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A

PROJECT REPORT

ON

Workers Participation in Management

Submitted in partial fulfillment for the requirement of the award of degree

in Master of Business Administration

SUBMITTED TO: SUBMITTED BY:

MBA Dept. Aalia Begum

(HOD) Roll No. 1115270001

MBA Final Sem

MANGALMAY INSTITUTE OF MANAGEMENT & TECHNOLOGY

8&9, KNOWLEDGE PARK-ll,GREATER NOIDA


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ACKNOWLEDGEMENT

A project is never the sole product of a person whose name has appeared

on the cover. Even the best effort may not prove successful without

proper guidance. For a good project one needs proper time, energy,

efforts, patience, and knowledge. But without any guidance it remains

unsuccessful. I have done this project with the best of my ability and hope

that it will serve its purpose.

It was really a great learning experience and I am really thankful to PROF.

SUNIL V. D ESH PANDE , who not only helped me in the successful

completion of this report but also spread his precious and valuable time in

expanding my knowledge base.

After the completion of this Project I feel myself as a well

aware person about the Research Procedure and the complexities that can

arose during the process. Also I get an insight of the advertising industry

and its effectiveness in promoting sales. Finally, I am also grateful to all

those personalities who have helped me directly or indirectly in bringing

up this project report.

Aalia


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PREFACE

A comprehensive practical study of management is a supplement to the

theoretical classroom knowledge. It helps to understand more precisely.

This report tries to outline idea of professional world and helps in

understanding the pragmatic aspects of WORKERS PARTICIPATION IN

MANAGEMENT. Own observations are significant towards the

contribution in learning. The report is therefore designed as a reference of

organization functioning rather than copy down instrument.

The purpose of PROJECT is to make management student familiar with

day to day functioning of business. The current report is an effort in this

direction.

My humble endeavor and motive in presenting the project is to impart a

balanced introduction and knowledge of workers participation in

Management.

It is hoped that this project will serve as a supportive document to

research workers as efforts has been tried to make this report an

informative, stimulating and self explanatory.


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TABLE OF CONTENTS

CHAPTER PLAN

Chapter-1 Introduction of Study ( Add objectives ,

scope and justification of study)

Chapter-2 Company Profile

Chapter-3 Research Methodology

Chapter-4 Analysis & Interpretation

Chapter-5 Conclusions

Chapter-6 Recommendations (After recco. Add

limitations of study)

Chapter-7 Bibliography (Bibliography after Annexures)

Chapter-8 Annexures

Chapter-9 Questionnaire (Questionnaire included in

Annexures)


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WORKERS PARTICIPATION IN MANAGEMENT

INTRODUCTION

Workers participation in management (WPM) has come to say in both

developed and developing countries. The concept is an extension of the

political system to the work place. In a democracy, participation of the

people in the political process is an essential ingredient of the system.

Similarly, WPM is an extension of the political process to workplace

relations.

Participation in the political context is an influencing process, so also at

the plant level, it affects employee terms is an influencing process, so also

at the plant level, it affects employees terms and conditions of

employment. Yet at the same time, the process of participation also helps

in understanding the dynamics of an enterprises viability, rather then

precipitating a We-They culture. Such a process helps in the growth of

the individual and creates a sense of belonging.

In broad sense, employee participation means associating

representatives of workers at every stage of decision making , as is

done in former East Germany and Yugoslavia. Participative

management is considered as a process by which the workers shares in

decision making extents beyond the decisions that are implicit in the

specific contents of the jobs they do. This, in actual practice amounts to


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the workers having a share in the reaching of final managerial decision in

an enterprise.

The structure, content and form of WPM depend on the political ideology

and systems adopted by a particular society.

The idea of WPM as an alternative to the capitalist pattern of management

has emerged in response to:-

1. The threats from the emerging centers of countervailing power,particularly the organized labour.

2. The demands of continuous production during the world warswhen managers tried strategies to insure uninterrupted

industrial activity.

Other factors, which led to the need for WPM, are the growth of public

enterprises, experiment of industrial psychologists, development of

scientific management, which encouraged closer cooperation between the

employers and employees in order to increase the efficiency of the

undertaking, and the role of ILO which clearly observes in its Philadelphia

Declaration the importance of measures which would lead to a close

collaboration of workers and employees.

India in its commitment to establish a socialist pattern of society through

mixed economy adopted the present system of workers participation in

management, which has been an important part of his labor policy since it

attained independence. The second five-year plan laid the emphasis on a

constructive relationship between employer end employee. According to

this plan, socialist society is built on ideas of service to the society and its

willingness to recognize such service. It is necessary in this regard that

workers be made to feel that they are helping to build a progressive state

.WPM in India can also be traced to one other factor namely the Gandhian


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approach to management of industrial relations which is based on the

concept of trusteeship. Gandhiji considered that both worker and the

owner are dependent on one another and the employer and the employee

should further act as trustees for the society. Thus, Gandhijis concept of

trusteeship is based on the theme of collaboration between the employer

and the employee rather than a conflict.

DEFINITIONS: -

Different authorities define and interpret workers participation inmanagement in different ways for example; employees interpret it as the

joint consultation prior to decision-making while experts often regard it

as the association of labour without the final authority or responsibility in

decision making process.

According to Mehtras, the concept of participation as a principle ofdemocratic administration in an industry implies to share by rank

and file in the decision-making process of an industrial organization

through their representatives at al the appropriate levels of

management in the entire range ofmanagerial action.

The International Institute of labour Studies remarks theparticipation results from practices which increase the scope for

employees share of influence in decision-making at different tiers

of the organizational hierarchy.

According to V.P. Michael, WPM is the involvement of workers onlyin such areas of activities of enterprises where they can some

positive contribution.


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In other words, workers participation is a system ofcommunication and consultation, either formal or informal, by

which employees of an organization are kept informed about the

affairs of the undertaking and through which they express their

opinion and contribute to management decisions,

In the words of Davis, it is a mental and emotional involvement of aperson in a group situation which encourages him to contribute to

goals and share responsibilities with them.

FEATURES OF WORKERS PARTICIPATION CAN BE

IDENTIFIED AS: -

1. Participation means mental end emotional involvement rather than amere physical presence.

2.

Workers participate in management not as individuals, but collectivelyas a group through their representative.

3. Workers participation in management may be formal or informal.4. Workers participation should be distinguished from collectivebargaining. The former is based on mutual trust, information sharing and

mutual problem solving. On the other hand, collective bargaining is

essentially based on power play pressure tactics and negotiations.

5. There can be four levels of participation Shop floor, plant andcorporate level

SHOP FLOOR LEVEL: -

At the shop floor council normally deals with


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-Production and storage facilities in the shop.

-Material economy

-Operational problems, wastage control, hazards.

-Safety problems.

-Quality improvements.

-Monthly targets and production schedules.

-Cost reduction programs formulation and implementation of work

systems.

-Design group working.

-Welfare measures related to the shop.

PLANT LEVEL: -

The plant council normally deals with

1. OPERATIONAL AREAS

-Determination of productivity schemes taking into consideration the

local conditions;

-Planning, implementation, and attainment and review of monthly targets

and schedules;

-Material supply and preventing its shortfall;

-Housekeeping activities;

Improvement in productivity in general and in critical areas in particular;

-Quality and technological improvements;

-Machine utilization, knowledge and development of new products;


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-Operational performance figures;

-Matters/problems not sorted out at the Shop floor level or those that

concern more than one shop; and

-Review of working of shop level bodies.

2. ECONOMIC AND FINANCIAL AREAS

-Profit and loss statements, balance sheet;

-Review of operating expenses, financial results, and cost sales;

-Enterprise performance in financial terms, labour and managerial cost,and markets condition, etc.

3. PERSONAL MATTERS

-Matters relating to absenteeism;

-Special problems of women workers; and

-Initiation and administration of workers programs.

4. WELFARE AREAS

-Implementation of welfare schemes, such as medical benefits, housing

and transport facilities;

-Safety measures;

-Township administration; and -Control of habits of gambling, drinking

and indebtedness among the workers.

5. ENVIRONMENTAL AREAS

-Environmental protection; and

-Extension activities and community development projects.


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BOARD/ CORPORATE LEVEL: -

At the board level, the workers representatives will participate in

function assigned to the board. They would also review the work of the

shop and plant level participating forums.

