RESISTANCE TO CHANGE AMONG EMPLOYEES OF A PUBLIC SECTOR UNDERTAKING With Special Reference To HINDUSTAN ORGANIC CHEMICALS LTD

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EXECUTIVE SUMMARY As it goes in the popular saying, There is nothing permanent in this world except change. Change is inevitable in every organization. This 6-letter word will determine the organizations direction; either to success or to failure. All organizations which implement this process, have to always confront resistance from people in the organization and HR Managers will have to address it with systematic planning and solutions. The purpose of this study was to examine the readiness among the employees of HOCL to undergo change from which the researcher tried to assess the level of resistance to accept change. It is very important to understand and learn the different issues associated with resistance to change. The value of this study lies in the contribution it gives to the knowledge basein the realm of resistance to change.It also has tried to study the determinants factors of that lead to readiness and resistance to change among employees of HOCL.The study used a cross sectional descriptive methodology using sample survey research. 40, sixth and seventh scale employees of HOCL were interviewed using a structured questionnaire and the collected data were analyzed using SPSS software. From the study the researcher found that the employees of HOCL showed readiness to change.The study proved that the major determinant in influencing the readiness among employees is Equitable Remuneration. It was also found that the resistance to change is also prevailing among employees in HOCL but is not to the level which necessitates any administrative action from HOCL.The researcher recommended that the management should be proactive to maintain the present level ofreadiness consistently.Employees should be consulted in the change process actively by hearing their views and considering their opinions. It is essential to discuss with them before initiating any change. The resistance to change among the employees of HOCL was studied by analyzing the opinion of the employees in the 6th and 7th scales working in the morning shift, and it can be considered as the major limitation of the study also.

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TABLE OF CONTENTS SL. NO. CHAPTER TITLE PAGE NO. 1-7 1 2 3 3 4 6 7 7

1 2 3 4 5 6 7 8

1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8

INTRODUCTION Introduction Statement of the Problem Objectives of the Study Scope of the study Research Methodology Sampling Plan Limitations of the Study Chapter Scheme

9 10 11 12 13 14 15 16 17 18 19 20 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36

2 2.1 2.2 2.3 2.4 2.5 2.6 3 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 3.15 3.16 3.17 3.18 3.19

INDUSTRY PROFILE History of Chemical Industry International Scenario Indian Scenario State Scenario Current Scenario Future Prospectus COMPANY PROFILE History of chemical industry Mission Objectives Company Policies Major Customers of HOCL Product Profile Market Share Management and Organization Achievements and Accomplishments Future Plans Financial performance Departments of HOCL Details of P & A Department Functions & Job Allocation Classification of Workers Conduct of Employees Attendance Leave Recruitment

8-13 5 9 10 12 12 13 14-35 14 15 15 15 16 17 18 19 19 20 20 23 25 25 27 29 29 29 29

3

37 38 39 40 41 42 43

3.20 3.21 3.22 3.23 3.24 3.25 3.26

Selection Process Training Training Interventions Performance Appraisal Welfare and Administration Industrial Relations Company Discipline

30 30 30 32 33 34 35

44 45 46 47 48 49 50 51 52 53 54 55 56 57

4 4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 4.9 4.10 4.11 4.12 4.13

LITERATURE REVIEW Change - An Ongoing Process The Notion of the Change in the Organization Types of Changes Models of Change Alternative Strategies of Change Resistance to Change Overcoming Resistance To Change Reducing Resistance to Change Literature Review Positive Approaches to Resistance Why Employees Resist Change Why People Accept or Welcome Change References

36- 67 36 36 37 39 40 45 49 50 53 61 63 66 67

58

5

DATA ANALYSIS AND INTERPRETATION

68 - 138

58

6.

FINDINGS, SUGGESTIONS AND CONCLUSION

139-141

60 61 62

6.1 6.2 6.3

Findings Suggestions Conclusion

139 140 141

63 64

7 8

APPENDIX BIBILOGRAPHY

142 145

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LIST OF TABLESSl.No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 Table No 3.1 3.2 3.3 4.1 5.1 5.1 5.2 5.3 5.4 5.5 5.6 5.7 5.8 5.9 5.10 5.11 5.12 5.13 5.14 Particulars Achievements and Accomplishments Performance Indicators Balance Sheet One-Dimensional Classification of Changes Introduced to the Organization Department wise Frequency of the Employees in the Study Frequency of Educational Qualification of the Respondents Frequency Distribution of Gender of the Respondents Age Wise Distribution of the Respondents Frequency of Experience of the Respondents Frequency of Prior Training given to the Respondents Factor Analysis Computation Based on the Tested Value of Overall Readiness to Change among Employees Overall Readiness to Change among Employees Factors Determining Overall Readiness of Employees Anova Test for Factors Determining Overall Readiness of Employees Influence of Department that the Respondents Work on their Overall Readiness Anova Table for Influence of Department that the Respondents Work on their Overall Readiness Influence of the Gender of the Respondents on their Overall Readiness Influence of the Gender of the Respondents on their Overall Readiness Page No 19 20 21 39 70 71 71 72 72 73 74 77 77 78 78 79 79 80 80

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20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

5.15 5.16 5.17 5.18 5.19 5.20 5.21 5.22 5.23 5.24 5.25 5.26 5.27 5.28 5.29 5.30 5.31 5.32

Influence of Education on the Overall Readiness of the Respondents Anova Table for Influence of Education on the Overall Readiness of the Respondents Influence of Age on the Overall Readiness of the Respondents Anova Test for Influence of Age on the Overall Readiness of the Respondents Influence of the Gender of the Respondents on their Overall Readiness Influence of Experience on the Overall Readiness of the Respondents Anova Table for Influence of Experience on the Overall Readiness of the Respondents Influence of Prior Training on the Overall Readiness of the Respondents Anova Table for Influence of Prior Training on the Overall Readiness of the Respondents Computation Based on the Tested Value of Environment One Sample Test for Work Environment Influence of Department on the Satisfaction of Work of the Respondents Anova Table for Influence of Department on the Satisfaction of Work of the Respondents Influence of Gender of the Respondents on Work Environment Influence of Gender of the Respondents on Work Environment Influence of Education of the Respondents on Work Environment Influence of Education of the Respondents on Work Environment Anova Table for Influence of Education of the Respondents on Work Environment Work

80 81 81 82 82 83 83 84 84 85 85 86 86 87 87 88 88 89

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38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

5.33 5.34 5.35 5.36 5.37 5.38 5.39 5.40 5.41 5.42 5.44 5.45 5.46 5.47 5.48 5.49 5.50 5.51

Influence of Age of the Respondents on Work Environment Anova Table for Influence of Age of the Respondents on Work Environment Influence of Experience of the Respondents on Work Environment Influence of Prior Training of the Respondents on Work Environment Anova Table for Influence of Prior Training of the Respondents on Work Environment One Sample Test for Equitable Remuneration Computation Based on the Tested Value of the Factor with Equitable Remuneration Influence of Department of the Respondents on Equitable Remuneration Anova Table for Influence of Department of the Respondents on Equitable Remuneration Influence of Gender of the Respondents on Equitable Remuneration Influence of Gender of the Respondents on Equitable Remuneration Influence of Education of the Respondents on Equitable Remuneration Anova Table for Influence of Education of the Respondents on Equitable Remuneration Influence of Age of the Respondents on Equitable Remuneration Influence of Experience of the Respondents on Equitable Remuneration Anova Table for Influence of Age of the Respondents on Equitable Remuneration Influence of Prior Training of the Respondents on Equitable Remuneration Anova Table for Influence of Prior Training of the Respondents on Equitable Remuneration

89 90 90 91 91 92 92 93 93 94 94 95 95 96 96 97 98 98

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56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74

5.52 5.53 5.54 5.55 5.56 5.57 5.58 5.59 5.60 5.61 5.62 5.63 5.64 5.65 5.66 5.67 5.68 5.69 5.70

Computation Based on the Tested Value of the Factor with Need for Change One Sample Test for Need for Change Influence of Department of the Respondents on Need for Change Anova Table for Influence of Department of the Respondents on Need for Change Influence of Gender of the Respondents on Need for Change Influence of Gender of the Respondents on Need for Change Influence of Education of the Respondents on Need for Change Anova Table for Influence of Education of the Respondents on Need for Change Influence of Age of the Respondents on Need for Change Anova Table for Influence of Age of the Respondents on Need for Change Influence of Experience of the Respondents on Need for Change Anova Table for Influence of Experience of the Respondents on Need for Change Influence of Prior Training of the Respondents on Need for Change Anova Table for Influence of Prior Training of the Respondents on Need for Change Computation Based on the Tested Value of the Factor with Willingness To Learn One Sample Test for Willingness to Learn Influence of Prior Training of the Respondents on Equitable Remuneration Anova Table for Influence of Prior Training of the Respondents on Equitable Remuneration Computation Based on the Tested Value of the Factor with Need for Change

