Performance Management

System at Usha Martin Ltd

Project Report

2/29/2012

Submitted by-

Group 10
Anumeha Gupta(h11067)
Dwaipayan Gupta(h11075)
Submitted to- Madhumita Bhattacharya(h11085)
Shesadri Biswas(h11110)
Prof SN Bagchi
Acknowledgement
We would like to acknowledge and extend our heartfelt gratitude to the following persons who
have made the completion of this project possible:
Mr. R R Mishra, Asst Vice President, HRD, Usha Martin Ltd, for helping us understand the
detailed operations of the Production Department,
Mr. T P Bose, Procurement Department, Usha Martin Ltd
Mrs, Meenu Singh,
Employees, Production Department, Usha Martin Ltd, for their assistance in explaining us the
entire manufacturing process,
Prof. Soumendra N Bagchi, Assistant Professor, XLRI, for his invaluable inputs during the
course sessions and for providing us the opportunity to work on this project.

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Executive Summary

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Table of Contents
About the company ................................................................................................................................... 5
Inception ............................................................................................................................................... 5
Products................................................................................................................................................. 5
UML, Jamshedpur................................................................................................................................. 6
Going Global......................................................................................................................................... 6
Looking Forward .................................................................................................................................. 6
Industry Analysis ...................................................................................................................................... 6
Steel Wire Industry in India .................................................................................................................. 6
UML’s position in the Industry................................................................................................................. 7
Manufacturing process .............................................................................................................................. 7
STRUCTURE ............................................................................................................................................... 8
Performance Appraisal System Followed ..................................................................................................... 8
Incentives .................................................................................................................................................... 10
Recruitment ................................................................................................................................................. 10
CSF ............................................................................................................................................................... 8

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About the company

Inception

Usha Martin Ltd (UML) started its operation in 1961 in Ranchi, Jharkhand & is India's largest &
world's second largest integrated specialty steel (long) & wire rope manufacturer. The Company
enjoys a 70% market share in the global wire ropes industry segment catering to the high-end oil
offshore services. It has a wide product portfolio & operates across the entire value chain, from
iron ore & coal mines to captive power, to iron and steel manufacturing & value added products
like wires, wire ropes & other allied products. UML has a very strong worldwide distribution,
service & marketing network. The company is its way of infusing INR 21 bn CAPEX, as around
INR 17 bn has been infused for expansion of its production capacities.

Products
It is a vertically integrated company where a large chunk of produced goods are consumed
internally to produce end products.

Steel: The Company’s steel products include steel wire rods, rolled products, billets, pig iron,
and allied products.

Wire and Wire Ropes: The Company manufactures steel wires, strands, wire ropes, cord, bright
bar, and related accessories.

Others: The Company also offers jelly filled telecommunication cables.

Global Business profile

Steel Wire and Wire rope Wire rope distribution

Telecommuniation guide Wire rope services

7%
8%
9% 39%

37%

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UML, Jamshedpur
In 1979, the company set up a steel plant with wire rod rolling mill at Jamshedpur, to benefit
from business integration. This ensured a steady supply of steel for the manufacture of value
added products. Today, the Jamshedpur unit has a truly integrated specialty steel manufacturing
facility of 700,000 MT per annum. Out of which, about 35% is consumed internally by its plant
in Ranchi, Hoshiarpur & Bangkok, producing steel wire, steel strand, steel cords, bright bar and
steel wire ropes. All its manufacturing facilities are ISO 9000 certified and the steel plant was
India’s first to receive the TPM Excellence Award from JIPM, Japan.

Going Global
With local success come global aspirations. Currently, the company has overseas manufacturing
operations in Thailand, UK and Dubai. Besides a vast network of distribution centres and
marketing offices spread across the globe to support an ever growing worldwide customer base.
The company exports over 60% of the wire rope output and about 20% of the total wire rods
produced.

Looking Forward
Usha Martin’s future plans are focused on its operation in Jharkhand – a state rich in mineral
resources. Future priorities include product mix enrichment, cost reduction and infrastructural
improvements. Already flourishing in its recent foray into mining operations, the company is
planning to invest in its iron ore and coal mines, sinter plant, pellet plant, power plants, while
also enhancing its steel making and value added products capacity with an investment of Rs
2,100 crore.

