country’s total
annual demand and produces around 81% of Natural Gas. ONGC is one of the largest publicly
traded companies by Market Capitalization in India.
The Oil and Natural directorate was formed in the year 1952 as part of department of Geological
Survey of India (GSI) to undertake the task of exploration of crude oil in the country. The
directorate was transformed into commission in the year 1956 thenceforth it was known
as Oil and Natural Gas Commission till recently in the year 1993 when it converted into a
public limited company and is known as Oil and Natural Gas Corporation Limited. The
ONGC is a pioneer organization today having its net assets worth Rs. 66199C r o r e s ( d u r i n g
2 0 0 8 - 0 9 ) a n d G r o u p S a l e s T u r n o v e r R s . 8 6 2 7 6 C r o r e s ( d u r i n g 2008-09). The
ONGC started with 60 employees in 1956 and most of them from GSI. The commission’s
initial expansion was very slow till the oil struck first time in the country in the year
1958 at Cambay. T h e C o m m i s s i o n ( a s i t i s k n o w n e a r l i e r ) u n d e r t o o k v e r y
c h a l l e n g i n g t a s k o f exploration and production of hydrocarbons within the country. It
surveyed large p a r t o f t h e c o u n t r y a c r o s s i t s l e n g t h a n d w i d t h . T h e
ONGC successfully discovered major fields in Gujarat, Assam and
B o m b a y H i g h . I t s r e c e n t discoveries are in Godavari, Kaveri basin and south
offshore. Its production rose from 53.75 MMT to about 60.77 MMT in the year 2008-09. The
rapid expansion in activities after discovering Bombay High oil fields and other prospective
areas called for large number of fresh recruitment. Founded on the 14th of August 1956 by
the Indian state with the visionary leadership of Pandit Jawahar Lal Nehru, and Shri Keshav Dev
Malviya who went against the wisdom of the multinational companies operating in the country
which had almost written India Off as a ‘Hydrocarbon Barren’ Country proved them wrong and
went forth setting up ONGC, which is now involved in exploring for and exploiting
hydrocarbons in 26 sedimentary basins of India, and owns and operates over 11,000 kilometers
pipelines in the country. Over 50 years of existence ONGC has crossed many a milestones to
realize the energy dreams of India. From a modest beginning, ONGC has grown to be one of the
largest Exploration & Production Companies in the world in terms of reserves and production.
Today ONGC is ranked 361 in the Fortune 500 Companies and is one of the ‘World’s Most
Admired Companies’. Ranked as the number two E & P Company in the world (Platt’s ranking
of top 250 Companies 2011), ONGC remains India’s most valuable PSU in terms of Net Profit
and Net Worth.
 ONGC has been ranked at 172nd position in the Forbes Global 2000 List for the year 2011
of the world’s biggest companies released on 21st April 2010. The ranking is based on
Sales ( US$ 22.6 Billion), Profits ( US $ 4.3 Billion ) ,Assets (US$ 44.6 Billion ) and
Market Capitalization ( US $ 53.2 Billion ).57 Indian Companies find placed in the list
among which ONGC has ranked at No. 3.
Deepika Singh
GEU Dehradun Page 9
 ONGC has been ranked 24th among Global publicaly –listed Energy Companies as per
‘PFC Energy 50”(2011)
 Financial Express in its latest listing of top 500 companies of India for the year 2010 -11
has placed ONGC, second on composite overall ranking amongst all the companies in
India.
 Business World in its latest survey on Most Respected Companies 2011 ( Published on
14th February, 2011) ranked ONGC fourth amongst all the companies in both Private
And Public Companies in India
 Transparency International in a recently released report ‘Promoting Revenue

Transparency: 2011 Report on Oil & Gas Companies has ranked ONGC at top on
parameters for Organizational Disclosures. ONGC ranked at 26th on reporting on Anti
Corruption programme and at 16th place on Country –level disclosure –International
Operations.
ONGC represents India’s Energy Security and has single handedly scripted India’s
hydrocarbon saga by:
 Establishing 7.38 Billion tones of In-place hydrocarbon reserves with more than 300
discoveries of oil and gas ;in fact 6 out of 7 producing basins have been discovered by
ONGC ; out of these In – place hydrocarbons in domestic acreages ,Ultimate Reserves
are 2.60 Billion Metric tons (BMT) of Oil Plus Oil Equivalent Gas ( O + OEG )
 Cumulatively produced 851 Million Metric Tons (MMT) of crude and 532 Billion Cubic
Meters (BCM) of Natural Gas from 111 fields.
 ONGC Has bagged 121 of 235 Blocks ( more than 50% ) awarded in the 8 rounds of
bidding under the New Exploration Licensing Policy (NELP) of the Indian Government.
 ONGC’s wholly owned subsidiary ONGC Videsh Ltd. (OVL) Is the biggest Indian
multinational, with 33 Oil Gas Projects (9 of them Producing ) in 15 countries i.e.
Vietnam ,Sudan, South Sudan ,Cuba, Russia, Libya, Columbia, Nigeria, Brazil ,
Kazakhstan, Venezuela.
ONGC has created the highest-ever Market Value-Added (MVA) of Rs. 24,258 Crore and the
fourth-highest Economic Value-Added (EVA) of Rs. 596 Crore, as assessed in the 5th Business
Today-Stern Stewart study (April 2003), ahead of private sector leaders like Reliance and
Infosys. ONGC is the only Public Sector Enterprise to achieve a positive MV A as well as EVA.
ONGC is targeting to have all its installations (offshore and onshore) accredited (certified) by
March 2005. This will make ONGC the only company in the world in this regard .Owns and
operates in more than 11000 kilometers of pipelines in India, including nearly 3200 kilometers of
sub-sea pipelines. No other company in India operates even 50 per cent of this route length.
Deepika Singh
GEU Dehradun Page 10
ONGC has Crossed the landmark of earning Net Profit exceeding Rs.10, 000 Crore, it is the first
to do so among all Indian Corporate, and has earned a remarkable Net Profit to Revenue ratio of
29.8 per cent. The growth in ONGC's profits is not solely due to deregulation in crude prices in
India, as deregulation has affected all the oil companies, upstream as well as downstream, but it
is only ONGC which has exhibited such a performance (of doubling turnover and profits).
Its 10 per cent equity sale (India's highest-ever equity offer) received unprecedented Global
Investor recognition. This was a landmark in Indian equity market, establishing beyond doubt,
the respect ONGC's professional management commands among the global investor community.
According to a report published in 'The Asian Wall Street Journal (Hongkong)', ONGC's Public
Issue brought in 20 Foreign Institutional Investors (FII’s) to India, as (it was reported), 'they
could not ignore the company representing India's energy security'.
The Market Capitalization of the ONGC Group (ONGC & MRPL) constitutes 10 per cent of the
Total Market Capitalization on the Bombay Stock Exchange (BSE). ONGC has an equity weight
age of 5 per cent in Sensex; 15 per cent in the Nifty (the only Indian corporate with a two-digit
presence there);ONGC commands a 7 per cent weight age in the Morgan Stanlely Capital
Investment.
The growth in ONGC's Market Capitalization (from Rs. 18,500 Crore before May 2001 to Rs. 1,
25,000 Crore in January 2004) is unprecedented and except Wipro (who had a higher market
capitalization temporarily),no other Indian Company (either in public or private sector) has show
such a growth phenomenon and hence ONGC has acquired the position in the World Map
ONGC has come a long way from the day (a few years back) when India and ONGC did not
figure on the global oil and gas map. Today, ONGC Group has 14 properties in 10 foreign
countries. Going by the investments (Committed: USD 2.708 billion, and Actual: USD 1.919
billion), ONGC is the biggest Indian Multinational Corporation (MNC). ONGC ended the
sectoral regime in the Indian hydrocarbon industry and benchmarked the globally- established
integrated business model; it took up 71.6 per cent equity in the Mangalore Refinery &
Petrochemicals Limited (MRPL), and also took up a 23 per cent stake in the 364-km-long
Mangalore-Hasan-Bangalore product Pipeline, connecting the refinery to the Karnataka
hinterland. By turning around MRPL in 368 days, ONGC has set standards of public sector
companies reviving joint (or private) sector companies, proving that in business, professionalism
matters, not ownership.
CORE ACTIVITIES OF ONGC