FACTORS THAT LED TO THE RISE OF WPM: -

The employers realization of the need for workers participation in

management was considerably influenced by the following factors:

a. The increased use of technology in industry has necessitated thegrowing co-operation of workers because of complex operations of

production.

b. The changed view that employees are no longer servants but are equalpartners with their employers in their efforts to attain the goal of the

enterprise.

c. The growth of trade unions which safeguard the interests of workersand protect them against possible exploitation by their employers.

d. Growing interest of the government in the development of industriesand welfare of the workers


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e. The need for increased and uninterrupted production which can beachieved only when there is a contented labor class.

EVOLUTION OF PARTICIPATIVE MANAGEMENT

Participative management is a constitutional commitment in India. Article

43-A of the constitution (42nd Amendment) provides: The state shall take

steps, by suitable legislation or in any other way, to secure the

participation of workers in the management of undertakings,

establishments or other organizations engaged in any industry. A

beginning towards workers participation was made with the passing of

the Industrial Disputes Act 1947, which made it mandatory for every large

industrial undertaking to constitute works committees comprising

representatives of employers and employees. In 1956, the Industrial

Policy Resolution was adopted by the government, which stated that there

should be some joint consultation to ensure industrial peace, and improve


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employer-emloyee relations. Subsequently, a study team, under the

chairmanship of Vishnu Sahay, Secretary in the Ministry of Labour,

Government of India, was sent to the U.K, Sweden, France, Belgium,

former West Germany and Yugoslavia to study the problems involved in

the scheme which was similar to the British system of joint management

councils and committees. The functions of these joint bodies were to be

consultative and were not binding on the management. The response to

the scheme was very encouraging, to start with .Soon, however, interest in

it waned.

A study team was appointed in 1962 to report on the working of joint

councils and committees. The team concluded that these bodies were a

failure. But no concrete steps were taken to remove the difficulties, or

change the pattern of participative management. The interest in

participation was revived during the Emergency of 1975-77.Workers

participation in the industry was a part of the 20-poit programme

initiated by the then Prime minister. The government started persuading

large enterprises to set up joint consultative committees and councils at

different levels. It was again emphasized in the new 20-point programme

adopted after the Congress Government came back to power in 1979. The

government notified, in 1983, a new and comprehensive programme. The

programme was applicable to all public sector undertakings. The

government introduced on May 30,1990, a bill-The participation of

workers in Management Bill-in the Rajya Sabha.

The bill requires every industrial enterprise to constitute one or more

Shop-Floor Councils at the shop floor level, and an Establishment

Council at the establishment level. These councils were to have an equal

number of representatives of employers and employees A shop- floor


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Council has such powers and functions as it deems necessary in relation

to:

1. Production

2. Storing.

3. Matarials economy.

4. Operational problems.

5. Wastage control.

6. Hazards of safety problems.

7. Quality improvement.

8. Cleanliness.

9. Monthly targets and production schedules.

10. Cost-reduction efforts.

11. Formulation and implementation of work-systems.

12. Design group working, and

13. Welfare measures particularly related to the shops.

Similarly, the establishment council has been conferred wide powers and

functions. These relate to operational areas, economic and financial areas,personnel matters, welfare, and environmental areas. The bill provides for

the constitution of a Board of Management of every corporate body

owning an industrial establishment. The bill also provides for penalties on

individuals who contravene any provision of the bill.


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CONCEPT: -

Participative management is based on two fundamental concepts. First,

every individual in every organization is capable of contributing to

improvements in the way work is done .It makes sense that the person

doing a particular task is the one most knowledgeable about it and

therefore most suited to enhance it. Moreover, individuals are motivated

to perform better and with greater satisfaction through having the

opportunity to influence the work situation. People also tend to be more

committed to the accomplishment of goals and changes that they have

helped to structure.

The second concept is that the output of a group working together can be

far greater than the sum of individuals separate efforts. This is known as

synergy. Not only are more effective decisions made when all those

affected are part of the decision making process, people also like to be

part of a successful, productive team.


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SCOPE

There are three groups of managerial decisions which have a directimpact on workers of any industrial establishment. They are social,

personnel and economic decisions. Economic decisions include financial

aspects-the methods of manufacturing, automation, shut-down, lay-offs,

mergers and similar other functions. Personnel decisions refer to

recruitment and selection, promotions, demotions, transfers, grievance

settlement, work distribution, and so on. Social decisions relate to hoursof work, welfare measures, questions affecting work rules and the conduct

of individual workers safety, health, sanitation and noise control. The

workers must have a say in the decisions on the issues mentioned above.

But there is a difference of opinion about the scope and the extent to

which workers can participate in social, personnel and economic

decisions. One school of thought is of the opinion that the workers or the

trade unions should, on parity basis, sit with the management as equal

partners and make joint managerial decisions on all matters. The other

school propounds the view that the workers should only be given an

opportunity, through their representatives, to influence managerial

decisions at various levels. The first view could lead to the workers actual

participation in the decision-making process of the management, while

the second aspect will work out to be consultation of workers in

managerial decisions.


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FACTORS ON WHICH EMPLOYEES PARTICIPATION DEPENDS

The intensity of employee participation depends on the following four

factors.

1. The subject-matter of participation: Workers interest inparticipation varies with the nature of issues involved in participation .If

they are trivial or foreclosed, and everyone realizes it, participation

methods will boomerang. Issues that concerned will not, on the whole,

engage their interest. Workers should have a stake in the results of

participation.

2. Level of participation: Participation can take place at threelevels in an enterprise: floor level, plant level and corporate level. In the

big enterprises there may be a fourth level also, that is, the departmental

level, in between the shop floor and the plant. Most workers desire

participation at the floor level because at this level they can directly

participate without representatives.

3. Personal characteristics: Participation also depends onindividual characteristics of workers. They cant be ordered to participate.

They must want participation and must have the necessary skills and

information to enable them to participate effectively.


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4. Extent of participation: This should be very clear to theworkers. If their advice only is required then they should be told so. If they

are asked for a decision then that decision must be accepted.


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PRINCIPALS FOR IMPLEMENTATION: -

1. Management commitment:It is the most overriding requirement for the success of the participative

approach. Many programmes begin at the workers level, and many such

programmes survive and prosper. But even the strongest of these must

eventually win over all the management ranks, including the most senior

executives, or they will ultimately fail. The management must have a

strong and visible presence in the participative process.

2. Management motivation:In order to achieve management commitment, it is frequently necessary to

begin with management motivation. Motivation continues through

measurement and tracking of the accomplishments of pilot efforts within

the organization. Measurement must also become the integral part of the

participative process in the face of the other strong pressures operating in

the business.

3. Organisational culture:Evaluating organizational culture is an important step in developing a

successful involvement process. Companies vary greatly in their

management styles, and not all of these are suited to the smooth

integration of employee involvement. The current economic health of the

organization, the success or failure of the other recent motivational

programmes, and similar intangibles must also be considered.

4. Tailoring of the process:Every company has its own character and its own level of rediness,

tailoring the process to the company is vital. Intermediate programmes


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are designed to move the corporate culture toward acceptance of

participative management, may be necessary.

5. Communication:Open communication must begin during the earliest planning stages of the

programme, to make clear the goals as well as the benefits anticipated for

both individuals and the organization as a whole. Slowly the

communication must be maintained and enhanced, to spread the words of

organization, and to keep interest and motivation high.

6. Teams:Teams should be made up of volunteers at the member level as a

minimum, and at all levels if possible. Team work requires the full and

willing participation of every individual involved.

7. Training:It is very essential. Employees are asked to identify, attack, and resolve

problems, as well as to understand and work within the frame work of a

team effort Training should be ongoing as well, to refresh employees on

the skills learned earlier, and to upgrade those skills as the teams efforts

become more sophisticated.

8. Employee recognition:Providing employee recognition for employees who participate in the

involvement process is highly recommended. Recognition need not to be

monitory. Posters and bulletin boards congratulating individuals and


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teams for their contributions, team hats, pins, or jackets, award dinners,

contests for the best management presentation, articles in company

newsletters may be adopted.

METHODS OF PARTICIPATION:

Financial

Participation

TQM

Empowered

Teams

Quality Circles

Suggestion

schemes

Opinion Survey

Open door

Performance

Management

Self-Assurance

Work

Simplification

Workers

Participation

In

Management

Ownership

Participation

Complete

control

Staff or works

councils

Joint councils

and committees

Collective

bargaining

Task forces

Quality of

Work Life

Board level

participation

JobEnlargement

And

Enrichment


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The forms, ways and level of workers participation in management may

vary widely between enterprises. The nature of participation depends on

a number of factors, such as the sociopolitical attitudes and situation, the

attitude of management and labour, labour-management relations, the

relative strengths of labour and management, the peculiarities of the

industry or enterprise.

