The Shipping Corporation of India Ltd.

1. The Shipping Corporation of India Ltd.

2. AGENDA • INTRODUCTION TO SCI • TRADITIONAL APPROACH TO APPRAISALS • THE NEED FOR CHANGE • THE INTRODUCTION OF THE PERFORMANCE RELATED INCENTIVE SCHEME • THE WAY FORWARD • DPE RECOMMENDATIONS 26/11/08 • NEW APPRAISAL FORMAT FOR SENIOR EXECUTIVES

3. About SCI • SCI was formed on Oct 2, 1961 with the merger of Eastern & Western Shipping Corporation • At inception, SCI owned 19 ships of 0.19 m dwt & constituted 14% of Indian tonnage • SCI is today a well diversified Company having a fleet of 76 vessels of 5.14 m dead weight tonne (dwt) & manages 65 vessels on behalf of other agencies (additionally, manning 3rd LNG tanker of LNG JV) • ‘Excellent’ rating under the MOU system consecutively for the last 17 years • SCI acquired Navratna status in August 2008, presently has an IrAA+ rating from ICRA.

4. Share of Major Shipping Cos in Indian Fleet [DWT (mil)] (As on 30.06.2009) DURING 2008, INDIAN TONNAGE WAS 1.16% OF WORLD TONNAGE AS ON 30.06.09, 238 INDIAN SHIPPING COMPANIES

5. Our Business • Provides Integrated shipping solution to the Indian oil industry – carriage of crude oil imports, lighterage, coastal movement & storage duties. • Deployment of bulk carriers through a judicious combination of COA, spot charter, trip-time-charter, period charter. • Presently operating 4 liner services in various consortium arrangements: Indian Subcontinent Europe service (ISES), India/ Far East (INDFEX), India/ far East-2 (INDFEX 2), India- Gulf (SMILE service) • World wide break bulk services through space charter arrangements. • We have 10 SCI-owned Offshore Supply Vessels as well as manage ONGC’s offshore supply vessels catering to the logistics requirements of India’s offshore exploration and production activities. • The vessel acquisition program of the company is handled in house. • Currently there are a total of 30 vessels on order of approximate value of US $1.5 billion.

6. Joint Ventures JVs for Petronet LNG project: SCI is the first Indian company to have shareholding in an LNG JV. Partners include Mitsui OSK Lines, NYK, K Line of Japan, Qatar Shipping Company (Q Ship), Qatar Gas Transport Company (QGTC) & Petronet. 3 Joint ventures formed owning 1 ship each From Jan 2009 SCI has taken over the operation and management of the first two LNG vessels - only Indian shipping company in LNG operations. Also taken over manning of 3rd LNG tanker after its delivery in November 2009. Irano Hind Shipping Company (IHSC): Established in March 1975. Presently, owns and operates a fleet of 8 vessels (including subsidiaries) aggregating 0.493 mil DWT SCI Forbes With Forbes Gokak Company and Sterling Investment Corporation Pvt. Ltd. for acquisition and operation of chemical tankers and other specialised vessels. Operating two chemical tankers (delivered in Aug’09 & Oct’09) Two more chemical tankers under construction. Proposed JV’s Proposed JV with SAIL Proposed JV with Shipping Corporation of South Africa

7. Upgradation of Information Systems • SCI embarked on a major exercise to upgrade its IT systems to provide a seamless integration of data • Appointed M/s TCS for Study and Program Management for the entire IT project and implementation of basic ERP and other modules • The project has been named “SET-IT” ie SCI’s Enterprise wide Transformation using Information Technology. • Estimated Project Cost : Rs.1 billion (abt US$21 million). • Partly gone live “April 2010”.

8. PERFORMANCE MANAGEMENT SYSTEM (PMS) AT SCI

9. NEED FOR CHANGE

10. Process Mapping of Traditional Confidential Appraisals Appraisal by Reporting Officer Assessment by Reviewing Officer Assessment by Accepting Officer • Limitations • Final Rating was confidential • Lesser objectivity in • assessment • Only Below Average rating • communicated • No scope for feedback • & improvement Final Rating placed in Appraisal file. Used for promotions

11. PERFORMANCE RELATED INCENTIVE SCHEME (PRI) • Ministry of Shipping vide their letter dated 22.12.2004 approved a PRI scheme • Salient features of the scheme: • Prospective w.e.f 2003-04 FY • PAT Rs. 300 Crore - 1 month basic • PAT over Rs.300 Crore - 10 days basic for each Rs.100 Crore on prorata basis

12. Performance Related Incentive (PRI) Contd. • Distribution: - Actual distribution not to exceed 5% of distributable profit. - Actual distribution to be adjusted as per MoU score • PRI payout to employees based on appraisal score

13. TERMS OF REFERENCE TO CONSULTANTS – ERNST & YOUNG

14. Building Blocks to the Performance Management System • Identification ofUniquejobs and structuring the jobs in SCI as Strategic – C&MD & Divisional Heads Operational – Dept, Group, Unit Administrative Support – Unit /Group supportOfficers and Staff b. Role profiles:These would detail the purpose and accountabilities of all unique jobs. Developed after meeting unique job holders. c.Scorecards:This would encompass KRAs, Measures & Targets for the employee which would be used for evaluation.

15. Illustrative Role Profile Position Group In Charge Dry Docking Cell Reports To GM Tanker Division B&T PURPOSE To formulate and implement the dry docking schedule of the vessel of the vessel of the B&T division by interfacing with technical managers to ensure sea and cargo worthiness of vessels of the division. KEY ACCOUNTABILITIES • Aid in the formation of dry docking schedule for vessels of the division based on the statutory requirements, citification requirements, and other constraints. • Collect repair specifications for each vessel from technical managers and formulate tender notifications. • Planning of the dry docking tender and identification of ship yards that are invited to bid in the process. • Tabulation of quotations from SCI registered ship yards that are invited to bid in the process. • Tabulation of quotations from SCI registered ship yards and identification of lowest price bids to make recommendations to management. • Gain approval for proposal from all the designated authorities including Group in charge of vessel, Head of Department, Internal auditors, Director finance, Designated Finance officer, Director B&T and CMD. • Awarding of contract for stemming of vessel after satisfying due process. • Scrutiny and settlement of bills of the ship yard, verification as to validity of repairs. • Ensure high level employee engagement and satisfaction and retention of key personnel in the department. • Aid other departments/divisions through timely reporting of information requested by them.

16. Illustrative Scorecard

17. COMPONENTS OF THE APPRAISAL • Scorecard / Key Responsibility Areas • Professional Attributes Rating • Suggested Development Plan • Overall Rating • Comments by Reporting, Reviewing & Accepting Officer

18. Performance Appraisal Components KRA Sheet

19. COMPONENTS OF THE APPRAISAL Suggested Development Plan

20. E.1 Reporting Officers Comments E.1 Reporting Officers Comments E.1 Reporting Officers Comments Name: Date: Designation: Signature: Name: Date: Designation: Signature: COMPONENTS OF THE APPRAISAL E.2 Reviewing Officers Comments Name: Date: Designation: Signature: E.3 Accepting Officers Comments Name: Date: Designation: Signature: Name: Date: Designation: Signature: Name: Date: Designation: Signature:

21. IN DESIGNING THE PMS THE VIEWS OF THE EMPLOYEES WERE TAKEN INTO CONSIDERATION

22. THE PMS FRAMEWORK Measures, Targets Key Result Areas (KRA’s) Performance appraisal Professional attributes Leave Variable pay: PRI for performance • Promotions • Training & Development

23. Performance Management System (PMS) – Implementation at SCI New PMS implemented from 2005-06 onwards Appraisal cycles till 2008-09 have been completed Of the total of about 780 officers 15% were rated as Ë”, 8% Were rated as OFD/DNME PRI payments based on the PMS have been made until 2007-08 to all employees Appraisal cycle of 2009-10 to be completed

24. DPE Recommendations – OM dated 26.11.2008 Performance Management System (PMS) • Each CPSE was to develop a robust and transparent PMS. • A “Bell Curve Approach” to be followed in grading officers to ensure the following: - Not more than 10%-15% executives should be “Outstanding/Excellent” - 10% of executives should be graded as “Below Par” • The PMS would link to the Performance Related Pay as a percentage of basic pay. • The PRP would be also be based on the CPSe’s MOU score, grade weightage factor and would be paid from the profits of the Company 60% of PRP will be with the ceiling of 3% of Profit before tax (PBT) - 40% of PRP will come from 10% of incremental profit. - The total PRP would be limited to 5% of year’s PBT. • PMS to be implemented latest by 31.03.2009

25. Performance Management System (PMS) – Implementation at SCI Based on the DPE guidelines the appraisal for the 2008-09 was rolled out in SCI The Bell Curve approach was strictly followed Where guidelines were not followed, moderations were carried out CHALLENGE FOLLOWING THE BELL CURVE APPROACH AND LIMITING THE TOP RATING TO ONLY 10-15%. 15% rated E and 8% rated OFD/DNME.

26. New Appraisal Format For Senior Officers As per DPE letter dated 05.04.2010, Performance Appraisal Report for top management has been revised as under: • Revised Performance Appraisal Report (PAR) shall be applicable to Chief Executives, Functional Directors, Directors, Executive Directors (E9) and General Managers (E8) of CPSE’s • Revised PAR should be adopted by CPSE’s from the year 2010 – 2011 onwards. • PAR would have 3 components: - MoU Targets - Individual Targets - Personal attributes & Functional Competencies • Appraisal to be completed within 1 year of reporting year. • “Bell Curve Approach” to be followed in grading of executives so that not more than 10%-15% of executives should be graded as “Outstanding/Excellent”.

27. THE APPRAISALS WITH EFFECT FROM 2010-2011 SHALL BE DONE ONLINE ENTIRE PROCESS IS CAPTURED IN SAP AND THE RATING COMMUNICATED ONLINE PRINT OF THE COMPLETED FORM TO BE MAINTAINED IN THE APPRAISAL FILE FOR RECORDS