ONGC is mainly involved in the process of “Exploration & Production” which broadly means-
Establishing commercial accumulation of crude oil and natural gas in Subsurface at depth and at
a given cost.
- Introducing the established oil and gas reserve optimally as a economic viable.
Deepika Singh
ONGC STAKES AND SUBSIDIARIES
 MRPL known as Mangalore Refinery &Petrochemicals Limited (100.6% equity stake)
 ONGC Videsh Limited (ONGC’s overseas arm)
 Indian Oil Corporation (9.6% equity stake)
 Mansarovar Energy Columbia Limited, a 50:50 joint venture between OVL and
SINOPEC of China.
 ONGC NILE GANGA BV, a wholly owned subsidiary of ONGC Videsh Limited,
incorporated in Netherlands.
 ONGC MITTAL ENERGY Ltd. Is a joint venture between OVL (49.98) and Mittal
Investment Sarl (48.02%), remaining 2% being with SBI capital.
Deepika Singh
ONGC PLANT
 Hazira Plants
 Uran Plants
ONGC PROJECTS
 Project ICE
 EPINET
 IMPETUS
 CDM
 Vadodara
ONGC INSTITUTES
 GEOPIC : GEO-Data Processing and Interpretation center (Dehradun)
 KDMIPE : Keshav Deva Malviya Institute of petroleum Exploration (Dehradun)
 IDT : Institute of Drilling Technology (Dehradun)
 IRS : Institute of Reservoir studies (Ahmedabad)
 IEOT : Institute of Engineering and Ocean Technology
 IMD : Institute of Management Development (Dehradun)
 INBIGS : Institute of Biotechnology and Geotectonic Studies
 IOGPT : Institute of Oil and Gas production Technology
 IPSHEM : Institute of Petroleum Safety Health and Environment Management.
Deepika Singh
INDUSTRY ANALYSIS
The Economy at a Glance
The world is seeing a two-speed economy. After the shadows of the great recession in 2008,
global economy has started expanding; however, with two speeds. In developed world the
economic recovery is more than anticipated but medium-term outlook remains unexciting.
Growth remains subdued, with unemployment numbers still high. High funding requirements of
banks and sovereigns in Europe remains a concern. In contrast, emerging markets are on strong
wicket; growing fast. However, increasing inflation pressure may emerge as a spanner in the
growth saga. World real GDP growth registered 5.0% (Real GDP Growth % on Year-to-Year
basis) in 2010 and is forecasted to grow by 4.4% in
2011. In 2010, the real GDP in advanced economies grew by 3%; compared to 7.3% growth
recorded in emerging and developingeconomies; India and China grew by 10.4% and 10.3%
respectively. World Economic Outlook (April, 2011) has
projected that GDP of advanced and emerging economies will grow by 2.4% and 6.5%
respectively in 2011 (Source: World Economic Outlook, April 2011 and International Monetary
Fund Publication).
Rising prosperity fuelled by economic growth in the emerging economies and also strong
demand in Middle East are driving strong demand for oil and other energy sources. The WEO,
2011, expects that the difference between supply and demand
Would be made up from rising production of natural gas liquids and unconventional oil, notably
Canadian oil sands and bio fuels.
Industry Size and Trend of Growth
The Oil Industry started off more than five thousand years back. Oil sipping up from the ground
was used to make the boats waterproof in the Middle East and also used as medicating as well as
for painting different things. The Oil Industry is a very important industry in the world and a lot
depends on the price of the oil and it has been observed that whenever the oil prices increase the
price of various products also increases. The Oil Industry also through oil production accounts
for a large amount of consumption of Energy. In this issue the Middle East is in the first position
and the lowest consumption is done by the countries in Europe. According to the statistic the
amount of oil consumption by the world every Year is as many as 30 Billion Barrel among
which nearly 25 percent of the oil consumption is done by United States of America. The Oil
Industry can be parted in two Upstream and Downstream. The Non- OECD Asia (Including both
India and China) accounts for around 40 percent of the total increase in world oil use. From
estimation it is found that to meet the projected increase in world oil demand the total petroleum
supply in 2030 is required to reach 118 million barrels per day from 80 million barrels per day as
of the year 2003. The world oil consumption has increased by 1.2 million barrels per day in the
year 2005, even after the increase of 2.6 million barrels per day as in the year 2004.
Deepika Singh
Top World Oil Net Exporters, 2006
Country Net Exports (million barrels per day)
1) Saudi Arabia* 8.65
2) Russia 6.57
3) Norway 2.54
4) Iran* 2.52
5) United Arab Emirates* 2.52
Indian Market
India is the fifth largest consumer of energy the world and is likely to surpass Japan and Russia
to become the world’s third biggest energy consumer by 2030. According to the International
Energy Agency (IEA), hydrocarbons satisfy major energy demand in India wherein coal and oil,
together, represent about two-thirds of the total energy use. Natural gas accounts for about 7
percent share. According to Oil & Gas Journal (OGJ), India has about 5.7 billion barrels of
proven oil reserves. India’s oil and gas sector has attracted investors round the Globe as the
country enjoys rich reserves of resources. India’s oil and gas sector has attracted investors round
the globe as the country enjoys the rich reserves of resources. India’s oil and gas sector has
attracted investors round the globe as the country enjoys rich reserves of resources. The
Petroleum and natural gas industry in India has attracted foreign direct investment (FDI) worth
US $ 3, 332.78 million during April 2000 to December 2011, according to data provided by
Department of Industrial Policy and Promotion (DIIP). The Department further recorded US$196
million during April –December 2011—12, in the industry.
The top Oil Producing Companies of India are:
1 Indian Oil Corporation

2 ONGC
3 Bharat Petroleum
4 Reliance Petroleum Limited
5 Essar Oil Limited
6 Gas Authority Of India
7 Hindustan Petroleum Limited
8 ABAN
9 Oil India Limited
10 Tata Petrodyne
Deepika Singh
In 2004, the consumption of oil and gas formed a major percentage in the World Energy
consumption basket. In India however, Coal dominated the Consumption basket. Energy
Consumption grew at an average compounded annual growth rate (CAGR) of 3.8% in the period
1999-2005 with the GDP growing at CAGR of 6.3% resulting into a very attractive GDP
elasticity of little above 0.6
The significance of the India Oil & Gas Sector can be gauged from the following facts:
*Largest contributor to the national exchequer in 2004-05 with taxes amounting to US$ 27
billion.
*Oil &Gas constituted 40 per cent of primary energy source in 2004
*India is sixth largest crude oil consumer in the world with consumption at 119.3 MMT in 2004-
05
*Petroleum, Oil Lubricants (POL) Imports is 28 percent (Source: PWC Analysis) of the total
imports of India and POl exports is 8 percent of the Total exports for 2004-05
*All five Indian Companies appearing on the Fortune 500 List operate in the Oil & Gas Sector.
*India is ninth largest crude oil importer the world and ranks sixth in the refining capacity in the
world with capacity at 2.5 million barrels of oil per day in 2004 which is 3 per cent of the
world’s refining capacity.
Deepika Singh
Demand and Supply Overview of Crude Oil & Natural Gas.
India Met 75 percent of its crude Oil demand through Imports. The Domestic production of
Crude Oil has been in the range of 32-34 MMT over the past few years. About 60 percent of its
crude imports are from the Middle East.
The Consumption of Natural Gas grew at CAGR of 2.7 per cent in the period 1999-2005
supported by rises in availability through domestic and imported sources of gas.
Natural Gas Consumption & Production (Billion Cubic Meters –BCM)
99-00 00-01 01-02 02-03 03-04 04-05 CAGR

Consumption 26.88 27.68 28.03 29.96 30.90 30.77 2.74%
Gross Production 28.45 29.48 29.71 31.40 31.96 31.80 2.25%
Deepika Singh
Competitive Analysis
India’s five largest companies in terms of sales are Oil Companies. Four out of the five are
owned by the government .The sale of the sixth Essar Oil-was negligible. Reliance’s shares’ of
sales were 17 percent of all the companies’ sales, but 60 percent of its output were exported. So
it does not require much analysis to say that the Indian Oil Industry is an Oligopoly, and it is
dominated by Government firms. The retail market for petrol and diesel is almost entirely a
government monopoly. This Monopoly also effects exploration and Production, for as we know
that a number of companies that have struck oil or gas do not find a domestic market because of
the Government’s Monopoly of distribution. It is difficult to conceive of completely free entry
into exploration because it involves access to land which has to be approved and sometimes
organized by the government. So some form of exploration licensing is unavoidable. The high
proportion of concessions granted to ONGC would suggest otherwise, but there is no overt
discrimination against foreign companies or exclusion of any companies other than on such self-
evident criteria as minimum experience and minimum investment. The government’s insistence
that discovered oil and gas must be used in India – its implicit export ban – reduces the potential
value of finds and probably leads to fewer bids and lower revenue for the government; now that
the balance of payments is no longer a policy problem, this domestic use requirement is
outdated. We have argued above for duty-free imports of crude. In those circumstances, an
export ban or insistence on domestic use makes even less sense. So the only important variable
in exploration and production would be taxation of production (exploration can obviously not be
taxed). The customary form of taxation here is that the government tax a share of the oil
produced – what is called profit oil. If profit oil is zero, the producing company takes all the oil
that is produced, and the government gets nothing. The government must be very desperate to
produce oil domestically before it takes zero profit oil. This is not the situation in India. At the
other extreme, profit oil can be 100 per cent. No oil company would agree to this unless the
government paid all costs plus some profit. So this case really comes to the government
exploring oil. Exploration does not necessarily imply production; a government may explore
simply to get better knowledge of the country’s oil resources. The knowledge would reduce the
risk in production, and would get the government better terms when it does decide to produce. At
present, the government gives companies exploration licenses with the condition that the data the
concessionaires collect in the course of exploration must be given to the government; they are
deposited with Directorate of Hydrocarbons. Given the fact that there is no urgency to produce, it
would be a good idea to separate exploration and production; the government should invest
simply in exploration and data collection. When it decides on production, it will then have ready
data to sell to potential bidders; it will get more bids, and better terms. So much for exploration.
However, it is refining and distribution that require reforms to introduce competition. There is
one precondition that is already satisfied and is the profit.
Deepika Singh
India’s oil companies revenue, 2007-08 Company Rs. Billion per cent Indian Oil Corporation
201534.7, Reliance Industries 111219.2, Bharat Petroleum 97216.8, Hindustan Petroleum
93916.2, Oil and Natural Gas Corporation 75513, Essar Oil 60.1. This all cumulates to being
5799100. The domestic market is close to monopoly.
There cannot be competition in exploration and production if refining and distribution are
concentrated; and there cannot be competition in refining unless crude is freely importable.
Hence the first condition for a more competitive market is absence of restrictions on foreign
trade. The next condition is tax parity of imports and domestic production. This means that
whatever domestic taxes are levied should be applicable to imports as well. Import duties may be
levied; but unless there is a reason to protect exploration and production beyond the size to
which they would grow without protection, crude imports should be duty-free, so that there is
maximum incentive to invest in refining. There will inevitably be taxation of refined products,
since some of them are considered inputs into luxuries (e g, aviation fuel and petrol), and are in
fact sources of prolific revenue. Duties on domestic production must be matched by equal import
duties, so that there is no discrimination in favor of exports. Under competitive conditions,
refining adds little value to crude. The tonnage of refined products comes to 90-95 per cent of the
crude input; and the throughput of a refinery is so high in comparison to its capital costs that a
low average profit margin gives a high rate of return. In 2007-08, margin before tax of 16.7 per
cent translated into a return on assets of 15.5 per cent for Reliance; for IOC, a margin of 3.9 per
cent translated into a return on assets of 12.3 per cent. IOC was forced by the government to give
huge subsidies on sales of petrol, diesel and kerosene (Appendix-table H1); on the other hand, its
refineries are older and their historical cost per ton is lower. But even for a highly sophisticated
refinery like that of Reliance, the capital- output ratio is close to one; for simpler refineries it
would be much lower, and the return on capital would be higher than the margin. Typically, a
refinery’s margin might be 10 per cent, and crude might account for 80-90 per cent of its costs.
Since some refinery products are considered luxuries and others necessities, taxes on them will
be different; and the average tax on refined product will be high. In the circumstances, the tax
system can be simplified and competition in refining intensified by not taxing crude at all, and
concentrating all taxation on refined products.
Deepika Singh
Corporate Mission and Objectives
Mission and Vision of ONGC
To be a world – class Oil and Gas Company integrated in energy business with dominant
Indian leadership and global presence.”
ONGC has a mission and vision to be world-class Oil and Gas Company integrated in energy
business with dominant Indian leadership and global presence."Not only had India... set up her
own machinery for oil exploration and exploitation... an efficient oil commission had been built
where a large number of bright young men and women had been trained and they were doing
good work."
World Class
 Dedicated to excellence by leveraging competitive advantages in R&D and technology with