1. Participation at the Board level: -Representations of workers on the Board ensure improved employer-

employee relations, and guarantee better productivity. The workers

representative on the Board can play a useful role in safeguarding the

interests of workers. He or she can serve as a control element and guide to

the management in its exercise of personnel and social functions. He or

she can prevail upon the top management not to take measures that are

unpopular with the employees. He or she can guide the Board members of

investment in employee benefit schemes like housing.

2. Participation through Ownership: -Workers may become more involved in industries by making them

shareholders of the company. This may be done by including them to buy

equity shares. The management may promote the scheme by allowing the

workers to make payments in installments. It may also advance loans or

even give financial assistance to such workers to enable them to buy

equity shares. Every year, the shares are revalued and prices are

announced. Employees are given an option to redeem their shares at

quoted prices.

3.

Participation through Complete Control: -


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Workers acquire complete control of the management through elected

boards. The system of self-management in Yugoslavia is based on this

concept. It (self-management) gives complete control to workers to

manage directly all aspects of industries through their representatives.

The system of complete control ensures the identification of the workers

with their organization. Industrial disputes disappear when workers

develop loyalty to the organization. Trade unions welcome this type of

participation.

4. Participation through Staff or Works councils: -Staff councils or works councils are bodies on which the representation is

entirely of the employees. There may be one council for the entire

24organization or a hierarchy of works councils, from the shop-floor to

the Board level. The members of the councils are elected by the employees

of the respective sections. The councils have different functions in the

management of an enterprise, ranging from eliciting information on the

managements intentions to a full share in decision making.

5. Participation through Joint Councils and Committees: -Joint councils are bodies comprising representatives of employers and

employees. The functions of these bodies may range from decision making

on some issues, to merely advising the management as consultative

bodies. Works committees have been constituted in industrial

establishments employing 100 or more workers, and these comprise

representatives of employers and employees. The constitution of a works

committees is a legal requirement under the provisions of the Industrial

Disputes Act, 1947.The committee discuss a wide range of topics

connected with the workers welfare.


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6. Participation through Collective Bargaining: -The principle of collective bargaining confers on the workers the right,

through collective agreements, to lay down certain rules for the

formulation and the contract of employment, as well as the conditions of

service in an establishment. Such agreements are normally binding on

parties and have the force of the law. Participation brings both the parties

together and develops appropriate mutual understanding, and brings

about a mature and responsible relationship.

7. Participation through Job Enlargement and Job

Enrichment:

Job enlargement means expanding the job contents-adding task elements

horizontally. Job enrichment means that additional motivators added to

the jobs so that it is more rewarding. The purpose of job enlargement and

job enrichment is to reveal the boredom of the worker which flows from

excessive specialization in mass production industries so that the job it

self may be a source of self satisfaction. Job enlargement and job

enrichment do provide for workers participation because they offer

freedom and scope to them to use their judgment. However, this form of

participation provides only limited freedom to a worker concerning the

method of performing his/her job. It will not give him or her any say in

some of the vital questions he or she may be interested in such a job and

income security, welfare schemes and other policy decisions of the

company which affect him/ her directly.

8. Participation through Suggestion Schemes: -


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Employees views on such matters as machine utilization, waste

management energy conservation and safety measures are invited, and

reward is given for the best suggestion. This procedure enables the

management to arouse and maintain the employees interest in the

problems of their concern and its management. The suggestion schemes

are increasingly used by progressive management.

9.Participation through Quality Circles: -

A quality circle (QC) consists of seven to ten people from the same area

who meet regularly to define, analyze, and solve quality and related

problems in their area. Membership is strictly voluntary, and meetings are

usually held once a week, for an hour. During the groups initial meetings,

members are trained in problem-solving techniques borrowed from group

dynamics, industrial engineering and quality control. These techniques

include brainstorming, Pareto analysis, Cause and effect analysis,

Histograms, Control charts, Stratification and Scatter diagrams.

10. Empowered Teams: -

Empowering refers to passing on authority and responsibility.

Empowerment occurs when power goes to employees who then

experience a sense of ownership and control over their jobs. Empowered

individuals know that their jobs belong to them. When they feel

responsible, they show more initiative in their work, get more done, and

enjoy the work more.


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9.Total Quality Management: -Total Quality management (TQM) refers to the deep commitment of an

organization to quality Quality of products and services is an obsession,

and every step in the companys processes is subjected to intense and

regular Scrutiny for ways to improve it. Employees are provided with

extensive training in problem solving, group decision making and

statistical methods.

TQM is classified as a participative method because every employee in the

organization is involved and is expected to take responsibility for

improving quality, everyday. It is a formal programme which involves

direct participation by all employees.

12. Financial Participation: -

The general purpose of financial participation is to enhance employee

commitment to the organization by linking the performance of the firm to

that of the employee. Thus, it is argued that the employee is more likely to

OrganisationalValues/

Leadership

Action

Human

Resource

Systems (e.g.

Rewards, Training)

Organizational

Structural

Job Design

Em owerment

Continuous

Improvement

Actions

CompetitiveQuality

Productivity

Customer

Service

OrganizationalValues/

Leadership

Action


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be positively motivated and involved if he or she has a financial stake in

the company by having a share of profits or by being a share holder. There

are many schemes of financial participation, but the more prominent of

them are the profit linked pay, profit sharing and employee stop option

scheme, workers cooperatives, management buyouts, pension fund

participation and wage earner funds.

13. Opinion Survey: -

Via a series of questions regarding the organization, the management, the

job, the strategy, and so forth, management solicits employees opinions,

identifies areas where improvement is needed, and takes actions. An

opinion survey often the first step taken by a management team that

recognizes the need for change.

14. Open Door/One-On-One: -

Management encourages employees to communicate ideas and concerns

by eliminating traditional barriers. Though some managers operate this

way by nature, many organizations specially prescribe these practices.

15. Performance Management: -

Employees develop asset of performance goals for themselves and

communicates them peers and superiors by publicly by displaying

progress charts. Each individual is thus encouraged to achieve goals

through peer support. In addition, knowledge of all others goals enables

people to assist their fellow employees as well as to accomplish their own

objectives.

16. Self-Assurance/Self-Control: -


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Employees are trained to be fully responsible for their own work output.

This requires knowledge of the desired results, knowledge of what the

present level of performance or conformance is, and the means to make

whatever adjustments are needed to achieve the desired outcome.

17. Work Simplification:

An organizational unit creates a flow chart of part or all of the process for

which it is responsible, be it production or service oriented. Each step is

examined in detail, and then the process is simplified by removing

redundant steps, combining others, streamlining, preventing recurring

errors, etc.

18. Task Forces: -

Management often creates temporary forces or teams of employees to

solve one time only problems. Although this provides those involved with

unusual opportunities, the temporary nature of the task force makes it

difficult to sustain motivation among the entire work force over long

period of time.

19. Quality of Work Life: -

QWL utilizes many of the same concepts and tools of employees

involvement as quality circles do. However, QWL is felt to be broader in

scope, integrating a larger set of organizational goals through

participative methods. It is closer to autonomous work groups, will solve

wide range of problems and usually dont need managements permission

to implement solutions.

PRE-REQUISITES FOR SUCCESSFUL PARTICIPATION


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To make any of the participative methods successful, the following

conditions have to be fulfilled:

1. The participants, namely, the management and the operatives, musthave clearly defined and complementary objectives. And the objectives of

one party should not work at cross-purposes with the objectives of the

other party.

2. There must be a free flow of information and communicationbetween the management and the workers. In this way, distrust and

suspicion are avoided, and workers become responsible and mature when

they discuss their demands with the management.

3. The representatives of workers must be drawn from the workersthemselves. The participation of outside trade union leaders should be

discouraged. This is necessary because the problems and difficulties of the

workers are better understood by the workers them selves than by others.

The workers, therefore, can put across their points of view to the

management with confidence.

4. Strong and effective trade unionism is necessary for the success ofparticipative management politicization and multiplicity of trade unions

defeat the purpose of participation and management.

5. Workers education and training make a significant contribution tothe purposive working of participative management. Trade unions and the

government can play a major and meaningful role in organizing and

conducting training programmes.

