Acknowledgement

I, DhavalGhetiya,student of TOLANI INSTUTE OF MANAGEMENT STUDIES

(TIMS) doing Post Graduate Diploma in Management at Adipur-Kutch, would
like to place on record my sincere thanks and gratitude to everyone in HR
Department of VADINAR POWER COMPANY LIMITED (ESSAR POWER).
It‟s my privilege for having this opportunity to work for vocational training with
VADINAR POWER COMPANY LIMITED (ESSAR POWER). It was a great
learning experience for me to work with this prestigious organization.

I hereby sincerely thank from the bottom of my heart to all the people who have
given me their support and encouragement throughout this training program.

I am most thankful to the VPCL head Mr. Kishor. B. Makadia (Vice President)
and department head Mr. Srinivas Siripurapu (Sr. HR Manager) and all other
member of Department. Without their guidance and support this wonderful
experience would not have been completed successfully.

I would also thank to all the member of administration, operation and HR

Departments for their assistance and guidance provided during the period.

And also I would like to specially thank Mr. VasantChavada, Mr. Rohan Joshi,
Mr. UrvishVadgama and Mr. ChandreshSomaiya.

Place: Adipur
Date: 19-07-10
(Ghetiya Dhaval)

1
 Preface

A practical knowledge in a student‟s life is very important. It helps a student to

know the real life situation and problems of life. Same is the case with the
corporate world. Theoretical knowledge is very much needed but practical
knowledge is equally important. This practical knowledge to a student is given in
a form of training and sometimes theoretical knowledge too is being imparted as
information or knowledge sharing.

Training helps a student to interact with the experienced people of the corporate
world and hence learn more from them. Here, the student learns how to apply the
theoretical knowledge in practice.

Being a student of TIMS it was a very valuable and memorable experience at

VADINAR POWER COMPANY LIMITED (ESSAR POWER) learnt the
management subjects. I practically, came across to various day to day activities of
the Organization. This wonderful experience has given me a new light to what I
had studied.

2
 DECLARATION

I hereby declare that the project work entitled “General Management

Program” at Vadinar Power Co. Ltd. (Essar Power)Submitted to Tolani Institute of
Management Studies, Adipur is a record of an original work done by me under the
guidance of Mr. Srinivas Siripurapu and this project work is not submitted for the
award of any other degree/diploma/associate ship/fellowship or seminar award.

Dhaval Ghetiya

19-07-2010

ADIPUR

3
 CONTENTS

Sr. Particulars Page No.

No
1 Introduction of ESSAR Group 7
2 ESSAR Group Of Companies 10

 Essar Oil Ltd. 10

 Essar Steel Ltd. 11
 Essar Communication Ltd. 12
 Essar Shipping & Logistics Ltd. 13
 Essar Constructions Ltd. 14
 Essar Power Ltd. 15

3 Industrial Overview 17

3.1 Indian Power Sector 17

3.2 Power supply units in India 20
3.3 Major players in India 22
3.4 Fuel reserves 25

4 History of VPCL 27

5 Details of Company 29

5.1 Company Profile 29

5.2 Mission & vision 31
5.3 Objectives of VPCL 32
5.4 Achievements of VPCL 33
5.5 Key value drivers 34
5.6 Levels in organization 35

6 Board of Directors 36
7 Management Team 37

4
8 Operation Department 38

Location 42
Production, Planning & Control 43
Material Handling 44
Maintenance management 45
Purchase procedure 47
Power generation process 48
Store Management 52
Inventory Management 53
Safety Department 54

9 Financial Department 58

Accounting Policies of VPCL 61

Balance sheet of VPCL 63
P & L Statement 64
Ratio Analysis 65

10 Human Resource Department 69

Recruitment and Selection Process 71

Training & Development 75
Performance Appraisal 77

11 Initiatives taken by VPCL 79

12 SWOT Analysis 81

13 Future expansion of VPCL 82

14 Limitations of Study 82

15 Suggestions to VPCL 82

16 Conclusion 83

17 Learning Outcome 84

18 Bibliography 85

5
 List of Figures

Sr. No. Particulars Pg. No.

1.1 Levels In The Organization 35

1.2 Input Output 39

1.3 Purchasing Process 47

1.4 Power Generation Process 48

1.5 Manpower Planning Process 70

1.6 Source of Recruitment 71

1.7 Training Process 75

List of Tables

Sr. No. Particulars Pg. No.

1.1 Performance Parameters 56

1.2 Balance Sheet 63

1.3 Profit & Loss Account 64

1.4 Selection of Middle & Junior Management 74

List of Chart

Sr. No. Particulars Pg. No.

1.1 Promoter‟s Stake 60

6
 1. Introduction of ESSAR Group

Essar Global Limited (EGL) is a diversified business corporation with a balanced

portfolio of assets in the manufacturing and services sectors of Steel, Energy, Power,
Communications, Shipping Ports & Logistics, and Projects. Essar has operations in
Asia, Africa, Europe, the Americas and Australia. The group’s enterprise value is
approximately US$ 15 billion with 60000 employed people.

The Essar Group was founded in 1969 by two brothers namely Mr. Shashi Ruia and
Mr.
Ravi Ruia.

The name of the company “ESSAR” is getting from the first letter of two brothers
“SHASHI” and “RAVI”, „S‟ as “ESS” and „R‟ as “AR”. Thus the combination of
them is making a new name “ESSAR”.

The Ruia family`s origins are in Rajasthan. Sometime in the 19th century, it moved to
Mumbai and set up its own business. In the 1956, Shri Nandkishore Ruia, father to
Shri Shashi and Shri Ravi Ruia, moved to Chennai, capital of the south Indian state of
Tamil Nadu, to begin independent business activities. He mentored his two sons in the
intricacies of business. When Shri Nandkishore Ruia passed away in 1969, the
brothers laid foundation of the Essar Group.

The Essar Group began its operations with the construction of outer breakwater in
Chennai port. It quickly moved to capitalized on every emerging business
opportunity, becoming India‟s first private company to buy a tanker in 1976. The 21st
century for the Essar Group has been all about consolidating and growing the
business, with M&As, new revenue streams and strategic geographical expansion.

7
The Essar Group is one of the India‟s largest corporate houses with interests spanning
the manufacturing and service sectors in both old and new economies: Steel, Energy,
Power, Communication, Shipping & logistic, Constructions and other like Agrotech,
Exploration. The group‟s value is app. US$ 15 billion with a total employees turnover
of around 60000 people. Strategic investments made by the group over the past
decade have resulted in the creation of tangible and intangible assets that are at the
heart of the Indian economy.

With a firm foothold in India, the Essar group has been focusing on global expansion
with projects and investments in Europe, North America, the Caribbean, Africa, the
Middle East and South East Asia. Privately owned and professionally managed, the
Group is judicially invested in the commodity, annuity and service business.

The group takes pride in being a high-performance multinational organization,

providing world class services and products. Manned by a highly efficient and
dynamic team of employees, the group is growing stronger day by day. As a
committed corporate citizen, the group provides unwavering support to the
community as well as initiates social and ecological drives that have a positive impact
on the society. EGL‟s abiding philosophy is to be a low cost, high quality, technology
driven group with innovative customer offering.

Essar Power is the India‟s first independent power plant and first multi-fuel plant. It
operates five power plants with a combined capacity of 1,200 MW in three locations
across India and planning to enhance their generating capacity to 6,000 MW. Essar
Power is exploring opportunities for new projects based on thermal, wind and hydro
energy.

8
Touching millions of lives

For decades, this group quietly touched the millions of people with the steel to build
cars, the oil to fuel factories, the power to light up thousands of lives and the pipelines
to bring drinking water to remote villages. Today, Essar Group has come closer by
connecting customers with their cellular phone services and talking to thousands of
people through their call centers, a country wide chain of fuel outlets and marketing
steel at the retail level.

9
 2. Essar Group of Companies

Essar Oil Ltd.

ESSAR oil is a fully oil company of international standards, covering size, scale, the
entire value chain from exploration and production to refining and retailing of
petroleum products.

Its 10.5 million metric tons per annum refinery at Vadinar in Gujarat has been built
with state-of-art, contemporary technology and will have the capability to produce
petrol and diesel suitable for use in India as well as advanced international markets.