99 99 100 100 101 102 102 102 103 104 104 105 105 106 106 107 107 108 108

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75 76

5.71 5.72

Influence of Educational Qualification of Respondents on Willingness to Learn Anova Table for Influence of Educational Qualification of the Respondents on Willingness to Learn Influence of Experience of the Respondents on Willingness to Learn Anova Table for Influence of Experience of the Respondents on Willingness to Learn Influence of Prior Training of the Respondents on Willingness to Learn Anova Table for Influence of Prior Training of the Respondents on Willingness to Learn Computation Based on the Tested Value of the Factor with Flexibility One Sample T Test for Flexibility Influence of Department of the Respondents on Flexibility Anova Table for Influence of Department of the Respondents on Flexibility Influence of Gender of the Respondents on Flexibility Influence of Gender of the Respondents on Flexibility Influence of Educational Qualification of the Respondents on Flexibility Anova Table for Influence of Educational Qualification of the Respondents on Flexibility 5.85 Influence of Age of the Respondents on Flexibility Anova Table for Influence of Age of the Respondents on Flexibility Influence of Experience of the Respondents on Flexibility Anova Table for Influence of Experience of the Respondents on Flexibility Influence of Prior Training of the Respondents on Flexibility

109 109

77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93

5.73 5.74 5.75 5.76 5.77 5.78 5.79 5.80 5.81 5.82 5.83 5.84 5.85 5.86 5.87 5.88 5.89

110 110 110 111 111 112 112 112 113 113 114 114 114 115 115 116 116

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94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112

5.90 5.91 5.92 5.93 5.94 5.95 5.96 5.97 5.98 5.99 5.100 5.101 5.102 5.103 5.104 5.105 5.106 5.107 5.108

Influence of Prior Training of the Respondents on Flexibility Anova Table for Influence of Prior Training of the Respondents on Flexibility Factors Determining Resistance to Change One Sample Test for Factors Determining Resistance to Change Influence of Department of the Respondents on Resistance to Change Anova Table for Influence of Department of the Respondents on Resistance to Change Influence of Gender of the Respondents on Resistance to Change Influence of Gender of the Respondents on Resistance to Change Influence of Educational Qualification Respondents on Resistance to Change of the

117 117 118 118 118 119 119 120 120 121 121 122 122 123 123 124 124 125 125

Anova Table for Influence of Educational Qualification of the Respondents on Resistance to Change Influence of Age of the Respondents on Resistance to Change Anova Table for Influence of Age of the Respondents on Resistance to Change Factors Determining Resistance to Change Influence of Experience of the Respondents on Resistance to Change Influence of Experience of the Respondents on Resistance to Change Influence of Prior Training of the Respondents on Resistance to Change Anova Table for Influence of Prior Training of the Respondents on Resistance to Change Computation Based on the Tested Value of Fear of Job Security Influence of Department of the Respondents on Fear of

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Job Security 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 5.109 5.110 5.111 5.112 5.113 5.114 5.115 5.116 5.117 5.118 5.119 5.120 5.121 5.122 5.123 5.124 5.125 5.126 Anova Table for Influence of Department of the Respondents on Fear of Job Security Influence of Gender of the Respondents on Fear of Job Security Influence of Gender of the Respondents on Fear of Job Security Influence of Educational Qualification of the Respondents on Fear of Job Security Influence of Age of the Respondents on Fear of Job Security Anova Table for Influence of Age of the Respondents on Fear of Job Security Anova Table for Influence of Education of the Respondents on Fear of Job Security Influence of Experience of the Respondents on Fear of Job Security Anova Table for Influence of Experience of the Respondents on Fear of Job Security Influence of Prior Training of the Respondents on Fear of Job Security Anova Table for Influence of Prior Training of the Respondents on Fear of Job Security Influence of Experience of the Respondents on Resistance to Change Computation Based on the Tested Value of Fear of Technological Change One Sample Test for Fear of Technological Change Anova Table for Influence of Department of the Respondents on Fear of Technological Change Influence of Gender of the Respondents on Fear of Technological Change Influence of Department of the Respondents on Fear of Technological Change Anova Table for Influence of Educationof the Respondents on Fear of Technological Change 126 126 127 127 128 128 129 129 130 130 131 131 132 132 133 133 134 134

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131 132 133 134 135 136 137 138

5.127 5.128 5.129 5.130 5.131 5.132 5.133 5.134

Influence of Ageof the Respondents on Fear of Technological Change Influence of Educational Qualificationof the Respondents on Fear of Technological Change Influence of Gender of the Respondents on Fear of Technological Change Anova Table for Influence of Ageof the Respondents on Fear of Technological Change Influence of Prior Training of the Respondents on Fear of Technological Change Computation Based on the Tested Value of Fear of Technological Change Fear of Technological Change Anova Table for Influence of Department of the Respondents on Fear of Technological Change

135 135 136 136 137 137 138 138

LIST OF FIGURESSl.No 1 2 3 4 5 Fig. No 3.1 3.2 4.1 4.2 4.3 Particulars Organizational Structure of HOCL Department Structure of Personnel & Administration Lewins Force Field Analysis Burke-Litwin First Order Change Burke-Litwin Second order Change Page No 6 10 11 48 50

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CHAPTER I INTRODUCTION1.1 Introduction

Modern enterprises operate on a global and competitive market, in an everchanging environment which is often unpredictable. They lose their effectiveness and competitivenessif they follow the traditional way of management. These enterprises are expected to apply new solutions to the whole management system. The methods of management (Lean Management, Outsourcing, Spin Off, and Agile Management, Just in Time) are to make the organizationsmore flexible, so as to quickly and painlessly adapt to the new market requirements and expectations. Thus new trends in changes management appear. Only yesterday change was perceived as a risk. At the moment change is regarded as an opportunity. Only yesterday a good idea for company operation could only be given by a specialist. Now, a good idea may come from various sources. Eventually, change itself is subject to changes. Few organizations may perceive change as an example of disruption of otherwise peaceful world. Too many thingsare changing too fast for the managers of any organization to afford to be calm. The changes are becoming increasingly dynamic. Change, in general, indicates any act of making something different. The factors that necessitate change in organizations are broadly categorized into people, technology, information processing and communication, and competition. Some changes in the organization occur suddenly without the conscious efforts of the people. These are called unplanned changes. On the other hand, some changes are initiated by the management to accomplish certain goals and objectives. These are called planned changes. More often, change is met with resistance. The resistance can be implicit (or covert) or explicit (or overt). Resistance to change can be classified into individual resistance and organizational resistance. Individuals resist change because they consider it as a threat to their habits, security and economic conditions.

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Organizational resistance occurs mainly because of structural inertia, group inertia, and fear of losing power, expertise or control over resources. To overcome resistance to change, management can educate employees, involve employees in change decisions, and go for negotiation, manipulation, co-option and coercion. Modern organizations emphasize on innovation and learning to cope with changes in the business environment and stay ahead of competition. The different sources of innovation include change in awareness due to acquisition of new knowledge, changing perceptions of people, demographic changes, rapid changes in industry and market structure, imperfect processes, incongruity between reality and expectation and unexpected happenings. Organizations need to be committed to change and innovation and change their structure and culture so as to facilitate continuous learning of employees. A change is also an intentional introduction or design (by man) of cybernetic systems which are based onreplacing the current state of affairs by other states of affairs, evaluated in a positive in the terms of established criteria, and together creating progress. But in some cases change is expressed somewhat differently; to change is to take different actions than previously. To take different actions than previously means to make different choices. Different choices produce change. The same choices produce sameness, reinforcementof the status quo.Change activities are involved in: defining and instilling new values, attitudes, norms, and behaviors within an organization that support new ways of doing work and overcome resistance to change, building consensus among customers and stakeholders on specific

changes designed to better meet their needs, and planning, testing, and implementing all aspects of the transition from one organizational structure or business process to another. 1.2 Statement of the Problem Change is a persistent element of organizational life; so too is resistance to change. Change, in organizations as elsewhere, involves moving from a known state to a new state one that is to some degree unknown. It involves letting go of things as they are in order to take up new ways of doing things. Organizational change challenges the status quo and it may challenge the values and perceived rights of 14

workers and workgroups. Understanding why and how opposition to change occurs, and developing the ability to respond effectively to manifestations of change resistance, is crucial to the success or failure of organizational change. The current study is conducted in a government organization and the general perception is that the employees of such organizations are not reluctant to changes. 1.3 Objectives of the Study 1. To know the perception of employees regarding change in HOCL. 2. To study the nature of resistance to change among employees. 3. To identify specific reasons behind the resistance to change. 4. To suggest if necessary the strategies to overcome the resistance to change. 5. To review the literature on resistance to change.

