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1. Performance Management System at GSL G S L

2. Need for New PMS Directives for introduction of Performance management System in the DPE circular dated 26.11.2008 for Implementation of Performance Related Pay (PRP) with the following objectives: • PRP should be based on the performance of the individual and on the performance of the organisation. • Effective measurement of performance which should include: • Robust and transparent performance management system • Identification of Performers from Non-performers • Maintain bell curve approach G S L

3. GSL Performance Management Cycle at a glance G S L

4. Performance Planning • Setting of KRAs by the 10th of April • KRA’s : (PART A) • It is the area for which the Assessee is responsible for and is accountable for its day today outcomes. • It could be any activity, project or assignment • It should: • Eliminate subjectivity • Target oriented G S L

5. Half Yearly Review & Feedback • Half yearly performance Progress review by IO, so as to track the progress& provide necessary input/ advice/ feedback whenever required. • Provision made for assessors & assessees comments. • No physical removal of KRA, only modification & addition if required, with justification G S L

6. Annual Assessment & Feedback10-20th April • Self appraisal- (Helpful in appraisal interview) • Achievements • Areas of shortfall • Appraisal Interview with IO • Training & Development need identification • Factors which helped or hindered performance. • Assessment of Managerial Competencies : (PART B) • Assessed by IO, RO and SRO • PART A has 60% weightage and PART B has 40% weightage G S L

7. Payment of PRP • PRP Amount= Total limit 5% of PBT • 60% of PRP= 3% of PBT • 40% of PRP= 10% of incremental profits limited to 2% of PBT G S L

8. Steps for Implementation of PMS and payment of PRP • Each CPSE to have Remuneration Committee headed by an independent director. • The Remuneration Committee will decide the annual bonus/variable pay pool and policy for its distribution across the executives and non unionised supervisors, within the prescribed limits. • The remuneration Committee of GSL decided to engage XLRI for Auditing our existing Performance Management system and improving the same. • XLRI had studied our existing Performance management system suggested some changes in the Performance Appraisal Formats. • The Remuneration Committee accepted the revised Performance Appraisal Formats as developed by XLRI with minor modifications. G S L

9. The Board had approved the recommendations of Remuneration committee to implement the assessment of Performance of Executives and Non Unionised Supervisors based on the revised Performance Appraisal formats for 2009-10. • Based on the above the assessment of performance for the year 2009-10 was done as per the revised formats. • After the assessment of performance was completed the final rating scores were normalised by the normalisation committee. For the purpose of normalisation the remuneration committee had referred the normalisation process of various other PSU’s and also the process that is followed by the Performance Appraisal Review Board (PARB) of the Indian Navy. • The Normalised Scores were assessed by the Remuneration Committee and it formed the basis for drawing the Bell curve distribution of scores. G S L

10. The bell curve distribution was done by drawing the bell curve of the whole organisation taking averages of Performers across various grades of Executives and Non Unionised Supervisors. • Remuneration committee developed a scheme for payment of PRP along with the guidelines of payment, rules and regulations, eligibility, scope etc. • The Board of GSL had approved the Bell Curve distribution of scores and Performance Related Pay. • The payment of PRP for the year 2009-10 would be decided by the remuneration committee based on the MoU rating of the organisation. The MoU rating for Goa Shipyard Limited is Excellent. G S L

11. Highlights of GSL PRP Scheme G S L

12. Performance of the individual after normalisation and bell curve distribution • The normalisation of scores would be done in the following manner: • a) The Normalisation process would be carried out after the Annual Performance rating score of all officers and non-unionised supervisors is completed. • b) The normalized marks of SRO duly ratified by the Normalization Committee and also by the Remuneration Committee shall be considered for drawing the bell curve. • Bell curve would be drawn in the manner that not more than 10% to 15% executives and non Unionised supervisors are “Outstanding/Excellent”. Similarly, 10% of the executives and non Unionised supervisors should be graded as below par. • Bell Curve shall be drawn for E-6 and below. • The said normalized score of each officer and non Unionised supervisor divided by hundred will be the multiplying factor (S) for calculation of PRP. Say for a normalized score of 82 , the multiplying factor would become 0.82 . G S L

13. As per Normal Distribution norms, 10 to 15% of total officers and supervisors strength will be graded ‘Excellent’. As an acknowledgement for their ‘excellent performance’ the normalised score of these top rated executives and supervisors will be enhanced to 100. So for the Officers and Supervisors lying in the Excellent category (10-15%) on the Bell Curve, the multiplying factor would be 1 (One). • For the Officers and Supervisors apart from the top 10 to15% strength, the multiplying factor would be ‘the normalized score of each officer divided by hundred’. • 3. For GMs and above including Board level executives, the multiplying factor will be considered as 1 (One) G S L