6. Neither party should feel that its position is threatened byparticipation. If workers think that status will be adversely affected, they

will not participate. If managers feel that their authority is threatened,

they will refuse participation or will be on the defensive.


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7. Consultative bodies, collective bargaining and suggestion schemesmake a mockery of participative management. To make workers

participation meaningful and purposeful, workers should be associated at

all levels of decision making.

8. The success of participation depends on a suitable participativestructure and a change of heart on the part of employers and employees,

which may take a long time to develop. To expedite this development,

some sort of legislative action is necessary.

9. There could be the danger of a major portion of the resources of theenterprises being diverted to workers without much consideration for

further investments. It may be desirable to reserve a certain percentage of

the resources for reinvestment, either through mutual agreement or

legislation.

10. The financial cost of participation should not exceed the values,economic and other wise that come from it. Employees can not spend all

their time in participation, to the exclusion of all other work completed.

Ethical Perspective: -

Participative management has ethical dimensions also. There are five

ethical perspectives involved in participative management:

The first ethical stems from the fundamental objective of anymorality-the impartial promotion of human welfare. This

impartiality requires a fair hearing for the interests of every person

in decisions concerning policies that affect their lives.


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The second principle requires the need to recognize the inherentvalue and dignity of the human being. One traditional basis for that

believe in dignity of the human being derives from the fact that

individuals are agents capable of free and rational deliberation.

The third ethical perspective relates to the assumption thatemployees who believe themselves powerless will loose

psychological good of self-respect. If all persons should be treated

with dignity, they deserve the conditions that contribute to their

sense of dignity or self efficacy. The self-worth the individual

enhances when he/she is allowed to exercise his or her capacities in

complex and interesting activities. Such activities exhibit him or her

as an autonomous human being this necessitates participation by

workers in corporate decisions. An employees sense of self respect

depends on his or her participation in decision making.

The fourth ethical principle supporting participation relates to themental and physical health of employees. It is well known that

repetitive work without control over ones own activities causes

worker alienation. Alienated individuals suffer from mental

disturbance and stress related physical illness. Since mental and

physical health are important human assets, there is moral

justification to protect them. Worker participation in corporate

decisions in a sure way to minimize the affects of alienation at work

place.

Finally, ethical justification for worker participation is derived fromthe negative consequences of hierarchal and authoritarian

organizations of work. Such organizational structures deny the

workers their voice in decision making. Such deprived employees

develop empathy towards any democratic process.


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IMPORTANCE OF PARTICIPATION: -

The greatest benefit of participative management is that the employee

identifies himself or herself with the work and this leads to an improved

performance. Participation tends to improve motivation because

employees feel more accepted and involved in the situation. Their self-

esteem, job satisfaction, and cooperation with the management will also

improve. The results often are reduced conflict and stress, more

commitment to goals, and better acceptance of a change. Employees may

also reduce turnover and absences when they begin to feel that working

conditions are satisfactory and they are becoming more successful in their

jobs.

Finally, the act of participation in itself establishes better work problems.

The management tends to provide workers with increased information

about the organizations finances and operations, and this helps

employees to give better quality suggestions.

1. MUTUAL UNDERSTANDING: -


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Participation brings the two parties closer and makes them aware of each

others problems. As a result a better understanding and mutual trust can

be created between the employer and the employee.

2. HIGHER PRODUCTIVIY: -

Cooperation between management and labour helps to increase

production and profits for the industry. Through participation workers

learn the problems of industry and better understand their role.

Participation improves employee motivation and job satisfaction, which in

turn increase their efficiency

3.. INDUSTRIAL HARMONY: -

Workers participation in management helps reduce industrial disputes

and to improve workers loyalty. Continuous dialogue between

management and workers improves peace in the industry.

4. INDUSTRIAL DEMOCRACY: -

Participation of workers in management brings in industrial democracy,

which is necessary for political democracy. Need for outside intervention

between employer and employees is eliminated and the workers are freed

from exploitation.

5.LESS RESISTANCE TO CHANGE: -Workers often resist change due to fear and ignorance. When workers

participate in the decision making, they come to understand that change is

ultimately for their own good. They become more prepared to adopt

themselves to technological and other changes made to improve

competitive position of the company.


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6. CREATIVITY AND INNOVATION: -

Participation encourages workers to think and take initiatives.

Participation is helpful in training and developing future executives.

Workers urge for self-expression is satisfied.

c Remove Conditi ons ofPowerlessness

Changes Leadership Reward System Job

Enhance Job-related self -

efficacy

Job mastery Role models Reinforcement Support

Perception of Empowerment

Competence High value Job meaning Increased use of

talent

Performance


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LIMITATIONS OF PARTICIPATION: -

Participative management suffers from many limitations. These are:

1. Technology and organizations today are so complex that specializedwork-role are required, making it difficult for people to participate

successfully if they go very far beyond their particular environment.

2. Another issue is an employees right-not to participate. There is noadvice that participation is good for everybody. Many people dont

want to be bothered with participation.

3. Another problem is that participative situations can be usedcovertly to manipulate employees. This manipulation is not

necessarily done by the management. It may be by the union or by

undercover cliques led by members skilled in group dynamics-the

social engineers of consent.

4. The feudalististic concept of the master and the servant is stillprevalent among industrial workers, especially in India. Workers

have an innate feeling that they are born to serve and not to rule.

Participative management, naturally, is of little interest to such

workers.

5. The role of trade unions in promoting participative management isfar from satisfactory. Most of the unions indulge in politicking and

little to think about participation. The result is that the workers

perceive a trade unions role as crises-oriented and not as extending

beyond certain individual problems. Naturally, workers dont expect

their unions to play a major role in participation.

6. The unwillingness of the employees to share power withrepresentatives, the disinterest of the workers, the perfunctory


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attitude of the government towards participation act as stumbling

blocks in the way of promotion of participative management.

IFFCO A UNIQUE EXPERIMENT IN COOPERATION

Farmers dream to have theirown unique organization, which can produce and

make available quality fertilizers to them at their door step was successfully realized

with the formation of IFFCO- a pioneer in Indian Cooperative Movement. Indian

Farmers fertilizer Cooperatives Limited (IFFCO) was registered as a multi-unit

cooperative society on 3rd November, 1967 as a unique experiment in Indian

Cooperative Movement in which farmers cooperatives joined hands and formed

their own organization with broad objectives augmenting, fertilizer production,

ensuring fertilizer availability at farmers doorstep, strengthening cooperative

fertilizer distribution system and educating, training and guiding the farmers for

improving agricultural productivity and rural economy.

IFFCO got technical assistance from CFI, USA to create a success story Today, IFFCO

has emerged as the largest producer and distributor of fertilizers in the world.

Indian farmers today take pride that their Society produces over 60 lakh tonnes of

fertilizer material every year and distributes through cooperative channel. IFFCO, asignificant player in promoting Indias green revolution, had always been on the

forefront of spreading the benefits of latest advancements in science and technology

for the welfare of rural India. The Society had been bestowed with Best

Management Work Force in India Award instituted jointly by M/s. Hewitt

Associates and CNBC TV 18.


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From its very inception, IFFCO has been performing exceedingly well. In fact, IFFCO

name has assumed the hallmark of success. Over the years, it has grown in stature,

strength and stability and become the light-beacon for others. In just three decades,

it has turned out to be an institution with immense contribution in National

progress.

IFFCO is the federation of more than 35,000 societies most of them being village

cooperatives spread all over India. This institutional organization is unique one in

the sense that the farmer owners represented through their village cooperatives

also the customers of its products.

IFFCOs four most modern plants are located at Kalol, Kandla in Gujarat and Phulpur,

Aonla in Uttar Pradesh having the total annual production capacity of 4.7 Million

tones of fertilizers. IFFCOs all the plants have been achieving the annual capacity

utilization in the range of 112-120 %.

COOPERATIVE MIGHT: -

IFFCO, which has made a humble beginning with membership of 57

cooperative societies in 1967-68, had grown in strength and stature and

has 37,381 member cooperative societies in its fold as on March 31, 2005.

Indian cooperatives initially contributed a sum of Rs. 6 lakh in the Share

Capital of IFFCO in 1967-68, which has now grown to a whooping

Rs.421.08 crore. Today, it is a Society of the farmers, by the farmers, for the

farmers.