1.4 Scope of the Study 1. The study helped HOCL to understand the perception of employees about change. 2. This study helps the company to avoid unnecessary industrial relations by preparing the employees for a change. 3. The study on perception for change was carried out by studying the employees in the 6th& 7th scales in HOCL, Ambalamugal unit. 4. Knowledge about various factors which influences employeesresistance can helpHOCL to develop a better working environment. 1.5 Research Methodology 1.5.1 Research design Research design provides the glue that holds the research project together. A design is used to structure the research, to show how all of the major parts of the research project work together to try to address the central research questions. The design chosen for the study is descriptive research design.Descriptive research deals with everything that can be counted and studied.

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1.5.2 Research Approach Research Approach refers to the approach or the methodology that is adopted to conduct the research. The research approach that was used in this study was survey researchto collect information.Survey research is one of the most important areas of measurement in applied social research. The broad area of survey research encompasses any measurement procedures that involve asking questions of respondents in the formof a short paper-and-pencil feedback. There are 98 employees in HOCL in 6th& 7th scales and as it was difficult because of short span of time, a sample survey research was done. 1.5.3a Research Instrument A structured closed ended questionnaire was used to collect the data. The questionnaire used had two parts, a set of 25 questions using a five point likert scale to measure the respondents opinions and the other part had the classification questions such as age, gender, department, educational qualification,etc. The questions were asked to know about the satisfaction level with their present working environment, to measure the need for change and their willingness to learn new things and also to know how they will perceive changes brought in HOCL. By these questions we can find out their resistance to change among employees. 1.5.3b Tools for Analysis 1. T-Test: A t-test is any statistical hypothesis test in which the test statistic follows a Student's t distribution, if the null hypothesis is supported. It is most commonly applied when the test statistic would follow a normal distribution if the value of a scaling term in the test statistic were known. When the scaling term is unknown and is replaced by an estimate based on the data, the test statistic follows a Student's t distribution. 2.Factor Analysis: It is used mostly for data reduction purposes a. To get a small set of variables (preferably uncorrelated) from a large set of variables (most of which are correlated to each other) 16

b. To create indexes with variables that measure similar things (conceptually) 3. Annova: In statistics, analysis of variance (ANOVA) is a collection of statistical models, and their associated procedures, in which the observed variance in a particular variable is partitioned into components attributable to different sources of variation. In its simplest form ANOVA provides a statistical test of whether or not the means of several groups are all equal, and therefore generalizes t-test to more than two groups. ANOVAs are helpful because they possess an advantage over a twosample t-test. Doing multiple two-sample t-tests would result in an increased chance of committing a type I error. For this reason, ANOVAs are useful in comparing two, three or more means. 1.5.4Data Sources Both Primary data and Secondary data were used for the study. a. Primary Data : Primary data are collected by the researcher mainly with the help of two methods. The key point here is that the data collected is unique to the researcher and the research, until it is published; no one else has access to it. Methods used for collecting primary data for the present study were: 1. Survey and 2. Personal interview b. Secondary Data: Secondary data is the data that have been already collected and readily available from other sources. Such data are cheaper and more quickly obtainable than the primary data and also may be available when primary data cannot be obtained at all. The sources of secondary data were the journals of HR department, annual report of the company, company website, journals, magazines and other published records of the company.

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1.6 Sampling Plan The sampling plan consists of the sampling unit and the sampling procedure which is given below: 1.6.1 Sampling Unit The population of this study was the sixth and seventh scale employees in HOCL. So the sampling unit is either a sixth or seventh scale employee working in the company. 1.6.2 Sample Size The Sampling size was restricted to only 40 employees as it was not possible to meet all people within the short span of time and it was difficult to meet people working in shifts. And to perform a statistical analysis the minimum sample taken should be 30 thus, the sample size was taken as 40. 1.6.3 SamplingMethod Sampling method is of two types: Non Probability Method and Probability Method.Under probability method, systematic random sampling is used in the study selecting the samples to be surveyed. 1.6.4 Sampling Procedure From the list of the selected samples, every second employee was selected starting from the first name with a skip interval of 2 approx.which was calculated by dividing the sample 40 by the total population of 98. 1.6.5 Contact Method The researcher used direct personal contact for collecting the primary data. The respondents in this study were approached directly by the researcher and their responses were collected using the pretested questionnaire. 1.6.6 Research Period The study was conducted from 7/3/2011 to 7/5/2011.

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1.7 Limitations of the Study a) The employees may be busy and so may not be able to give sufficient time for interview and for filling the questionnaire. b) Being an outsider may also limit what is revealed to me. The employees may be guarded in their conversations. c) The study was to be conducted in a limited span of time (8 weeks) which also posed a limiting factor. d) Respondent error Whether the respondent has responded in full faith is revealing his issue. e) Some individuals tend to use extremes when responding to questions, while there are others who tend to respond more neutrally, which can be another issue, when it comes to the rating questions. f) I was able to cover only the 6th and 7th scale employees working in morning shift in HOCL. 1.8 Chapter Scheme This report is presented in six chapters.1. The first chapter introduces the study by highlighting the need for the study, the study objectives, methodology and scheme of reporting. 2. The second chapter on industry profile discuss about the International scenario, then about the national and state scenario. 3. Third chapter describes profile of Hindustan organic chemicals limited. 4. The fourth chapter describes the Literature Review. 5. The Fifth Chapter is about the Data Analysis and Interpretation. 6. The last chapter is on Findings, Suggestions and Conclusion.

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CHAPTER II INDUSTRY PROFILE2.1 History of Chemical Industry The chemical industry is regarded as a key industry in the industrial structure. It has a direct bearing on the economic development of the country. The most important features which characterize the chemical industries from other industries are that the former tear down and rebuild basic substances, where the latter change the size, shape, patterns and the features of raw materials without disturbing the molecular arrangements of substances. For example, chemical industry of the world change the petroleum in to rubber, coal and air in to artificial silk, coal tar in to dye stuffs, medicines or food flavoring. The advanced countries of the world chemical industry occupy the foremost position among the national industries. The first step in the development of chemical industry was taken in the year 1749when sulphuric acid was made in England, then in Germany, other European countries and USA.The present is an era of chemical discovery. Research chemist and chemical engineers have played a dominant role in building up chemical industries. Chemical research has become an essential component of modern industry. Chemical industry yields a large number of products such as industrial or heavy chemicals .Soil fertilizers, explosives, dye stuffs, plastics, drugs, medicines, fine laboratory Chemicals, soaps, essential oils, perfumes, biological rayon-nylon cosmetics, synthetic rubber and other chemical substances used in the manufacturing process. The raw materials used in the chemical industries are varied from industry to industry. Some of the substances are derived from organic matter. For instance the cellulose, hydrocarbons, carbohydrates, nitrates etc. are obtained from air, bromine, iodine, sodium salt and potassium from the earth. Based on the usage in the industrial production chemicals are grouped in to two: 1. Heavy chemicals 2. Fine chemicals

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1. Heavy Chemicals A firms heavy chemicals are applied to substances such as common acids, alkalies, fertilizers. They are mainly used for processing raw materials of other industries such as textiles, soaps, paper, glass, leather, kerosenes, lubrication oils etc. The heavy chemicals are produced in enormous quantity and at low cost and are consumed in manufacturing and agricultural operations. 2. Fine Chemicals It comprisesphotographic materials, drugs and other pharmaceutical products, paints, varnishes, pigment, dye stuffs etc. They are manufactured in relatively small quantities. Their production requires great skill and is in each operation. 2.2 International Scenario The chemical industry has shown phenomenal growth for more than fifty years. It was in the manufacture of synthetic organic polymers used as plastics, fibers and elastomers where most of the growth originated. Synthetic polymers form 80% of the chemical industrys output worldwide. Historically and presently the chemical industry is still concentrated in three areas of the world, Western Europe, North America and Japan (the Triad). The European Community remains the largest producer area followed by the USA and Japan. The traditional dominance of chemical production by the Triad countries is being challenged by changes in feedstock availability and price, labour cost, utility cost, differential rates of economic growth and environmental pressures. Instrumental in the changing structure of the global chemical industry has been the growing participation of developing countries and regions such as the Middle East, South East Asia, Nigeria, Trinidad, Thailand, Brazil, Venezuela, and Indonesia. Chemical and Engineering News lists and monitors the performance of the global top 50 chemical companies since 1989. In their recent publication they reported that although sales for the top 50 companies were up, the average operating profit margins were down slightly from the previous years, strengthening the feeling that the industry is on the down side of its traditional cycle. The distribution of the sales of the top 50 companies is depicted in the chart below, it indicates that the total 21

sales of the distinguished companies was US$ 397 billion. The report further reinforces the dominance of the European based companies with their sales accounting for 54% of the total amongst the leaders. The chemical industry is the most globalized of all manufacturing industries and the globalization is still in progress. The driving factors for the trend are the need for improvement of profitability by reducing production costs and proximity to markets. Companies choose location for a specific operation based on the levels of trade between countries and high competition for markets. The recent increasing cost of feedstock (largely crude oil) and other factors increasing production costs has led to consolidation and merger of multinational companies. The increasing feedstock costs have led the industry to explore alternative sources like gas. Even with this move oil will remain the most favored feed stock because of large reserves, which guarantee sustainable supply for the future. 2.3 NationalScenario Chemical industry occupies an important place in the countrys economy. It nearly contributes about 7% of GDP and 17.6% of the manufacturing sector. However, India continued to be a net importer in from 2005 with imports of In the post WTO era, Indian