Industry Analysis
The company is engaged in mining, manufacture, distribution and service centres related to the
steel industry. The Jamshedpur plant specializes in manufacturing steel wire. As we know steel
industry is a cyclical industry.

Steel Wire Industry in India

The Steel Wire Industry in India is quite competitive in its production costs compared to other
developed and developing countries. This cost competitiveness needs to be maintained by
adoption of new and clean technologies, which lower specific energy consumption and which
generate much lesser pollutants. We need to automate processes and focus on product quality
and packaging to produce wires internationally acceptable.

In today’s environmentally conscious world adoption of such technologies would make the
products much more acceptable and also lower costs by reducing wastages. This will throw open
many new markets accelerating the pace of growth of the industry.

Raw materials mainly wire rods account for a major part of the cost of wires. In the past there
were very few suppliers but with the growth in the steel industry a number of mid-sized
companies have started producing Mild Steel Wire Rods. This has increased the availability and

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resulted in better commercial terms for the wire industry. Most value added wires use high
carbon wire rods as an input. These are now available in the country from Five Major Suppliers
(JSPL, JSW, RINL, TISCO, USHA MARTIN) with imports as an alternative whenever they are
commercially viable. A number of new wire rod mills (VISA STEEL, ELECTROSTEEL
CASTING) are at an advanced stage of commissioning. This will make all grades of wire rods
abundantly available. The steel wire industry in India is at a juncture where very soon raw
materials will be available at internationally competitive rates, consumption is poised to jump,
new export markets are waiting to be tapped, and skilled manpower is readily available.
Therefore, there will be a bright future ahead for the Steel Wire Industry.

UML’s position in the Industry

UML ranked under No2 in world and in India No. l Company in manufacturing of the wire rope.

 Market share is strong

 Large distribution network
 Dealers, Branch offices, Ware house is connected with internet in all over the India.
 UML has become brand equity in this field, customer first choice by UML.
 Its product is world class in quality; it is tested by several authorities.
 The company acquired BRUNT SHAW LTD.A leading U.K wire rope manufactures, to
source logically advanced rope and access the European market.
 UMI has very good infrastructure and work force.
 Healthy financial position

Raw material available as it is produced by sister concern.

UML has implemented TPM (Total productive management) and ERP (Enterprise recourse
planning) in 2000 - 01 with the objective, raising quality and reducing cost.

Manufacturing process
We will limit our study within the production of steel wire ropes, largely the Jamshedpur plant.
So here we provide the diagram depicting the manufacturing process of steel wire at Jamshedpur
plant.

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STRATEGY
The main strategy is primarily retaining its market leadership through cost leadership. However,
quality is also considered very important. Backward integration helps to control the availability
as well as the price fluctuation of the inputs. The increased competition, better quality products
offered by the larger competitors and the uncertainty of the demand remains the challenges for
the company. Also, vertical integration often increases the production cost. Hence cost
effectiveness is also of paramount importance. This disadvantage is probably partially covered
by the high economies of scale and related differentiation (wide range of steel/alloy products).

Lower cost
of Inputs
Margin
Lower cost of
Operation
Profitability
Productivity
Competitive
Volume
pricing
Customer
Satisfaction
Quality

CSF
The firm is in a manufacturing industry and the nature of the process is mass production
(although some little customizations are made as per the requirements, but variations are very
small and doesn’t involve much setup time or cost). Quality and productivity are obvious CSFs
along with cost effectiveness.

 Quality
 Productivity
 Cost Effectiveness

STRUCTURE

The organization is consisted of several divisions which are highly inter-related. The
organization has a functional structure in which it has been divided according to different
functions (as shown in Exhibit 1). The major advantage of this structure is that it allows
specialization and higher efficiency. The functional structure is probably the most sought out
structure for a cost leader. The decision making is centralized and most of the decisions are taken

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by managers. The hierarchy is medium in size. The tasks for the workers are routine in nature
and adhering to the procedures is of prime importance to ensure quality. Supervisors observe
workers perform a specialized set of tasks leading to operational efficiencies within that group.
Not much supervision by managers in there (probably because of the unpleasant temperature of
the shop floor). In fact, some managers from HR don’t even seem to know about the
manufacturing processes at all. As per our personal discussion, working in the office (much more
comfortable environment) is itself considered to be a great inducement by the plant level
managers and staff. So, good performances shown can help them in a different way along with
the monetary gains. The functional structure within a division suits the organization because it is
majorly a producer of standardized goods at large volume and low cost. Coordination and
specialization of tasks are centralized in a functional structure, which makes producing a large
amount of products efficient and predictable.
Performance Appraisal System Followed

Workers

The workers are assessed by the supervisors. Assessment is mostly by counting the exceptions
like bad behavior, free riding etc. However no link is there between appraisal and incentives. The
yearly productivity data is used to calculate the yearly bonus. An egalitarian structure is followed
while allotting bonuses i.e. same bonus for all workers at the same level.
Supervisors

They are assessed by their respective superiors. Rest is as above.

Officers

180 degree appraisal is followed. Self-appraisal form includes two parts. In the first part, officers
are asked to appraise themselves in terms of the achievements of major tasks (as assigned by the
higher authority) as well as other non-routine achievements. The part-B is filled up by the
superior and “behavioral competencies” in terms of Adaptability, Communication Skill, Result
Orientation through Leadership and Team Building, Analytical Ability and Problem solving
Approach, Creativity and Initiative, Customer orientation, Customer orientation are included.

 For Other Employees  180 degree appraisal (Self + Peer)

 No IT Based System for Performance Appraisal
 For Production ERP “BaaN” is used
 Performance appraisal form is given to employees as hard copy and also over mail
 Better planning and control in meeting deadlines.
 More flexible working structure than the conventional model.
 Emphasis on professional competence - marked by a dominance of authority of
knowledge rather than of designations.

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  Greater motivation results since individuals can focus directly on deadlines and output.
 Communication within the organization improves with the abandonment of hierarchies.
 Liberates the top management and enables them to take long-term actions.

Incentives
 Workers wages based on union negotiation
 Productivity Based incentive for all involved
 Suppose Production is 40000 MT Get x%; If Production 50000MT get y%
 Everyone in the department gets the same bonus
 For Confirmed EmployeesEvery Department is allocated Bonus, Say HR 75%,
Operations 100%; Based on total productivity bonus is distributed equally between all
employees in the department. For example our Contact Mr RR Mishra, got 2750 as
bonus, and also his deputy 2 levels below got 2750 as bonus
 Performance parameters are designed basically to ensure egalitarian system example if
GM is working as per his responsibility he gets a good rating, if Sr. manager is working
as a Gm he gets excellent

Other Benefits
 Workers bonus as per bonus act. Additionally he mentioned about the Welfare medical
Pool System which every employee contributes to, in case of hospitalization of a worker
(say heart attack upto 90% of hospitalization expenses are reimbursed
 Tie Up with 7 Hospitals
 Fulltime MBBS Doctor available 24 Hrs, along with 2 Ambulances

Recruitment
 For experienced candidates  Vacancy Profiling Qualification-> Jobspace
referral System as well as recruitment agency
 For GT & DGT Usha Martin Training Institute--< Campusing each year over 40-50
GT & 40-50 Diploma GT
 Contract Workers: Regular 50: 50 (according to RR Mishra, but as per my gut feeling
more contractual employees are involved)
 Workers recruitment through ITI
 Contract workers are unskilled, regular workers are skilled
 Keep Buffer Stock of Trainees

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Appendix

Exhibit 1: Organization Structure:

AVP-HR

AVP STEEL

Sr. VP - IRON-
DIVISION

Sr. VP -
Commercial
Store Purchase

VP - Engg. &
Projects/Safety

AVP STEEL

Sr. VP -
Metullargical
Services - QA

Dr. V. Sharma GM (Aloy)

(Director &
CEO)
AVP - SMS - 1&2

AVP-SMS 3

AVP-PPC

VP-Bloom Mill

AVP-WRM

GM-UMTI

Mgr-IED/ISO/TS

Mgr-PR/Comm

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