14. CALCULATIONS FOR INDIVIDUAL PAYOUT OF PRP • The individual payout will be determined by the following formula: • PRP payable = {(0.6 (P* Q* R*S*Tc) + 0.4(P* Q*R*S*Tp)} • where, • P = Revised Annual Basic Pay of the individual; • Q = Rating for MOU performance of the Company for the year; • R = Grade Factor • S = Performance rating factor • Tc = Payout factor (i.e. ratio of amount available to amount required) for component of current year PBT. • Tp = Payout factor (i.e. ratio of amount available to amount required) for the component of increase in profit over the previous year; • The actual annual basic pay (P) paid to the individual during the year will be taken for this purpose. G S L

15. Terms and Conditions • The Period of Probation for Executives and Non Unionised Supervisors will be counted for payment of PRP. • An employee having put in 30 days service in a financial year shall be eligible for drawing the PRP. • The PRP will be paid for the whole year provided an individual has put in minimum of 240 days physical presence. • Period of unauthorized absence, leave without pay and absence on account of suspension as punishment will not be counted for calculation of qualifying period for payment of PRP. An employee who is on leave without pay/unauthorized absence for a period of 15 days or more shall not be eligible to receive PRP. • In respect of employees who have put in service for a part of the year PRP will be paid proportionately on pro-rata basis. 20 days physical presence will be counted as a full month, below 20 days will be ignored. • Period of temporary duty, compensatory off and period of disablement due to accident arising out of and in the course of employment only will be taken as physical presence with the approval of Head of Department. G S L

16. The period of training and tour in India and abroad for which employee is permitted to be on training or tour in relation to Company’s business will be counted for calculation of payment for PRP. However, the period while an employee is allowed for study leave in India or abroad, foreign deployment for study pertaining to self development such as doing PhD or any management programme etc. will not be reckoned towards eligibility for payment of PRP. • The period of deputation of an employee for foreign assignment for the Company’s job for the period beyond six months the payment of PRP will be regulated as per the terms of employment of such employee. • The condition of actual presence as aforesaid shall not be applicable to employees superannuated, died while in service or retired on VRS including Medical VRS. However in respect of employees who joined during the financial year and are on the rolls of the company at the time of disbursement of PRP and have put in atleast 30 days service in the financial year shall be eligible to receive PRP on pro-rata basis as mentioned above. • In case of separation of officer/ non-unionised supervisor on account of superannuation/death/medical VRS/ resignation during the financial year the same principle would be applicable for payment of PRP scheme G S L

17. The newly joined probationary Executives and Non-unionised supervisor would not be entitled for any PRP under this scheme if they have served for less than 30 days in the respective financial year, provided they continue on the rolls of the company on the date of disbursement of the PRP. The PRP will be paid only after completion of one year of service on the regular rolls of the Company. • The annual basic pay will be calculated in the following manner: The total amount of basic pay from April to March. • In case of promotion of an officer or non unionized supervisor during the financial year the PRP will be calculated on the basis of his Basic Pay and grade factor separately for pre and post promoted basic. • The officer/non unionized supervisor being separated during the financial year and performance ratings are not available for calculation of PRP, the PRP would be paid on the basis of average of performance ratings for the past three years or for the lesser period as available. G S L

18. Executives separated on account of superannuation, resignation with prior permission and death will be eligible for PRP for the period in which they were in service of the company. • Officers and non unionized supervisors joining on regular rolls and resigning before completion of one year (12 months) in the service of the Company will not be entitled for payment of PRP. • PRP will be subject to deduction of income tax. • Disqualification: PRP will not be payable to executives and non-unionised supervisors who ceased to be in service on the following grounds: • Dismissal/termination. • Suspension as punishment. • Left the service without notice/discharging bond liability. G S L

19. Executives and non unionized supervisors on deputation or are deputed to other organizations will not be eligible for PRP. • If disciplinary proceedings are initiated against an executive/supervisor or employee has some pending enquiry on grounds of misconduct or other reasons stipulated under CDA/GSL Rules, payment under the scheme will be kept in abeyance till completion of proceedings and may be released if such employee is exonerated of the charges. However, in case of minor and major penalties, following will be imposed: • If minor penalty is imposed: • For the year, the minor penalty is imposed to an officer/ non- unionised supervisor he would be paid only 50% of the PRP for that year provided he is otherwise eligible to receive PRP. • If major penalty is imposed (discharge/dismissal/demotion/reduction to lower grade/pay): • For the year, the major penalty is imposed to an officer/ non-unionised supervisor, no PRP shall be paid G S L

20. The excess payment, wrong payment, arithmetical & system errors in calculation of PRP and arrears shall be subject to corrections, adjustments and recoveries. • The Management Trainees will not be entitled for PRP during their training period including extended period of training. • The management reserves the right to alter, change, modify, revise, amend or withdraw any or all the provisions of the same. • Incase where a question arises as to the interpretation of any clauses/ conditions of the scheme, the decision of the CMD shall be final & binding. G S L

21. THANK YOU G S L

22. Thank You