US$7.92 billion and exports at US$5.95 billion.

chemical industry is undergoing a massive expansion, brand building and increased global reach. The industry is expected to grow at a CAGR of over 10% for the next 3 years, in line with the growth of manufacturing industry. The wide and diverse spectrum of chemical products can be broken down into a number of categories inorganic and organic (commodity) chemicals, drugs and pharmaceuticals, plastics and petrochemicals, dyes and pigments, fine and specialty chemicals, pesticides and agrochemicals and fertilizers. India was late entrant in the field of chemicals. In the ace of most of the products, there was a lag of 20-25 years, between the introduction of the products in the international market and that of India. The chemical industries of 50s in India were entirely on ethanol. It manufactured low density polythene at Rishra in west Bengal using ethylene products from ethanol. Synthetic and chemical ltd produced styrene butadin rubber using ethanol at Barely in UP. Poly chem. Ltd. Manufactured

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poly styrene from ethylene based on ethanol at Vishakhapatnam in AP. Chemical and plastic ltd manufactured poly vinyl chloride at Mettudam in Tamil Nadu, which was also based on ethanol. A committee was formed in 1956-66 and 1970-71. The committee recommended that steps to be taken for setting up for steam cracking unit should be established close to Refineries in Mumbai. The second near Barauni refinery, the third near a refinery proposed to set upin south India Against all these development and having built a strong conviction in this field.Govt finally took a decision to manufacture basic building blocks and intermediaries like ethylene , propylene, butadiene , benzene, xylene and ethyl terephthalate in the public sector, with a view to further processing building blocks to produce industrial products. The manufacture of consumer products then convert industrial products .Accordingly govt.

concentrated in developing two mother plants for manufacturing of building blocks .The inauguration of these downstream plants marked the successful culmination of the co-operation between Indian designs, engineering and the construction companies. Indian and foreign equipment and the construction companies. , Indian and foreign equipment manufactures various govt. and private research organizations the international process licensers. This also meant beginning of an era for the chemicals, thermoplastic elastomers, synthetic fibers, and organic intermediary for drugs, insecticides, pharmaceuticals and dyestuffs. Now the chemical industry in India is well established, the country has recorded a rapid growth in manufacture of chemical drugs during the last few years. Prominent among them are caustic soda, soda ash, carbon blocks, phenol, acetic acid, methanol and dyes. The production and availability of chemicals are largely sufficient and imports have been curtailed. However some of the inputs for the industry are in short supply. In the production of certain chemicals, existing capacity is not sufficient to meet the demand, for example; titanium di oxide, citric acid etc. The Indian chemical industry is the fastest growing industry of economy and represents 12% of manufacturing output and accounts for 10% of total exports. The sales turnover of chemical industry in India exceeds Rs750 billion and wide spectrum of products viz. pharmaceutical dyes, manmade fibers, plastics, fertilizers, cosmetics, paints and auxiliary chemicals. 23

India has achieved the credit in global chemical industry. India had account of for one by twelfth of world production of pharmaceuticals. In pesticides, India is the second largest producer next only to Japan. Till 1980-89, the country was not able to export chemicals in large quantity. However the Indian chemical industry has shown as impressive performance in the field of exports. There has a substantial increase in export of chemicals during last few years. 2.3.1 Liberalization The government has taken numerous steps to help the industry. Investment in the chemical sector has been encouraged through the liberalization policy. Except for a small list of hazardous chemicals. All chemicals and pharmaceuticals can be manufactured without any licensing control. The exports and imports of chemicals and petrochemicals have been made smooth through simplified products. Private participation is now permitted in virtually in all industries. Tax structure has been simplified and rates have been reduced. The liberalization policy have been created a continental environment for investors. 2.4 State Scenario Kerala's chemical industry improved its performance in the October-March period last fiscal by increasing production and sales by 20-25 per cent and 15-20 per cent respectively.Caustic Soda is one of the basic inorganic chemicals manufactured from common salt. There are four processes used in the manufacturing of caustic soda, chlorine and Hydrochloric acid which are the bye products obtained through these processes. In the state, only TCC is engaged in the production of caustic soda, chlorine and hydrochloric acid. TCC has an installed capacity to produce 175 TPD caustic soda and it is used in manufacturing of soaps, textiles, plastics etc. There are many small scale industries in the state which consumes caustic soda for the production of soaps, plastics, textiles. Though the average demand, at an average rate of 4% the capacity has been increased by nearly 7% in view of the high transportation cost and hazardous nature of chemicals transported. Also because of the high transportation cost, it is not possible to export caustic soda in large volume from the state. The chlorine industrial units are working properly. Chlorine is a basic material

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required for water purification and without chlorine; the government waterworks will not be able to supply drinking water to the public. 2.5 Current Scenario Indian chemical industry that contribute about 7% of Indias GDP and play a significant role in earning valuable foreign exchange for the country. The Government had reduced customs duty of raw materials used in the chemical industry. The current state of R&D in chemical and process industry is not very encouraging. The reason for this is many. Increase in global competition faced by chemical industry and reducing tariff barriers have had their impact on the industry. Indian industry, especially in fine chemicals, pharmaceuticals, petrol chemical sector is going through a period of readjustment and consolidation. From these we can understand that, during these period, focus has been on survival rather than on growth .Several players in the fine chemical industries in India havepositioned themselves as efficient and economic out sourcing options for chemicals and intermediaries for global companies.The petroleum files stock prices in Indian are significantly higher as compared to major exporting countries moreover the capacity in the Indian industry is small compared to these competitors abroad ., which had resulted in high overhead cost for our country. 2.6 Future Prospectus In order to dumping and to reform the sector to enable it to meet the global competition , government will have to find the alternatives .The bottom line of chemical industry can be protected only through excellence in production and marketing effort . The industry should reorient its promotional activities and extensive work to meet the requirement of competitive approach in discipline and sharing of melt information for health competition and to stop unscrupulous imports. The industry hope that as a period of consolidation come to close , the India chemical industry will better approach and understand its inherent strength irreligion global company and define its strategy for future growth and new capital investment , this will fuel the future R&Din this era . 25

CHAPTER III COMPANY PROFILE3.1 History and Growth of the Company HOCL, a govt. of India enterprise incorporated in December 12th 1960 under the Companies Act, 1956, with registered office at Rasayani, Raigad district in Maharashtra. It was set up with a view to serve as an indigenous source of supply of organic intermediaries required for different industries by using indigenously available raw materials like benzene, toluene, naphtha, hydrogen and caustic soda.HOCL produce organic chemicals which serve as raw materials for many vital industries. HOC is in commercial operation for about 25 years over these years the company gives care to maintain high level of production and profitability. HOCs products which are important substitutes provide support for the growth of downstream industries like dyes, rubber, chemicals, pesticides, and pharmaceuticals. The registered office of HOC is situated at Rasayani in Maharashtra. It has a second unit at Kochi and subsidiary unit at Hyderabad. Rasayani unit started its operation in 1970 to produce a wide range of products like Nitro benzene, Nitro toluene, Aniline formaldehyde, Sulphuric acid etc. The Kochi unit of HOC established in 1987for the production of phenol and acetone. HOC started its subsidiary unit HFL (Hindustan Fluro carbon Limited) in Hyderabad in the year 1983. 3.1.1 HOCL, Kochi Unit Kochi unit of HOC at Ambalamugal, 14 Km away from Kochi, commissioned in the year 1987for the manufacture of 40000 TPA phenol and 24640 TPA acetone. The raw material required for the production unit are LPG and benzene received from Cochin Refinery. New project for production of Hydrogen peroxide commissioned in the year 1997 with the industrial capacity of 5225 TPA (100%) i.e 10450 TPA at 50% concentration.Kochi unit is certified for ISO 9001: 2000 , Quality management from 1996, and ISO 14001, Environment management system in November 1999. since its inception, unit has begged excellent record in safety, production, pollution control.

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3.2 Mission To play a dominant role in the domestic market and to be competitive. 3.3 Objectives 1. To maintain growth in turn over & to optimize return on investment 2. To maintain health of plant & equipments to realize all its objectives 3. To ensure upgradation of technology and innovations of value added products through R&D efforts 4. To maintain international quality standards & optimum level of efficiency 5. To practice customer friendly culture 6. To Continue Development of Human resource efforts 7. To adhere to safety, Health and environmental policy standards 8. Implementation of growth strategy. 3.4 Company Policies Its the policy of HOCL, Cochin unit marketing and selling phenol, acetone and hydrogen peroxide to operate the quality management system that will fully meet the requirement of ISO9001; 2000. The objective is to enhance the customer satisfaction by providing consistent quality products and to achieve continual improvement through business reviews and customer focus. 3.4a HRD Policy a. To attract and retain competent personnel by providing a productive environmental opportunity for growth and comparable to industry practices. b. To build nurture work culture that focus on work entries and commitment to productivity, cost of conscious and commercial orientation, team work and dedication and to take pride in the company. c. To provide welfare facilities and amenities that will ensure highest standard of quality of life both at work place and outside. d. To enclose high performance through performance management system and recognition of contribution.

