of 82
7/31/2019 Pmi 13 Oct 08 Final
1/82
A
PRESENTATION
TOEXECUTIVE TRAINEES
ON
&
MOU SYSTEM
SPS Solanki AGM (CP)
7/31/2019 Pmi 13 Oct 08 Final
2/82
PUBLIC SECTOR
PUBLIC ENTERPRISES
7/31/2019 Pmi 13 Oct 08 Final
3/82
DEFINITION
Public SectorPublic Sector - set of organisations which are ownedby Public (representatives), to the extent of 50% ormore
Public Enterprises(A Subset of Public Sector)In Indian context Central Govt.organisation - owned by Public
Authorities, to the extent of 50% or more
- engaged in activities of Business character
(involving Investment & Returns and markets its outputfor a price).
i.e
Central Public Sector Enterprises Established as Govt.Companies or Statutory Corporations .
7/31/2019 Pmi 13 Oct 08 Final
4/82
PUBLIC SECTOR
PUBLIC
ENTERPRISES
Governmentcompanies inCentralsector
Post &Telegraph
R
ailway
s
Governmentcompanies in State
sector
OrdnanceFactories
Banking,Insurance
,Financialservices
7/31/2019 Pmi 13 Oct 08 Final
5/82
Role of the PSE:
A Historic consensusKarachi session 1930- The state shall own or
control key industries and services, mineralresources, waterways, shipping and other means
of public transport National Planning Committee- 1938 -classified
industries into defence, key and public utilities andrecommended that they be owned and operated bythe state.
The Bombay Plan, 1944- Government interventionwas necessary to cope with the huge task ofpushing through the extensive industrialprogrammer.
7/31/2019 Pmi 13 Oct 08 Final
6/82
1947
At the time ofIndias Independence in
1947 country had:
A weak industrial base
Low level of Savings and Investments
Near absence of infrastructure facilities
Vast percentage of extremely poor population
Inequalities of Income
Lack of trained manpower
7/31/2019 Pmi 13 Oct 08 Final
7/82
Objectives of Public Sector
Among the imperatives before the Govt. were: A Removal of poverty
Employment generation
Regional imbalances removal
Accelerated growth of agriculture and industrial production
Better utilisation of natural resources
Prevention of concentration of economic power in few hands.
This led to pragmatic compulsion to use PublicSector as an instrument for self-reliance economic
growth.
7/31/2019 Pmi 13 Oct 08 Final
8/82
Objectives of Public Sector
Objectives of setting up of public enterprises was,
inter-alia to:
Ensure the rapid economic development and industrialization of
the country and create the necessary infrastructure for economic
development.
Promote redistribution of income and wealth;
Create employment opportunities
Promote balanced regional development
Assist the development of small-scale and ancillary industries; and
Promote import substitutions, save and earn foreign exchange for
the economy.
7/31/2019 Pmi 13 Oct 08 Final
9/82
Role of the PSE:
A Historic consensusIndustrial Policy Resolution of 1948 - accepted the
inevitability of the state ownership of means ofproduction alongside private enterprise which was to
be properly directed and regulated
Industrial Policy resolution, 1956
large area of industrial, activity both for exclusive(Schedule A) and priority (Schedule B) developmentby the public sector while the remaining industrieswere left in general to the initiative and enterprise ofthe private sector (Schedule C ).
7/31/2019 Pmi 13 Oct 08 Final
10/82
Industrial Policy Resolution, 1956
Two different principles of organization werevisualized: one, the public economy for
allocating resources through administrative andpolitical decision giving priority toconsiderations other than profit mainly socialequity and two, the private economy based on
the principles of market relationships with profitmotive being the guiding criteria for allocation
resources.
7/31/2019 Pmi 13 Oct 08 Final
11/82
GLOBAL SCENARIO
Direct involvement of Government in
Industrial, Fiscal or Trading Activities -
MUST for development of any economy
during developing phase.
7/31/2019 Pmi 13 Oct 08 Final
12/82
7/31/2019 Pmi 13 Oct 08 Final
13/82
PUBLIC SECTOR
Over the last more than five decades,public sector in India has evolved into amajor force. Being the principalinstruments of planning in India itoccupies the commanding heights of theeconomy, controlling and directing in alarge measure the whole course of
development. Its growth has beenphenomenal in terms of investment andproduction as well as in scope ofactivities.