involved people.
 Imbibe high standards of business ethics and organizational values.
 Abiding commitment to safety, health and environment to enrich quality of community
life.
 Foster a culture of trust, openness and mutual concern to make a stimulating and
challenging experience for our people.
 Strive for customer delight through quality products and services.
Integrated in Energy Business
 Focus on Domestic and international oil and gas exploration and production business
opportunities.
 Provide value linkages in other sectors of energy business.
 Create growth opportunities and maximize shareholder value.
Dominant Indian Leadership
Retain dominant position in Indian petroleum sector and enhance India’s energy availability
ONGC’s HR Vision
"To attain organizational excellence by developing and inspiring the true potential of
company’s human capital and providing opportunities for growth, well being and enrichment"
ONGC’s HR Mission
"To create a value and knowledge based organization by inculcating a culture of learning,
Deepika Singh
innovation & team working and aligning business priorities with aspiration of employees leading
to development of an empowered, responsiveness.
OPPORTUNITIES AND THREATS
India is fast emerging as an activated economy centre in the world. The fourth largest economy
in the world on Purchase Power Parity (PPP) is also emerging as a notable consumption centre
and particularly for all forms of energy. Creating suitable energy infrastructure has become the
first priority. ONGC being a leader in the E&P sector thus has enormous opportunity to
meaningfully integrate in the entire energy value-chain to leverage business opportunities.
Government of India is now looking for Open Acreage Licensing Policy (OALP), an operator
friendly flexible system. ONGC has the opportunity to leverage its vast exploration data and
knowledge base to its advantage.
At the same time, the Government of India is in the process of firming up policy for exploration
and exploitation of Shale gas. ONGC has taken structured initiatives towards R&D for Shale gas
exploration and as such the new policy may provide opportunity to the company for taking the
lead by its first mover initiatives.
The hydrocarbon potential of vast majority of the sedimentary basins remains to be established.
This gives immense business opportunity for E&P companies like ONGC. Improving recovery
factor of the existing matured fields provides enormous opportunity in terms of production
upside to your Company.
These established fields have significant scope in terms of brown-field development leveraging
superior technology. The Improved Oil Recovery (IOR) and Enhanced Oil Recovery (EOR)
techniques which ONGC has mastered over the years provide good opportunity for association
and growth in global oil business as number of operators or countries are looking for such know-
how and
skills.
Subsidiary of ONGC, OVL has large presence in global E&P sector and is associating with a
large number of NOCs (National Oil Companies) as well as IOCs (International Oil Companies).
These associations may provide OVL an opportunity to increases its Presence.
Commercialization of new sources of energy like CBM, UCG, Shale gas, etc., has substantial
upside for growth. At the same time alternate sources of energy also have enormous potential.
Early lead in cost effective commercialization of these sources through innovative technologies
and solutions is an opportunity.
The frontier areas like deepwater, ultra-deepwater, Arctic regions, etc., are emerging as
opportune hydrocarbon resource centers. However, these challenging regions would require cost-
intensive and technology driven innovative solutions. As such collaborations with the technology
leaders become imperative. Political unrest in the MENA region is a major threat for the oil
industry. In case the unrest prolongs for long it will adversely affect the Oil industry globally.
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RISK AND CONCERNS
E&P business, characterized by inherent uncertainties, has always been highly risky. Ongoing
unrest in MENA region and related volatility in oil prices is a concern for your organization. As
in high oil price regime the cost of services has all potential to go up and adversely affect the
finances of ONGC.
The existing subsidy sharing mechanism is a major concern for your organization. The sharing of
the under-recoveries of oil marketing companies has adversely affected financials of your
Company. Net realization towards crude oil sale has been significantly lower than
The international price. ONGC being the licensee, has to pay the entire liability towards royalty
in JV operated Blocks like - CY-OS-90/1, CB/OS-2 and
RJ-ON-90/1, though it’s Participating Interest varies from 30 to 50%. It is also bearing the entire
liability towards cess for fields in CYOS- 90/1, CB/OS-2 and PY-3 blocks.
ONGC has taken up intensive exploration to locate hydrocarbon reserves even in challenging
locales like deep-water and ultradeep water regions. Exploration and development in these
regions is not only cost intensive but technologically challenging as well.
Maintaining production levels from the matured field is cost and technology intensive. At the
same time, reducing size of the new discoveries and monetizing them cost effectively is a
challenge.
Inherent risks are associated with oil and gas field operations like – spillage, rupture, blowout of
wells, earthquake, tsunami, terrorist activities, etc. These risks are being mitigated right from
design stage; however probability of emergency cannot be totally eliminated. In the event of any
such unfortunate events the risk of significant liabilities always exists.
Land acquisition for exploration and development projects and particularly for new sources of
energy like CBM, UCG, Shale gas, etc., Remains an area of major concern. Naphtha demand in
the country remains volatile due to which marketing/ evacuation of produced naphtha is
challenging.
Important factors that continue to influence the operations include, demand and supply,
availability of inputs, their prices, changing
Govt. policies, legislations, taxes, political and economic developments-both within and outside
the country
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FINANCIAL ANALYSIS
BALANCE SHEET
Sources of funds 2011 2010 2009
Owner's fund
Equity share capital 4,277.76 2,138.89 2,138.89
Share application money - - -
Preference share capital - - -
Reserves & surplus 93,226.67 85,143.72 76,596.53
Loan funds
Secured loans - - -
Unsecured loans 17,564.26 16,405.64 16,035.70
Total 1,15,068.69 1,03,688.25 94,771.12
Uses of funds
Fixed assets
Gross block 80,938.60 71,553.78 61,355.61
Less : revaluation reserve - - -
Less : accumulated
depreciation 62,299.05 55,905.28 50,941.23
Net block 18,639.55 15,648.50 10,414.37
Capital work-in-progress 65,354.44 56,073.25 52,923.19
Investments 5,332.84 5,772.03 5,090.32
Net current assets
Current assets, loans &
advances 95,105.34 89,690.14 83,204.71
Less : current liabilities &
provisions 70,159.50 64,337.00 57,512.08
Total net current assets 24,945.84 25,353.15 25,692.62
Miscellaneous expenses not
written 796.03 841.32 650.61
Total 1,15,068.69 1,03,688.25 94,771.12
Notes:
Book value of unquoted
investments 2,576.36 3,015.56 2,333.84
Market value of quoted
investments 19,167.92 19,090.78 11,143.95
Contingent liabilities 38,979.63 39,178.54 36,024.57
Number of equity shares
outstanding (Lacs) 85554.90 21388.73 21388.73
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PROFIT & LOSS ACCOUNT
2011 2010 2009
Income
Operating income 66,164.34 60,251.77 64,003.99
Expenses
Material consumed 2,777.77 2,313.84 10,824.41
Manufacturing expenses 32,384.37 26,913.20 19,849.28

Personnel expenses 6,445.18 5,618.16 4,536.80
Selling expenses 6,812.24 6,527.78 7,005.91
Adminstrative expenses -22,749.34 -18,823.82 -10,465.65

Expenses capitalised - - -
Cost of sales 25,670.22 22,549.17 31,750.75

Operating profit 40,494.12 37,702.60 32,253.25
Other recurring income 5,431.11 3,363.33 4,604.51

Adjusted PBDIT 45,925.23 41,065.94 36,857.76
Financial expenses 11,133.34 11,276.89 8,485.40

Depreciation 6,835.01 5,242.66 4,355.62
Other write offs - - -

Adjusted PBT 27,956.88 24,546.39 24,016.74
Tax charges 9,177.53 8,258.73 8,437.78
Adjusted PAT 18,779.35 16,287.66 15,578.96