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3.4b Environmental Policy a. HOCL follows the philosophy of maintaining harmonious relationship with environment by adopting suitable technology in different areas of operations. b. HOCL committing them to minimizing waste and prevent pollution . promoting safety at work place for all employees and promote good housekeeping. And comply with relevant statutory and legal requirements. 3.4c Health and Safety Policy a. Safe healthy and accident free environment by adhering safety rules and regulations. b. All possible preventive steps, precautions and protective measure against any anticipated hazardous. c. All safety measures in operating and maintenance technology and all process technology changes.

3.5 Major Customers of HOCL 3.5a Phenol: Major Customers a. Larsen service and Trading co. Ltd. Mumbai. b. Aravind Industries, Calcutta. c. Alta Laboratories, Calcutta. 3.5b Acetone: Major Customers a. Solvents and chemicals, Cochin. b. Pioneer chemical industry, Mumbai. c. Dr Reddys Laboratories, Hyderabad 3.5c Hydrogen peroxide: Major Customers a. Hindustan News Print Ltd. Kottayam. b. Tamilnadu Newsprint Ltd. Tamilnadu c. Gem Enterprise, Madras.

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3.6 Product Profile The product from HOCL, go in to products, that are part of everyday life. Following are some exclusive finished products and the waste products of HOCL. 3.6a Finished Products 1. Phenol It is also known as carbolic acid. It is corrosive, toxic and inflammable in nature. It causes severe damage to skin and eyes and also cause very rapid, severe, and poisoning. It is colourless solid with perceptible odour. It has a wide range of application in the manufacture of pharmaceuticals, dyes,PF resins, moulding resin, lamination and rubber chemicals. 3. Acetone It is a colourless liquid with perceptible odour, which is completely mixable with water. It is highly inflammable substances and can form explosive mixture with air in unclean receptacle. It is an important raw materials in the explosive and lacquer industry. It is also used in the manufacturing of surface coating, MMA, MIBA, diactone alcohol and pesticides. 3. HydrogenPeroxide It is a colorless liquid with sharp odour. It is very powerful oxidizing, corrosive material and non-toxic in nature. It is used as a bleaching agent mainly in textile for cotton fibers, natural fibers like wool, silk, and jute. It is also used in the paper and pulp industry. It can also be used for bleaching wood, wood pulp,chemical pulp, writing papers, cotton linkers. It is also used as raw material for manufacturing of synthetic detergents, pharmaceuticals, food processing, cosmetics. 3.6b By Products In the process of manufacture of cumene, phenol and acetone, some waste products are also obtained at different stages of manufacture.

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1. HeavyEnd of Cumene Alkylation of benzene with propylene is the basic reaction taking place in the production process of cumene. Apart from and addition to main reaction some secondary reaction also possibly taken in to yield. These being heavy in nature, settle down bottom of cumene column, such waste products are known as heavy end of cymene. It may be used as a fuel for furnace since it has a very high caloric value. 2. DragBenzene The unreacted benzene in the alkalization process is recycled successively. Even after this some benzene may remain unreacted due to non-aromatic impurities present. Such benzene is not desirable in the cumene process is removed from the system is called drag benzene. 4. CumoxOil The bottom portion of acetone column consists of impurities. It is sent to tar cracking section for removal of tary wastes. This is called cumox oil. It is partially soluble in water. 3.6cApplications of the Products 1. Phenol: Pharmaceuticals, dye, PF resins, moulding resins, laminations, pesticides, bisphenol-A 2. Acetone: Surface coating, MMA, MIBK, diacetone alcohol, explosives, pesticides. 3. HydrogenPeroxide: Pulp and paper bleaching, textile, chemical industry, environmental protection, electronic industry, production of detergents, cosmetics. 3.7 Market Share HOC having the market share of more than 60%. The prominent users the products of HOC are the plastic industries, pharmaceuticals, paint industries, plywood industries, paper and leather industries.The outstanding overall performance of the company reflects the dedication, enthusiasm of people at all levels of HOC.

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3.8Management &Organization A board of directors, managers of HOC are headed by a chairman and MD, who is also looking after the day to day affairs of the company. He will be assisted by a well experienced professionals in different areas. It is very proud to see that the company has sufficient qualified and experienced executives at all levels for the efficient and effective running of the business. 3.9 Achievements and Accomplishments HOC's products have always conformed to international standards. Its quality assurance system in its Kochi and Rasayani Units has been recognized with ISO 9001-2000 certificate by Bureau Veritas Quality International (BVQI).Our Kochi Unit has also received ISO 14001-1996 certification in Environmental Management System.HOC has received a multitude of accolades and awards. They include: Table No: 3.1 Achievements and Accomplishments Year 1979 Description First Prize for HOC's Annual Report (1978-79) in the 21st National Award for Excellence in Printing and Designing by DAVP, Ministry of Information and Broadcasting, Government of India. 1980-81 "Award in the Public Services Advertisement Category for HOC's Advertisement captioned Eye Appeal for its Community Vision Project, by DAVP. 1991-92 First Prize in the Chemical sector for Energy Conservation for the year 199192 by Government of India, Ministry of Energy, Department of Power. 2000 National Energy Conservation Award, 2000 First Prize in Chemical Sector by Government of India, Ministry of Power, New Delhi 2001 National Energy Conservation Award, 2001 Second Prize in Chemical Sector by Government of India, Ministry of Power, New DelhiSource : http://www.hocl.gov.in

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3.10 Future Plans 1. HOCL has signed the Gas transmission Agreement with M/s GAIL with the availability of Natural Gas from GAIL, the Company would change the feed stock of Hydrogen from Naphthato Natural Gas and also for boiler operation in place of furnace oil natural gas would be used. 2. Further, with the availability of natural gas, company also plans to put up Captive Power Plant based on Natural Gas to economize on the operation.

3.11 Financial Performance The financial performance of the Company for the year ended March 31, 2011 is summarized below: Table No: 3.2 Performance Indicators2005-06 2006-07 2007-08 2008-09 2009-010 2010-11

Production (MTs) Equity Reserves & Surplus Net Worth Capital Employed Value of Production Sales (Net) Exports Operating Profit Profit before Tax

313460 67.27 81.02 -80.39 253.86 765.65 646.82 26.08 84.7 10.25

216224 67.27 80.64 -133.94 217.89 452.35 386.05 1.25 -0.41 -56.68

2071110 337.27 80.16 148.16 326.11 583.8 505.96 0.31 70.6 17.71

242013 337.27 79.74 172.25 275.39 555.48 571.43 0.17 60.67 15.67

245192 337.27 77.24 189.37 292.35 527.69 546.53

221249 337.27 64.78 63.56 253 476.51 478.63 0.12

23.16 -25.74

-34.56 -84.32

Source : Annual Report of HOCL, 2011

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Table No: 3.3 Balance Sheet as on 31.03.2011Particulars Sources Of Funds: 1.Shareholders Funds: A)Capital B)Reserves &Surplus 2.Loan Funds: A)Secured Loans B)Unsecured Loans 2048.21 0 158.88 0 669.05 0 48.92 0 211.55 0 1165.71 0 1554.44 0 3342 3342 3342 43042.8 3342 50417.68 3342 57912.61 3342 59913.2 3342 61387.63 2004-05 2005-06 2006-07 2007-08 2008-09 2009-010 2010-11

34407.68 42551.68

Total Application Of Funds: 1.Fixed Assets(Net) 2.Investments 3.Current Assets Loans & Advances A)Inventories B)Sundry Debtors C)Cash And Bank D)Accrued Income E)Loans &Advances Less: Current Liabilities And Provision Net Current Assets 4.Misc. Exp. Not Written Off5.Head Office Account TOTAL

39797.89 46052.56

47053.85

53808.6

61466.16

64420.91

66284.07

11905.46 10803.15

9871.24

9309.36

8522.19

7698.2

7195.27

3981.99 4063.52 88.6 260.83 1057.32

5554.01 4713.43 180.48 265.46 739.68

6248.51 2915.47 66.94 272.41 1717.47

4963.02 4855.9 948.09 269.95 1834.72

4223.53 5853.39 981.17 266.74 1669.44

5460.73 3515.46 329.8 271.09 2773.54

5864.9 4492.07 96.66 252.78 1696.42

9452.26 11453.06 4489.91 4732.69

11220.8 5428.06 31389.87 47053.85

12871.68 5919.95 37547.51 53808.6

12994.27 5306.24 45255.94 61466.16

12350.62 4178.35 48280.44 64420.91

12402.83 5078.11 51764.08 66284.07

22930.08 28529.04 39797.89 46052.56

Source : Annual Report of HOCL,2011

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Fig No: 3.1 Organizational Structure of HOCL