PRODUCTION: -

The Society has to its credit four state of the art fertilizer plants at Kalol and Kandla

in Gujarat and Phulpur and Aonla in Uttar Pradesh. During the year 2004-05 all four

fertilizer units together produced 61.54 lakh of fertilizer material, registering overall


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capacity utilization of 101 per sent in nitrogenous fertilizers and 114 per sent in

phosphatic fertilizers.

The Kalol Plant that went on commercial stream in 1975 comprises plants for

production of Ammonia, Urea and Dry ice. It produced 5.55 lakh tonnes of urea with

a capacity utilization of 102 per sent during the year 2004-05.

The Kandla unit also commenced commercial production of DAP and NPK in

varying grades in 1975. During 2004-05, the plant churned out 24.40 lakh tonnes of

NPK/DAP< attaining a capacity utilization of 114 per cent.

The Societys twin plants at Phulpur near Allahabad Produced 14.29 lakh tonnes of

urea by achieving a capacity utilization of 100 per sent. The unit bagged FAIs

runner-up Award for 2003-04 for best Overall Performance of an operating unit for

nitrogen (Ammonia plant). It had also been recipient of National Energy

Conservation Award 2004 (Certificate of Merit).

Similarly, IFFCOs units at Aonla-1 and Aonla-11 near Bareilly accounted for

production of 17.30 lakh tonnes of Urea with a capacity utilization of 100 per sent

during 2004-05.

The Society contributed about 18.3 per cent to countrys total nitrogenous fertilizer

production and 23.5% to total phosphatic fertilizer production during 2004-05

while plant productivity stood at 1510 tonne/person.

The Society further excelled in the field of energy conservation by clocking the

overall annual energy of 6.138 Gcal/tonne of urea, which favorably compares with

the previous lowest of 6.11 Gcal/tonne the year before.

MARKETING: -

Besides producing fertilizers, IFFCO realizes the importance of reaching out to

farmers at the right time. It markets and distributes fertilizers through an impressive

network of five Zonal Offices, 18 State Offices, 62 Area Offices and 158 Farmers


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Service Centers. The marketing of IFFCOs products NPK/DAP/UREA is channeled

through the cooperatives.

During the year 2004-05, IFFCO has notched up a record sale of 64.64 lakh tonnes of

fertilizer material comprising 36.70 lakh tonnes of urea and 27.94 lakh tonne of

NPK/DAP against the sale of 60.54 lakh tonne of fertilizer material in the previous

year. The year also witnessed the best ever marketing productivity of 4042

tonne/head.

FINANCIAL PERFORMANCE: -

Maintaining its streak of excellence IFFCO has recorded a turnover of Rs. 7224 crore

and harvested pre-tax profit of Rs. 470.92 crore during the year 2004-05 while net

worth of the Society stood at Rs. 3300 crore.

IFFCO has paid dividend for the year 2004-05 @ 20 per cent of the paid up equity to

its shareholders for the fourth consecutive year.

IMPETUS TO COOPERATIVE MOVEMENT: -

Right from the beginning, IFFCO has been sparing no efforts to educate and inform

the farmers on various packages of practices through its dedicated field team at the

grass root level. Its need-based educational and promotional programmes like field

demonstrations, field days, farmers meetings, seed multiplication, village adoption,

crop seminars, special campaigns are proving to be effective in transfer of

technology.

In a bid to improve economic viability of cooperative societies, IFFCO has been

developing some of the adopted societies as IFFCO franchisees by giving them the

business of rake handling, transportation and warehousing of IFFCO fertilizers.

Strengthening nations cooperative fabric has been IFFCOs principal forte. To make

grassroots cooperative societies healthy, strong and vibrant, IFFCO has been paying

patronage rebates. IT has promoted IFFCO-NCDC societies and has instituted


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Sahakarita ratna and Sahakarita Band Awards. Lectures on Cooperation in

memory of Pandit Jawaharlal Nehru are also regularly arranged.

RURAL DEVELOPMENT PROGRAMMES: -

The Society initiated development of model agricultural villages through its village

Adoption Programme. The programme started with an objective to bring about over

all development in the living standards of rural community through integrated rural

development with particular emphasis on agriculture development, creation of

drinking water facilities, medical and veterinary care. During the year 2004-05, it

adopted 420 villages most of them economically backward, under this programme.So far, over 3300 villages have been benefited under this scheme since its inception

in 1975-76.

The Societys 127 Storage-cum-Community Centers set up through out the country

are being utilized for storage of fertilizers and agricultural inputs apart from

providing venues for organizing agricultural extension activities and social functions

for villagers in their respective areas.

INVESTMENT OUTSIDE IFFCO: -

Apart from its own growth and service to farmers, IFFCO has contributed

towards creation and development of other organizations. It has

contributed 24.9 per sent equity (Rs. 7.97 crores) in Godavari Fertilizersand Chemicals Ltd. (GFCL) which has a plant at Kakinada. IFFCO is also a

joint venture partner in Industries Chimiques Du Senegal (ICS) that

produces Phosphoric acid in Senegal. It has also contributed to the equity

of Indian Potash Limited (IPL), Maharashtra State Cooperative Ltd., Indian

Tourism Cooperative Ltd. (COOPTOUR) and National Film and Fine Arts

Cooperative Ltd. (NAFFAC).


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IFFCO-TOKIO GENERAL INSURANCE COMPANY LIMITED: -

Pursuant to IFFCOs plans to diversify into areas other than fertilizers, IFFCO and

TOKIO Marine and Fire Insurance Co. Ltd., Japan, established a joint venture

company known as IFFCO-Tokyo General Insurance Co. Ltd. (ITGL) for undertaking

general insurance business in India. IFFCO has subscribed to 51% equity in the

shareholding of ITGL, while 26% equity is held by the TOKYO-Marine and Fire

Insurance Co. Ltd.

ITGL operates in four zones with a network of 41 offices across the country. The

company launched 48 products to meet the market need for almost all thesegments.

The company during the year has earned gross Written Insurance Premium of Rs.

502 crore registering a growth of 55% over the previous year.

NATIONAL COMMODITY & DERIVATIVE EXCHANGE

LTD.(NCDEX): -

To empower the farmers by enabling them to get reasonable prices fortheir produce and also to reduced the price risk through hedging; IFFCO

has acquired a 12% stake in National Commodity and Derivative Exchange

Ltd. (NCDEX). NCDEX is a leading national level exchange offering Futures

Trading in commodities, most of which are agro-commodities. The

operation of this exchange will provide a cushion against the inefficiencies

of the current trading system and hence, enhance economic welfare offarmers.


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NATIONAL COLLATERAL MANAGEMENT SERVICES LTD.(NCMSL): -

IFFCO Along with seven other institutions co-promoted National Collateral

Management Services Limited (NCMSL) on September 28,2004. IFFCO

holds 13.33% equity in NCMSL, which is first national level collateral

Management Company to be set up in India. It would provide services in

agricultural sector as well as Industrial sector.

INDIAN FARM FORESTRY DEVELOPMENT COOPERATIVE LTD.

(IFFDC):

Under the joint Contribution Agreement signed with India-Canada Environment

Facility (ICEF), IFFCO had promoted Indian Farm Forestry development

Cooperative Limited (IFFDC) as a separate Multi State Cooperative Society with the

basic objective of development of wasteland and to enhance the socio-economic

status of the rural poor.

ICEF-IFFDC Project implemented the afforestation and rural development work in

the States of Uttar Pradesh, Madhya Pradesh and Rajasthan by promoting 113

Primary Farm Forestry Cooperatives Societies (PFFCS), with a membership of

23150 covering 21451 hectare of different categories of wasteland against the

target of 20,000 hectare. Women constitute an impressive 37 percent of the total

membership.

IFFDC and five PFFCS prompted by IFFDC bagged the prestigious IndiraPriyadarshani Vrikshamitra Award instituted by the Ministry of Environment and

Forests.

IFFCO FOUNDATION: -

IFFCO laid the foundation of a Think Tank and Brain Bank named IFFCO

Foundation with a primary aim to focus on strengthening primary

cooperatives, social human resources and culture development in


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cooperative sector, empowerment of women and youth, financial

discipline and reforms in cooperatives. Eminent experts are assisting the

Foundation by taking up various programmes.

CAPACITY ENHANCEMENT: -

IFFCO is also planning to carry out further de-bottlenecking of the exiting plants to

enhance the capacity of Urea production by about 5 lakh tonnes per annum. The

Naphtha based Phulpur Plant is being converted to use Re-gasified Natural Gas

(R_LNG) for which GAIL is laying a gas pipeline of around 150 km to connect

Phulpur plant with the HBJ Gas pipeline for supply of R-LNG. The total estimatedcapital investment for this project is Rs.480 crore and will generate an additional

earning of Rs. 115 crore per annum for the society after implementation.