7/31/2019 Pmi 13 Oct 08 Final
14/82
Image of the Public Sector
BUT.
The image of the Public Sector has been
under attack by vested interest through asystematic dissemination of disinformationand myths.
Until 1991, a number of decision were taken on
the way which saddled the public sector withfailed private enterprises - in order to protectthe employment of thousands of workers lefthigh and dry.
7/31/2019 Pmi 13 Oct 08 Final
15/82
Public Sector today
What is completely missed is that the publicsector is not what it was even a decade ago.
It has been undergoing a transformationand is fast joining the mainstream of themarket economy
Growth has been phenomenal in terms of
investment and production as well as inscope of activities.
7/31/2019 Pmi 13 Oct 08 Final
16/82
CONTRIBUTION OF PSEs
PUBLIC + ENTERPRISE
Social (Public)Obligations
Employment, Public Welfare, Community
Development etc.
Commercial(Enterprise)entity
Economically viable & contributory to National
Exchequer
7/31/2019 Pmi 13 Oct 08 Final
17/82
2006-07 2005-06 %agechange
Cumulative investment of all (244)
CPSEs as on 31.3.2007
421089 403706 4.31
Overall growth in turnover of CPSE 964410 837295 15.18
Aggregate reserves and surpluses of
all CPSEs
416494 359181 15.96
Net profit of CPSEs* 81550 69536 17.28
Rs. In Crore
Performance of PSEs: SelectedIndicators
7/31/2019 Pmi 13 Oct 08 Final
18/82
Performance of PSEs: SelectedIndicators
Profit before deprecation, interest and tax & EP Rs. 178083 crore in 2006-07
Rs 150262 Cr in 2005-06 Rs 530,62 Cr in 1997-98
The return on investment
20.91 per cent in 2006-07 (PBITEP to CE) 19.54 per cent in 2005-06 14.89 per cent in 1997-98.
Capital employed in CPSEs Rs. 665124 crore in 2006-07 (13.60% increase) Rs.585484 crore in 2005-06 Rs.2,49,855 cr in 1997-98
Net worth of CPSEs Rs.452995 In 2006-07 - (24.09% increase) Rs.397275 cr. In 2005-06 Rs,1,34,443 Cr in 1997-98
PBITEP
Profit before interest, tax and extraordinary items and prior period adjustments
7/31/2019 Pmi 13 Oct 08 Final
19/82
Performance of PSEs: SelectIndicators
Contribution to Central exchequer
Rs 147635 Cr in 2006-07 as against Rs 125456 Cr in2005-06.
DIVIDEND
During 2006-07, total dividend paid was Rs.26805 Cras compared to Rs. 22886 Cr dividend paid in theprevious year registering an increase of 17.12 percent.
7/31/2019 Pmi 13 Oct 08 Final
20/82
Performance in Power Sector
National Production 704.45(100%)
State Sectors production 338.05(48%)
CPSEs Production 298.95(42%)
NTPCs production 200.86
(28.51%)
All Figures in Billion Units(2007-08)
7/31/2019 Pmi 13 Oct 08 Final
21/82
PRESENT STATUS
As on 31.3.2007, there are 247 CentralPublic Sector Enterprises
54 Schedule A77 Schedule B48 Schedule C06 Schedule D
( The rest are uncategorised )
7/31/2019 Pmi 13 Oct 08 Final
22/82
Top 10 enterprises in terms of investmentsS.No. Name of the Enterprise Investment (Rs.
Cr.)
1. Oil and Natural Gas Corporation Ltd. 1299842. Bharat Sanchar Nigam Ltd. 123851
3. NTPC Ltd 74406
4. Indian Oil Corporation Ltd. 63625
5. Power Grid Corporation of India Ltd. 478956. Steel Authority of India Ltd. 32385
7. Nuclear Power Corpn of India Ltd. 32611
8. National Hydro Electric Power CorpnLtd.
27456
9. Bharat Petroleum Corpn. Ltd. 21162
10. Hindustan Petroleum Corpn. Ltd. 24126
Total 577501
7/31/2019 Pmi 13 Oct 08 Final
23/82
TOP TEN PROFIT MAKING CPSEs(Rs. in crores)
Name of the Enterprise Profit 2006-07
1. Oil & Natural Gas Corpn.Ltd.2. Bharat Sanchar Nigam Ltd.
3. Indian Oil Corporation Ltd.4. NTPC Ltd.5. Steel Authority of India Ltd.6. Coal India Ltd.7. Bharat Heavy Electrical Ltd.