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3.12Departments of HOCL 1. Personnel & Administration HR is considered as one of the greatest and hidden asset of the company. Company has recognized the optimal use of these resources by training development program. 2. Production Department Production department keeps close watch on the production process and also look in to the problem that arises in the mechanical, electrical and instrumentation department. This department starts production in accordance with the work order. 3. Marketing Department The main functions of this department are a. Create customer satisfaction. b. Retain considerable market share. c. Stay ahead of competition d. Promotional activities are not being carried out because the products are industrial products 4. Materials Department This department divided in to two sections a. Purchase and store section b. Finished product section. Main raw materials are benzene, LPG and cumene. LPG is brought out through the direct pipe lines from KRL. 5. Quality Control Department This department observes the sharpness of production at various levels. A group of technical experts work under this department efficiently. Quality control system has put up two labs for phenol and acetone and one for hydrogen peroxide. and

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6. Electrical Department This department mainly deals with acceptance, generation and distribution of power for the plant. They generate power for the phenol plant completely with the LSHS ( Low Sulpher High stock) and rest of the power got from KSEB. 7. Mechanical Department Activities of this department include a. Running maintenance b. Preventive maintenance c. Break down maintenance d. Shut down maintenance 8. Fire and Safety Department HOCL has taken all important steps to produce the safety measures to its employees and to reduce the number of accidents. HOC has assumed the possession of various safety work permits. 9. Technical Service / Environmental Safety Department Environment safety department commitment to safe and clean operations in line. Company already received the ISO certification for Quality management for all products in Rasayani and Kochi unit. And the company has also obtained the ISO 14001 certification in Kochi and Rasayani unit, for maintaining high environment standards. 10. Instrumentation Department Main function of this department is measuring, controlling and maintenance. Parameters that are used to measure are pressure, temperature, flow levels and analysis. This department controls the quality of the products. 11. Project Department The main function is to look after the technical services of the organization, plant and all other activities connected with the environment. They also do the paper works concerned with the projects and fuel consumption.

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12. Civil Engineering Department This department mainly deals with the maintenance activity with repair works. They even look after the damages that own with passage of time complaints etc. 13. Management Service and System Department Two functions of this department are a. Industrial engineering b. Computers Company has an integrated software system and network followed in HOC is LAN. They do most of paper work. 14. FinanceDepartment Proper planning and control of firms financial resources is very necessary for the success of the business. Financial Management implies the procurement and effective utilization of funds. Finance department is divided in to sections like a. Purchase / store section b. Sales section c. Miscellaneous payments d. Establishment section e. PF section. f. Financial accounts, costing and budgeting Most of the sales in HOCL are done on credit basis. Credit period allowed for phenol and acetone are 45 days and 30 days. 15% interests are charged per month for delay in payments and 15 % discount provided for advance payments. HOCL renders its payment in cheque. An advance payment is done for purchase of LPG from BPCL. KR. Rest of the raw materials purchased on credit basis, with credit period varying for each materials. 3.13 Details of Personnel and Administration Department The Personnel and Administration Department deals with management of people within HOCL. There are a number of responsibilities that come with this title. First of all, the Department is responsible for hiring members of staff; this will 37

involve attracting employees, keeping them in their positions and ensuring that they perform to expectation. Besides, this department also clarifies and sets day to day goals for the company. It is responsible for organization of people in the entire Company and plans for future ventures and objectives involving people in HOCL

Chief P&A Manager

Manager P&A (1)

Manager P&A (2)

Dy. Manager P&A Dy. Manager Training Assistant Manager Coordination Asst. Officer Doc. & Library Medical Officer Assistant Officer Nursing

Senior Professional officer Asst. Hindi Officer Asst. Officer Commun ication

Assistant Administrative Officer

Fig No: 3.2 Department Structure of Personnel& Administration Chief Manager (P & A) followed by 2managers (P&A), I & II, heads Personnel and Administrative department each with different functional

responsibilities. Dy. Manager, Training & Personnel assistant Managers. There is an assistant manager Communication supporting the functions of the manager II. 4 assistant officers support day to day activities as well as overall functioning of the department. Each department has functions like Documentation, Official language implementation & Administrative work. 38

3.14 Functions & Job Allocation 1. Manager P&A (I) : a. Supervision of P&A department in the absence of CPAD. b. Industrial Relations. c. HR initiatives & interventions. d. Time office & other related functions. e. Enforcement of discipline. f. Grievance redressal. g. Insurance. h. Redesigning & implementation of Human Relation information System. i. Any other matter that may be assigned from time to time. 2. Manager P&A (I): a. Recruitment / Promotion. b. Establishment matters. c. Legal matters. d. Performance management. e. Statutory Compliance. f. Front office management. g. Any other matter that may be assigned from time to time. 3. Deputy Manager (Training): a. Training & Development including Apprentices Training / In-plant Training. b. ISO implementation. c. Any other work that may be assigned from time to time. 4. Deputy Manager (P&A): a. Township administration including guest house. b. Public Relation & Liaison with Govt. officials & social welfare etc. c. Security Management. d. Official language implementation. e. Any other work that may be assigned from time to time. 39

5. Assistant Manager (Co-ordination): a. Managing the office of CPAD. b. Co-ordination of works among officer of P&A. c. Handling of confidential correspondence. d. Local Transport arrangement. e. Travel & accommodation arrangements. f. Any other work that may be assigned from time to time. 6. Senior Personnel Officer: a. Estate Management including housekeeping & engagement of contract labor. b. Employee welfare. c. Any other work that may be assigned from time to time. 7. Assistant Officer (Documentation & Library) : a. Maintenance of library & documentation system. b. Record management. c. Any other work that may be assigned from time to time. 8. Assistant Administrative Officer : a. Attached to Manager P&A will carry out the following works under the guidance of Manager(P&A) & Dy. Manager(Training). b. Insurance matter. c. Compliance of provisions of Apprentices Act & rules there under. d. Engagement of apprentices & their training. e. Any other work that may be assigned from time to time. 9. Public Relation Assistant Officer (Communication) : a. Attached to Manager (P&A) and will carry out the work of front office management under the guidance of Manager (P&A). 10. Medical Officer : a. Management of medical centre & related statutory compliance.

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11. Official Language Officer: a. Attached to Deputy Manager (P&A) and will carry out the work of official language implementation under the guidance of Deputy Manager (P&A). b. The official language in HOCL is Hindi. 3.15 Classification of Workers a. Permanent b. Temporary c. Probation d. Apprentices/ Trainees e. Substitutes 3.16 Conduct of Employees Every worker shall contribute his whole time & energy exclusively to the business and interest of the company. In particular a worker shall not directly or indirectly engage in any other trade, profession or business. Every worker shall hold himself readiness to perform any reasonable duties required for him by his supervisors, to the best of his ability. All workers should respect each other, their supervision & try to maintain a good relationship with the management. 3.17 Attendance All employees who are working within factory premises record their attendance by biometric punching process. Here employees are recognized by their finger print identity. The employees are supposed to punch 2 times in a day. It records the time spend by the employees in the plant & thus forms the basis for determination of the salary. 3.18 Leave In HOCL there are 3 kinds of leaves available: a. Casual Leave : 30 available in a year b. Earned Leave: 20 available in a year (first 10 issue in Jan. rest 10 issue in July). c. Half Pay Leave: 20 available in a year (first 10 issue in Jan. rest 10 issue in July). 41

d. Maternity Leave: 3 months maternity leave can be given to the ladies employees. 3.19 Recruitment Vacancies are advertised in major newspapers& companys website or notified to the employment exchange in accordance with the Govt. rules. Appointments are purely based on merit. 3.20 Selection Process The process consists of written test & interviews. Weight age in a scientific basis is given for educational qualifications, experience, aptitude, personality, communication skills and physical fitness. The final selection depends on :a. Candidate successfully clearing medical examination by a company approved physician or the companys medical officer. b. Candidate submitting documentary proof of the educational qualification. c. Candidate satisfying & executing the certified No Relation declaration. d. The initial appointment for permanent post is in a probation period of 6 months. 3.21 Training a. Education, Training & personal developments are all the parts of management development leading to an atmosphere of learning. HOCL believes that training is one of the most important instruments of HRD. b. The training & development activities are carried out in the organization in order to improve the skill for performing the job &self-development of employees, which will meet the anticipated needs of the organization in terms of productivity, environmental & organizational change & growth. c. Based on the organizational needs identified, employees are covered under various training program schedule for an extended span of 2 years. This schedule is audited & approved as per the ISO 9001 & ISO 14001 stipulations. d. HOCL have management expertise & resources to impart training in Management & in Technical areas.