ENERGY SAVING SCHEME: -

IFFCO has embarked upon a massive Energy Saving Schemes Project for all five

Ammonia Plants at Kalol, Phulpur-1 & 11 and Aonla-1 & 11 at an estimated capital

investment of Rs.480crore. The energy saving measures consists of incorporation of

techno-economically feasible schemes such as LTS Guard Bed, S-50 Converters,

Make-up, Gas Chiller and Dryer, modifications in Syn. Gas Compressor and CO2

Removal system etc. The Society envisages an earning of Rs. 120 crore per year after

the implementation of this project.

IFFCO KISAN SEWA TRUST: -

A Charitable Trust known as IFFCO Kisan Sewa Trust(IKST) was

established to provide relief and rehabilitation to the victims in the wake

of natural calamities like floods, earthquakes, cyclones, fires, landslides

and droughts etc. The Trust has also undertaken programmes for the

welfare and critical medical attention of needy farmers including


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programmes and projects aimed at improving the quality of life of affected

farmers.

COMMUNICATION/ INFORMATION TECHNOLOGY: -

Apart from various decision support system based on Information Technology in

the area of HR, Marketing, Finance, Materials, Production and maintenance, IFFCO

has taken initiative to promote e-culture in rural India, It has developed and installed

touch screen based multilingual kiosks having web based services to provide

exhaustive information on Agriculture, Fertilizer Industry, Agro-Chemicals, daily

Mandi information and information on Cooperative Sector.

The latest initiatives taken by the society are in the areas of e-

procurement and e-tendering and e-recruitment. IFFCO is among the first

one in the country to implement e-procurement based on public key

infrastructure.

IFFCO ACQUIRES WORLDS LARGEST DAP PLANT:

16th September, 2005 was another momentous date for the fertilizer cooperative

major IFFCO. In a historic deal the largest ever in the industry; IFFCO acquired

the DAP, NPK and phosphoric acid facilities at Paradeep in Orissa from Oswal

Chemicals & Fertilizers Ltd. The deal was stuck between IFFCO and Oswals for a sale

consideration of Rs. 2180 crore that includes banks and financial institutions

exposure of Rs.1915 crore.

The Paradeep facility includes a two million tonne capacity to produce both DAP and

complex fertilizers annually. It also has a phosphoric acid plant along with railway

siding facility.

The acquisition comes in the wake of the VISION 2010of the organization, which is

geared up to take new challenges and opportunities in its stride. The facility will

increase the complex fertilizer capacity of IFFCO by 2 million tones strengthening


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its business, assisting its efforts to bring in more opportunities to serve the farmers

of the country.

The Oswal Chemicals and Fertilizers plant, commissioned in April 2000 is the

worlds largest grassroots Di-ammonium phosphate (DAP) plant, can produce 2

million tonnes of the fertilizer a year. In terms of nutrients, the production capacity

amounts to 0.8 million tonnes of P2O5 and 0.325 million tonnes of N per annum.

IFFCO has acquired the Di-ammonium phosphate (DAP), Nitro-phospo-potassium

(NPK), and Phosphoric Acid facilities of Oswal Chemicals and Fertilizers Ltd. along

with the entire Oswal Township. Plant capacities:

DAP/NPK : 2 Million Tons/Year

Sulphuric Acid: 7000 TPD

Phosphoric Acid: 2650 TPD

COOPERATIVE RURAL DEVELOPMENT TRUST (CORDET): -

IFFCO promoted Cooperative Rural Development Trust (CORDET) in the year 1979

to provide education and training to farmers on various aspects of crop production,

horticulture, animal husbandry, farm machinery etc.

Land for CORDET adjacent to Phulpur plant of IFFCO was made available by Motilal

Nehru Memorial Trust and CORDET has established Motilal Nehru Farmers

Training Institute at Phulpur. At CORDET, Phulpur the training programmes are of

one-six week duration, while at CORDET, Kalol training programmes of one-two

weeks duration are held on different aspect related to farm production. Besides

facilities for seed production and soil testing with an annual analyzing capacity of

25000 soil samples are set up. IFFCOs field staff collects the soil samples and

forward them for its analysis. Farmers are communicated the results and they are

encouraged to apply nutrients based on soil test. At CORDET, Phulpur a bio-fertilizer


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unit was established in 1996-97 with an annual capacity of 75 MT of different

strains. Bio-fertilizers are sold through IFFCOs Farmers Service Centers and

Cooperative societies and also distributed to the farmers as one of the component of

CIP.

Development work at Kandla was started from July, 1999. Total area of the farm is

74 ha. CORDET, Nellore has undertaken its activities on 54 ha area. Fencing in some

area has been completed. Annual maintenance work was undertaken on plants

such as eucalyptus, coconut etc. Propagation of mother plants for orchard of mango,

sapota, gauva, etc. have also been done. The plants are progressing well. Under

paddy cropping sequence, seed multiplication programme was undertaken. Water

harvesting tanks have been developed along the slope of the farm and installed

pump set to irrigate existing crops.


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PROPOSALS UNDER CONSIDERATION/IMPLEMENTATION

A. ICS Expansion Project: -

IFFCO is partner in a joint venture company, ICS Senegal since 1984 for manufacture

of phos. acid. The capacity, of the existing plant is 330,000 MT P2O5 per annum, is

being further expanded to 660,000 MT P2O5 per annum at a total estimated cost of

US$ 250 million. IFFCO's equity participation in the expansion project is US$ 20

million out of the total equity capital of US$ 100 million. The expansion plant is

expected to be commissioned shortly.

B. Oman India Fertiliser Project: -

Government of India and Government of the Sultanate of Oman signed an

Memorandum of Understanding (MOU) on July 30,1994 to initiate plans for

construction of ammonia/urea complex in Oman. The MOU was also signed by

KRIBHCO, RCF and OOC (Oman Oil Company) as co-sponsors. The Joint VentureCompany, with RCF, KRIBHCO and OOC as partners was formed in February 1998.

The project would be located in Qalhat near Sur on the East Coast of Oman, and have

a capacity of 16.52 lakh tonne of urea per annum. The plant capacities would be

2*1750 tonne per day for ammonia plant and 2*2530 tonne per day for urea plant.

Auxiliary facilities such as power plant, desalinated water plant, jetty, urea &

ammonia storage would be included in the project scope.

IFFCO has purchased the shares of RCF in Oman India Fertilizer Company (OMIFCO)

and become a partner in the Joint Venture Company on signing of the Amended and

Restated Joint Venture Agreement between IFFCO / KRIBHCO and Oman Oil

Company (OOC) on 20th October 2000.


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The project cost has been estimated at US$ 969 million and will be financed by debt

and equity in the ratio of 2:1. IFFCO & KRIBHCO will contribute US$ 80 million each

and Oman Oil will contribute US$ 160 million as their equity.

C. Nellore Fertilizer Project: -

Meeting of the PIB to consider the project was held on 29th April 1999. Final

decision from GOI is awaited. The validity of the bids for ammonia and urea plants

expired on 31.3.2000 and the bid bonds have been returned to the respective

bidders. In case of active consideration of the Project by GOI, fresh bids will be

invited. The estimated Project cost as per third estimate worked out in April 2001 isRs. 1946 crore.

D. Indo-Iran Qeshm Grassroots Project: -

IFFCO and KRIBHCO are exploring the feasibility of a Joint Venture Ammonia Projectin Iran in collaboration with Qeshm Free Area Authority having capacity of 1750

MTPD. The total project cost is expected to be US $ 262 million.

E. Venture Joint Phos. Acid Project with GFCL, CPG & GCT in

Tunisia: -

IFFCO and Godavari Fertilizers & Chemicals Ltd. (GFCL) have entered into a

Memorandum of Understanding with Groupe Chimique Tunisien (GCT) and

Compagnie des Phosphates de Gafsa (CPG) of Tunisia for a Phos. Acid project at

Skhira, Tunisia to set up a new Phos. Acid Project having capacity of 1.8 lakh tonne

P2O5 per annum and acquiring the existing Phos. Acid Plant of 3.6 lakh tonne P2O5

per annum capacity


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IFFCO's JV Indo-Egyptian Fertiliser Company launched in Egypt: -

World' s premier fertilizer cooperative (IFFCO), in collaboration with EI Nasar

Mining company (ENMC) launched Indo Egyptian Fertilizer Company (IEFC) in

Egypt on 21st November, 2005 for setting up a state of the art Phosphoric Acid

Project in at an estimated capital cost of US$ 325 million. The Project will be

financed with the debt equity ratio of 70:30. IFFCO is the major stakeholder with 76

percent in its equity participation while the balance 24 per cent will be held by

ENMC.