Non recurring items -403.04 252.63 -518.92
Other non cash

adjustments 547.70 183.99 790.68
Reported net profit 18,924.00 16,724.28 15,850.72
Earnigs before
appropriation 18,924.03 16,724.30 15,850.81
Equity dividend 7,486.05 7,058.28 6,844.39
Preference dividend - - -
Dividend tax 1,215.65 1,161.56 1,163.20
Retained earnings 10,222.33 8,504.46 7,843.21
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Analysis of Balance Sheet and Profit and Loss Account
 Share Capital
The Share Capital has increased by 2138.87 million from the year 2010 to 2011 that is
almost 100 percent, though it was stagnant during the year 2009 – 2010 and remained
where it was. This was because the company had split its equity share having face value
of Rs 10 into two parts that is of Rs.5 each and bonus share have been issued in the
proportion of one new Equity bonus share of Rs.5 each for one existing fully paid equity
share of Rs. 5 each held on 09-02-2011.As a result the shares have doubled from what it
was in the year 2010.
 Reserves and Surplus
It is seen that over the years company is accumulating on the reserves and surpluses as
one can see that during the year 2009-10 the companies reserves had increased by Rs
8547.19 million and over the years 2010-11 it has increased by Rs.8082.95 million. It is
also seen that General Reserve accounts for all the major Reserves and Surpluses. This
clearly indicates that the company is secured and sound towards contingencies.
 Loans And Funds
It is seen that the company does not have any Secured Loans and the Unsecured Loans
that it has are more or less constant during the years 2009-10 and over the years 2010-11
it has increased by 1158.62 million that is a very small amount. This is a very favorable
situation as this depicts the soundness of the Company as it has borrowed less money
from the market.
 Fixed Assets
This being an Oil and Gas Exploration and Production Company has heavily invested in
Fixed Assets over the years and this is clearly evident as in the year 2009 it had invested
Rs.61355.61 and in the year 2010 it had increased investment in Fixed Asset by
Rs.10198.19 and during the year 2011-10 it by Rs.9384.82.It is also seen that major
investment in Fixed Asset is of Plant and Machinery.
 Investments
It is clearly noticeable that the company’s investments are quite low and they have been
more or less attained a stagnant position over the years. This clearly depicts that the
company is investing in its own units.
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 Current Assets
It is evident that the Current Assets have been decreasing continuously but at a slow rate.
With a deeper insight it is known that the Cash and the Bank Balances make up for a big
proportion in the Current Assets this is a very good sign as one can also see that in the
Sundry Debtors out of Rs.4541.69 Million debts outstanding for six months only
Rs.1489.15Million Debts are good and the rest are doubtful this is not a favorable
situation but still it is also sighted that the other Debts which accounts for Rs 37,595.88
only Rs.626.05 are Doubtful and the rest are good this is a very Favorable sign as it is
known that high Liquidity is very good for the Organization.
 Current Liabilities
The Current Liabilities have been increasing year by year but in not the same proportion
as Current Assets this is again a good sign These current liabilities include the amount
taken as advance from customers and creditors for supplies work for the micro, small and
medium enterprises and also the liability for royalty gratuity and deposits from the
suppliers and the contractors.
 The Operating Income is decreasing form the year 2009 -10 by 3752.22 but it also seen
during the year 2010 -11 the operating income is increasing by 59112.57 as a result
making it to Rs.66164.34 million.
CASH FLOW STATEMENT ANALYSIS
ONGC uses the Indirect Method as set out in the Accounting Standard- 3 on Cash Flow
Statements issued by The Institute of Charted Accountants of India to prepare the Cash Flow
Statement.
Profit after Tax for the year 2009 was Rs.239149.59. for year 2010 it was Rs.249, 838.43. For
year 2011 it was Rs. 276189.70. Earnings per Share of Rs.10/ each Basic earnings per share for
the year 2009 was 75.40.In The year 2010 the share was split into Rs 5 each and hence forth the
Basic Earnings Per share In For year 2010 it was 19.60. For year 2011 it was 22.12. The Gross
Block of fixed assets for the year 2009 were 6, 13,556.05. For the year 2010 it was 7, 15,537.79.
For the year 2011 it was 8, 09,385.98.
The cash flow from operating activities in the year 2009 was Rs 22,272.74 million, for the year
2010 it was Rs.20, 388.01 and for the year it was Rs 32,765.85.It is seen that the Cash Flow from
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Operating Activities had decreased from the year 2009 to 2010 but had shown a tremendous
increase in the year 2010-11. The reason for the in decrease from the year 2009-10 was that in
the Year 2009 it was seen that Cash Generated from Operations was higher than that of the year
2010, It was also seen that during the year 2010 the company had spent a lot amount on Non
Cash Recouped Costs, and had also paid alot on adjustments for loans and advances and trade
payable and other securities. The reason For an Increase in The Operating Activities in the Year
2010-11 was that the Operating Profit before working Capital changes was Rs 50,452.65 more
than the previous year. It was also seen that the tax payable and other liabilities was no more a
negative balance. Hence the cash flow from Operating Activities was Rs 12,368.84 more than
the previous year.
The cash flow from investing activities in the year 2009 was Rs.(17457.91),For the year 2010 it
was Rs( 13237.10)and for the year 2011 it was Rs (16818.10). There was a purchase of fixed
assets and the heavy investment in Exploratory and Development Drilling resulted in the
negative cash flow or outflow of cash over the Years. It was also seen that the Loans and
advances to the Subsidiaries had also increased over the Years. This all had resulted in the
negative balances of Cash flow from Investing Activities.
The Cash Flow from Financing activities in the year 2009 was Rs. (83134.27) for the year 2010
it was Rs (8,016.08) and for the year 2011 it was Rs (11722.63).The cash flow from financing
activities includes the heavy amount of Dividend that the Company has been paying and this is
the major cause for the negative balances of Cash Flow From Financing Activities.
RATIO ANALYSIS
In finance, a financial ratio or accounting ratio is a ratio of two selected numerical values taken
from an enterprise's financial statements. There are many standard ratios used to try to
evaluate the overall financial condition of a corporation or other organization. Financial ratios
may be used by managers within a firm, by current and potential shareholders (owners) of a
firm, and by a firm's creditors. Security analysts use financial ratios to compare the strengths
and weaknesses in various companies. Financial ratios quantify many aspects of a business and
are an integral part of financial statement analysis. Financial ratios are categorized according to
the financial aspect of the business which the ratio measures. Liquidity ratios measure the
availability of cash to pay debt. Activity ratios measure how quickly a firm converts non-cash
assets to cash assets. Debt ratios measure the firm's ability to repay long-term debt.
Profitability ratios measure the firm's use of its assets and control of its expenses to generate
an acceptable rate of return.
Financial ratios allow for comparisons
*Between Companies
*Between Industries
*Between Different time periods for one Company
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*Between a single Company and other Companies of the Industry
LIQUIDITY RATIOS
2011 2010 2009

Liquidity ratios
Current ratio 1.36 1.39 1.45
Current ratio (inc. st loans) 1.36 1.39 1.45
Quick ratio 1.20 1.22 1.27
Investor look at liquidity ratios to determine the ability of a business to pay off its short term
obligations from cash or near cash assets to evaluate the risk associated if were to invest in this
company. Failure to pay off short term obligation may result in financial difficulty or bankruptcy
in near future.
Quick ratio also known as Acid Test, it measures the ability of a company to pay off its short-
term obligations from current assets, excluding inventories. The reason of excluding inventories
is due to its low liquidity and thus quick ratio provide better measurement of company ability to
paid off its current obligations compare to current ratio.
In year 2008-9, the quick ratio of the company comes out to be 1.27, in year 2009- 10 it is 1.22,
and for the year 2010-11 it is 1.20. In all the three years the quick ratio is between 1 and 2, which
shows that the company may fail to meet the short term commitments.
Current ratio measures the company's ability to pay its short-term liabilities from short-term
assets.
In year 2008-09, the current ratio of the company comes out to be 1.45, in year 2009- 10 it is
1.39, and for the year 2010-11 it is 1.36. In all the three years, the ratio is above 1, which is not
favorable.
Stock Turnover Ratio: ascertains whether investment in stock has been efficiently used or not, i.e
that the minimum required amount is invested in stock or not. This ratio enables the business to
earn a reasonable margin of profits.
In the year 2008-09, the stock turnover ratio was 111.98, in the year 2009- 10 it is 87.82, in the
year 2010-11 it was 94.69.
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PROFITABILTY RATIOS
Profitability 2011 2010 2009

ratios
Operating
Ratio (%) 61.20 62.57 50.39
Gross profit
Ratio (%) 50.87 53.87 43.58
Net profit Ratio
(%) 26.43 26.35 23.50
Reported On
Assets (%) 19.56 19.39 20.65
Return on
Equity (%) 33.97 34.54 34.29
The profitability ratios are the basic bank financial ratios. Profitability ratios are the financial
statement ratios which focus on how well a business is performing in terms of profit.
Operating Ratio- This Ratio is used to test the operational efficiency of the business. It shows the
percentage of sales that is absorbed by the cost of sales and operating expenses, lower the
operating ratio, better it is, because it would leave higher margin to meet interest , dividend, etc.
In year 2008-9, the Operating Ratio of the company comes out to be 50.39, in year 2009- 10 it is
62.57, and for the year 2010-11 it is 61.20.
Gross Profit Ratio – This ratio is a reliable guide to the adequacy of selling prices and efficiency
of trading activities. The basic objective of this ratio is to determine the selling price so that there
is adequate gross profit to cover the operating expenses, fixed charges, dividend and building up
reserves, another objective is determine how much the selling price per unit may decline without
resulting in losses on operations of the firm and also Gross Profit Ratio when compared to earlier
years, If significantly different is a reason for the management to investigate the change.
In year 2008-9, the Gross Profit Ratio of the company comes out to be 43.58%, in year 2009- 10
it is 53.87%, and for the year 2010-11 it is 50.87%.
Net Profit Margin Ratio -This ratio is the percentage of sales dollars left after subtracting the
Cost of Goods sold and all expenses, except income taxes. It provides a good opportunity to
compare your company's "return on sales" with the performance of other companies in your
industry. It is calculated before income tax because tax rates and tax liabilities vary from
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company to company for a wide variety of reasons, making comparisons after taxes much more
difficult.
In year 2008-09, the net profit margin ratio of the company comes out to be 23.50%, in year
2009-10 it is 26.35%, and for the year 2010-11 it is 26.43%.
Return on Equity – ROE - Return on equity reveals how much profit a company earned in
comparison to the total amount of shareholder equity found on the balance sheet. A business that
has a high return on equity is more likely to be one that is capable of generating cash internally.
In year 2008-09, the return on equity of the company comes out to be 34.29 %, in year 2009-10 it
is 34.54%, and for the year 2010-11 it is 33.97%.
Return on Assets or (Return on Investment) - this ratio measures the efficiency with which
the company is managing its investment in assets and using them to generate profit. It measures
the amount of profit earned relative to the firm‘s level of investment in total assets.
In year 2008-09, the return on Asset of the company comes out to be 20.65% in year 2009-10 it
is 19.39%, and for the year 2010-11 it is 19.56%.
Operation Efficiency Ratios or Activity Ratios
Operation Efficiency ratio measure how efficiency the management are utilized the company
assets and turn into revenue, inventory management and accounts receivable and accounts
payable process and system.
Activity Ratio 2011 2010 2009