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e. The organization extends its facilitate & resources to the student of Management Institutes, Engineering & Professional Colleges & the other Institutions to undertake in plant training as part of the curriculum. It also guides the studentsto carry out the project work in both Management & Technical areas.HOCL provides training to fresher to undergo Apprenticeship training. The company engages training to: Graduate Apprentice Trade Apprentice Vocational Technician Apprentice

3.22 Training Interventions Based on skill inventory & training needs identified by HOD/ Section Supervisors, various training inputs are planned & implemented to achieve the training objective. Various schemes related to training in operation are :3.22a Employee Development Program a. Mazdoors, Messengers (Unskilled categories). b. Operational & Maintenance staffs like operator/ Technician/ Master Technician. c. Supervisory Development Program for supervisory staffs(Both from field & office). d. Development programs for office staff. 3.22b Executive Development Program a. Up to the level of Assistant Managers. b. Dy. Managers. c. Chief Managers & above. The training activities for this level are shown below :a. In-house training through internal/ external faculty. b. Outside specialized training courses. c. Employees are sponsored to various renowned training institutes/ organization in the country. 43

3.22c Management Development Program a. For senior level executives through IIMs & premier institutes in India. 3.23 Performance Appraisal Separate appraisal is made to officers & non officers. For both officers & non officers their immediate supervisor will appraise them. Generally performance appraisal is done annually & based on that they will give promotions & other incentives to the employees. The reporting officer must be generally at least one grade higher than the officer being assessed & they should have firsthand knowledge of him & his work. Performance appraisal should not be made based on previous years records. Generally HOCL makes performance appraisal on 15 performance qualities or traits & different weights are given to each quality. Marks shall be given depending upon degree of fulfillment of requirement of each trait. The qualities or traits on which performance appraisal is made are as follows:I. Knowledge a. Skill b. Decision making capacity c. Grasping & judgment ability II. Performance a. Practical ability b. Response to work assigned c. Hard working d. Fitness for job e. Cost conscious III. Personal Ability a. Initiative b. Behavior with superior & colleagues c. Honesty & reliability d. Devotion to duty

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IV.

Conduct & Discipline a. Punctuality & time conscious b. Availability at work place c. Attendance & leaves

V.

Overall Assessment a. 85 to above b. 70 to 85 c. 54 to 69 d. 45 to 54 e. Less than 45 Outstanding Very good Good Satisfactory Poor

3.24 Welfare and Administration 1. Medical Centre :HOCL Kochi unit has a medical centre in the factory premises, which operates round the clock. 2. Medical Benefit Plan : a. Outdoor treatment: - Rs.6000/- to each employee every year & to their family members. b. Indoor treatment:- In & around Tripunithura/ Ernakulam medical bills will be reimbursed. c. Company trainees are covered under ESI scheme. 3. Group Personnel Accident Scheme: This scheme comes under workmens compensatory act. The group insurance is taken from UNITED INDIA INSURANCE CO. For getting the benefit the concerned worker must report to HOD & Dy. GM(P&A). The delayed communication may result in disqualification of benefits. 4. Deposit Linked Insurance Scheme: It is applicable to all members who come under PF scheme. The premium is paid by the company. 5. Family Planning : The company gives special increment to the employees as per rules in addition to special leave. 6. Employee Education : Fort the education of the employees the company grants incentive/ leave.

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7. Schooling for Employees Children : Rs. 7500/- should be paid for donation of the school to the employee. And it is limited to max. 2 children. 8. Merit Scholarship: It is applicable only for permanent employees. It is available for +2, professional &nonprofessional courses described in the scheme. 9. Company Housing : Company provides houses for the employees. Company has its own township. 10. Canteen : Canteen facility is provided for all the employees @ Rs. 372 per month. Tiffin careers are provided for the workers in the plant. 11. Co-operate Credit Society: Society is managed by the Board of Directors, elected by the employees. Members can avail loan up to Rs.35000/- @15% interest. 12. Recreational Facility: Company provides library & communication hall for the employees. 13. HOCL also Provides : 1) Uniform, safety shoes, & helmet. 2) Long service awards. 3) Holiday home. 4) Bachelors hostel. 5) Employees suggestion scheme. 6) Advance. 3.25 Industrial Relations HOCL endorses good industrial relations. The manager uses all possible ways to maintain good industrial relations with in the organization. There is a grievance cell in the organization for handling the employees grievances. There are 3 trade unions in it. a. HOCL Workers Union(CITU) b. HOCL Staff & Workers Union(INTUC) c. HOCL Employees Union(BMS) Suggestion scheme is in existence in HOCL. All employees are eligible to participate in this scheme. Selected suggestions are implemented & best suggestion is awarded.

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3.26 Company Discipline Company follows strict discipline. If any non-disciplinary action occurs, department HOD reports to the HR department. Discipline is ensured strictly ordering to standing orders. 3.26a HRP Policy a. To attract & retain competent personnel by providing a productive environment, opportunity for growth & compensation comparable to industry practices. b. To build & nurture work culture that focus on work entries & committed to productivity cost consciousness & commercial orientation team work & dedication & to take pride in the company. c. To ensure high performance through Performance Management System & recognition of contribution. d. To provide opportunities for competence development on a continuous basis by various HRD interventions such as job rotation, in house & external training program. 3.26b Social Responsibility The company has the consciousness regarding social responsibility. To fulfill them this, company is providing basic civic amenities to its neighbor villages, rendering assistance to the neighborhood in different from viz. financial assistance, providing building material, furniture computers, laboratory equipments to the neighboring schools, construction of nearby roads& toilet blocks, drinking water supply, medicines to village people etc. To encourage deserving students the company is giving scholarships.

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CHAPTER IV REVIEW OF LITERATURETheoretical Framework 4.1 Change - An Ongoing Process According to an oft-quoted proverb, the only constant is change. This is certainly the case when it comes to organizations and workplaces, with change coming from advances in technology, products, and processes. Effectively managing change is one of the key drivers of team and organizational success. Change is the law of nature. It is necessary way of life in most organizations for their survival and growth. Man has to mould himself continuously to meet new demand and face new situations. Change is process of moving from the current state to the desired state (vision) of future. Making a change involves, moving the organizations people and culture in line with the strategies, structure, processes and systems to achieve desired state. Companies no longer have a choice, they must change to survive. Unfortunately, people tend to resist change. It is not easy to change an organization, let alone an individual. This puts increased pressure on management to learn the restraints of change.

4.2 The Notion of the Change in the Organization R.W. Griffin defines it as each significant modification of a part of the organization. In this definition, a change may refer to almost every aspect of the organization(Griffin, R.W. 2004).According to Z. Pietrasiski, a change is intentional introduction or design (by man) of cybernetic systems which are based onreplacing the current state of affairs by other states of affairs, evaluated in a positive in the terms of established criteria, and together creating progress (Pietrusiski, Z. 1971).R. Martin expresses change somewhat differently; to change is to take different actions than previously. To take different actions than previously means to make different choices. Different choices produce change. The same choices produce sameness, a reinforcement of the status quo (Martin, R. Beer, M. & Nitin N. 2000).

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Change activities are involved in: a. defining and instilling new values, attitudes, norms, and behaviors within an organization that support new ways of doing work and overcome resistance to change, b. building consensus among customers and stakeholders on specific changes designed to better meet their needs, and c. planning, testing, and implementing all aspects of the transition from one organizational structure or business process to another. The notion of the change as a transitionof the whole company or its part from a certain initial state to another which is explicitlydifferent. This transition is brought about either by internal stimuli or by some external factors. A change is introduced to the company on purpose and it is assessed positivelyin the light of the criteria defined by the project originator of the change.Organizations need to change and transform in order to survive and become morecompetitive. Two basic objectives in the company could be distinguished. These are increasing adaptiveness and competitiveness of the organization with reference to the environment, and a change in the behavior patterns and the system of values of the organization members. 4.3 Types of Changes One of the important classifying factors of the change is the situation of the organization which causes a change. Changes introduced to the organization could be divided into : a) Creative Changes they are introduced to the organization when the company looks for new development paths, setting itself certain goals which the company tries toachieve. Priority goals connected with creative changes are the following: winning new markets, entering new areas of activity, or innovations in production technique and technology used in the organization. b) Anticipation Changes they are supported by previous detailed research. They refer to anticipating changes events in the environment. These changes also aim at searching for new development paths. As opposed to creative changes, however, they depend on present or anticipated events. If the predictions come true, the company has an opportunity to outstrip its competition and take position of the leader in a given industry or its branch. 49

c) Adaptive (Adjustment) Changes they are a reaction to current events. The speed and efficiency of introducing adaptive changes to the organization is crucial in achieving success by the organization. Quick and efficient adjustment changes enable the organization to maintain its current position on the market. It is the basic measure for preventing the degradation of the financial situation of the company and potential threats to its functioning. d) Improvement Changes they are introduced to the organization when the company is in a very difficult situation. This situation is caused by not adapting the company to ongoing changes and not introducing improvements in a sufficient way. In such cases an improvement change is an alternative to liquidation or bankruptcy of the company. The manner in which changes are introduced is a very important classifying factor. According to this factor, changes may be divided into: a) Evolutionary Changes also called gradual changes. They are implemented slowly, gently and gradually in the company. Gradual changes are always present in the functioning of the organization. They result from constant adjusting of different elements of the organization to one another and present reacting to small events taking place around. They are a constant element in the functioning of the organization, as individual elements of the organization are never perfectly fitted to one another. Gradual changes are aimed at correcting small deviations from the norm. b) Revolutionary Changes also called step changes, they occur as a result of sudden and radical changes taking place around. Usually they refer to the whole company undergoing deep transformations. Its character is

revolutionary, therefore, to a certain extent, it breaks with the past. Usually these are complex, multidimensional, undertakings which require a division into subprograms. The applied qualifier is also the nature of the change, depending on which, the following could be distinguished: a) Planned Changes: as changes which have been prepared and implemented in an organized way and according to a certain schedule, anticipating future events. It is an anticipated or creative change.