Egypt's largest rock phosphate mining company will supply rock phosphate, thebasic raw material for the Project while IFFCO will buy back the entire Phosphoric

Acid thus produced for its DAP Plant at Kandla. After the first Board Meeting of the

Joint Venture Company in Cairo, Sh. U.S. Awasthi, Managing Director, IFFCO, said that

the necessary land for construction of the Project at Edfu near the rock phosphate

mines has been allotted by the Aswan Governorate and the Project has been

accorded Free Zone status by the general authority for Investments and Free Zones,Egypt.

He disclosed that discussions with International Financial Institutions for syndication of

about US$ 220 million loan for the Project are in progress. He further informed that

with the commissioning of the Project scheduled in early 2009, IFFCO will have

assured supply of about one million tonne bulk Phosphoric Acid for its Kandla Plant.

Sh. U.S. Awasthi said that Sh. Surinder Kumar Jakhar, Chairman of IFFCO has also

been elected Chairman of Indo Egyptian Fertilizer Company (IEFC).

IFFCO - Chhattisgarh Power Ltd. (ICPL): -

Share Holders Agreement was singed between fertilizer giant, Indian Farmers

Fertilizer Co-operative Limited ( IFFCO) and Chhattisgarh State Electricity Board

(CSEB) paving way for the incorporation of a Joint Venture Company named IFFCO

Chhattisgarh Power Ltd. (ICPL). Agreement to this effect was signed by Dr U S


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Awasthi, Managing Director, IFFCO and Shri Rajib Ranjan, Chairman, CSEB, on 3rd

Nov. 2005 at New Delhi. Earlier IFFCO had signed an MoU with Government of

Chhattisgarh and Chhattisgarh State Electricity Board (CSEB) for setting up a Mega

Power Project of 1000 MW in District Sarguja, Chhattisgarh.

Revealing details of the project Dr U S Awasthi, Managing Director, IFFCO & Shri

Rajib Ranjan, Chairman, CSEB said that the estimated cost of the Power Project will

be Rs. 4,500 Crores & the project financing will be on 70: 30 Debt- Equity pattern.

IFFCO and CSEB will share the equity in the ratio of 74% and 26% respectively. The

financial closure of the project is targeted to be achieved by December 2006. The

project will start generating power from year 2010. CSEB will off-take up to ninety

percent of power generated from the project. It is worth mentioning here that it is a

pit head Thermal Power Project which shall provide livelihood opportunities to the

people of under developed area of District Sarguja, Chhattisgarh

Dr U S Awasthi, MD IFFCO further added that IFFCO, under its expansion

programme VISION 2010, has decided to make a foray in the field of power so as to

provide another important input- Electricity to the farmers, apart from fertilizer &

seeds.

Oman India Fertiliser Company SAOC (OMIFCO): -

IFFCO has along with the Oman Oil Company SAOC ("OOC'') co-promoted The

Oman India Fertilizer Company SAOC (''OMIFCO''). Oman Oil Company SAOC

(''OOC'') is the single largest shareholder of the company with a total of 50% stake in

the company. IFFCO holds 25% of the entire share capital. OMIFCO has a modern

world scale two-train ammonia-urea fertilizer manufacturing plant at the Sur

Industrial Estate in the Sultanate of Oman.

The implementation of the project by a joint venture of Snamprogetti of Italy and

Technip - Coflexip of France under a lump-sum turnkey EPC contract started on

15th August 2002. Completion of construction, commissioning and performance


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testing was done within the budgeted cost and also on schedule date of 14th July

2005, which is the start date of Commercial Production.

The Complex is designed to produce 1.652 million tons per year of granulated urea

and 0.255 million tons per year of surplus ammonia using natural gas as feedstock.

Both the products are being imported to India. The Government of India (''GOI'') will

off take the urea production and IFFCO will off take the surplus ammonia

production. The Oman Ministry of Oil and Gas (''MOG'') will supply the gas feedstock

under long-term agreements.

Mission OF IFFCO: -

To provide to farmers high quality fertilizers in right time and in adequatequantities with an objective to increase crop productivity.

To make plants energy efficient and continually review various schemes toconserve energy.

Commitment to health, safety, environment and forestry development to enrichthe quality of community life.

Commitment to social responsibilities for a strong social fabric. To institutionalize core values and create a culture of team building,empowerment and innovation which would help in incremental growth of

employees and enable achievement of strategic objectives.

Foster a culture of trust, openness and mutual concern to make working astimulating and challenging experience for stake holders.

Building a value driven organization with an improved and responsive customerfocus. A true commitment to transparency, accountability and integrity in principle

and practice.


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To acquire, assimilate and adopt reliable, efficient and cost effective technologies. Sourcing raw materials for production of phosphatic fertilizers at economicalcost by entering into Joint Ventures outside India.

To ensure growth in core and non-core sectors. A true Cooperative Society committed for fostering cooperative movement in thecountry.

Emerging as a dynamic organization, focussing on strategic strengths, seizing

opportunities for generating and building upon past success, enhancing earnings to

maximize the shareholders' value.

VISION 2010: -

In order to maintain the sustained pace of remarkable growth the society is in the

process of formulating another growth plan Vision 2010 which aims at: Attaining

an annual turnover of Rs. 15000 crore by 2010; Installation of Ammonia and Urea

plants including acquisition of fertilizer units; Backward integration to meet feed

stock requirements such as Phosphoric acid; Generation of Power,

Exploration/distribution of Hydrocarbons; Production and marketing of micro-

nutrients, seed, bio-fertilizers, pesticides etc; Value addition to agri-products and

marketing; Manufacture of Petrochemicals; Banking and Financial Services and

Information Technology and IT enabled services.

IFFCO has also embarked on a $1 billion investment plan to augment the indigenous

fertilizer production capacity as well as saving in energy consumption in its Urea

Plants. Under this expansion plan:-

A Phosphoric Acid Plant in Egypt, with a capacity of approximately 5 lakh tonnes of

P2O5 per annum will set up as a joint venture with state owned mining company of

Egypt namely EI Nasar Mining Company (ENMC). Under the arrangement


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phosphate rock will be mined in collaboration with ENMC and IFFCO will buy back

the produced phosphoric acid.

A Phosphoric Acid Plant in Kutchh district in Gujrat with a capacity of approx. 5 lakh

tonnes per annum of P2O5. This plant will be wholly owned by IFFCO.

DAP/NPK Plant with an additional capacity of 18 lakh MT per annum of fertilizer

will be set up in Kandla.

Discussion with a government entity to undertake mining of rock phosphate in

Egypt is in progress. This will involve production of 20 lakh tonnes of rock

phosphate. The rock from these mines would be used for the Phosphoric Acid Plant

in India.

The Society has entered into MoU with Government of Chhattisgarh and

Chhattisgarh State Electricity Board (CSEB) for setting up 1000 MW coal-based

Power Plant at a cost of Rs. 4500 crore in Sarguja district. CSEB will contribute 26

per cent equity while IFFCO will have the balance 74 per cent. The project is

scheduled for commissioning in the year 2009 and shall achieve full capacity in

2011. The project will benefit the state and its farmers by making available

substantial quantity of energy at low tariff.


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MAGAZINES PRODUCED FROM IFFCO & ITS VARIOUS PLANTS: -

IFFCONEWS:- It is home magazine of IFFCO,

AONLA JYOTI:- It is home magazine of IFFCO Aonla,

ASHPANDAN:- It is home magazine of IFFCO Phulpur,

SAHYOG:- It is home magazine of IFFCO Kandla,

KASTOORI:- It is home magazine of IFFCO Kalol.

Inauguration of IFFCO's New Corporate Office - IFFCO Sadan: -

IFFCO's New Corporate Office, IFFCO Sadan, C-1, District Centre, Saket Place, New

Delhi. , Was Inaugurated by Mr. Surinder Kumar Jakhar, Chairperson IFFCO at 10:26

AM on March 02 , 2006. The Board of Directors, Managing Director and all the

Senior Executives of IFFCO were also present at the event . On this auspicious

occasion entire IFFCO family participated in the havan and puja in the premises of

'IFFCO Sadan'.