Fixed Asset 0.82 0.84 1.05
Turnover Ratio
Stock Turnover 94.69 87.82 111.98
Ratio
Fixed Asset Turnover Ratio – This ratio measure the effectiveness of the company‘s utilization
of its fixed assets. It measures whether the company uses its fixed assets to as high a percentage
of capacity as other firms in the industry.
In year 2008-09, the Fixed Asset Utilization of the company comes out to be 1.05, in year 2009-
10 it is 0.84, and for the year 2010-11 it is 0.82.
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Stock Turnover Ratio - ascertains whether investment in stock has been efficiently used or not,
i.e. that the minimum required amount is invested in stock or not. This ratio enables the business
to earn a reasonable margin of profits.
In the year 2008-09, the stock turnover ratio was 111.98, in the year 2009- 10 it is 87.82, in the
year 2010-11 it was
LEVERAGE RATIO
2011 2010 2009

Leverage ratios
Debt / Equity 0.18 0.18 0.20
Proprietary Ratio 84.73 84.17 83.07
Leverage ratios are the financial statement ratios which show the degree to which the business is
leveraging itself through its use of borrowed money.
Debt to Equity Ratio - Debt to Equity Ratio is also referred to as Debt Ratio, Financial
Leverage Ratio or Leverage Ratio. The debt to equity ratio indicates the extent to which the
business relies on debt financing. Upper acceptable limit of the debt to equity ratio is usually 2:1,
with no more than one-third of debt in long term. A high financial leverage or debt to equity ratio
indicates possible difficulty in paying interest and principal while obtaining more funding
In year 2008-09, the debt to equity ratio of the company comes out to be 0.20, in year 2009-10 it
is 0.18, and for the year 2008-09 it is 0.18.
Proprietary Ratio
The Objective of computing this ratio is to establish a relationship between Shareholder’s Fund
and total Assets. Proprietor’s Fund means share capital plus reserves and surplus, both of capital
and revenue nature. This Ratio shows the extent to which the shareholders own the business. The
difference between this ratio as % and 100 represents the ratio of total liabilities to total assets.
A high ratio shows that there is safety for creditors of all types and a ratio below 50% may be
alarming for the creditors since they may have to lose heavily in the extent of company’s
liquidation on account of heavy losses.
In year 2008-09, the Proprietary Ratio of the company comes out to be 83.07%, in year 2009-10
it is 84.17%, and for the year 2010-11 it is 84.73%.Hence this is a ery favorable situation as it
depicts the safety for creditors.
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“EFFECTIVENESS OF PERFORMANCE
APPRAISAL IN ONGC”
Human resource is one of the biggest strengths of your Company and as a strategy it has been a
constant endeavor to maintain steady inflow of talent. ONGC has drawn up a five-year
manpower induction plan aligned to the business plans as well as factoring the manpower profile
of ONGC. During FY’11, your Company inducted 1,517 people with requisite skills-sets to meet
the requirement as well as replenish the manpower loss on account of superannuation which has
increased in recent years.
ONGC believes that continuous development of its human resource fosters engagement. The
training programmes have been designed to equip the executives with latest knowledge in the
respective areas of specialization as well as honing up managerial skills. ONGC also took
structured initiatives to provide work-life balance to the employees as well as improving living
and working
Conditions. ONGC has been declared as the 'Best Employers to Work For' among all PSUs.
ONGC with an Index score of 40 stands at 13th amongst top 25 India Corporate.
33,229 ONGC’ians (as on 31st March, 2011) dedicated themselves for the excellent performance
of your company during the year.
The workforce intake strategy pursued by ONGC caters to meeting the demands of maintaining a
steady flow of talent, in a business which is characterized by high risks and uncertainties,
enormous costs, fast changing level of technology, physically challenging work environment,
fluctuating product prices and growing competition. ONGC has drawn up a scientific five-year
manpower induction plan aligned to the business plans as well factoring the manpower profile of
ONGC. During the year, HR ensured that adequate numbers with requisite skill-sets were
inducted to meet the requirements of the Company as well as replenish the manpower loss on
account of high superannuation. ONGC believes that continuous development of its human
resource fosters engagement and drives competitive advantage. Towards that end, during the
year, ONGC conducted Business Games to hone the business acumen of its executives. Business
Games in ONGC was introduced for executives in 2007. It has proved to be a very popular
initiative and tests the ability of the executives through business quizzes, business simulations
and case-study presentations. The winners of the Business Games are felicitated by the CMD at
Republic Day Celebrations. For the first time, Fun Team Games (FTGs) were initiated for E0
and staff level employees to inculcate MDT (Multi-disciplinary Team) concept and spirit of
camaraderie and belongingness to the organization, which was very well received by the
participants. The winners are felicitated by the CMD at Republic Day Celebrations. ONGC also
conducted the Assessment Development Centre (ADC) programs for 189 DGM level executives
and provided them developmental inputs. An engagement survey was conducted across ONGC,
providing valuable inputs for the management to take follow-up action,
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PERFORMANCE APPRAISAL
Performance appraisal is a process of assessing, summarizing and developing the work

performance of an employee. It is the systematic evaluation of the individual with respect to his
performance for development. Performance appraisal should also be viewed as a system of
highly interactive processes which involve personnel at all levels in differing degrees in
determining job expectations, writing job descriptions, selecting relevant appraisal criteria,
developing assessment tools and procedures and collecting interpreting, and reporting results.
Appraisal data is needed for:

 Assessment of current employee performance
 Training needs
 Career planning and development
 Compensation programs
 Internal employee relations
 Recruitment and selection
 Human resource planning
 Assessment data is helpful in building replacement or succession charts
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METHODS OF PERFORMANCE APPRIASAL
E-PERFORMANCE APPRAISAL REPORT (E-PAR) IN ONGC:
The e-PAR system introduced in O.N.G.C is a four tier appraisal system.
E-PAR in ONGC is a four step process:

1. At the beginning of year KRA/KPI’s are finalized between the appraisee and the appraiser.
2. Provision exists for mid-term review of the KRA/KPI’s filled by appraise due to
a) Change of assignment
b) Change of place (in case of job rotation)
3. At the end of the assessment year performance feedback is obtained from the appraiser.
4. In case of adverse remarks the concerned employee is referred to for respective counseling
program.
NEED FOR e-PAR:
 Address the need for a transparent, multi-dimensional evaluation system in sync with
industry practices.
 Introduce performance contracting and objective evaluation.
 Supplement efforts to enable speed up HR processes like promotions, special
assignments, deputation out, rewards and incentives etc. through system.
 IT enabled performance management system already in use in organizations like
IOC, HPCL, SAP, etc.
 Streamlining of PAR process.
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EXECUTIVE PERFORMANCE APPRAISAL RULES
1. Title:
 Performance Appraisal Report is an index of an employee/ executive’s works
performance over a given period of time. It is crucial for his/her career growth as it
indicates the strengths, weaknesses (if any), training needs, nature of job being
performed, problems faced in work situation.
2. Objectives:
The objectives of the performance appraisal system are:
 To set norms and targets of work performance, as well as, to monitor the work progress
of employees.
 To facilitate placement of employees in accordance with their suitability for different
types of assignments.
 To provide an objective basis for determination of merit, efficiency and suitability for the
purpose of promotion.
 To identify areas requiring exposure for training/development.
3. Evaluation:
The performance appraisal system seeks to evaluate:
 The work performance of an employee on the present job in relation to the expected
levels of performance, both qualitative and quantitative.
 The extent of development achieved by the employee during the period under Review.
 Evaluation of behavioral attributes and abilities .Evaluation of potentials for assuming
higher responsibility.
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4. Coverage:
The Appraisal shall cover
a) Performance during the period from 1st April to 31st march of every year.
b) All regular employees of the company. There shall, however, be 5 different formats for:-
1) Class III and IV
2) E-0
3) E-3
4) E-4 to E-6
5) E-7 and above (PESB format)
c) The appraisal form PAR/ ACR will have to be filled in respect of all such employees who
have served for a period of at least 4 months in the organization during the relevant year.
5. Definition of Executive:
An Executive is a person employed under the authority of ONGC in any of the executive grade
E1 and above but shall not include a trainee. This would not include Directors or any of the other
people appointed by the President of India, for any of the offices or its subsidiaries and
associated offices.
6. Appraisal Year:
The appraisal period is 12 months of Financial Year between 1st April to 31st March of
succeeding year.
7. Appraisee
i. Apprasiee: An appraisee is an executive who was worked under the direct control and
supervision of another executive for a minimum period of 4 months within the time span
of 1st April – 31 March (12 months) in an appraisal year.
ii. Second Appraisee: Second Appraise is an executive who belongs to a professional group
but works under control of different group. 22
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iii. 8. Appraisers:
i. There are two levels of appraisers. The first appraiser, also called Reporting Authority,
means an executive under whose direct control and supervision the appraisee operates. In
case of second appraise, immediate functional senior executive (who may be equal in
status to 1st appraiser) could be the joint appraiser with the reporting authority, and he
would only record, whether or not, he agrees with the observations of the 1st appraiser.
ii. The second appraiser also called Reviewing Authority means a senior executive who
oversees the activities of the appraisee, and who offers professional advice to, or controls,
the first appraiser. Normally the assessment of performance of an appraisee is considered
in detail by these two appraisers and they should briefly explain the rationale for the
grade. Specific observation must be recorded for very high or low grading in comments
columns.
9. Procedure:
1. PAR/ ACR in respect of an employee is required to be assessed/written by levels
indicated below:-
a) By the reporting officer under whom employee is working.
b) By the reviewing officer.
2. Class III & E-0 employees: The reporting officer for writing PAR of an employee of
Class III/IV and E-0 Level category will be the executive under whose control the
employee is working. The Reviewing officer will be of one grade above the grade of
Reporting officer. The PARs in respect of CLASS III and IV employees duly
reviewed/accepted is maintained at region/institutes/ headquarters group-wise in the
concerned establishment section/PAR sections.
The PAR in respect of E-0 to E-6 level executives is being maintained in PAR Department at
Headquarters of R&P division. As regards, E-7 and above all such reports which are received
from regions/institutes/headquarters are maintained at chairman-cum-managing director’s office
Deepika Singh
3. The reporting officer will be the officer to whom the executives reports for his day to day
work. Review of the PAR will be done by the executives to whom the reporting officer is
responsible for his functions. Accepting authority will be the executive higher than
reviewing officer at different stages depending upon the nature of the grades, as per
delegation of powers in PAR rules.
a) The Performance appraisal reports of executives of E-6 level i.e. deputy general
manager and above will be submitted to concern functional director for final
review and acceptance.
b) The Performance appraisal reports of Executives of E-5 level i.e. CM and
equivalent will be reviewed by the RD/ED/Nominee of the director concerned.
c) The Performance appraisal reports of Executives up to E-4 level i.e. Manager and
equivalent would be reviewed by the functional Head/GM/GGM not less than E-
7.
10. Adverse Remarks:
1. In the event of the overall assessment being not satisfactory, or carrying some adverse
remark, a communication will need to be issued to the concerned employee after the
report has been accepted by the concerned authority.
2. The adverse remark will be conveyed to the concerned employee by the personnel
department. The grading of fair and poor are considered as adverse and as per the rule
these are required to be communicated to be concerned employees. In case an employee
has been assessed poor or fair against a specific attribute, even this also needs to be
communicated to the employees so that he gets a feedback for improvement.
3. Any employee who may be aggrieved by the adverse remarks in the ACR/PAR as
communicated to them and who desire to prefer an appeal against the same will be
required to follow the following procedure:
a) An employee aggrieved by the adverse remarks may make an appeal within
90days of receipt of the adverse communication.
b) The appeal made by the employee shall contain briefly his contention along with
documentary evidence, if any in support of the same and shall be routed through
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proper channel. A copy of the appeal made may be submitted to the personnel
department.
Deepika Singh
11. Accepting Authority:
A very senior officer who is designated under the rules to re-look at the performance of the
appraisee, and review the observations of the first and second appraisers. He would finally
determine and evaluate the performance of the appraisee. In case of disparity between his
assessment and that of the first and second appraisers, he has to record the basis of his revised
assessment. He is expected to record specifically his comments in cases of overall performance
grading A+ or D, and low score for personality traits by either of the earlier two appraisers.
12. The Grading System:

The block numerical values have been assigned to assist the 1st appraiser in making an overall
assessment. The overall total source for determining a grade is merely a guide and the final grade
may be at variance with the total score. The second appraiser i.e. the reviewing authority and the
accepting authority, have to take an overall view, both of the performance and the personality,
have to take an overall view, both of the performance and the personality of the appraise, while
determining the ‘Final Grading.’
The overall rating in grades in respect of appraisals would be as under:
A+ = Exceptional (rare occasions)

A = Top Performer
B = Very Good
C = Adequate
D = Inadequate
The final grade given by the Accepting Authority after detailed and the consideration to the
rating by the 1st and 2nd appraisers, will be the ‘Decisive Grade’ of the appraise executive. In
case this final rating is different from those of the 1st and 2nd appraiser, adequate justification
MUST be mentioned by the accepting authority. There must be adequate explanation by the 1st
and 2nd appraisers and the accepting authority for any grades assigned to the appraisee. In the
absence of adequate explanation the report will be considered incomplete and returned back
to the appraisers for confirming to the directives contained in the instructions.
Deepika Singh
13. The Grades:
The performance categories are defined as follows:
 EXCEPTIONAL (A+)
This is a person whose job performance and personality attributes are clearly remarkable.
This person meets or exceeds company’s highest standards and achieves extraordinary
results in extraordinary circumstances. A rare individual who achieves this once in a
while.
 TOP PERFORMER (A)
This is someone whose job performance is noteworthy and he makes valuable
contribution to the organization. He does not have any negative personality attributes. He
is one of the top performers.
 VERY GOOD (B)
This is an individual whose performance consistently meets company’s expectations.
This is a person who is unquestionably above average.
 ADEQUATE (C)
This is a person whose overall performance meets basic requirements of the job and the
basic targets.
 IN-ADEQUATE (D)
This is an individual who needs to improve his or her performance and has not achieved
results in spite of guidance and counseling by appraisers. This aspect must be specially
stated in the comments/remarks column of the PAR format by the appraisers.
Deepika Singh
14. Benefits Envisaged:
 Uniform application across the company and standardized performance criterion,
 Minimize subjectivity.
 System driven control and monitoring mechanism.
 Single point data capturing and authentication.
 Reduce cycle time and adherence to time schedules.
 Enhanced data security and confidentiality.
 Authenticity and audit trail of transactions.
 Availability of online information.
 Linkage to performance based rewards/incentives and HR processes like promotion

awards, etc.
Deepika Singh
RESEARCH ANALYSIS
The methodology adopted to accomplish this project was in accordance with the topic assigned.
The study was based on data collected mainly from primary as well as secondary sources.
Descriptive research methodology was adopted for the purpose of study. Explorative study was
also conducted to design the questionnaire.
RESEARCH OBJECTIVES
To evaluate the online performance appraisal system of the organization.

a) To analyze how performance appraisal system helps the employees for their
 Personal development
 Job satisfaction
 Overall career growth
b) To measure the effectiveness of the online performance appraisal system.
c) To analyze the shortcomings of the system, if any.
RESEARCH DESIGN
The research design chosen for the project is cross sectional descriptive research design.
Descriptive research is a type of conclusive research that has its major objective as the
description of something- usually market characteristics of functions.
RESEARCH INSTRUMENT
Structured questionnaire:
The questionnaire consisted of well-structured and close ended objective questions i.e. questions
which restricted responses to the already provided options even though respondents were
encouraged to mention anything they considered worth mentioning. Dichotomous questions i.e.
questions which has only two possible responses (Yes/No) were included. Likert based scale
questions and ranking based questions were also used in our questionnaires.
Deepika Singh
DATA USED FOR ANALYSIS
Primary Data: Collected from respondents by the means of questionnaires.
Secondary Data: Data already collected by someone else and readily available is called
secondary data. Data was collected through the following sources-
 ONGC Websites
 ONGC journals
 ONGC HR manual
SAMPLING PLAN
Sampling Technique:
The type of sampling used was non probabilistic convenience sampling.
Sample Size:
The sample size should be such that it represents the population fully & is simple to Administer.
For the purpose of this study the sample size includes 100 Executives from various departments
in different business areas.
Sample Unit: 100
Sample Area: ONGC Tel Bhavan, Dehradun
Deepika Singh
RESULTS AND ANALYSIS:
Q.1 Does PAR helps in fostering a climate of creativity, innovation, and enthusiasm, in
O.N.G.C?
Table 4.1: Does PAR help in fostering a climate of creativity, innovation, and enthusiasm, in O.N.G.C?
FREQUENCY PERCENT VALID CUMULATIVE

PERCENT PERCENT
VALID YES 89 89.0 89.0 89.0

NO 11 11.0 11.0 100.0
TOTAL 100 100.0 100.0
Figure 4.2: Does PAR help in fostering a climate of creativity, innovation, and enthusiasm, in O.N.G.C?
Inference- 89% of respondents believe that PAR helps in fostering a climate of creativity,
innovation, and enthusiasm in O.N.G.C, 11% don’t believe so.
Deepika Singh
Q2. Do you think the evaluation methodology as per e- par system increases employee
motivation?
Table 4.2: Do you think the evaluation methodology as per e- par system increases employee motivation?

PERCENT PERCENT
VALID YES 84 84.0 84.0 84.0

NO 16 16.0 16.0 100.0
TOTAL 100 100.0 100.0
Figure 4.2: Do you think the evaluation methodology as per e- par system increases employee
motivation?
Inference- 84% respondents said that the e-par system increases employee motivation and 16% said it
does not.
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Q3. The current method used in par system is objective enough to evaluate the performance and potential
of the employees.
Table4.3: The current method used in par system is objective enough to evaluate the performance and
potential of the employees.

PERCENT PERCENT
VALID
STRONGLY AGREE 27 27.0 27.0 27.0
AGREE 62 62.0 62.0 89.0
NEUTRAL 6 6.0 6.0 95.0
DISAGREE 4 4.0 4.0 99.0
STRONGLY DISAGREE 1 1.0 1.0 100.0
TOTAL 100 100.0 100.0
Figure4.3: The current method used in par system is objective enough to evaluate the performance and
potential of the employees.
Inference- 62% of 100 respondents said that they agree and 27% strongly agree that the current method
used in PAR system is objective enough to evaluate the performance and potential of employees. Hence,
it can be said that most of the employees believe that the e-par system is fair and objective.
Deepika Singh
Q4. Do you agree that existing par system facilitates career growth of employees?
Table 4.4: Do you agree that existing par system facilitates career growth of employees?

