Informatics Publishing Limited

V. K. Seth , N. D. Jaju

Abstract

Management and organasation go hand is band, and the success or failure of an organisation primarily depends on the Management cadre. It is the motivation, guidance, and control of employees at all levels Which brings success. A good organisation is one where equal opportinuties are available to people to grow and which provides for special rewards to there who do better. It is not enough to expose the weaknesses or shortcomings of employees and to punish them for the same. What is of greater importance is to ensure that employees are rewarded for good work. This Would be possible if there is a forward looking system of monitoring and performance appraisal in an organisation. The Madhya Pradesh State Forest Development Corporation, has during its four years Of existence, pioneered several significant managerial innovationas. The latest is the evolution of a methodology for monitoring and performance appraisal. The methodology for monitoring and performance appraisal has been explained in the paper. It is hased on identification of primary and secondary functions, activities and important parameters for evaluation. Points are to be allotted on the basis of field visits, compilation of data and scrutiny of returns Reports in order to determine ranking of divisions. The merit of the methodology lies in its elasticity and its applicability, with suitable adaptation to all field units down the line or to any other organisation. In MPSFDC it is proposed to evolve a system of rewards and incentives, based on monitoring and appraisal. Considerable importance is attached by the Central Government and State Governments to performance appraisal. As such this paper should be of topical interes. The State Governments could adopt this type of methodology for carrying out performance appraisals of state level Corporations and the Agriculture Ministry could use it for comparing tbe performance of the different Forest Development Corporations is the country.

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V. K. Seth , N. D. Jaju

Abstract

Corporate planning is an attempt to ensure that Managers are continually measuring their performance against the Company's long-term profit and market objectives, evaluating alternative methods of reaching their goals and keeping in touch with rapid changes in the market as well as techniques. Profit is the criterion of efficiency. In the State undertakings, social objectives are more important than profit. The MP State Forest Development Corporation aims at generating employment in the remote and under-developed areas not only to improve the standard of living of the tribal people, but also to ensure rapid economic growth by building up required infrastructure. This publication deals with financial review, profitability analysis and performance appraisal in relation to corporate objectives and socio-economic aims of MP State Forest Development Corporation. The performance appraisal should aim at finding out if the existing forest produce has been exploited as economically and expeditiously as possible and as to whether the same has been prudently replaced by raising successful plantations of economically valuable and useful species,in addition to its financial liquidity and return on capital. The study is an attempt to present for a three year period of Corporation's existence, planting performance, productivity and profit analysis, economic growth and finacial visibility, profitability and return on capital employed, financial break up of revenue expenses in relation to value of production, funds utilisation analysis,employment generation and review of staff expenses.

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V. K. Seth , K. G. Venkataraman , N. D. Jaju

Abstract

The lease rental concept evolved by the National Commission on Agriculture (NCA) in its report on "Production Forestry-Man.Made Forests" (1972) could well be regarded as a landmark in Indian Forestry. NCA had recommended that for forest areas transferred by the State Governments to Forest Development Corporations (FDCs) the State should take as revenue only an equivalent of the average revenue of previous three years it has been receiving from them and to leave tbe rest of the income from clearfelling to support the programme of harvesting and raising plantations and their maintenance plus suopporting industries. In formulating the ahove recommendation, NCA overlooked the implications of a crippling dose of corporation taxes, which would be payable by the FDCs. Actually, it has been noticed that payment of heavy corporation taxes would defeat the very purpose for which FDCs have heen formed. An in-depth study has been carried out in the Madhya Pradesh State Forest Development Corporation (of which this paper is the result) on the suggestion of the Board of Directors, as well as the State Governtnent on the implications of the lease rental concept in relation to profitability and taxation liabilities. Detailed projections have been made on assumed optimum norms for the next ten years taking into consideration the inflow of money from equities, institutional finance and liabilites for repayment of borrowed money with interest and then the pivotal role of lease rental have been examined. From. The above study, it clearly emerges tbat a static concept or lease rental in a dynamic situation of resource mobilisation fails to serve the desired purpose of transferring benefits of extended working or improved efficiency to the State Government. It cannot be denied that the State Government has a bigger stake in the activities of MPSFDC than the Centre. A new formula for the determination of lease rental has been proposed on the basis of cashflow and generation of runds and it has been shown that its adoption would ensure proper distribution of profits of MPSFDC and at the same time, provide for its growth. The suggestion is to charge 60% of tbe Gross Surplus or 15% of the Gross Income as lease rental. By adopting this new formula the distribution of gross income on the basis of lease rental, payment of corporation tax and dividends would amount to 67.2% for the State Government, 31.1% for the Central GovernlDent and 1.7% (for generation of reserves) for the Corporation. This would be in keeping with the effective contributions of the State Government and the Central Goveroment. It is hoped that this study would lead to the adoption of a pragmatic approach to the determination of lease rental for FDCs in the country on the basis of facts and reasoning rather than on emotions or ad-hocism.

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