MANAGEMENT (IFFCO): -

The Representative General Body (RGB) which is the General Body forms

the supreme body that guides the various activities of IFFCO. The RGB

consists of :

1. Members of the Board of Directors.

2. One delegate from each of the Member Societies holding shares of

the value of Rs.100 thousand and above; such delegate shall be as per the


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provisions of the Multi-State Cooperative Societies Act/Rules as amended

from time to time;

3. Delegates to be elected from amongst the representatives of

Member-Societies (other than Members holding shares of the value of

Rs.100 thousand and above) in each State/ Union Territory at the rate of

one delegate for every 200 societies or part thereof. However, the

maximum number of such delegates from any State / Union Territory shall

not exceed 25. Such elected delegates shall be as per the provisions of the

Multi-State Cooperative Societies Act/ Rules amended from time to time.

The Board of Directors of IFFCO carries out all functions as specified

under the Multi-state Cooperative Societies Act/Rules. The Board of

Directors frame policies, direct the various activities of the Society, and

under take any other activities conducive to overall growth and

development of Societies. The Board is headed by the Chairman.

The Managing Director is the Chief Executive of the organization with

responsibilities for general conduct, supervision and management of day

to day business and affairs of IFFCO. The Finance Director oversees the

financial aspects and the Marketing Director looks after the marketing

functions of IFFCO. These three functional directors are assisted by Senior

Executives who are experts in various disciplines. : -

AONLA UNIT: -

The flagship of IFFCO, Aonla Unit is located in the Gangetic Plains of Uttar Pradesh in

Bareilly district about 28 Km. South-west on Bareilly-Aonla Road.

Aonla unit, an Ammonia-Urea complex, is comprised of two phases; Aonla-1 and

Aonla-11. The total capacity of Aonla unit including both phases is 8,91,000 MTPA

for Ammonia and 14,52,000 MTPA for Urea having two streams of Ammonia and

four streams of Urea. The natural gas from HBJ pipeline being supplied from


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Bombay High is the feedstock for the plants. Aonla-1 was commissioned in May,

1988 and Aonla-11 in December, 1996. Both Aonla-1 & 11 units are achieving

average annual capacity utilization of 116%.

IFFCO Aonla unit is one of the most efficient and quality a well as environment

oriented unit so that M/s KPMG Peat Marwick, a quality registrar has certified it as

ISO:9002 unit and M/s BVQL London has accredited it as ISO:14001 unit.

The unique feature of Aonla Plant is that it is having Zero Effluent technology.

Whatever effluent is generated, is used in the irrigation of 80-250 meter wide Green

Belt which has been developed around the plant and township. Vermicomposting

Plant having production capacity of 596 MT/year has been installed in Township for

conversion of biodegradable waste to Vermicompost.

Aonla unit takes pride in its contribution to the social welfare of surrounding villages

by implementing various developmental schemes.

True to the Mission of IFFCO: In the services of farmers, Aonla unit is putting all

round efforts in the service of the society for National progress.

Paul Pothen Nagar, the township for the employees, boasts of most modern facilities

and is a beautiful place to live in.

QUALITY POLICY OF IFFCO, AONLA UNIT: -

IFFCO Aonla is committed to achieve satisfaction of its cooperative societies, farming

community and customers by manufacturing and supplying specified quality

product by pursuing:

Improving Technology for Enhancing / Maintaining productivity and growth, Creating safe & healthy working conditions and eco-friendly environment, Co-operation and team spirit,


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Development of human resources.

ENVIRONMENTAL POLICY OF IFFCO, AONLA: -

It unit is committed for continual improvement and protection of environment by

setting & reviewing the objectives and targets through environmental management

system focusing at :

Compliance of legislation related to stack emissions, effluent discharge, ambientair and water quality.

Conservation of natural resources, Emergency preparedness for safety of plant and concerned personnel, Effluent and waste minimization, Development of all-round awareness and competence on environment issues.

SAFETY PRACTICES :-

The quality level of Aonla unit is reflected in its safety performance also. Aonla unit

has observed accident free period for almost four years. Several safety features are

in built in the design of the plant. Longest continuous accident free running figure of

996 days has been achieved which is equivalent to 7.82 million man-hours. A

detailed disaster management action plan has been prepared to overcome any

unforeseen occurrence. Fire alarm system network has been installed and

commissioned throughout the factory consisting of automatic fire detection system

and manual call alarm system.


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E NV I R O N M E N T F RIENDLY APPROACH: -

Implementation of Environmental Management System- ISO 14001, Developing the environment & natural surroundings in Plant & Township toupgrade the quality of work life,

Green Belt Development, Use of effluent water for development of Green Belt, Ban on use of Polythene bags in the township, Tree Plantation drive, Conducting awareness programmes to cover all employees on environmentalissues.

COMMUNITY DEVELOPMENT: -

IFFCO Aonla Unit is driven by a unique sense of social responsibility and always

strives to improve the socio-economic conditions of inside and outside the factory

complex. IFFCO Aonla unit has provided direct as well as indirect benefits to people

in villages surrounding the fertilizer complex. 210 villagers have derived direct

benefits in the form of direct employment while the other villagers, from whom land

was acquired got indirect benefits through various employment opportunities like

providing goods and services to the inmates of IFFCO township, working as

contractors etc.

WELFARE ACTIVITIES: -

IFFCO-Aonla Unit initiates and implements various programme out of its welfare

fund. Following programmes are being implemented under these schemes :-

Health Camp,


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Eye Camp, Animal Health Campaign, Education Programmes on improved methods of cultivation, Construction of Village Path Way, Distribution of Plants through Social Forestry, Drinking Water Facilities like providing Hand Pumps in Villages, Construction of Bus Stops, Financial aid to schools / institutions of nearby area.

THE SALIENT FEATURES OF AONLA UNIT :-

(A) Particulars Aonla-1 Aonla-

11

Capacity (per annum) Capacity (per annum)

Ammonia 5,01,600 MT 5,01,600 MT

Urea 8,64,600 MT 8,64,600 MT

Project Zero Date 08.01.1985 30.09.1993

Mechanical Completion 08.01.1988 30.11.1996

Ammonia Production started 15.05.1988 13.12.1996

Urea Production started 18.05.1988

26.11.1996(unit-31)

18.12.1966(unit-41)

Commercial Production started 16.07.1988 25.12.1996


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Feedstock Natural Gas Natural Gas

With Naphtha

Project Cost (Rs. in crores) 652 955

Guaranteed Specific Energy per

MT Ammonia 8.07 GCal. 7.54 GCal. With

Q NG+ Naphtha

Urea 5.78 GCal. 5.59 GCal.

Plant Technology: -

Haldor Topsoe, Denmark Ammonia Ammonia

Snam Progetti, Italy Urea Urea


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Consultants: -

Development Consultant Ltd. & TEC Steam & Power Generation, Offistes

And PH Plants of both phases

PDIL and HTAS Ammonia Ammonia

PDIL and Snam Progetti Urea Urea

Dedicated to Nation by honble 17.05.1989 29.05.1997

PRIME MINISTER Late Sh. Rajiv Gandhi Sh. I. K. Gujral

(B) Major InputsNatural Gas 1.7 MMSCMD 1.7MMSCMD

(C) Plant and Township Area 273 Acres


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AONLA UNIT HAS BAGGED FOLLOWING AWARDS: -

IFFCO AONLA Unit has been awarded THE RAJIV RATNA NATIONAL AWARDfor EXCELLENT INDIAN INDUSTRIES - BEST EXECUTIVE GOLD AWARD.

Yogyata Praman Patra for developing and implementing effectiveOccupational Safety and Health Management System and Procedures for the

year 2004 from National Safety Council.

National Safety Award for outstanding performance in Industrial Safety asRunner-Up during the year 2004 based on Longest Accident Free Year.

IFFCO Aonla Unit has been awarded Indo-German Greentech EnvironmentExcellence Award (1stPosition) for the year 1999-2000.

IFFCO Aonla Unit has been awarded Indo-German Greentech EnvironmentExcellence Award (2nd Position) for the year 2000-2001.

Fertilizer Association of India's award for excellence in safety for the year2001-02.

National Safety Council of India's safety award, 2000 & 2002 (PrashanasaPuraskar) for developing and implementing very effective occupational

safety and health management system and procedures and achieving very

good performance.

AONLA - I: -

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