PERCENT PERCENT
VALID
AGREE 60 60.0 60.0 85.0
NEUTRAL 11 11.0 11.0 96.0
DISAGREE 3 3.0 3.0 99.0
TOTAL 100 100.0 100.0
Figure 4.4: Do you agree that existing par system facilitates career growth of employees?
Inference- 60% respondents agree and 25% strongly agree that the existing PAR system facilitates career
growth of employees.
Deepika Singh
Q5-1. E-par system attributes: Flexible
Table 4.5.1: E-par system attributes: Flexible

PERCENT PERCENT
VALID
AGREE 5 5.0 5.0 8.0
NEUTRAL 30 30.0 30.0 38.0
DISAGREE 34 34.0 34.0 72.0
TOTAL 100 100.0 100.0
Figure 4.5.1: E-par system attributes: Flexible
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Q5-2. E-par system attributes: Transparent
Table 4.5.2: E-par system attributes: Transparent

PERCENT PERCENT
VALID
AGREE 6 6.0 6.0 10.0
NEUTRAL 11 11.0 11.0 21.0
DISAGREE 32 32.0 32.0 53.0
TOTAL 100 100.0 100.0
Figure 4.5.2: E-par system attributes: Transparent
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Q5-3. E-par system attributes: User-friendly
Table 4.5.3: E-par system attributes: User-friendly

PERCENT PERCENT
VALID
AGREE 3 3.0 3.0 7.0
NEUTRAL 10 10.0 10.0 17.0
DISAGREE 44 44.0 44.0 61.0
TOTAL 100 100.0 100.0
Figure 4.5.3: E-par system attributes: User-friendly
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Q5-4. E-par system attributes: Impartial
Table 4.5.4: E-par system attributes: Impartial

PERCENT PERCENT
VALID
AGREE 10 10.0 10.0 16.0
NEUTRAL 18 18.0 18.0 34.0
DISAGREE 38 38.0 38.0 72.0
TOTAL 100 100.0 100.0
Figure 4.5.4: E-par system attributes: Impartial
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Q5-5. E-par system attributes: Reliable
Table 4.5.5: E-par system attributes: Reliable

PERCENT PERCENT
VALID
AGREE 3 3.0 3.0 5.0
NEUTRAL 19 19.0 19.0 24.0
DISAGREE 33 33.0 33.0 57.0
TOTAL 100 100.0 100.0
Figure4.5.5: E-par system attributes: Reliable
Deepika Singh
Q6. Are you well aware of your KRAs/KPIs?
Table 4.6: Are You Well Aware Of Your KRAs/KPIs?

PERCENT PERCENT
VALID YES 78 78.0 78.0 78.0

NO 22 22.0 22.0 100.0
TOTAL 100 100.0 100.0
Figure 4.6: Are You Well Aware Of Your KRAs/KPIs?
Inference- 78% of respondents are well aware of their KRAs/KPIs while 22% are not.
Deepika Singh
Q7. Do you find pre-defined KRA useful while filling E-PAR?
Table 4.7:Do you find pre-defined KRA useful while filling E-PAR?

PERCENT PERCENT
VALID YES 82 82.0 82.0 82.0

NO 18 18.0 18.0 100.0
TOTAL 100 100.0 100.0
Figure 4.7: Do you find pre-defined KRA useful while filling E-PAR?
Inference- 82% of respondents find pre-defined KRA useful while filling E-PAR and 18% do
not.
Deepika Singh
Q8. Are you aware of the significance of mid-term review (MTR)?
Table 4.8: Are you aware of the significance of mid-term review (MTR)?

PERCENT PERCENT
VALID YES 93 93.0 93.0 93.0

NO 7 7.0 7.0 100.0
TOTAL 100 100.0 100.0
Figure 4.8: Are you aware of the significance of mid-term review (MTR)?
Inference- Most of the respondents, i.e. 93% are aware of the significance of mid-term review.
Deepika Singh
Q9. Do you think PAR process improves communication between appraiser and appraisee?
Table 4.9: Do you think PAR process improves communication between appraiser and
appraisee?
PERCENT PERCENT
VALID YES 86 86.0 86.0 86.0

NO 14 14.0 14.0 100.0
TOTAL 100 100.0 100.0
Figure 4.9: Do you think PAR process improves communication between appraiser and
appraisee?
Inference- 86% out of 100 respondents said that PAR process improves communication between
appraiser and appraisee and 14% said that it does not.
Deepika Singh
Q10. Appraisals in O.N.G.C are an annual activity; are you in favor of appraisal cycles having
smaller frequency?
Table 4.10: Appraisals in O.N.G.C are an annual activity; are you in favor of appraisal cycles
having smaller frequency?

PERCENT PERCENT
VALID YES 42 42.0 42.0 42.0

NO 58 58.0 58.0 100.0
TOTAL 100 100.0 100.0
Figure 4.10: Appraisals in O.N.G.C are an annual activity; are you in favor of appraisal cycles
having smaller frequency?
Inference- 42% of respondents said that they are in favor of appraisal cycles having smaller
frequency. However, 58% are against it.
Deepika Singh
Q11. Are you aware of the weightage given to PAR in deriving the value of performance related pay
(PRP)?
Table 4.11: Are you aware of the weightage given to PAR in deriving the value of performance
related pay (PRP)?

PERCENT PERCENT
VALID YES 84 84.0 84.0 84.0

NO 16 16.0 16.0 100.0
TOTAL 100 100.0 100.0
Figure 4.11: Are you aware of the weightage given to PAR in deriving the value of performance
related pay (PRP)?
Inference- 84% out of 100 respondents are aware of the weightage given to PAR in deriving the
value of performance related pay.
Deepika Singh
Q12. Should PAR be used to fix annual increments?
Table 4.12: Should PAR be used to fix annual increments?

PERCENT PERCENT
VALID YES 29 29.0 29.0 29.0

NO 71 71.0 71.0 100.0
TOTAL 100 100.0 100.0
Figure 4.12: Should PAR be used to fix annual increments?
Inference- 71% said that PAR should be used to fix annual increments and 29% said that PAR
shouldn’t be used to fix annual increments.
Deepika Singh
Q13. Should promotion be purely based on performance appraisal?
Table 4.13: Should promotion be purely based on performance appraisal?

PERCENT PERCENT
VALID YES 41 41.0 41.0 41.0

NO 59 59.0 29.0 100.0
TOTAL 100 100.0 100.0
Figure 4.13: Should promotion be purely based on performance appraisal?
Inference- 59% of respondents said that promotion should not be based purely on performance
appraisal.
Deepika Singh
Q14. Are you aware of the grievance system in E-PAR?
Table 4.14: Are you aware of the grievance system in E-PAR?

PERCENT PERCENT
VALID YES 33 33.0 33.0 33.0

NO 67 67.0 67.0 100.0
TOTAL 100 100.0 100.0
Figure 4.14: Are you aware of the grievance system in E-PAR?
Inference- 67% of respondents replied that they were not aware of the grievance system in E-
PAR.
Deepika Singh
Q15. In case of "adverse remark” in PAR of an employee, does counseling with the identified
person regarding possible areas of improvement lead to conclusive results?
Table 4.15: In case of "adverse remark” in PAR of an employee, does counseling with the
identified person regarding possible areas of improvement lead to conclusive results?

PERCENT PERCENT
VALID
AGREE 67 67.0 67.0 85.0
NEUTRAL 13 13.0 13.0 98.0
DISAGREE 1 1.0 1.0 99.0
TOTAL 100 100.0 100.0
Figure 4.15: In case of "adverse remark” in PAR of an employee, does counseling with the
identified person regarding possible areas of improvement lead to conclusive results?
Inference- A majority of 67% agree and 18% strongly agree that counseling in case of an
adverse remark leads to conclusive results.
Deepika Singh
Q16. Does E-PAR help in integrating the organization's (O.N.G.C) and individual's goals?
Table 4.16: Does E-PAR help in integrating the organization's (O.N.G.C) and individual's goals?

PERCENT PERCENT
VALID
AGREE 59 59.0 59.0 85.0
NEUTRAL 11 11.0 11.0 96.0
DISAGREE 3 3.0 3.0 99.0
TOTAL 100 100.0 100.0
Figure 4.16: Does E-PAR help in integrating the organization's (O.N.G.C) and individual's goals?
Inference- A majority of 59% respondents agree that E-PAR help in integrating the
organization's (O.N.G.C) and individual's goals.
Deepika Singh
Q17. E-PAR system is effectively used as a tool for the assessment of training and development
needs of employees in O.N.G.C.
Table 4.17: E-PAR system is effectively used as a tool for the assessment of training and
development needs of employees in O.N.G.C.

PERCENT PERCENT
VALID
AGREE 42 42.0 42.0 54.0
NEUTRAL 26 26.0 26.0 80.0
DISAGREE 17 17.0 17.0 97.0
TOTAL 100 100.0 100.0
Figure 4.17: E-PAR system is effectively used as a tool for the assessment of training and
development needs of employees in O.N.G.C.
Inference- Amajority of 42% agree that E-PAR system is effectively used as a tool for the
assessment of training and development needs of employees.
Deepika Singh
Q18. Do you think there is a need for "external consultants" in E-PAR?
Table 4.18: do you think there is a need for "external consultants" in E-PAR?

PERCENT PERCENT
VALID YES 58 58.0 58.0 58.0

NO 42 42.0 42.0 100.0
TOTAL 100 100.0 100.0
Figure 4.18: Do you think there is a need for "external consultants" in E-PAR?
Inference- 58% respondents said that there is a need for "external consultants" in E-PAR.
Deepika Singh
Q19. Should there be a performance appraisal system where performance of an employee is
assessed by self, his colleagues, controlling officer and sub-ordinates?
Table 4.19: Should there be a performance appraisal system where performance of an

employee is assessed by self, his colleagues, controlling officer and sub-ordinates?

PERCENT PERCENT
VALID YES 70 70.0 70.0 70.0

NO 30 30.0 30.0 100.0
TOTAL 100 100.0 100.0
Figure 4.19:Should there be a performance appraisal system where performance of an employee

is assessed by self, his colleagues, controlling officer and sub-ordinates?
Inference- 70% of respondents replied that there should be a performance appraisal system
where performance of an employee is assessed by self, his colleagues, controlling officer and
sub-ordinates while 30% did not agree with this.
Deepika Singh
Q20. Rate the overall effectiveness of performance appraisal system in ONGC.
Table 4.20: Rate the overall effectiveness of performance appraisal system in ONGC.