8. GAIL (India) Ltd.9. National Aluminium Co. Ltd.10.National Mineral Dev. Corpn.TOTAL
.
15642.927805.87
7499.476864.716202.292822.812414.70
2386.672381.382320.2156341.03
7/31/2019 Pmi 13 Oct 08 Final
24/82
TOP TEN LOSS MAKING CPSEs(Rs. in crores)
S.No Name of the PSE Loss
1. Fertilizer Corporation of India 1432.59
2. Hindustan Fertilizer Corporation 1065.14
3. National Jute Manf. Corpn Ltd. 794.49
4. Hindustan Photofilms Manf. Co. Ltd. 653.06
5. National Textile Corpn Ltd. 535.80
6. Air India Ltd. 447.93
7. ITI Ltd. 405.26
8. Indian Drugs & Pharmaceuticals Ltd. 351.16
9. Hindustan Cables Ltd. 310.68
10. Indian Airlines Ltd. 240.29
Total 6236.40
2006-07
7/31/2019 Pmi 13 Oct 08 Final
25/82
Navratna and Miniratna PSEs enjoy certain amount of financial powers under their Articles of
Association.
Post liberalisation, Government introduced Navratna and Mini Ratna schemesunder which substantial powers were delegated to major profit-making PSEs. Navratna Scheme
Bharat Electronics Limited Bharat Heavy Electricals Limited Bharat Petroleum Corporation Limited GAIL (India) Limited
Hindustan Aeronautics Limited Hindustan Petroleum Corporation Limited Indian Oil Corporation Limited Mahanagar Telephone Nigam Limited National Aluminium Company Limited NMDC Limited NTPC Limited Oil & Natural Gas Corporation Limited Power Finance Corporation Limited Power Grid Corporation of India Limited Rural Electrification Corporation Limited Shipping Corporation of India Limited Steel Authority of India Limited
7/31/2019 Pmi 13 Oct 08 Final
26/82
Navratna and Miniratna
Miniratna SchemeThere are 42 Category-I Miniratna and 13 Category-IIMiniratna PSEs.
Category-I CPSEs Should have profit in last 3 years continuously
Pre-tax profit : Rs.30 crore or more in at least one of the threeyears
Should have a positive networth.
Category-II CPSEs :
should have made profit for the last three years continuously and
Should have a positive networth.
7/31/2019 Pmi 13 Oct 08 Final
27/82
Criteria MaxScore
Maximum scoreto be given
NTPCPer-
formance
Score awardedas per
DPE NTPC DPE NTPC
NPNW 25 >20 >=13 13.66 20 25
Manpower Costto Total Cost
15 =12 21.19 15 15
PBIT toTurnover
15 >=25 >=25 33.65 15 15
EPS 10 >=30 >=3 7.55 4 10
Inter SectoralPerformance
20 I I 2* 16 16
Total 100 85 96
Navratna Score Sheet (2006-07)
* Under Inter-sectoral criteria, no.1 company is NVVN which is NTPCswholly-owned subsidiary company engaged in trading of power
7/31/2019 Pmi 13 Oct 08 Final
28/82
Composite Scores for the Navratna CPSEs
S.No. Name of Composite RemarksCPSE Score
1. BHEL 71
2. BPCL 58 Score less than 603. GAIL 794. HPCL 58 Score less than 605. IOC 636. MTNL 35 Score less than 60
7. NTPC 858. ONGC 899. SAIL 79
7/31/2019 Pmi 13 Oct 08 Final
29/82
Performance improvement of CPSEs is acontinuous process and enterprise specificmeasures are taken by the Government like
- Signing of MOU with PSEs- Periodic review of performance
- Professionalisation of Board
Performance Improvement inCPSEs
7/31/2019 Pmi 13 Oct 08 Final
30/82
Disinvestment in CPSEs
Started in 1991-92 Public Sector Disinvestment
Commission constituted in 1996 and itsubmitted reports on 41 CPSEs.