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b) Adjustment Changes: can be defined as a reaction to circumstances at the moment they occur. It is a gradual rather than a total change. As a result of one-dimensional stance on the typology of changes introduced to the organization it is possible to divide them into particular groups on the basis of the intensity of a chosen feature. The result of that organization is a classification presented in the below table.

Table No: 4.1 One-Dimensional Classification of Changes Introduced to the Organization Classification Author Dowycki, 2003 criteria Situation of organization Creative Changes Type of change Anticipation changes Adaptive (adjustment) change Sapijaszka, 1996 Manner ofchange implementation Griffin, 2004 Nature of changeSource:http://www.ebrc.fi/kuvat/812-824_05.pdf

Improvement changes

Evolutionary changes

Revolutionary change

Planned change

Adjustment changes

4.4 Models of Change Managers are criticized for emphasizing short-term, quick-fix solutions to organizational problems. When applied to organizational change, this approach is doomed from the start. Quick-fix solutions do not really solve underlying problems and they have little staying power. Researchers and managers alike have thus tried to identify effective ways to manage the change process.

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4.4.1 Lewin's Change Model Most theories of organizational change originated from the landmark work of social psychologist Kurt Lewin. Lewin developed a three-stage model of planned change which explained how to initiate, manage, and stabilize the change process. The three stages are unfreezing, changing, and refreezing. Before reviewing each stage, it is important to highlight the assumptions that underlie this model. 1. The change process involves learning something new, as well as discontinuing current attitudes, behaviors, or organizational practices. 2. Change will not occur unless there is motivation to change. This is often the most difficult part of the change process. 3. People are the hub of all organizational changes. Any change, whether in terms of structure, group process, reward systems, or job design, requires individuals to change. 4. Resistance to change is found even when the goals of change are highly desirable. 5. Effective change requires reinforcing new behaviors, attitudes, and organizational practices.

4.4.2 The Three Stage Model According to Lewins three step model, successful change in

organizations should follow three steps: 1. Unfreezing The focus of this stage is to create the motivation to change. In so doing, individuals are encouraged to replace old behaviors and attitudes with those desired by management. Managers can begin the unfreezing process by disconfirming the usefulness or appropriateness of employees' present behaviors or attitudes.

2. Changing Because change involves learning, this stage entails providing employees with new information, new behavioral models, or new ways of looking at things. The purpose is to help employees learn new concepts or points of view. Role

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models, mentors, experts, benchmarking the company against world-class organizations, and training are useful mechanisms to facilitate change 3. Refreezing Change is stabilized during refreezing by helping employees integrate the changed behavior or attitude into their normal way of doing things. This is accomplished by first giving employees the chance to exhibit the new behaviors or attitudes. Once exhibited, positive reinforcement is used to reinforce t he desired. Additional coaching and modeling also are used at this point to reinfor ce the stability of the change. 4.4.3 Lewins Force Field Analysis Any change occurring at any point of time is a resultant in a field of opposing forces. That is, the status quo- whatever is happening right now- is the result of forces pushing in opposite directions Production level of a manufacturing plant as a resultant equilibrium pointin a field of forces, with some forces pushing toward higher levels of production and some forces pushing toward lower levels of production. Steps in Force Field Analysis 1. Define problem (current state) and target situation (target state). 2. List forces working for and against the desired changes. 3. Rate the strength of each force. 4. Draw diagram (length of line denotes strength of the force). 5. Indicate how important each force is. 6. How to strengthen each important supporting force. 7. How to weaken each important resisting force. 8. Identify resources needed. 9. Make action plan: timings, milestones, responsibilities.

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Source:http://www.valuebasedmanagement.net/methods_lewin_force_field_analysis.html

Fig No:4.1Lewins Force Field Analysis

4.4.4 Burke-Litwin & Organizational Change Model Developed by Warner Burke & George Litwin. This model shows how to create first-order and second-order change also called as Transactional Change and Transformational Change. 4.4.4a First Order Change Some features of the organization change, but the fundamental nature of the organization remains the same. OD interventions directed towards structure, management practices and policies and procedures result in first-order change.

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Source : http://nptel.iitm.ac.in Fig No: 4.2 Burke-Litwin First Order Change 4.4.4b Second Order Change The nature of the organization is fundamentally and substantially altered. The organization is transformed OD programmes emphasis on second-order

transformational change. Interventions directed towards mission and strategy, leadership and organization culture result in second-order change.

Source:http://nptel.iitm.ac.in Fig No:4.3Burke-Litwin Second order Change

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4.4.5 Kotters Eight Stages Model Step1: Create a Sense of Urgency For the change to happen, it needs the whole organization behind it believing in it:1.

Identify potential threats and develop potential scenarios showing what could happen in the future.

2. 3.

Examine the opportunities that should be exploited. Start discussions, giving people convincing reasons to start thinking and talking and thinking about the change.

4.

Rally support from your customers and outside investors to reinforce your argument.

Step 2: Form aChange Coalition To help convince people that change needs to happen, find and fuel effective leaders in your organization:1. 2. 3.

Identify true leaders in your organization Ask for emotional commitment from these people Check your team for weaknesses and make sure you have a good mix of people from different areas and levels

Step 3: Create a Vision for Change We need a clear vision so people can understand the purpose of what youre asking them to do:1. 2.

Determine the values that are central to the change Develop a short summary that captures what you see as the future of the organization

3. 4.

Create a strategy to execute the vision Practice your vision speech often

Step 4: Communicate the Vision What you do with your vision will determine whether you are successful or not and youll find many other run of the day company communications competing against yours:1. 2.

At every opportunity, talk about your change vision Address peoples concerns and there will be concerns

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3. 4.

Tie your vision to operations- training, reviews, hiring process Lead by example

Step 5: Remove Obstacles You need to remove obstacles to empower people to execute your vision:1. 2. 3. 4.

Identify change leaders Recognize and reward people for making change happen Identify those resisting change and help them see the need Remove barriers human and other

Step 6: Create Short-Term Wins Success motivates give your team a taste for success:1.

Pick a simple project you can implement with help from the die hard critics

2. 3.

Choose inexpensive projects where you can justify the spend Reward the people the help you meet the goals

Step 7: Build on the Change Real change runs deep keep looking for improvements:1. 2.

After every win, analyze what went right and what went wrong Set goals to continue building on what youve achieved

Step 8: Anchor the Changes in Corporate Culture Reinforce the value of successful change via recruitment, promotion, new change leaders. Weave change into culture.

4.5Alternative Strategies of Change Change has been a matter of great interest to the Sociologists and Behavioural Scientists. A number of theories and models have been postulated. Olmosk has presented a comprehensive view of a number of Change strategies and called them Seven pure strategies of change. Each of these strategies have been briefly summarized and explained. 4.5.1 The Fellowship Strategy The assumption underlying this strategy seems to be, If we have good, warm inter-personal relations, all other problems will be minor. Emphasis is placed on getting to know one another and on developing friendships. Groups that use this model often sponsor discussions, dinners, card parties, and other 57

social events that bring people together. The fellowship strategy places strong emphasis on treating everyone equally; this often is interpreted as treating everyone the same way. All people must be accepted; no one is turned away. When the group is making decisions, all members are allowed to speak, and all opinions are weighed equally. No fact, feeling, opinion, or theory is considered inherently superior to any other. Arguments are few, because conflict generally is suppressed and avoided. 4.5.2 The Political Strategy Political Strategists tend to believe that If all the really influential people agree that something should be done, it will be done. They emphasize a power structure that usually includes not only formally recognized leaders but informal, unofficial leaders as well. Much of the work done under the political strategy is the result of the leaders informal relationships. The political strategy emphasizes the identification and influence of people who seem most able to make and implement decisions.It usually focuses on those who are respected and have the largest constituency in a given area.Ones level of influence is based on ones perceived power and ability to work with other influential people to reach goals that are valued by ones constituency. 4.5.3 The Economic Strategy Economic strategists believe that Money can buy anything or any chan