PERCENT PERCENT
VALID
VERY HIGH 21 21.0 21.0 21.0
HIGH 28 28.0 28.0 49.0
MEDIUM 44 44.0 44.0 93.0
LOW 4 4.0 4.0 97.0
VERY LOW 3 3.0 3.0 100.0
TOTAL 100 100.0 100.0
Figure 4.20 Rate the overall effectiveness of performance appraisal system in ONGC.
Inference- It can be said that the overall effectiveness of the E-PAR system in O.N.G.C is
neutrally rated by the employees (44%). This shows that though the current system might not
be highly effective, the employees believe it still manages to serve its purpose.
Deepika Singh
CROSS TABULATION
Q. Cross tabulation between Q.6 and Employee level
Table 4.21
Employee Level Total
Are you well aware of KRAs/KPIs? E0 E1 E2 E3 E4 E5 E6

Yes
No 1 4 18 22 21 11 1 78
1 2 5 6 7 0 1 22
Total
2 6 23 28 28 11 2 100
Figure 4.21
Inference- It can be seen that most of the employees (78%) are well aware of their KRAs/KPIs.
However, 22% of respondents answered NO. From this cross tabulation we can see that the
managers at E2, E3 and E4 are most highly aware of their KRA/KPIs. This may be due to
Deepika Singh
frequent job rotation which requires employees to be optimally motivated and productive to meet
the set benchmarks.
Q. Cross tabulation between Q.20 and Employee Level.
Table 4.22
Employee Level Total
Rate the overall effectiveness of E0 E1 E2 E3 E4 E5 E6

performance appraisal system in
ONGC.
Very High 1 1 8 5 3 2 1 21
High 1 1 7 9 6 2 2 28
Medium 1 1 11 16 8 4 3 44
Low 0 0 2 1 1 0 0 4
Very Low 0 0 1 1 1 0 0 3
Total 3 3 29 32 19 8 6 100
Figure 4.22
Deepika Singh
Inference- It can be seen thatmost of the employees (44%) have rated the current Performance
Appraisal System at ONGC as Medium, followed by 28% rating it as High and 21% rating it
Very High. From this Cross Tab it can be seen that of those rating it Medium, a majority lies
among the E2, E3 and E4 level. The reason behind this could be the benefits that these 3 levels
of executives reap from the Performance Appraisal System, in terms of Promotions and Pay
hikes.
Deepika Singh
CONCLUSIONS
The existing PAR system in ONGC is perceived to be effective .It is also seen as sufficient to
evaluate the performance and potential of employees.
 Majority of the employees are comfortable with the new Performance Appraisal System
i.e. e-PAR Process.
 The present system of Performance Appraisal helps in bringing to the knowledge of the
employees the organization’s goals and objectives.
 PAR in ONGC is used as an effective tool for assessment of training and development
needs, whereby the employees lacking in performance are given the opportunity to fill the
gaps in their performance.Majority of employees are satisfied with the existing
performance appraisal system.
 Majority of respondents think that PAR system increases employee motivation.
 Majority of respondents feel that Annual Increment should not be based on PAR system.
 Also, a large number of respondents said that promotions should not be purely based on
performance appraisal.
 One particular question showed a tremendous level of satisfaction or agreement, which

was regarding the 360-degree appraisal. There is a very strong demand amongst the
respondents towards the need for an appraisal system that uses the 360- degree approach.
People feel that 360-degree should be present there to judge the performance.
Deepika Singh
 Majority of employees think that PAR process improves communication between
appraiser and appraise and it also encourages team spirit. It also seen as sufficient to
facilitate career growth of employee.
 E-PAR is perceived to be more objective than paper PAR.
 Majority of respondents do not find any need of “external consultants” in existing PAR system.
Deepika Singh
RECOMMENDATIONS
On the basis of the responses given by the respondents through questionnaires, some suggestions
may be considered to strengthen the Performance Appraisal System. These are:
 It was found that communication is issued to the concerned employee only in case of
adverse remarks or the overall assessment being not satisfactory. However it is very
essential to communicate positive feedback also, which the management can use as a
motivating tool.
 In the online PAR form, there should be an opportunity for the employees to express their
views and do a type of self-assessment on all parameters to make it more effective and
acceptable.
 In e-PAR the list of KRA/KPIs should be more exhaustive and self-explanatory.
 There should be more awareness about the grievance system in E-PAR so as to make
rectifications, if any and improve the system.
 It was noticed that many employees felt that PAR is fair transparent and well
communicated to them and they were in favor of implementing 360 degree appraisal
system in which the employees performance can be judged by superiors, peers and
subordinates so that appraiser’s biases (if any) can be avoided.
 The PAR form should be modified such that there are two sections-one where employees
himself is able to identify the areas where he feels he is lacking and needs training and
the other sections where appraiser identifies the employee’s training needs and individual
and organizational objectives can be easily achieved.
Deepika Singh
 Performance Appraisal in ONGC should not be restricted to an annual activity rather;
appraisal cycles having smaller frequency (monthly, six monthly, etc.) should be
implemented in near future.
 The shortcomings or the faults of the employees should be communicated to them in such
a way that they feel that the organization cares for their development and is always ready
to support them.
 Trust between the superiors and the subordinate is a key for coordination in the activities
being performed. An impartial and transparent environment provided by the appraisers
can prove beneficial.
 The main aim of Performance Appraisal is to assess and develop the potential of the
human capital present in the organization.
 Apart from the current counseling process, which is a part of the Appraisal process,
Provision should be made for “Informal Counseling Sessions” as well, whereby
Counseling is given to the employees weekly, fortnightly, etc. depending on the need for
such kind of assistance.
Deepika Singh
LIMITATIONS
 Since ONGC is a multi-disciplinary and multi work centre organization (Scattered all
over the country) it becomes very difficult to include employees form all the disciplines,
all over the work centers and all the levels in the study. Sample size was only 100, which
cannot be a true representative of the company having more than twenty one thousand
(21000) executives. However, attempt has been made to include persons of different
disciplines and different levels working in ONGC, Tel Bhavan, Dehradun.
 More over responses were collected from the executives working in the office, and
responses can’t be collected from the fieldwork executives. Responses so collected have
been generalized across the corporation.
 Efforts had been made to distribute the questionnaire in proportion to the executives in
different Business Group and Departments to have a true representation of all Business
Group and Departments. The responses received though were not in similar proportion.
 The executives in the organizations are spread at different levels like E1, E2, …and E9.
The questionnaires could not be distributed in proportion to their strength. Also equal
weightage has been assigned to all respondents irrespective of their level.
 Due to time constraint and hectic schedule of ONGC employees sometimes it was
difficult to interact with employees at length.
Deepika Singh
KEY LEARNING
 From this internship, I got intensive corporate exposure. Throughout this project I got the
opportunity to interact with industry experts and got a firsthand experience of corporate
life.
 This internship gave me the opportunity to enhance my critical thinking and reasoning
through interaction with various executives at various levels and receiving their
feedbacks and opinions.
 Interaction with my Industry Mentor gave me further insight into the working of the
Human Resource Department in a Public Sector establishment, such as ONGC, and also
increased my knowledge about the various policies and practices within such an
organization.
 It also helped me adapt to the work culture in a corporate establishment, which would be
of great use to me in future when I take up a job in a similar corporate organization.
Deepika Singh

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PROJECT REPORT ON

“Effectiveness of Performance Appraisal in ONGC”

Submitted in partial fulfillment of MBA

Under the supervision of Submitted by

“Effectiveness of Performance Appraisal in ONGC”

Summer Internship Report

FACULTY OF MANAGEMENT STUDIES

Name: Deepika Singh

1 Executive Summary Page 5

2 Introduction & Objectives Page 6,7

3 Company’s Profile Page 8 – 12

4 Industry Analysis Page 13 – 21

5 Financial Analysis Page 22 – 31

6 Research Project Page 32 – 70

10 Key Learning Page 78

 Transparency International in a recently released report ‘Promoting Revenue

CORE ACTIVITIES OF ONGC

 KDMIPE : Keshav Deva Malviya Institute of petroleum Exploration (Dehradun)

 IDT : Institute of Drilling Technology (Dehradun)

 IRS : Institute of Reservoir studies (Ahmedabad)

 IEOT : Institute of Engineering and Ocean Technology

 IMD : Institute of Management Development (Dehradun)

 INBIGS : Institute of Biotechnology and Geotectonic Studies

 IOGPT : Institute of Oil and Gas production Technology

 IPSHEM : Institute of Petroleum Safety Health and Environment Management.

Industry Size and Trend of Growth

The top Oil Producing Companies of India are:

1 Indian Oil Corporation

*Oil &Gas constituted 40 per cent of primary energy source in 2004

99-00 00-01 01-02 02-03 03-04 04-05 CAGR

Mission and Vision of ONGC

 Dedicated to excellence by leveraging competitive advantages in R&D and technology with

Integrated in Energy Business

 Create growth opportunities and maximize shareholder value.

Dominant Indian Leadership

OPPORTUNITIES AND THREATS

Sources of funds 2011 2010 2009

Manufacturing expenses 32,384.37 26,913.20 19,849.28

Selling expenses 6,812.24 6,527.78 7,005.91

Adminstrative expenses -22,749.34 -18,823.82 -10,465.65

Cost of sales 25,670.22 22,549.17 31,750.75

Other recurring income 5,431.11 3,363.33 4,604.51

Financial expenses 11,133.34 11,276.89 8,485.40

Other write offs - - -

Tax charges 9,177.53 8,258.73 8,437.78

Adjusted PAT 18,779.35 16,287.66 15,578.96

Other non cash

Reported net profit 18,924.00 16,724.28 15,850.72

Dividend tax 1,215.65 1,161.56 1,163.20

Retained earnings 10,222.33 8,504.46 7,843.21

 Reserves and Surplus

 Loans And Funds

CASH FLOW STATEMENT ANALYSIS

2011 2010 2009

Current ratio 1.36 1.39 1.45

Current ratio (inc. st loans) 1.36 1.39 1.45

Quick ratio 1.20 1.22 1.27

Profitability 2011 2010 2009

Operation Efficiency Ratios or Activity Ratios

Activity Ratio 2011 2010 2009

2011 2010 2009

Performance appraisal is a process of assessing, summarizing and developing the work

Appraisal data is needed for: