Annual Performance Linked Incentive

STEELCO GUJARAT LTD Page No

HUMAN RESOURCE & ADMINISTRATION DEPARTMENT DRAFT : ANNUAL PERFORMANCE LINKED INCENTIVE 1. PREAMBLE :

The scheme shall be called “Annual Performance Linked Incentive Scheme” for the Steelco executives. The main consideration while designing the scheme are:

1.1

Quantum of Incentive should be enough to motivate the employees to put extra efforts while at the same time ensuring the payments are consistent in economic terms with the level of the performance.

1.2

The scheme should have the characteristics of Simplicity, Objectivity, Smooth Operatibility and Amenability to unambiguous calculations..

2. OBJECTIVE:

The Annual Performance Linked Incentive (APLI) is defined as the variable part of the pay which is awarded each year depending on the performance.

APLI scheme is applied at the individual Executive employee level The main objective of this scheme is to promote Motivation, Moral and foster Team spirit among the employees. Besides boosting their performance related Prepared by Reviewed by Issued by Head : HR & Admin HR Committee Managing Director

STEELCO GUJARAT LTD Page No

HUMAN RESOURCE & ADMINISTRATION DEPARTMENT DRAFT : ANNUAL PERFORMANCE LINKED INCENTIVE towards the business objectives set by the top management. To qualify for the APLI, the executive must achieve excellence in the delivery of services and other performance commitments as defined under his / her personal “ Key Performance Indicators / Key Responsibility Area” matrix.

3. SCOPE:

Annual Performance Linked Insensitive scheme shall cover all executives (other than Staff & Workmen, Trainees / Apprentices) of the Steelco Gujarat Ltd. The benefit under the scheme, shall be payable to the employees who are on the rolls of the company during the year under review provided he/she has worked for not less than six months in that year. However, the payment will be made on pro – rata basis to such candidates.

4. POLICY YEAR:

The computing of Annual Performance Linked Incentives will be based on the st

st

Financial Year i.e. from 01 April to 31 March.

5. METHOD: Prepared by Reviewed by Issued by Head : HR & Admin HR Committee Managing Director

STEELCO GUJARAT LTD Page No

HUMAN RESOURCE & ADMINISTRATION DEPARTMENT DRAFT : ANNUAL PERFORMANCE LINKED INCENTIVE The personal performance is not only measured in terms of specific KPI, but also in terms of achieving desired goals and outcomes covering his / her area of

responsibilities.

Performance

is

effective

service

delivery

and

responsiveness to stakeholders. It is the shift from inputs – process emphasis (efficiency) to results and outcomes (effectiveness).

The proposed methodology for the APLI consists of the following steps : STEP – 1: Select Key Departmental Objectives Objectives represent the development requirements to be achieved by the department in a particular set of policies and programs over a specific period of time (short – medium- long) . Individual objectives should be linked and derived from the Departmental Vision and Mission statement.

STEP – 2: Assign Relative Weights to Objectives Objectives in the Performance Management system should be ranked on priority according to the degree of significance and specific weights should be attached to these objectives. All weights must add to 100.

STEP – 3: Specify Means for Achieving Objectives Prepared by Reviewed by Issued by Head : HR & Admin HR Committee Managing Director

STEELCO GUJARAT LTD Page No

HUMAN RESOURCE & ADMINISTRATION DEPARTMENT DRAFT : ANNUAL PERFORMANCE LINKED INCENTIVE For each objectives, the department must specify the required actions (Policies, Programs, Schemes & Projects) to achieve the objective.

STEP – 4: Specify Success Indicators For each of the means specified in Step 3, we must specify one or more success indicators or key Performance Indicators (KPIs) Success indicators are important management tools for driving improvements in departmental performance.

The KPI should represent the main business of Steelco and should also aid accountability. The weight assigned to a particular objective should be spread across the relevant success indicators.

STEP – 5: Specify Targets for success Indicators The next step is to choose a target for each success indicator. In setting targets, we should consider the best mix of volume, quality, efficiency, financial performance and customer (Internal / External) service targets given their priorities.. A good set of targets can balance the pursuit of improved service delivery with the need to provide value for money.

Prepared by Reviewed by Issued by Head : HR & Admin HR Committee Managing Director

STEELCO GUJARAT LTD Page No

HUMAN RESOURCE & ADMINISTRATION DEPARTMENT DRAFT : ANNUAL PERFORMANCE LINKED INCENTIVE

Targets are tools for driving personal performance improvements. Target levels should, therefore, contain an element of stretch and ambition. However, they must also be achievable. The target should be presented as the following FIVE POINT scale:

Parameter

Excellent

Very Good

(5)

(4)

Good (3)

Fair /

Poor (1)

Average (2)

Target*

110

100

75

50

25

(Note: Target figures are given as example only)

6. PERIODICITY OF PAYMENT

As nomenclature suggest, Annual Performance Linked Incentive (APLI) shall be calculated once in a year, i.e. after the end of financial year. Financial year shall st

st

be the year of evaluation and is deemed as period from 01 April to 31 March.

Prepared by Reviewed by Issued by Head : HR & Admin HR Committee Managing Director

STEELCO GUJARAT LTD Page No

HUMAN RESOURCE & ADMINISTRATION DEPARTMENT DRAFT : ANNUAL PERFORMANCE LINKED INCENTIVE 7. GENERAL CONDITIONS

The amount of APLI earnings will neither be termed as pay nor allowance, nor wages. Accordingly, this amount would not count for any service benefits (PF, Gratuity, etc.). The figure of achievement and other record as maintained by the management shall be final and binding to all.

The scheme may be reviewed, if required, and the management has a right to revise performance parameters, tables, eligibility criterion, payment criterion, etc. appearing in the scheme, as appropriate.

In case of any ambiguity in defining and explaining the provisions of the scheme, the matter shall be referred to the Managing Director only. The management reserve the right of shutting down Annual Performance Linked Incentive Scheme for reasons beyond its control.

Prepared by Reviewed by Issued by Head : HR & Admin HR Committee Managing Director