Proceeds from disinvestment till March,2006 are Rs.49,241 Cr.
44 CPSEs are listed on Stock Exchanges.
Market capitalisation of 38 listed CPSEstill 31st March, 2007 is Rs.650671 crore.
7/31/2019 Pmi 13 Oct 08 Final
31/82
Sickness Revival and Restructuringin Public Sector
For sick enterprises Sickness in certain CPSEs has been persisting
since last many years. Their losses surpassed their net worth. Since 1992, 75 PSEs registered with Board for
Industrial and Financial Reconstruction (upto30.6.2007) Some of the strategies to deal with sickness on
long-term basis include : Revival
Financial restructuring JV with capable partner Fresh fund infusion Organisational and business restructuring Manpower rationalization Improved marketing strategies
Cost control measures
7/31/2019 Pmi 13 Oct 08 Final
32/82
7/31/2019 Pmi 13 Oct 08 Final
33/82
RECOGNITION
General recognition - PEs hadhelped in the creation of a strong
and diversified industrial base inthe country and managerialmanpower.
7/31/2019 Pmi 13 Oct 08 Final
34/82
RECOGNITION
Promotion of Balanced RegionalDevelopment
PSEs: At the Cutting Edge of Technology
Setting High Standards as ModelEmployers
Representation of weaker and vulnerable
sections such as SCs, STs, OBCs andPhysically Handicapped in their workerforces.
7/31/2019 Pmi 13 Oct 08 Final
35/82
Centrality of PSEs in the Indian economy
- CPSEs have a share of:
43.08% of power,85.52% of the national production of coal,100% of lignite,85.87% of crude oil,
74.51% of refinery and26.89% of finished steel in the country.
7/31/2019 Pmi 13 Oct 08 Final
36/82
A glimpse into the rapid transformation ofthe PSEs
(random selection)
NTPC-the largest power utility in the country accounts for 29 per cent of the total power generation in
India, is the sixth largest thermal generation company in
the world second most efficient among the top thermal utilities
according to a global survey.
Recorded the highest ever plant Load Factor of 92.24
per cent (Coal Units) - India average 78.06 per cent. Indian Oil Corporation- Indias flagship national oil
company, finds a place in fortunes prestigious listing
of the Worlds 500 largest corporations.
7/31/2019 Pmi 13 Oct 08 Final
37/82
A glimpse into the rapid transformation ofthe PSEs
(random selection)
ONGC- a flagship Navratna PSU ranked 133rd in theForbes 400 Global Corporate and at 326th rank in theFinancial Times Global 500 by market capitalization
GAIL (India) - a flagship Navratna national gas company-controlling 83 percent market share of gas.
(BHEL) - unquestioned market leader in its corebusiness area of heavy electrical equipment in thecountry.
7/31/2019 Pmi 13 Oct 08 Final
38/82
IN INDIAN
CONTEXT
SPS Solanki, AGM (CP)
7/31/2019 Pmi 13 Oct 08 Final
39/82
GENERIC PROBLEMS OFPUBLIC ENTERPRISES
7/31/2019 Pmi 13 Oct 08 Final
40/82
Issues of concern
Relationship between PSEs and theGovernment dysfunctional.
Government established PSEs ascorporate bodies with independent legalexistence but, it continue to treat themas subordinate departmental offices, and
play the role of a super-management ontop of the Board of Directors.
7/31/2019 Pmi 13 Oct 08 Final
41/82
Issues of concern Government - roles
owner,
super manager and
Government',
and did not keep them distinct.
relationship of superior and subordinate
different from what was envisaged in theIndustrial Policy Resolution of 1956,which talked of 'freedom of management'for functioning on 'business lines.'bureaucratic and political interventionsand interferences of various kinds.
7/31/2019 Pmi 13 Oct 08 Final
42/82
Issues of concern Elaborating on his philosophy and vision behind
the PSEs, Nehru had prophetically sounded anadvance caution in this regard. He said, Theway a government functions is not exactly theway that business houses and enterprisesnormally function...when one deals with a plantand an enterprises where quick decisions are
necessary, this may make a difference betweensuccess and failure. I have no doubt that thenormal governmental procedure applied to apublic enterprise of this kind well lead to the
failure of that public enterprises
7/31/2019 Pmi 13 Oct 08 Final
43/82
Issues of concern
Lack of clarity on expectations from PSEs.If a PSE made losses it was criticised; and if it made profits itwas criticised on some other grounds.
Unclarity regarding accountability.The prevailing systems concentrated on proceduralcorrectness of individual actions , decisions rather than onanswerability for results.
The managers in turn tended to offer ex post factoexcuses as there was no ex anteagreement on what was
expected.
7/31/2019 Pmi 13 Oct 08 Final
44/82
Issues of concern
little overall evaluation of performance;no proper evaluation methodology or
machinery was in operation.-Indian Audit Department.
-Reports of the Parliamentary Committee on Public
Undertakings.
7/31/2019 Pmi 13 Oct 08 Final
45/82
PROBLEMS OF PUBLIC ENTERPRISES
ADMIN.MIN PLANN.COMM.PROFIT NONPROFIT
MULTIPLEPRINCIPALS
COPUFINANCEMIN
MULTIPLEGOALS
LACK OF ACCOUNTABILITY
LACK OF AUTONOMY
7/31/2019 Pmi 13 Oct 08 Final
46/82
PROBLEMS OF PUBLIC ENTERPRISES-II
GOVERNMENT
NOT ME SYNDROME
PEOPLE
PUBLICENTERPRISE PARLIAMENT
7/31/2019 Pmi 13 Oct 08 Final
47/82
CRITICAL ISSUE
WHETHER THE PROBLEM IS DUE TOOWNERSHIP ONLY-?
THE MAIN ISSUE IS :
UNDER WHAT CONDITIONS WILL PSE MANAGERS BE MORE
LIKELY TO ACT IN THE PUBLICS INTEREST.
7/31/2019 Pmi 13 Oct 08 Final
48/82
REFORMING PUBLIC SECTOR
DO WE NEED PUBLIC SECTOR?
YES- REFORM andRETAINTHEM
NO- REFORM andSELLTHEM OFF
7/31/2019 Pmi 13 Oct 08 Final
49/82
1984-85 PRE-LIBERALISATION ERAREFORMING PROCESS
Economic Administration ReformsCommission (the Jha Commission) wasformed with one of objectives of findingways to improve public enterprise
performance .
The Arjun Sengupta Committee (1984)also went into the question of
performance evaluation of publicenterprises.
proposed a short list of indicators forperformance improvement process.
7/31/2019 Pmi 13 Oct 08 Final
50/82
CONCEPT
Performance Cycle
7/31/2019 Pmi 13 Oct 08 Final
51/82
TARGETSETTING
APPRAISAL
COUNSELLI
NG
ENABLING
Performance Cycle
Performance Cycle
7/31/2019 Pmi 13 Oct 08 Final
52/82
TARGETSETTING
APPRAISAL
COUNSELLI
NG
ENABLING
Performance CyclePerformance Criteriaweightage
Delegation
ofpower
Evaluation
Future planning
Performance Cycle
7/31/2019 Pmi 13 Oct 08 Final
53/82
TARGETSETTING
APPRAISAL
COUNSELLI
NG
ENABLING
Performance Cycle
7/31/2019 Pmi 13 Oct 08 Final
54/82
MANAGEMENT TECHNIQUE
AIM
PERFORMANCE IMPROVEMENT
MOU
CONCEPT OF MOU IS SIMPLE
7/31/2019 Pmi 13 Oct 08 Final
55/82
CONCEPT OF MOU IS SIMPLEMEMORANDUM OF UNDERSTANDING
BETWEEN TWO PARTIES IS A FREELY NEGOTIATED
PERFORMANCE AGREEMENT
BETWEEN GOVERNMENT ACTING ASOWNER OF THE PUBLIC ENTERPRISEAND ENTERPRISE
CLEARLY SPECIFIES THE
INTENTIONS, OBLIGATIONS ANDRESPONSIBILITIES OF THE TWOPARTIES
S S
7/31/2019 Pmi 13 Oct 08 Final
56/82
SYSTEM
THE ENTERPRISE UNDERTAKES TO ACHIEVE THETARGETS SET IN THE AGREEMENT AND THEGOVERNMENT AGREES TO PROVIDE NECESSARYASISTANCE FOR ACHIEVING THE TARGETS AT THE
BEGINNING OF THE YEAR. IT IS SIGNED BY THE CHIEF EXECUTIVE ON BEHALF
OF ENTERPRISE AND SECRETARY OFADMINISTRATIVE MINISTRY ON BEHALF OF
GOVERNMENT. MOU COVERS BOTH FINANCIAL PERFORMANCE AS
WELL AS NON-FINANCIAL PERFORMANCE.
7/31/2019 Pmi 13 Oct 08 Final
57/82
WHAT WAS THE OBJECTIVE
?
7/31/2019 Pmi 13 Oct 08 Final
58/82
AUTONOMY
ACCOUNTABILITY
7/31/2019 Pmi 13 Oct 08 Final
59/82
AUTONOMY IS INCREASED BY
GRANTING GREATER DELEGATION OF
POWERS
REDUCING MULTIPLE EVALUATIONS BY
DIFFERENT GOVERNMENT AGENCIES
REDUCING FREQUENCY OF
EVALUATION
REDUCING BUREAUCRATIC
INTERFERENCE IN DAY-TO-DAY
FUNCTIONING OF PUBLIC
7/31/2019 Pmi 13 Oct 08 Final
60/82
ACCOUNTABILITY IS INCREASED BY
CLEAR SPECIFICATION OF PERFORMANCE CRITERIA
COMPREHENSIVENESS OF PERFORMANCE CRITERIA
PRIORITISING PERFORMANCE CRITERIA Ex-ANTEAGREEMENT OF JUDGING DEVIATIONS
FROM PERFORMANCE TARGET (CRITERIA VALUES)
7/31/2019 Pmi 13 Oct 08 Final
61/82
ALTERNATIVE NAMES
PERFORMANCE CONTRACT
PERFORMANCE AGREEMENT
CONTRACT PLANS CONTRACT DE STABILITE
CONTRACT DE PROGRAMME
CONTRACT DU PLAN MEMORANDUM OF UNDERSTANDING
(MOU)
7/31/2019 Pmi 13 Oct 08 Final
62/82
IMPLEMENTATIONMECHANISM
7/31/2019 Pmi 13 Oct 08 Final
63/82
DEPARTMENT OF PUBLIC ENTERPRISES(DPE)
NODAL AUTHORITY FOR PUBLIC ENTERPRISES
7/31/2019 Pmi 13 Oct 08 Final
64/82
ADMINISTRATIVE SET UP
DEPTT. OF PUBLIC ENTERPRISES
HIGH POWER COMMITTEE
TASK FORCE
DPE STAFF
RESOURCE PERSONS
MEMBERS OF TASK FORCE
7/31/2019 Pmi 13 Oct 08 Final
65/82
MEMBERS OF TASK FORCE(TF)
RETIRED SECRETARIES
RETIRED CHIEF EXECUTIVES.
MAGNAGEMENT CONSULTANTS
ACADEMICIANS
CHARTERED ACCOUNTANTS
PROFESSIONALS
MEMBERS OF HPC
7/31/2019 Pmi 13 Oct 08 Final
66/82
MEMBERS OF HPC
THE COMMITTEE CONSISTS OF THE FOLLOWINGMEMBERS. CABINET SECRETARY, CHAIRMAN
FINANCE SECRETRY, MEMBER
SECRETARY (EXPENDITURE), MEMBER
SECRETARY (PLANNING COMMISSION) MEMBER
SECRETARY (PROG. IMPL.), MEMBER
CHAIRMAN (PESB), MEMBER
CHAIRMAN (Tariff Commission)
CHIEF ECONOMIC ADVISER, MEMBER
SECRETARY (PUBLIC ENTERPRISE), MEMBER SECY.
7/31/2019 Pmi 13 Oct 08 Final
67/82
FORMULATION ANDCONTENTS
Th t t f th MOU di id d
7/31/2019 Pmi 13 Oct 08 Final
68/82
Part I Vision, Mission & Objectives of the PSE
Part II Exercise of enhanced autonomy & delegation of
financial powers
Part III Performance Evaluation parameters and targets
Part IV Commitments/Assistance from the Government
Part V Action Plan for implementation & monitoring of
MOU
The contents of the MOU are divided
into following five parts:
7/31/2019 Pmi 13 Oct 08 Final
69/82
Performance Evaluation parametersand targets
Performance Evaluation parameters
7/31/2019 Pmi 13 Oct 08 Final
70/82
and targets
7/31/2019 Pmi 13 Oct 08 Final
71/82
EVALUATIONMECHANISM
7/31/2019 Pmi 13 Oct 08 Final
72/82
MOU TARGETS (French System)
Parameters Unit Target Actual Actual Actual (1) (2) (3)
ProductionMT 1200 1200 1300 1180
Profit Rs.Crs. 400 400 370 425
Rating (WHICH ACTUAL IS BEST?)
MOU TARGETS (Si li S t )
7/31/2019 Pmi 13 Oct 08 Final
73/82
MOU TARGETS (Signaling System)
Exl. V.Good Good Fair Poor
Production MT 40% 1250 1200 1150 1100 1050
Profit crs 60% 410 400 390 380 370
ACTUALS A B C D
Production MT 1230 1300 1180 1200
Profit Rs.Crs 395 370 425 400
Rating- ? Which Company has performed best ?
MOU TARGETS (Signaling System)
7/31/2019 Pmi 13 Oct 08 Final
74/82
( g g y )
Parameters Unit Wt. TARGET
Exl. V.Good Good Fair Poor
Production MT 40% 1250 1200 1150 1100 1050
Profit Rs. Cr. 60% 410 400 390 380 370
Calculation Example (PROD- 1230; PROFIT- 395)
Actuals Raw Score Wtd.Score
Production MT 1230 1+(1250-1230)/(1250-1200)
=1+.4=1.4 1.4X.4=0.56
Profit Rs. Cr. 395 2+(400-395)/(400-390) 2.5x0.6
=2.5 2.5X0.6=1.5
Rating Composite Score (Total) 2.06
7/31/2019 Pmi 13 Oct 08 Final
75/82
7/31/2019 Pmi 13 Oct 08 Final
76/82
MOU EVALUATION
MOU Composite score Grading
1.00 - 1.50 Excellent
1.51 - 2.50 Very Good
2.51 - 3.50 Good
3.51 - 4.50 Fair
4.51 - 5.00 Poor
7/31/2019 Pmi 13 Oct 08 Final
77/82
IMPLEMENTATION OF
MOU INTERNALISATION
CATALYTIC AGENTS
7/31/2019 Pmi 13 Oct 08 Final
78/82
CATALYTIC AGENTS
OBLIGATIONS UNDER GOI, MOU SYSTEM
FLOW OF PLANS
NEED FOR STRENGHTHENINGCOMMUNICATION
FLOW OF PLANS
7/31/2019 Pmi 13 Oct 08 Final
79/82
FLOW OF PLANS
INTERNAL
MOUs
(Annual)
BUSINESSPLANS
(5 Yearly)
CORPORATE
PLAN(1997-2012)
SYSTEM BENEFITS
7/31/2019 Pmi 13 Oct 08 Final
80/82
SYSTEM BENEFITS
Internalisation of MOU system will facilitate
Unification and integration of departmentalGoals/objectives with the organisation goalsand objectives.
To Provide clear-cut direction for the growthof the enterprise
To improve Workculture and attitude.
. Identification of the weaknesses and strengths
down the line. Defines the performance in clear terms and
brings in enhanced accountability
7/31/2019 Pmi 13 Oct 08 Final
81/82
System benefits
Contd...
Tie-up the inputs/support .
Relative priorities of the goals
performance evaluation methodology brings-in the
objectivity in evaluation
Healthy competition amongst various units
. Freedom to operate/ functional autonomy. Enhancement of Managerial / competitive skill
7/31/2019 Pmi 13 Oct 08 Final
82/82
Good Luck