Essar‟s strategy of commissioning is retail outlets as well as bulk consumers.

10
 Essar Steel Ltd.

ESSAR steel holdings limited is the largest integrated steel producer in western India
and has full control over the entire process of manufacturing- from iron ore to ready-
to-market products. Essar Steel produces highly customized value added products
catering to wide variety of products segments including roofing, automobiles, oil and
gas, shipbuilding, fabrication and white goods where they compete with the best
players in international markets.

Essar Steel‟s “24-carat steel” brand is one of the most trusted brands in the steel
industry.

11
 Essar Communication Ltd.

India is emerging as the major Information Technology centre in the world. The IT
sector is expected to become the next wealth creating engine. In order to be part of the
global business process outsourcing revolution, Essar has created a strong presence in
this sector in the US and India with Aegis communications group. Aegis has call
centers and IT operation in the USA and India and employs over 9000 people. Essar
also has partnership with Vodafone.

12
 Essar Shipping & Logistics Ltd.

It is a leading integrated logistics provider for steel mills, oil refineries and thermal
power generation companies across the world. Essar shipping and Logistic operates in
five main business areas:

1. Essar shipping:

2. Vadinar Oil Terminal:

3. Essar Logistics:

4. Essar Bulk Terminals:

5. Oil field drilling services:

13
 Essar Constructions Ltd.

It is a leading company with over 30 years of experience in creating the backbone of

India‟s infrastructure. The company has expertise in industrial projects, civil and
irrigation projects, pipelines, marine projects and highways and expressways. Essar
construction has entered into strategic alliance with Indian and multinational
organization and employs over 1000 skilled trained engineers with specialized
construction equipment.

14
 Essar Power Ltd.

ESSAR power holdings limited set up India‟s first new generation independent power
project at Hazira, India in the early 1990s. Essar power is operating four power plants
with capacity of over 1000MW at HAZIRA near Surat, VADINAR, near Jamnagar
and VISHKAPATNAM, Andhra Pradesh.

The 515 MW natural gas fired combined cycle has consistently set new standards of
excellence in the Indian power sector and meets the highest operating benchmarks.
This environment friendly plant operates with a plant availability factor in excess of
94%. Essar, with its proven experience of developing power projects is well
positioned to implement the large sized power projects. Essar Power is also foraying
in to wind energy generation with cohesive integration of consultancy, design,
manufacturing, installation, operation and maintenance services. Essar Power is
setting up a 2000MW power plant in Mahan coal block of Singrauli district in the
state of M.P.

15
PLANT LOCATION:

HAZIRA:

515 MW combined cycle power plant.

500 MW captive combined cycle power plant for Essar Steel

VIZAG:

32 MW coal based power plant

VADINAR:

120 MW fuel based captive power plant for Essar Oil Ltd.

16
 3. Industrial Overview

3.1 Indian Power Sector:

Indian power sector comes under the MINISTRY OF POWER which was earlier
known as MINISTRY OF ENERGY. The Indian power sector has a history of about
125 yrs. It has come a long way from a single small hydro unit set up in Darjeeling in
1880, followed by commercial production and distribution in Calcutta in 1889. The
sector is poised to produce over 750 billion units in 2008-09.

The power sector has registered significant progress since the process of planned
development of the economy began in 1950. Hydro power and coal based thermal
power have been the main sources of generating electricity. Nuclear power
development is at slower pace, which was introduced, in late sixties. The concept of
operating power systems on a regional base crossing the political boundaries of states
was introduced in the early sixties. In spite of the overall development that has taken
place, the power supply industry has been under constant pressure to bridge the gap
between supply and demand.

India is positioned as the Eleventh Largest Manufacturer of Energy, representing

roughly 2.4% of the overall energy output per annum; it is also the world‟s 6th largest
energy user, comprising about 3.3% of the overall global energy expenditure per
year. In spite of its extensive yearly energy output, Indian Power Sector is a regular
importer of energy, because of the huge disparity between production and utilization.

The power industry in India derived its fund and financing from the government,
some private players that have entered the market recently, World Bank, Public issues
and other global funds. Power Finance Corporation (PFC) Ltd. India also looks after
the installation of any new power projects as well as renovation of an existing power
projects in India.

17
Many government as well as private organizations has taken up the task of power
generation in India which includes NTPC, Bhakra Beas Management Board, Enercon
System India, TATA power, Torrent power etc.

Usually energy, especially electricity, has a major contribution in speeding up the

economic development of the country. The existing production of per capita
electricity in India is around 600 KWH per annum. Ever since 1990s, India‟s gross
domestic product (GDP) has been increasing very rapidly and it is estimated that it
will maintain the pace in the next couple of decades. The rice in GDP should be
followed by an increase in the expenditure of key energy other than electricity.

The gross electricity production capability of Indian Power Sector is placed at around
111 GW. A key portion of this generated electricity is i.e. 78 GW or 70 % is thermal
energy. Though, this is still not sufficient.

The government of India has its Mission, Power to all by 2012. Achievement of this
target requires development of large capacity projects. Recognizing the fact that
economies of scale leading to cheaper can be secured through development of large
size power projects.

The per capita power consumption in India is expected to grow by 1000KWH by

2012. To meet the growing demand and shortage encountered in various regions,
generation capacity is required to be doubled in 10 years between 2006 and 2016, so
that the total demand both in terms of peak and energy can be met. The current
power generation capacity of India is 115000MW.

According to finance ministry, the country‟s power requirement expected to touch

8,00,000 MW by 2031-32, India would need an investment of Rs. 6, 00,000 crore.

18
The major problems faced by this sector are that developers are not coming forward
and State Electricity Board is not financially healthy. If government instructs them to
supply free power, government should also compensate them.

Scenario is yet to change and power sector indeed has an opportunity the way it is
emerging. It can be evaluated as per the growth of the industry and the entry of
private players into it.

Source:

http://www.adbi.org/discussion-
paper/2007/04/26/2236.policy.environment.power.sector/the.indian.power.sector.
an.overview/

19
3.2 Power Supply Units in India:

Power is derived from various sources in India. These includes thermal power,
hydropower or solar power, biogas energy, wind power etc. the distribution of power
generated is undertaken by Rural Electrification Corporation for electricity power
supply to the rural areas, North Eastern Electric Power Corporation for electricity
supply to the North East India regions and the Power Grid Corporation of India
Limited for an all India supply of electrical power in India.

 Thermal Power:
Thermal Power in India is mainly generated through coal, gas and oil. In India
coal power forms a majority share of the sources of power supply in India. the
electric power in India is generated at various thermal power station in India.
The power generated at these thermal power plants is then distributed all over
India through a network of power grid at regional and national levels. The
power ministry organization is responsible for the thermal power management
in India is the NTPC.

 Hydropower:
Hydropower in India is one of the mega power generators in India. Various
hydropower projects and hydro power plants have been set up by the ministry
of power for generation of hydro power in India. Various dams and reservoirs
are constructed on major rivers and the kinetic energy of the flowing water is
utilized to generate hydroelectricity. The power generator here is the running
water. The hydroelectric power plants and the hydro power generation
companies are managed by the National Hydro Electric Power Corporation
(NHPC).

20
 Wind Power:
Wind Power in India is available in the plenty as India witnesses high intensity
winds in various regions due to the topographical diversity in India. Effort
have been made to utilize this natural source of energy farms have been set up
by the government for tapping the wind energy by using gigantic windmills
and then converting the kinetic energy of the wind into electricity by the use of
power converters. The wind power advantages start with the very fact that a
wind energy power plant does not require much infrastructure inputs and the
raw material i.e. wind itself is available free of cost. The wind power is
generated by Suzlon Power.

 Solar Power:
Solar Power in India is being utilized to generate electricity on smaller scale
by setting up massive solar panels and capturing the solar power. Solar power
is also being utilized by the power companies in India to generate solar energy
for domestic and small industrial uses.

 Nuclear Power:
Nuclear Power in India is generated at huge nuclear power plants and nuclear
power station in India. A nuclear power plant generates the electricity using
nuclear energy. All the nuclear power plants in India are managed by the
Nuclear Power Corporation of India Ltd. (NPCL). The electricity from all
India nuclear plants is distributed by the NPCL as per nuclear power project
scheme.

 Biogas Power:
Biogas Production in India is still in its infancy stage. Also the number of
biogas plants in India is still very low. India being the largest domestic cattle
producer has plenty of biogas fuel and thus utilization of the fuel for mass
biogas production by setting up more biogas plants in India would solve the
power shortage problem to some extent.
21
3.3 Major Players in Indian Power Sector:

“Without Competitor You Can Never Win.”

Competitor is one of the important factors of the company‟s success. Without

competition, one can‟t know about their qualities and limitations. While company
wants to enter in any business, it has to face first its competition.

Many government as well as private organizations have taken up the task of power
generation in India. The major Indian power companies playing are:

 Jindal Steel & Power Limited

 Karnataka Power Transmission Corporation Limited(KPTCL)
 Karnataka Renewable Energy Development Limited
 Magnum Power Generation Limited
 Reliance Energy Ltd.
 TATA Power
 Torrent Power
 Suzlon Power
 Caterpillar Power India
 Alton Power India

22
Tata Power

TATA Power Started as the Tata Hydroelectric Power Supply Company in 1911, it is
an amalgamation of two entities: Tata Hydroelectric Power Supply Company and
Andhra Valley Power Supply Company (1916).Today Tata Power Company
Limited is India‟s largest private sector electricity generating company with an
installed generation capacity of over 2670 MW. The Company is a pioneer in the
Indian power sector. Tata Power has a presence in thermal, hydro, solar and wind
areas of power generation, transmission and retail. The founders of Tata Power
pioneered the generation of electricity in India with the commissioning of India‟s first
large hydro-electric project in 1915 in Bhivpuri and Khopoli, Karjat.

Operations

The thermal power stations of the company are located at Trombay in Mumbai,
Jojobera in Jharkhand and Belgaum in Karnataka. The hydro stations are located in
the Western Ghats of Maharashtra and the wind farm in Ahmednagar.

The Company has been a front-runner in introducing state-of-the-art power

technologies. Tata installed India‟s first 500 MW unit at Trombay. Tata Power has
served Mumbai‟s consumers for over nine decades.The Distribution joint venture with
the Government of Delhi called the “North Delhi Power Limited” (NDPL), has met
with considerable success. This joint venture serves over 800,000 consumers The
Company has also executed several overseas projects in the Middle East, Africa and
South East Asia. in Dubai, Saudi Arabia, Kuwait, UAE.

Tata Power has also won a contract for building 4000 MW power plant at Mundra. A
unique aspect of this project is that for the first time in India a 4000MW power plant
is being built utilizing one large construction project.

23
Jindal Power Limited

Jindal Steel and Power is a part of the Jindal Group, founded by O. P. Jindal in
1969.

Jindal Power Ltd. (JPL) a subsidiary of Jindal Steel & Power Ltd has set up a 1000
MW O P Jindal Super Thermal Power Plant at Raigarh, Chhattisgarh, with an
investment of over Rs. 4,500 crores.

JSPL with its large experience in installation, operation and maintenance of thermal
power plants is the Project Management Consultant (PMC) for the project.

In order to reduce the project cost, JPL has decided not to appoint any EPC
(Engineering, Procurement and Construction) Contractor. Instead, it will place
individual orders on various suppliers for major packages. JPL has also decided not to
appoint any O&M (Operations & Maintenance) Contractor to reduce the running cost
of the plant. Instead, it will deploy its own team to operate and run the plant. In fact, it
is the first power project to have a pit head with its own coal mine.

All these initiatives have enabled JPL to provide lower tariff in the competitive power
sector. This will help in contributing towards achieving Government of India's goal of
'affordable power for all by 2012'. 1000 MW O P Jindal Super Thermal Power Plant
at Raigarh, with an investment of over Rs. 4500 crores. The last unit was
commissioned in the first week of September,2008.

JPL has planned more hydro & thermal power projects and has an aggressive
blueprint to increase domestic Power production to help in contributing towards
achieving Govt.of India's goal of "affordable power for all by 2012".JPL has signed
an MOU for setting up 2520 MW plant with an investment of over Rs.11, 340 crore in
Chhattisgarh and 2640 MW with an investment of over Rs.11, 880 crore in Jharkhand.
-

24
Suzlon Energy

Suzlon Energy is a wind power company in India. In terms of market share, the
company is the largest wind turbine manufacturer in Asia and the fifth largest
worldwide. In terms of net worth, it is the world's most valuable wind power
company. Suzlon offers customers total wind power solutions including consultancy,
manufacturing, operations & maintenance services. Suzlon is a multinational
company with offices, R&D and technology centers, manufacturing facilities and
service support centers spread across the globe. Suzlon plans to increase its presence
within India, and around the world. It already has a presence in over 40 locations
around the world

Reliance Power

Reliance Power Limited, a part of the Reliance Anil Dhirubhai Ambani Group, was
established to develop, construct and operate power projects in the domestic and
international markets. Along with its subsidiaries, it is presently developing 13
medium and large-sized power projects with a combined planned installed capacity of
28,200 MW.

The company website identifies project sites broadly to be located in western India
(12,220 MW), northern India (9,080 MW) and northeastern India (2,900 MW) and
southern India (4,000 MW). They include six coal-fired projects (14,620 MW) to be
fueled by reserves from captive mines and supplies from India and abroad, two gas-
fired projects (10,280 MW) to be fueled primarily by reserves from the Krishna
Godavari Basin (the "KG Basin") off the east coast of India, and four hydroelectric
projects (3,300 MW), three of them in Arunachal Pradesh and one in Uttarakhand.

25
3.4 A brief write up about natural fuel reserves and how long are
these expected to last:

Primary fuel resources of the country are Hydro Power, Fossil-Coal, Lignite, Natural
gas and Nuclear Power as per details shown below:

 Hydro power: 84044 MW

 Pumped Storage Hydro: 94000 MW

 Coal Reserve: 204.7 Billion Tones

 Lignite reserves: 27.5 Billion Tones

 Crude Oil: 732 Million Tones

 Natural Gas: 660 Billion Cubic Meter

 Uranium: 6700 Tones

 Thorium: 363000Tones

Source:
http://www.google.co.in/url?sa=t&source=web&cd=3&ved=0CCIQFjAC&url=http%
3A%2F%2Fwww.indiapower.org%2Fimages%2Fipsco.pdf&ei=ZR5ATKWaFZLEv
QOs8-nlDA&usg=AFQjCNF3JIrHoP6LxfYlXKR4vq99F6VSXQ

26
 4. History of Vadinar Power Company Limited

VPCL was established in the year of 1998 along with refinery to manage internal
steam & power requirement. The capacity of the plant is 120MW equivalent, 175
TPH*3 oil fired boilers, 38.5MW*2 steam turbines, feed water and steam supply to
refinery. The main objective of the company is to continuously supply power & steam
to the refinery for their operation. The present focus of VPCL is in the expansion
projects that they have undertaken. Also the administration office at VPCL is under
construction.

There are mainly four departments in any company which includes Operation, human
resource, Finance, marketing.

In VPCL Operation management includes management of resources, operation

control, planning, safety and security, competency management, performance
management. For maintenance of the plant there are three main departments like,
Mechanical, Electrical, and Instrumentation & Control.

27
Human resource management includes manpower planning, recruitment &
selection, training & development, performance appraisal, employee welfare
activities, employee engagement, etc. There are many Essar power initiatives like,
Gemba Kaision, mentor-mentee meet; Guru-Shisya relationship, etc. are followed by
the VPCL.

Major Financial decisions are taken from the Mumbai Essar House. While in VPCL,
activities like Tax Compliance Mechanism, MIS Report like Monthly balance sheet,
Bank reconciliation statement, IRGR report, Vendor aging report, group company
reconciliation statement are done.

As VPCL is generating power only for refinery there is no any marketing department.

28
 5. Details of Company

5.1 Company’s profile:

Name : Vadinar Power Company Limited

Address : P.O. Box No. 24,

Head P.O. Khambhaliya,

Dist. Jamnagar – 361305

India.

Registered office : Refinery Administration Building,

Khambhaliya Post,

Dist. Jamnagar – 361305

India.

Telephone No. : + 91 2833 241 444

Fax No. : + 91 2833 241 818

E-mail : essarpower@essar.com

Website : www.essar.com

29
Year of Establishment : July 2006.

Auditors of Company : S.R.BATLIBOI & Co.

Banker of Company : Punjab National Bank, AXIS Bank Ltd.

Raw Material : Fuel Oil, Fuel gas, DM Water,

No. of Employees : 145

Size of Unit : Large Scale

30
5.2 Mission and Vision:

Vision

“We will be a respected global entrepreneur, through the power of Positive Action.”

Mission

“We are committed to innovative growth, through our personal passion, reinforced by
a professional mindset, creating value for all those we touch.”

31
5.3 Objectives of VPCL:

 The main objective of the company is to continuously supply power & steam
to the refinery for their operation.

 It should be an efficient co-generation power plant.

 Situational availability of boiler, turbine.

 100% Compliance for employees through PME (Pre-Medical Examination)

and fulfill all legal requirements for employees.

 Aim for zero leakage for environmental safety.

32
5.4 Achievements of VPCL:

 Near Miss Award given by Health Safety Environment Forum (HSEF)

because VPCL reported 207 near misses.

 100% compliance in cross functional model.

 Operational Excellence – Silver Band Award.

 1st Winner in Fire Quiz.

 100% PPE Compliance audit.

 99% Safety audit compliance Jun-2007.

33
5.5 Key value drivers

 India‟s first independent power plant and first multi-fuel plant.

 World-class plant design and construction; equipment from General Electric,

Siemens and Honeywell

 Highly automated, with India‟s lowest manpower to megawatt ratio.

 One of the few companies to receive the „Sword of Honour‟ from the British
Safety Council.

 One of India‟s best technical teams, capable of setting up varied power plants
in operations and maintenance.

 Planning projects to enhance our generating capacity to 6,000 MW.

34
5.6 Levels in the organization

CEO/Director

Senior Vice President

Vice President

General Manager

Joint General Manager

Deputy General Manager

Senior Manager

Manager

Deputy Manager

Assistant Manager

Engineer / Executive

Trainee

fig.1.1: levels in organization

*Source: HR Dept., VPCL

35
 Board of Directors

Shri. Shashi Ruia Chairman

Mr. Anshuman Ruia Promoter-Director

Shri. Rewant Ruia Promoter - Director

Mr. KVB Reddy Executive Director

Mr. SJ Coelho Independent Director

Mr. RK Narayan Independent Director

Mr. Mukul kashwal Independent Director

36
 Management Team

Mr. KVB Reddy Executive Director

Mr. BCP Singh CEO, EPGL

Mr. RP Gupta CEO, Essar Power MP Ltd.

Mr. TS Bhatt Sr. VP, Operations

Mr. V Suresh CFO

Mr. Anil Matoo Head, HR & Administration

Mr. Raahil Burhani Chief Information Officer

37
Operation Department

38
 Introduction

The term operation management refers to the direction and control of the processes
that transform inputs into product and services. Broadly interpreted, operations
management underlies all the functional areas, because processes are found in all the
business activity.

Production department is the most vital aspect in a set of organization because the
success of the industry depends upon the targets that are fulfilled by the production
department. Thus, it is essential to develop a production structure in the industry.

“Production management is concerned with those processes which convert the inputs
into outputs. The inputs are various resources like raw material, men, machine,
method, etc. and the outputs are goods and services.”

INPUTS OUTPUT

Materials
Labor
Capital Production Products
Energy
Function Services

Information
Information
Resources

Product or

Services

Fig. 1.2: Input Output

39
VPCL is a captive power plant of refinery which caters the refinery requirement of
power; steam and high pressure water. Power is required to run multiple refinery
equipments whereas steam is required in various processes carrying out in refinery.
HP water is required to run various steam generators in various unit of Refinery.

Operation management includes management of resources, operation control,

planning, safety and security, competency management, performance management.

Management of resources includes control and planning and of resources like fuel;
de-mineralized water; sea cooling water; instrument and plant air; sweet cooling
water. These resources are coming from refinery and are planned to meet out the
continuous demand of power plant. Fuel oil is produced in refinery and stored in tank
on weekly basis or as per the demand.

Operation control includes planning for future demand of power, steam and HP
water which depends on the quality of crude oil which is to be processed. Operation
control also includes the annual shut down planning as well as normal stoppage of
equipments. It also includes managing plant reliability by enhancing the availability
of equipment.

Documenting reports as well as histories of various equipment is the major part in

operation as it reveals the behavior of equipment. Documentation related to plant
modifications is being recorded in DMS (Data Management System) which is
accessible to all plant operators.

Safety being one of the major concerns in power plant has to be managed as per
standard. There are different types of permit system which are being followed in
power plant along with refinery for any maintenance activity for the safety of people
as well as equipment. Also in power plant near-miss are recorded and subsequently
modified and attended to increase safety.

40
Competency management includes managing competency of engineers and
operating personnel to increase performance of operation and safety standard. Half
yearly competency check is being done for all the operational personnel to track the
competency.

Performance management includes management of individual equipment‟s

performance. All major equipment performance are carried out on quarterly basis and
corrected incase detoriation in performance is observed.

Operation budget is prepared on yearly basis and tracked for better usage of allotted
fund. Budget is prepared on the basis of previous experience and also with future
demand consideration. Budget helps management to take decision to meet out future
demands and also look for availability (substitute) of resources.

41
 Location

The selection of location is key-decision as heavy investment is required for building,

plant and machinery. It is not advisable or not possible to change the location very
often. So an improper location of plant may lead to waste of all the investment made
in building and machinery, equipment.

Before a location for a plant is selected, long range forecasts should be made
anticipating future needs of the company. The plant location should be based on
company‟s expansion plan and policy, diversification plan for the products.

VPCL a captive power plant is situated Vadinar, Jamnagar. They selected this
location because of the following reasons:

 As it is a captive power plant must be near to the refinery as raw material like
fuel oil & fuel gas coming from the refinery, & output also supplied to the
refinery only.

 Facility of coastal area as water availability is very important for power

generation.

 The area is far away from the Residential Places.

 Availability of the land at a cheaper rate.

 Labor is also available at a cheaper rate.

 Environmental Issues.

 Ease of transportation.

42
 Production, Planning and Control (PPC)

Production planning is determination, acquisition and arrangement of all facilities

necessary for production of products.

Production control means when there is a deviation in planned production,

production control identifies measures and tries to resort to planned production by
taking corrective steps.

Production Planning and Control is direction and coordination of resources towards

attending the prefix goals. PPC helps to achieve uninterrupted flow of materials
through production line by making available the materials at right time and required
quantity. Without production planning and control it is not easy to carry out the
production effectively. It becomes difficult for the company to make decision
regarding how much to produce.

In VPCL the decision regarding production of power is on the basis of power

requirement in the Essar Oil Ltd., EOL is forecasting the quantity of steam & power
every month. So, VPCL have to plan about the requirement of raw material like fuel
oil, fuel gas, DM water at which time.

Shift wise planning is also made in operation department.

In VPCL planning is also made about emergency shutdown if any boiler or turbine is
not working. Then they are taking the power from the G.E.B. for the requirement of
EOL.

43
 Material Handling

According to American Material Handling Society, in a manufacturing industry

Material Handling amounts to 15 to 25 % of the total cost of production. It is the art
and science involving the movement, handling and storage of materials during
different stages of manufacturing.

In VPCL, there are different type of material handling equipments are used. Major of
them are as following,

 Fuel Oil Pump for supplying fuel oil from fuel tank to the boiler.

 Boiler feed pump for feeding water to boiler.

 Fuel Gas Knock out Drum is used for removal of condensate.

 High pressure pumps for supplying HP water to refinery.

 Deaerator is used for the removal of oxygen from feed water as well as a
storage tank.

44
 Maintenance Management

Maintenance of facilities and equipments in good working condition is essential to

achieve specified level of quality and reliability and efficient working of the
machineries. Plant maintenance is an important service function of an efficient
production system. It helps in maintaining and increasing the operational efficiency of
plant facilities and thus, contributes to revenue by reducing the operational costs and
increasing the effectiveness of production.

At VPCL, they are giving more important to the maintenance of power plant so they
are having three main departments for that. i.e.

1. Electrical department.
2. Instrumentation & Control department.
In Brief:-

1. Electrical Department:
Operation team is handling electrical equipments of existing 77MW power plant. The
major electrical equipments are:

Generators, generating transformer, station transformers, excitation and other

auxiliary of the generator, protection system of the power plant and other plant
auxiliary electrical equipment.

The reliability and stability of the power plant is depending on the generator output.
So, constant monitoring and control of generator is very crucial. Technician and
below level is done by the third party which is Prince Engineering.

In short, electrical team is responsible for operation, supervision, monitoring and

controlling of the major electrical aspects of the power plant to ensure reliability and
stability of the power plan.

45
 2. Instrumentation & Control department:

Instrumentation is the technology used to measure & control all the physical,
chemical properties is called Instrumentation.

The basic purpose of instrumentation in a process is to obtain the Requisite

information pertaining to go the successful completion of the process. The principle
objective is that before a condition can be controlled, it must be measured.

With the growth of continues manufacturing the need for continuous measurement
becomes urgent. There are mainly following measures are taken:-

 Pressure Measurement
 Temperature Measurement
 Level Measurement
 Flow Measurement
 Speed Measurement
 Vibration Measurement

And some other activities taken by I & C which are as follows:-

 Designing the control system

 Emergency shutdown system
 Distribution control system
 Programmable logic controller system

46
 Purchasing Procedure:

Department need

Purchasing Requisition (PR) (by user department)

Ware House (for 1st release)

Plant Head (for final release)

Commercial Department

Enquiry from venders (E- Tender)

Offer

Technical team (indicator) for technical evaluation

Technical reconciliation (to commercial department)

Final negotiation (E- bidding)

Purchasing Order (PO)

Material Receipt

Inspection by Purchaser

Goods Receipt Note (GRN)

Material Load on SAP (Inventoried).

Issued by particular dept.

fig.1.3: Purchasing Process

*Source: Technical Dept., Essar Power Ltd.

47
 Power Generation Process:

fig.1.4: power generation process

*Source: Technical Dept., VPCL

The dematerialized water from the refinery enters the upper boiler drum using boiler
feed pumps. This DM water then passes through the bank tubes where it is converted
to steam and flows through the turbine on reaching the desired pressure and
temperature. The water is converted to steam using the heat energy of the fuel used in
combustion process. The fuel used is fluid oil and the gases after exchanging heat
through the water tubes escapes as combustion gas from the stack.

48
The steam after passing through the turbine goes to condenser for condensation. The
process is repeated again wherein, the condensed steam is sent back to the upper drum
using feed water pumps. The turbine rotates using the steam and the generator
connected through the gear box rotates which in turn leads to generation of electricity
thereby utilizing the field from the exciter. This electricity is then transmitted using
the transmission lines.

BOILER DESCRIPTION

The boiler is outdoor located, bi-drum, natural circulation, forced draught, front wall
fuel oil/fuel gas fixed type. Each boiler consist of upper and lower drum, furnace,
bank tubes, supply tubes, water wall tubes, over flow tubes, super heaters,
economizer, steam air preheated, soot blowers burners, safety valves and integrated
piping. The function and use of each parts of the boiler is as given below

I. UPPER DRUM (STEAM DRUM)

The steam drum is of fusion welded construction located at the upper section of the
boiler. Steam drum is bottom supported by bank tubes and water wall tubes. One
manhole is provided at dished end of the steam drum.

II. LOWER DRUM (WATER DRUM)

There is a water drum to distribute water from steam drum to furnace bottom supply
header, for front and rear walls. It also supplies water for side and dividing walls. This
is connected with steam drum through bank tubes.

49
 III. FURNACE
It is of water cooled membrane wall provided with 3 oil/ gas burners. Burners are
provided with igniters and flame scanners.

IV. BURNERS
Burners are provided with igniters and flame scanners. All the burners are mounted on
front wall in two elevations. Capacity of each burner is 33.3%.

V. SUPERHEATERS
The super heaters are provided to superheat the saturated steam coming out of the
steam drum. The super heaters are provided in the two stages arranged counter flow to
the flue gases.

VI. FEED WATER PREHEATER

Feed water heater is provided to maintain the flue gas temperature above dew point
temperature of sulfur dioxide, under all operating conditions. It is arranged in the
water portion of steam drum and consists of finned tubes.

VII. ECONOMISER
It is of drainable type. Its headers are vertical. Tubes are arranged horizontally in the
flue gas path and are made of alloy steel seamless quality. The economizer is used for
the recovery of the heat of the flue gases.

VIII. SAFETY VALVES

Each boiler is provided with 3 nos. of safety valves to protect the boiler pressure parts
from over pressurizing. 2 nos. is provided on steam drum and 1 nos. on super heater.

50
IX. STEAM COIL AIR PREHEATER (SCAPH)
It is located in air path to heat combustion air for proper combustion. LP steam flows
in tube side and air flows over the tubes. LP steam is supplied from LP steam header.
Its condensate from SCAPH flows through steam trap to de-aerator.

X. DEAERATOR
The boiler feed water has to be de-aerated before going to the boilers as the presence
of harmful gases like O2, CO2 etc. are harmful to the boilers and steam piping. The
feed water is de-aerated by spraying it through a tray type sprayer in the form of mist.

XI. FEED WATER PUMP

De-aerated water is pumped to boilers by HHP boiler feed pumps. 4 nos. of HHP
boiler feed water pumps each capable to meet 100% of one boiler. Out of these one is
turbo driven and other three are motor driven. Feed water will also be supplied to
process units and for the de-superheating purposes. There are three nos. of HP feed
water pumps. Out of these three, one is turbo driven and two are motor driven.

51
 Store management

Store is the place where materials are kept. It is also known as “warehouse”. In stores
material can be the operational requirement, the maintenance management, finished
material, scrap, surplus, etc.

Store management is concerned with optimizing the use of resources to meet the
actual means in an efficient manner. Alternatively, store management is planning,
organizing, and controlling of store activities.

In VPCL, there are following equipment for physical and well-being of the stock.

 Fuel Storage tank

 Water handling tank
 Water handling plant

52
 Inventory Management

Inventory is defined as a usable resource which is physical and tangible, such as

material. Though inventory is a usable resource, it is also an idle resource unless it is
managed effectively and efficiently.

Inventory management is a planned approach of determining what to order, where

to order and how much to order so that cost associated with buying and storing are
optimal without interrupting production and sales.

In simple words, inventory management is a place where finished products are stored
safely before they are sold.

In VPCL, the inventory is been maintain in the refinery Ware-House. And can be
excess from there. As the plant is running stage the forecasting of the inventory is
been not necessary. Because the raw materials are needed in the maintenance of the
plant is very low and also not that much costly one to have that amount of raw
material. But in case of Shut Down, there is need of the forecasting of the material
needed during Shut-Down period. Here in this case the Shut Down is done in the step
wise manner, means in the plant three Boiler & Two Gas-Turbine are there, so while
that period First the shutdown of one Boiler is there and after that the second one and
vice versa.

So, in this case the inventory is been forecasted before the shutdown period. And in
the Ware House the material is been arranged mainly on two basis;

I. The usage of the material.

II. The weight of the material.

53
 Safety department

Safety is very essential for every organization. Safety department is necessary in

organization for following reasons:-

 To avoid work down, accident.

 Corporate Social Responsibility (CSR).
 Goodwill.
 Confidence of Employee.

In VPCL the main objective of Safety department is to ensure active involvement of

line management into Health Safety Environment Management System
(HSEMS).

Safety being one of the major concerns in power plant has to be managed as per
standard. There are different types of permit system which are being followed in
power plant along with refinery for any maintenance activity for the safety of people
as well as equipment. Also in power plant near-miss are recorded and subsequently
modified and attended to increase safety.

54
Control Procedures:

I. Management of Change:
In VPCL before changing any equipment of plant, one has to inform to
the management team & after that team will make the analyses of
change by brainstorming & checklist. This whole process takes 10
days.

II. Competency Assessment :

In VPCL before assigning any job competency assessment is done in
order to assure safety for people as well as machinery.

III. Employee Participation :

Whenever near miss happens employees should report it to the safety

dept. when people report the near miss, plant head will give thanks
giving letter in order to appreciate them.

 When a person reports more than 5 near misses he gets an award.

 450 near misses reported since the power plant started.
 Policy of penalization is also there for whom are not followed rules.

55
 Quality Control System

Process Performance Parameter in terms of Quality:-

Sr. Parameter Description

No

1 Co-Generation The efficiency of overall plant including power and

Efficiency steam generation

2 Availability of Boilers The total time for which the boiler is available for the
refinery

3 Efficiency of boiler The ratio of heat absorbed in steam to the heat supplied
by the fuel

4 Availability of Turbines The total time for which the Turbine is available for the
refinery

Table1.1: Performance Parameters

56
 Financial
Department

57
 Introduction

Finance is the blood for any organization. Without adequate finance the organization
cannot succeed. Procurement and allocation of the fund should be done after
analyzing the condition of the firm and all the available project of the firm. Finance
management is concern with the rising of adequate funds at the minimum cost and
using them effectively in business.

In other words, finance is concerned with the financial problems of the business
organization with the best possible solution to the concerned problem. Thus, finance
management dose not stop at procuring the required finance. It has also to see that it is
effectively utilized in business.

“Financial management is concerned with such matters as, how a business

corporation raises its finance and how it makes use of it.”

In the business organization to manage the finance properly and to make the financial
management effective special finance department is created which mainly perform the
function like:

Major functions of finance department

Financial Planning

Raising of Funds

Allocation of Funds

Financial Control

58
 Capital Structure

“Capital Structure refers to the makeup of firm‟s Capitalization” In other words, it

represents mix of different sources of long-term funds in the total Capitalization of the
Company.
- Gersternberg

Pattern of Capital Structure:

 Capital Structure with Equity Shares only.

 Capital Structure with both Equity Shares & Preference Shares.
 Capital Structure with Equity Shares & Debentures.
 Capital Structure with Equity Shares, Preference Shares & Debentures.

Capital Structure of VPCL:

VPCL has capital structure with Equity shares & debts. The ratio of equity and debt is
3:7. As it is captive power plant, the shares are held by Essar Oil Limited, the holding
company and its nominees.

59
Management and promoter’s stake:

In VPCL promoter‟s stake is 47 % from the EPL and 53 % from the EOL.

promoter's stake

47% 53% EOL

EPL

Chart- 1.1 Promoter’s stake

60
 Accounting Policies of VPCL

The accounting policies of VPCL are as under:

1. Basis of accounting: The financial statements are prepared in accordance with the
historical cost conversion and are based on accrual basis of accounting.

2. Use of estimates: The preparation of financial statements and conformity with

generally accepted accounting principles (GAAP) requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent liabilities on the date of financial statements and
reported amounts of revenue and expenses for that year. Actual result could differ
from these estimates. Any revision to accounting estimates is recognized
prospectively in current and future periods.

3. Fixed assets: Fixed assets are recorded at cost less accumulated depreciation and
impairment loss, if any. Cost includes duties, taxes, erection / commissioning
expenses, borrowing costs, expenditure construction, inseparable know how cost,
relating to acquisition and installation of fixed assets are capitalized. Gains / loss
on conversion / translation / settlement of liabilities in respect of acquisition of
fixed assets from outside India is adjusted to the carrying amounts of fixed assets.

4. Capital Work in progress: It includes progress payments made under supply and
erection contract, technical advisory and management fees, in respect of project.

5. Expenditure during construction: Expenditure incidental to construction of 77

MW co-generation power plant is accumulated as expense during construction
pending allocation to fixed assets on completion / commission.

61
6. Depreciation: Fixed assets are depreciated as per written down value method.
Depreciation is computed on rates based on estimated useful life of the assets or
whichever is higher. Depreciation on additions / deductions to fixed assets made
during the period provided on pro – rata basis from / up to the date of such
additions as the cash may be.

7. Impairment of assets: The carrying amounts of the companies‟ assets are

reviewed at each balance sheet date. If any indication of impairment exists, an
important loss is recognized to the extent of the access of the carrying amount
over the estimated recoverable amount.

8. Foreign currency transactions: Transactions in foreign currency are accounted

at the rate prevailing on the transactions date. Current assets and liabilities
denominated in foreign currency are stated at the exchange rates prevailing at the
balance sheet date. Gains/loss settlements of foreign currency transactions are
recognized in expense during construction accept pertaining to liabilities in
respect of assets required from outside India.

9. Borrowing costs: Borrowing costs that are attributable to the acquisition or

construction of qualifying assets are shown as capital work in progress and
expense during construction pending completion of project.

10. Income Tax: Provision for current tax is made on the basis of estimated taxable
income for the current accounting period in accordance with the Income Tax Act,
1961. The deferred tax for time being differences between the book and tax
profits, if any. For the year accounted for, using the tax rates and laws that have
been substantially enacted as of the balance date. Deferred tax assets arising from
timing differences are recognized to the extent there is reasonable certainty that
this would be realized in future. Income tax exemptions for 10 years from the date
of operations.

62
 Financial Performance
BALANCE SHEET OF VADINAR POWER CO. LTD. AS ON 31ST MARCH, 2009
Rs. In lacs.
As on
31st March 2009 31st March, 2008

SOURCES OF FUNDS
SHAREHOLDER‟S FUNDS
Share Capital 19347.80 10300.00
Share Application Money 1925.00 4997.80
Reserves & Surplus (Surplus in P&L A/c.) 5939.11 -
27211.91 15297.80
LOAN FUNDS
Secured Loans 27231.67 32678
Deferred Tax liability (net) 305.98 -
TOTAL 54749.56 47975.80

APPLICATION OF FUNDS
FIXED ASSETS
Gross Block 34234.37 25.40
Less: Accumulated Depreciation 1711.92 5.07
Net Block 32522.45 20.33
Capital work-in-progress including
Pre-operative expenses
Advances on capital 36048.11 38362.57
68570.56 38382.90
INVESTMENTS 1901.12 -
CURRENT ASSETS
Inventories 606.45 492.73
Sundry Debtors 1767.64 912.80
Cash & Bank Balances 296.66 8230.04
Loans & Advances 8905.85 1375.52
11576.60 11011.09
LESS: CURRENT LIABILITIES
Current Liabilities 27262.9 1405.60
Provisions 35.82 12.59
27298.72 1418.19

NET CURRENT ASSETS (15722.12) 9592.90

TOTAL 54749.56 47975.80

Table1.2: Balance Sheet *Source: Annual report 2008-09., VPCL

63
 VADINAR POWER COMPANY LTD.

PROFIT AND LOSS ACCOUNT FOR YEAR ENDED 31st MARCH, 2009
Rs. In lacs
As on
31st March 2009 31st March, 2008

INCOME
INCOME FROM OPREATION 11557.06 _
OTHER INCOME 122.99 _
11680.05 _
EXPENDITURE
OPRERATION, MAINTENANCE & OTHER EXPENSES 1136.02 _

PROFIT BEFORE INTEREST,DEPRECIATION AND INCOME TAX 10544.03 _

INTEREST AND FINANCE CHARGES-NET 2530.61 _
PROFIT BEFORE DEPRECIATION AND INCOME TAX 8013.42 _

DEPRECIATION / AMORTISATION 1706.32 _

PROFIT BEFORE INCOME TAX 6307.10 _

PROVISION FOR INCOME TAX

CURRENT TAX (NET) (REFER NOTE 3 OF NOTES TO ACCOUNTS) 52.02 _
DEFERRED TAX 305.98 _
FRINGE BENEFIT TAX 9.99 _
367.99

PROFIT AFTER INCOME TAX 5939.11 _

BALANCE BROUGHT FORWARD FROM PREVIOUS YEAR _ _

BALANCE CARRIED OVER BALANCE SHEET 5939.11 _

Table- 1.3: Profit & Loss Account

*Source: Annual report 2008-09., VPCL

64
 Comparative Analysis

Ratio Analysis

Ratio analysis is an essential par of the budgetary control and standard costing. Here
various standards are fixed in advance by the regulator board and the actual calculated
ratios are then compared with the standard ratios.

Various ratios of the Vadinar Power Company Limited are calculated as under.

Current Ratio : Current Assets

Current Liabilities
In the year 2008:
= 11011
1418
= 7.7:1
In the year 2009:
= 11576
27297
= 0.43:1

1. The standard current ratio is 2:1.

2. The current ratio is reduced to 7.27.
3. The position is unfavorable.
4. The position is unfavorable because the current liabilities and provision
increase by Rs. 27297-1418 = 25879.
5. The current assets remain almost same 11011 but liabilities increase.

65
Liquid Ratio : Current Assets - Stock
Current Liabilities – Bank O/d.

In the year 2008:

= 11011 - 493
1418 – 0
= 7.5:1

In the year 2009:

= 11576 - 607
27297 – 0
= 0.41:1

1. The standard liquid ratio is 1:1.

2. The liquid ratio is reduced to 7.09.
3. The position is unfavorable.
4. The current liabilities increase by 19 times & assets will remain same.
5. The assets remain almost same but liabilities increase.

Gross Profit Ratio : Gross Profit x 100

Sales

In the year 2009:

= 10544 x 100
11557

= 91%

It is a favorable position in the year 2009 of the VPCL.

66
In the year 2009:
Return on capital employed : PBIT x 100
Capital Employed

= 8837.71 x 100
27211.91
= 32.48%

Return on equity shareholder’s funds: PAT x 100

Equity Shareholder’s funds

= 5939.11 x 100
27211.91
= 21.83%

Return on equity capital : Divisible Profit

Equity Share capital

= 5939.11 x 100

19347.80

= 30.7%

Net Profit Ratio : Net Profit x 100

Sales

In the year 2009:

= 5939 x 100
11557
= 51%

It is a favorable position in the year 2009 of VPCL.

67
Human Resource
Department

68
 Introduction

Any organization needs basically six inputs to run the organization smoothly. They
are man, money, machine, market, material and method. Outputs of these human
resources are the most important inputs. They differ from other inputs like feelings,
emotion, and sense of job satisfaction, motivation etc. The personnel function can be
broadly defined as “Management of people at work.”

In past time, there were not given due importance to Human Resource management in
Indian Industrial scenario. At present, Human Resource management is being given
its due importance and has become a Key decisive functional arm of the management.

Employees are considered as assets of the company. The success of any company
depends on the manpower. The Manpower of the company is the differentiating factor
in every organization. If employees are efficient enough, it leads to efficient
organization. Employees holds key place in an Organization. So Management of the
employees is one of the very important & critical tasks of company.

Manpower management is that part of management progress which is primarily

concerned with the human constitution of an organization. It is rightly said, “Manage
your men; men will manage your all work.” A man is the heart of the unit and make
organization living.

The department has to obtain and maintain the efficient workers to achieve
profitability of the firm and get man for right job, at right time and at right place.
Lawrence therefore wrote, “Management is the development of people and not the
direction of things.”

69
 Manpower Planning
The success of an organization depends largely on the quantity and quality of its
human resources. No organization can be successful in the long run without having
the right number and right kind of people doing the right jobs at the right time.
Procurement of the right kind and right number of personnel is the first operative
function of human resource management. Before selecting the right man for the right
job, it becomes necessary to determine the quantity and quality of people required in
an organization. This is the function of human resource planning or manpower
planning. Human resource management begins with manpower planning

If the proper manpower planning is not done in the organization then there may be the
over staffing or the under staffing and because of that the human resource is not
utilize properly.

Manpower Planning Process:

(1)
CORPORATE ANALYSIS

Objectives and Strategies

Company Organization Plans
Market Forecasts and Budgets
Financial Plans
Production Targets

(2) (3) (4)

DEMAND FORCAST MANPOWER GAPS SUPPLY FORECAST

Numbers Surplus of numbers Manpower inventories

Job Categories And skills Losses and Additions
Shortages External Supply
Skill Requirements

(5)
MANPOWERS PLANS

Recruitment and Selection

Training and Development
Retrenchment
Retention/internal mobility
Fig.: 1.5 Manpower Planning Process
Productivity
*Source: HR Dept., VPCL

Monitoring and control

70
 Recruitment

Recruitment:

Recruitment is to make prospective candidates apply for a vacancy and employ them
by contacting various sources. It is to be made when an enterprise is established;
employee resigns, dies or retires. It can be possible in following sources:

Sources of recruitment:

Sources of

Recruitment

Internal Sources External Sources

Transfer Advertisement
Promotion Employment Exchanges
Friends & Relatives of Employees Placement Agency

Recalling Retrenched Employees Recruitment at Gate

Waiting List

Fig.1.6: Source of Recruitment

Source: HR Dept., VPCL

71
Recruitment in VPCL:
For recruitment of employees, VPCL uses internal as well as external sources which
are as following;

Internal Source for VPCL

In this they promote employees at higher post as a part of internal recruitment. This
promotion is given on the basis of work experience. Because of Internal Recruitment,
company can get benefit of:

 Lower Cost Of Training

 Lower Rate Of Labor Turnover
 Healthy & Progressive Atmosphere

External Sources for VPCL

As every place can‟t be fill with only internal source, there are following external
sources use by the VPCL.

 Placement Agencies:
The Location HR head may shortlist two or three competent placement agencies
based on their past record, experience and domain expertise. The profiles of such
agencies shall be forwarded to Business HR Head for enrolment. Only after
formal agreement of enrolment is issued to an agency, the HR will start working
with the agency. Use of placement agencies should be minimized as far as
possible.

 Campus Recruitment:

Campus recruitment would be centrally co-ordinate by Group HR in order to

leverage common resource and contracts with leading campuses. Like, for power
engineers they are going to the NTPI.

72
  Recruitment Advertisements/Walk-ins:

Advertisement is an effective medium when the number of people required is

high, the candidate profile is homogeneous and the target group is widespread. HR
may work out advertisement campaigns in liaison with functional heads/corporate
communication group based on large or critical requirements. All advertisements
for M4 and above level positions shall need approval of Business Head/Business
HR Head; for other positions, approval of Business HR Head will be needed.

Interview Panel

The selection / interview panels for different levels of positions shall be as follows.

Senior Management Each candidate is put through a panel interview which constitutes
of 3-4 top management professionals in their respective fields.

M 01 - M 02 Positions

2 Functional experts (1 internal and 1 external)

Business Head or CEO

Group President Human Resources

Promoter Director

M 03 - M 04 Positions

2 Functional experts (1 internal and 1 external)

Business Head or CEO

Group President Human Resources (only in case of M-03)

1 Human Resources representative from the relevant business

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Middle and Junior Management

Grade Panel Members

M5 Business Head, Corporate Function Head / Location Head/

Business HR Head

M6 , M7 Location Head, Location Function Head, Location HR Head,

Business HR Head

M8, M9 Location Head, Function Head, Location HR Head

M10, M11 Functional Manager / Head, Location HR Head

Table1.4: Selection of Middle & Junior Management *Source: HR Dept., VPCL

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 Training & Development

Training is the process of increasing the knowledge and skill for doing a particular job
it is an organized procedure by which people learn knowledge and skill for a definite
purpose. The purpose of training is basically bridge the gap between job requirements
and present competence of an employee. Training is aimed at improving the behavior
and performance of a person. It is never ending or continuous process. Training is
closely related with education and development but needs to be differentiated from
these terms.

Process of Training

Training needs Assessment

Designing T & D Program

Implementation of Training Program

Evaluation of Training Program

fig.1.7: process of training

*Source: HR Dept., VPCL

These activities are performed at two level viz. Management Development at

corporate level and training at unit level. Both on the job training and off job training
are provided to the employees as per their requirements.

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Essar has establish its Learning Center at Vadinar which takes care of the training
needs of the employees based on the identification which is based on performance
appraisal from different business group. A CALANDER is then prepared by training
programmers by fixing dates and the areas of training.

This calendar is prepared for a full financial year at a time. For some specific business
requirements, unit may decide to allocate its employees for training abroad. It
includes program date, venue, level & strength of participants, faculty, objective of
each course, content of each course, and methods of training.

Training part is divided mainly into three parts viz. Technical, Functional Skills and
General Behavioral Training.

Technical Training is given to the employees for Quality assurance, Engineering

knowledge, Product Process and Equipment Expertise.

Functional skills Training is given to the employees for Industrial relations, Material
management, Taxation, Total marketing cost management, Contracts law, Zero based
budgeting, etc.

General Behavior Training is for Executive leadership, Presentation & Public

speaking, Stress management, Time management, Negotiation skills, Communication
& Counseling.

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 Performance Appraisal

It is a process of obtaining, analyzing & recording information about the relative

worth of an employee. Performance Appraisal evaluates the Performance of
employees by quantitative factors such as quantity of output and rejected output,
standard of work Etc…

Performance appraisal in VPCL done on the basis of the following ratings:

The Key Performance Indicators (KPI) & Key Results Area (KRA) is a tool to
measure the appraisal of any employee in the organization. They use a five point
training scale in Essar, suggestive of individual performance; each rating is differently
defined as given below. The final overall rating is a combination of individual
performance and relative ranking and is based on the same 5 point scale. There is an
Executive Development Review (EDR) process which helps in developing the
employees through training which also demands feedback.

Leave policy

It includes following:

Earned leaves: 24 days

Medical leave: 12 days

Maternity leave: 12 weeks

Students leave: 3yrs

There are other rules that have to be considered for applicability of this leave. It
include employee must be permanent, must not retire before five years and like that.

Probation base employees are not allowed to take maternity leave or student leave.

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Open door policy

Its main aim is to look out any problems at its starting phase. Every employee is
allowed to communicate with superior and say his problem. Essar also provide
Mentor for fresher and a buddy for experienced one.

It also has steps which are as follows:

 Frank discussion
 Investigation
 If matter is confidential then employee can directly contact HOD
 Then matter sent to HR department.
 Then to CEO of the division.
 Ultimately to corporate HR.

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 Initiatives taken by Essar Power:

I. For the people, by the people – Gemba Kaizen at Vadinar:

Kaizen is a culture of sustained continuous improvement; Gemba means workplace –

in their case, the shop floor. Gemba Kaizen is a systematic approach to identifying,
reducing and eliminating undesirable conditions in the workplace. It is a
commonsense low cost approach for improvement in the workspace, be it the physical
environment or equipment related.

At VPCL, it is aimed at improving productivity by finding unsafe and undesirable

working conditions and addressing them immediately. And it is done by all
employees from unit head to workman collectively, on the shop floor. Leakages,
safety related concerns and repetitive maintenance issues are discussed at the site
itself and immediate corrective actions are taken. Repetitive concerns are tackled with
group discussions.

The Kaizen strategy starts and ends with people.

Overtime, they find that senior executives, managers and engineers are getting
distanced from the workspace and the plant. Gemba Kaizen helps them bridge this
gap. On the one hand, the Plant head and managers get hands on understanding about
running equipment as well as housekeeping issues. On the other, they get to utilize
their experience and knowledge with respect to the equipment.

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 II. Open Houses show the way

At Essar power, open house is their tool of choice for downward communication
simply for its ability to create a climate of transparency, openness and shared mission
in the business. Open houses are conducted for associates, every quarter, at each of
the sites; Hazira, Bhander Power, Vadinar, Salaya and Vizag. The open houses are
addressed by respective plant heads of the location. Some of the areas covered are:
overview of business performance, progress on current projects, overview of plant
operations and safety performance, employee engagement and other HR initiatives.

They strongly believe that this platform enhances the bonding among associates and
facilitates the process of free flow of communication on many facets of business plans
and its implementation.

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 SWOT Analysis

Strengths:

 Employee‟s co-ordination is very high and so team work of the employees is

better.
 As it is a captive power plant the VPCL does not have to do marketing all the
power is generated to Essar Oil Ltd.
 VPCL has employees recruited directly from famous institutions like NPTI
who are well trained and specialized in the power sector.
 When compared to other giant companies the employees of Essar are very
much satisfied with the HR facilities given to them.
 The VPCL was three months prior started than the refinery.
 The five Ps is the strength of the Essar group Proper, Planning, Prevents, Poor
& Performance.
Weakness:

 Employee attrition rate is very high.

 It has to be dependent on the Essar Oil refinery for finance purpose.
 The capacity of plant is 77 MW but the requirement of the EOL is only 69
MW so there is no maximum utilization of resources.
Opportunities:

 Expansion of the power plant will surely help them earn higher rates of profit.
 When the refiner of the Essar Oil Ltd. will be expanded it will directly give an
opportunity to the Vadinar Power Co. Ltd. to expand.
Threats:

 Exhaustion of energies i.e. fuel and oil is a threat to the company.

 As fuel is a limited resource, it may not last for more than 3 to 4 decades. It is
threat for the company. Company should find some alternatives for fuel.
 Terrorism is the major threat. Location of the company is not appropriate as it
is located at sea coastal area and border area.
 As it is near to coastal area any natural calamities can destroy the power plant.

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 Future Expansion of VPCL
220 mw co-generation power plant at Phase-I will be started in the month of June end.

350 mw power plant in Phase-II:

Construction is started already for this expansion.

Because of confidential data, it is difficult to get the final date of completion of the
said plant.

Limitations of the Study

 Time period is very less.
 Study is very expensive.
 We cannot get enough knowledge and information from 6 weeks.
 Employees don‟t have time to explain everything.
 Trainer is not provided.

Suggestions to VPCL
1. Induction/Orientation should be given to vocational trainees.
2. Water facility, for the workers who are on contract basis, should be separate
from the office.
3. If in case of issuing any of the letters from the VPCL to any
employee/trainee/visitor, there should be inserted contact number of the
concern people, so that he/she can contact the concern person in case of
having any trouble.
4. Safety rules/Do`s and Don’ts should be written in front of each plant for the
safety.
5. Walking is not allowed in the company so there should be a particular
SHUTTLE stop made with a time table where all shuttle will stop and
visitor/employee don‟t have to ask to each and every vehicle for the lift. By
doing this, traffic can be managed well in the company.
6. Instead using diesel vehicles in shuttles, Eco-friendly vehicles should be used.

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 Conclusion

The Essar group is involved in the manufacturing and service sectors like Steel,
Energy, Power, Communication, Shipping & logistic, Constructions and other like
Agrotech.

This project report is about organizational study of the captive power plant Vadinar
Power Company Limited (Essar Power). The main objective for establishing this plant
is to cater need of refinery for power as well as steam. As refinery can get the power
from grid also but for steam, VPCL is the only source. All the department of the
VPCL is working very efficiently for the continuous supply of power and steam to the
refinery.

Whole Essar group focuses on the Quality. There are many parameters being checked
for the best quality. They also emphasize on the Safety of machinery as well as
people.

Essar is considering their employees as assets of the company rather than liability.
That‟s why employees of the Essar are more satisfied than any other organization.
Essar believes in Slow and Steady wins the race.

They believe in, “I am positive, I am action, I am Essar.”

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 Learning Outcome

1. As a part of my training I tried to get along with official work, in which I

learnt that what procedure should be done in administrative work.
2. Even I learnt that what hierarchy should be followed accordingly the types of
work.
3. I have also learnt that How to make good relation with the people through
communication and a good interaction.
4. As I was looking after some basic working of admin work of VPCL, I got
opportunity to meet different people in company.
5. If we try to express and represent our self around the environment prevailing
us, we get respect from all that‟s sure.
6. Last but not least, always respect to all and think positive to make all the
things possible, definitely we will never meet the problems in life.

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 Bibliography

www.essar.com
www.essarnet.com
www.google.com

http://www.adbi.org/discussion-
paper/2007/04/26/2236.policy.environment.power.sector/the.indian.power.sector.an.o
verview

http://www.google.co.in/url?sa=t&source=web&cd=1&ved=0CBgQFjAA&url=http
%3A%2F%2Fwww.dpncindia.com%2Fnews%2FPower%2520and%2520Alternative
%2520Sources%2520of%2520Energy.pdf&ei=ZR5ATKWaFZLEvQOs8-
nlDA&usg=AFQjCNEDODXlLZXdancfdQHD5PGHvZmhiw

http://www.google.co.in/url?sa=t&source=web&cd=3&ved=0CCIQFjAC&url=http%
3A%2F%2Fwww.indiapower.org%2Fimages%2Fipsco.pdf&ei=ZR5ATKWaFZLEv
QOs8-nlDA&usg=AFQjCNF3JIrHoP6LxfYlXKR4vq99F6VSXQ

Essar Learning Centre:

 Powerite
 Essence

Annual report of VPCL

Technical Diary of VPCL

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