comparative analysis of compesation structure of hpc ltd. vis-a-vis other companies of same industry

Comparative Analysis Of Compensation Structure Of HPC Ltd. viz-a-viz Other Companies From

Paper Industry

_____________________________________________________________________________________

1 | P a g e

A REPORT

ON

COMPARATIVE ANALYSIS OF COMPENSATION

STRUCTURES OF HPC Ltd. viz-a-viz OTHER COMPANIES

FROM PAPER INDUSTRY

By

Richa Ranjan

(09BS0001880)

HINDUSTAN PAPER CORPORATION LIMITED


Paper Industry

_____________________________________________________________________________________

2 | P a g e

A REPORT

ON

COMPARATIVE ANALYSIS OF COMPENSATION

STRUCTURES OF HPC Ltd. viz-a-viz OTHER COMPANIES

FROM PAPER INDUSTRY

By

RICHA RANJAN

09BS0001880


A report submitted in partial fulfillment of the requirements of

MBA Program of

The ICFAI University, Dehradun

Date of Submission:14/05/2010


Paper Industry

_____________________________________________________________________________________

i | P a g e

Authorization

I, Richa Ranjan (Roll Number- 09BS0001880), (2009-2011) do hereby declare that this project entitled

“Comparative Analysis Of Compensation Structure Of HPC Ltd. viz-a-viz Other Companies From Paper

Industry” submitted to HINDUSTAN PAPER CORPORATION LIMITED, 75-C PARK STREET, KOLKATA-

700091, is a bona-fide record of research work done by me, in partial fulfillment of the requirements of

MBA Program of ICFAI University, Dehradun and has not been published anywhere else prior to this.


Paper Industry

_____________________________________________________________________________________

ii | P a g e

Acknowledgements

The Summer Internship Project with Hindustan Paper Corporation Limited, Kolkata during the 14-weeks

period has been of immense importance to my learning process. The project is an outcome of the

support and encouragement provided by a number of people who contributed their thoughts, expertise

and insights towards the successful completion of this project.

Firstly, I would like to express my deep gratitude to Hindustan Paper Corporation Ltd. for giving me this

valuable opportunity to work on a project of the company. I am grateful to Mr.Cherian Thomas , Head

(HR Dept.) for giving me permission to do this project in his department.

I would like to thanks my Company guide Mr.Govind Kumar, Senior Manager (HR & ES Department) HPC

Ltd. and Faculty guide Dr. Rachana Chattopadhayay IBS Kolkata, who have always supported me.

I would like to extend a deep sense of gratitude to my two more guides Mr. D.P.Satpathy, Manager (HR

& ES Department) and Mr. P.K.Adithian, Senior Executive P.S(HR & ES Department) for their guidance

and suggestions because without them this project wouldn’t have been possible.

Last but not the least a special & heartfelt thanks to my friends and family members for being a constant

source of support.

This guidance, support and co-operation is not only useful for this project only but will be grate constant

source of inspiration for me in the future life.


Paper Industry

_____________________________________________________________________________________

iii | P a g e

Abstract

This study attempts to explore the different compensation structures in different firms of same

industry (the industry in question is Paper Industry). This study also helps us to evaluate the

effectiveness of Collective Bargaining in different firms for setting up compensation for their

workmen.

This project aims to do a comparative analysis of Compensation Management/ Structure for HPC

Ltd. with its counterparts in the same industry, as to draw inferences about the best practices

adopted by HPC Ltd. and other similarly placed companies and to find out the following

hypothesis:-

Ho : “Will HPC Ltd. be able to sustain with this Salary& Wages Structure viz-a-viz Production

realization and number of Employees in the present scenario.”

For this Analysis firstly, I have done proper study on compensation management and then the

compensation structure of HPC Ltd. i.e. revised pay structure effective 1.1.2007, compensation

policies and organizational structure etc. To arrive at conclusion the similar kind of study have

done for other two companies also i.e. Mysore Paper Mills Ltd. and Tamil Nadu Newsprint and

Paper Ltd.

With the help of secondary data what HPC Ltd. and other companies provided, I came to know

that the Methodology/structure used to set up their compensation is “Graded Pay Structure”.

HPC Ltd. has more vertical structure as compare to other two companies.

Percentage (%) to salary & wages to turnover is very high, approximately 19% (2008-09) in case

of HPC Ltd. which should be ideally (7-11)%. Employee Cost/tonne is also high and increasing

day by day. Though HPC Ltd. is paying good salary to its employees/workers as compare to

other companies but it has to take some sincere steps to limit ‘Percentage to salary & wages to

turnover’ to less than 10% and to lower down ‘Employee cost/tonne’.


Paper Industry

_____________________________________________________________________________________

iv | P a g e

Table Of Contents

Authorization ................................................................................................................................... i

Acknowledgements ......................................................................................................................... ii

Abstract ........................................................................................................................................... iii

INTRODUCTION ....................................................................................................................................... 1

1. Compensation Management ........................................................................................................ 1

1.1. Components of Compensation System ..........................................................................................................1

1.2. Types of Compensation .........................................................................................................................................1

1.3. Need of Compensation Management .............................................................................................................2

2. Setting Up-Compensation Structure ............................................................................................. 3

2.1. Executive compensation .............................................................................................................................................4

2.2. Worker’s compensation ..............................................................................................................................................5

3. Collective Bargaining .................................................................................................................... 6

4. Different Pay structures ............................................................................................................... 8

4.1. Criteria for pay structures..........................................................................................................................................8

5. Scope of the Project ..................................................................................................................... 9

6. Methodology ............................................................................................................................... 9

7. Limitations ................................................................................................................................... 9

Background of the company .................................................................................................................. 11

1. Mission Of HPC .......................................................................................................................... 12

2. Product portfolio of HPC Ltd. ..................................................................................................... 13

3. End users ................................................................................................................................... 13

4. Projects...................................................................................................................................... 14

5. Performance & Achievements of the company .......................................................................... 14

5.1. Physical (during last 3 years ) ............................................................................................................................... 14

5.2. Financial(during last 3 years) ............................................................................................................................... 15

5.3.The other Achievements to name a few are- ................................................................................................. 15

Compensation set-up in HPC Ltd............................................................................................................ 16

1. For Executive- Revised Scales of Pay (2007 pay structure) .............................................................. 16

2. Negotiation through Collective Bargaining in HPC ltd. .................................................................... 24

3. For Workmen-Revised Scale of Pay (2007 pay structure)/ Wage Grades......................................... 25


Paper Industry

_____________________________________________________________________________________

v | P a g e

About Competitor ................................................................................................................................. 34

1. Mysore Paper Mills Limited ........................................................................................................ 34

1.1. Introduction of the MPM Ltd. .......................................................................................................................... 34

1.2. Compensation Setup in Mysore Paper Mills Ltd. .................................................................................. 35

2. Tamil Nadu Newsprints and Paper Limited ................................................................................. 41

2.1 Introduction of TNPL ................................................................................................................................................. 41

2.2. Compensation Setup in Tamil Nadu Newsprint and Paper Mills Ltd. ............................................ 42

Comparative Analysis ............................................................................................................................ 47

1. For Workmen ............................................................................................................................. 47

2. For Executive ............................................................................................................................. 56

3. Percentage (%) of salary & wages to turnover ............................................................................ 61

4. Employee Cost Per Tonne .......................................................................................................... 64

Conclusion............................................................................................................................................. 67

Recommendations ................................................................................................................................ 68

Bibliography .......................................................................................................................................... 69

List of Illustrations

Figure 1:% Range of each grade for workmen in HPC ltd. ....................................................................... 47

Figure 2: %Range of each grade for workmen in Mysore Paper Mills Ltd. ............................................... 48

Figure 3:%Range of each grade for workmen in Tamil Nadu Newsprints and Paper Ltd. ......................... 49

Figure 4: For TNPL ................................................................................................................................. 61

Figure 5: For MPM ltd. ........................................................................................................................... 62

Figure 6: HPC Ltd. .................................................................................................................................. 62

Figure 7 ................................................................................................................................................. 64

Figure 8 ................................................................................................................................................. 65

Figure 9 ................................................................................................................................................. 65

Table 1: % range in basic pay of HPC ltd. ................................................................................................ 47

Table 2 : % range in basic pay of MPM Ltd. ............................................................................................ 48

Table 3: % range in basic pay of TNPL .................................................................................................... 49

Table 4: for TNPL ................................................................................................................................... 64

Table 5: for MPM ltd.............................................................................................................................. 64

Table 6: for HPC Ltd. .............................................................................................................................. 65

Appendice-1


Paper Industry

_____________________________________________________________________________________

1 | P a g e

INTRODUCTION

1. Compensation Management

Compensation Management is an integral part of human resource management which

helps in motivating, retaining the employees and improving organizational

effectiveness. Compensation is the remuneration received by an employee in return for

his/her services to the organization. It is an organized practice that involves balancing

the work-employee relation by providing monetary and non-monetary benefits to

employees.

1.1. Components of Compensation System

Compensation systems are designed keeping in minds the strategic goals and

business objectives. Compensation system is designed on the basis of certain factors

after analyzing the job work and responsibilities. Components of a compensation

system are as follows:

1.2. Types of Compensation

Compensation provided to employees can direct in the form of monetary benefits

and/or indirect in the form of non-monetary benefits known as perks, time off,


Paper Industry

_____________________________________________________________________________________

2 | P a g e

etc. Compensation does not include only salary but it is the sum total of all rewards

and allowances provided to the employees in return for their services. If the

compensation offered is effectively managed, it contributes to high organizational

productivity.

1.3. Need of Compensation Management

A good compensation package is important to motivate the employees to increase

the organizational productivity.

Unless compensation is provided no one will come and work for the organization.

Thus, compensation helps in running an organization effectively and accomplishing

its goals.

Salary is just a part of the compensation system, the employees have other

psychological and self-actualization needs to fulfill. Thus, compensation serves the

purpose.

The most competitive compensation will help the organization to attract and retain

the best talent. The compensation package should be as per industry standards.


Paper Industry

_____________________________________________________________________________________

3 | P a g e

2. Setting Up-Compensation Structure

Although money isn't everything, it certainly is one of the top issues potential

employees look at when interviewing new companies. Whether a company offering

a straight basic salary structure or an incentive-based pay structure may make

or break you in the eyes of top job candidates. Let's look at how each system works.

A standard base pay program offers fixed salary ranges for each position type

for employees performing the standard duties of their jobs. Set up minimum and

maximum levels within those pay ranges to account for variations in experience and

skill levels. When setting the base pay structure, determine where your company

falls within your own industry as well as competing industries that may also offer

job opportunities for your employees. Set up your pay levels to be competitive, or

else you risk losing employees.

Once your base pay structure is in place, most companies then set up a merit pay

program that will take the employee through the salary range for their position at a

performance-driven speed. This comes into play when the employee's managers do

Annual employee performance reviews. The downside of this is that employees

may begin to see it as a given that they will get a salary increase after each

evaluation, and it ceases to be a motivation to perform better in their jobs.

For this reason, more companies are moving toward more of a “reward-based

compensation” style, also called Incentive Compensation.

Incentive-based compensation is becoming much more common because of the

increased emphasis on performance and competition for talent. This type of

compensation structure significantly helps motivate employees to perform well.

Hiring bonuses are also frequently used now, even for new college graduates.

However, a company might want to tie in a specific time period prior to the

employee collecting this bonus for example-: one-half after six months and the


Paper Industry

_____________________________________________________________________________________

4 | P a g e

remainder after one year of employment. Otherwise, you could run the risk of the

employee departing after that first check, which would defeat your purpose. So the

incentive compensation may be beneficial, if a company’s business is in an industry

where you really have to compete to get good employees.

Setting up an incentive-based compensation program requires the same research

into the desired industry as the base pay program.

Nowadays, most of the companies setup their compensation with combination of

Fixed Pay (base pay) and variable pay (incentives, bonuses and other allowances

etc). But sometimes there is a difference between in the way of setting up

compensation in Private sector companies and in the Public sector companies.

Most of the Private companies establish their base pay levels but slightly lower

and build into that base the annual or quarterly (or any other interval)incentives,

bonuses, commissions, or other types of shared cash compensation.

But in the Public sector companies they usually setup large base pay comparatively

bonus and allowances given to the employees.

Compensation for the employees can be categorized into two-

1)For Executives and supervisors and 2) For Workers.

2.1. Executive compensation

Executive compensation is the total remuneration or financial compensation a top

executive receives within a corporation. This includes a basic salary, all bonuses, shares,

and any other company benefits. Over the past three decades, executive compensation

has risen dramatically beyond the rising levels of an average worker's wage. Executive


Paper Industry

_____________________________________________________________________________________

5 | P a g e

compensation is an important part of corporate governance, and is often determined by a

company's board of directors. (wikipedia)

A base salary

long-term incentive plans (LTIP)

employee benefits

perquisites, or perks.

2.2. Worker’s compensation

Worker’s compensation has totally different concept from the executive compensation.

Other than basic wage workers' compensation includes-:

Insurance that provides compensation medical care for employees who are injured in

the course of employment. The tradeoff between assured, limited coverage and lack of

recourse outside the worker compensation system is known as "the compensation

bargain." While plans differ between jurisdictions, provision can be made for weekly

payments in place of wages (functioning in this case as a form of disability insurance),

compensation for economic loss (past and future), reimbursement or payment of

medical and like expenses (functioning in this case as a form of health insurance), and

benefits payable to the dependents of workers killed during employment (functioning in

this case as a form of life insurance). (wikipedia)

Dearness allowance (DA).

Shift allowance.

Washing allowance (job specific).

Location Specific allowance like- Hill Tract allowance [HTA] to the forest staff who work

in difficult location of forest.

Incentives on acquiring professional qualification for the willing workers.


Paper Industry

_____________________________________________________________________________________

6 | P a g e

Overtime wages payment.

Festival advance and etc [many more benefits and facilities].

Worker’s compensation is not decided by one person or a team it is decided on the mutual

understanding of Trade Union and the management which is done through “Collective

Bargaining”.

3. Collective Bargaining

Collective bargaining is the technique that has been adopted by unions and

managements to reconcile their conflicting interest. In organized labor/industrial

relations, collective bargaining involves workers organizing together (usually in unions)

to meet, discuss, and negotiate upon the work conditions with their employers. Such

bargaining normally results in a written contract (collective agreement) setting forth the

wages, working hours and other conditions which the parties agree on for a stipulated

period. “A collective agreement functions as a labor contract between an employer

and one or more unions.” (Mr.P.K.Adithian, 1986)

Collective bargaining plays a significant role in improving labour-management relations

and in ensuring industrial harmony. The negotiations for collective bargaining requires

joint sessions of the representatives of labour and management. Through discussions

and interaction, each party learns more about the other, and misunderstandings are

often removed. Collective bargaining helps in resolving out many minor differences; and

there are many instances in which even major disputes have been settled without any

work-stoppage or outside intervention.


Paper Industry

_____________________________________________________________________________________

7 | P a g e

Mandatory Bargaining Items

Wages Severance pay

Hours of work Non-discriminatory hiring of all

Discharge Plant rules

Arbitration Safety

Holidays, paid Prohibition against supervisor doing unit work

Vacations, paid Super-seniority of union

Duration of agreement Stewards

Grievance procedure Plant close down and relocation

Lay-off plan Job posting procedure

Reinstatement of workers Plant reopening

Change of payment from Employee physical examination

Hourly base to salary base Agreements for negotiation

Union security and check-off Change in insurance benefits

Work rule Profit shares plan

Merit wage increase Over-time pay

Work schedule Agency shop

Lunch period Sick leave

Rest period Employer’s insistence on clause giving arbitration.

Pension plans Right to enforce award

Retirement age Company house

Bonus payment Sub-contracting

Price of meals provided by company Discrimination racial

Group insurance(health, accident, policies life) Product ceiling imposed by union

Seniority Change of employee status to independent contractor

Transfer Management strikes clause

No strikes clause Cancellation of seniority on relocation of plant

Piece rates Contract clause providing for supervisor’s keeping

Work load Seniority in units

Discount on company products Shift differentials

Procedures for income tax with-holding

(Murlis)


Paper Industry

_____________________________________________________________________________________

8 | P a g e

4. Different Pay structures

A pay structure provides a framework within which an organization defines the

different levels of pay for job or group of job, on the basis of assessments their

relative internal value and of external relativities(market rate). The level of pay in a

structure may have been negotiated for all or some categories of employees.

The most important types of pay structures are as follows:

Graded pay structures.

Broad banding structures.

Job family structures.

4.1. Criteria for pay structures

Pay structures should:

Be appropriate to the characteristics and needs of the organization: its culture, size

and complexity; the degree to which it is subjected to change and type and level of

people employed;

Be flexible in response to internal and external pressures, especially those related to

market rates and skill those related to market rates and skill shortage;

Facilities operational and role flexibility so that employees can be moved around the

organization between jobs of slightly different sizes, without the need to reflect that

size variation by changing rates of pay;

Give scope for rewarding high-level performance and significant contributions,

while still provide appropriate rewards and recognition for effective and reliable

‘core’ employees who form the majority in most organization.

Facilitate rewards for performance and achievement;


Paper Industry

_____________________________________________________________________________________

9 | P a g e

Help to ensure that consistent decision are made on pay in relation to job size,

contribution, skill and competence;

Clarify pay opportunities, developmental pathways and career ladders;

Be constructed logically and clearly so that the basic upon which they operate can

readily be communicated to employees;

Enable the organization to exercise control over the implementation of pay policies

and budgets.

5. Scope of the Project

To know about the best practices adopted by the HPC Ltd. and its private & public

sector counterparts in their compensation structure.

This project also aims to find out the loopholes in the compensation structure of

HPC Ltd. by comparative analysis with other counterparts

This study will help the company to retain their skilled employees and to attract the

new one.

This study will help us to know whether “HPC Ltd. will be able to sustain with this

Salary& Wage Structure viz-a-viz Production realization and number of Employees in

the present scenario.”

6. Methodology

Collection of secondary data from the different companies of the same industry

[Paper Industry].

Personal study.

7. Limitations

Some of the companies are not ready to entertain and disclose their internal data

regarding their Compensation Structure.

Data provided by all other companies other than HPC Ltd. are inadequate.


Paper Industry

_____________________________________________________________________________________

10 | P a g e

INTRODUCTION

TO



Paper Industry

_____________________________________________________________________________________

11 | P a g e

Background of the company

Hindustan Paper Corporation Ltd. (HPC) is a company promoted by the Government of

India (GOI). The company was incorporated as a Private Limited Company in 1970

under the name Hindustan Paper Corporation Ltd and the company set up two units

namely Nagaon Paper Mills (NPM) which started production in October 1985 and

Cachar Paper Mill (CPM) in April 1988.

The company also had three subsidiaries namely Hindustan Newsprint Ltd. (HNL),

Nagaland Paper and Pulp Co. Ltd (NPPC) having a total capacity of 1,66,000 tpa.

The Nagaland Paper and Pulp Co. Ltd. Which had a capacity of 33,000 tpa became sick

and was referred to BIFR. Now it is being revived with doubling capacity i.e. 66,000 tpa.

NPM and CPM are located at Jagiroad, Dist. Moergaon; and Panchgram, Dist. Hailakandi,

in Assam respectively. Both the mills are very close to the source of raw material which is

mainly bamboo.

HPC is one of the largest manufacturers of paper in India (in public sector) with an installed

capacity of 3,00,000 tons per annum (tpa) (including its subsidiaries).

The company is engaged in the manufacture and marketing of various varieties of

cultural paper and newsprint and also small quantities of caustic soda and chlorine.


Paper Industry

_____________________________________________________________________________________

12 | P a g e

1. Mission Of HPC

To be a major contributor to the cultural segment in paper industry in terms of volume as

well as quality, production standard, customer services, R&D and technological up

gradation.

To ensure optimum utilization of existing assets to generate maximum internal

resources for renovation, growth and expansion.

To develop professional management culture consistent with the requirement of the

industry to attract, develop and retain committed and skilled workforce with emphasis

on trust and teamwork.

To preserve the ecological balance and explore eco-friendly production process to strike

a harmonious relationship between nature and industry.

To explore and implement technological up gradation of the existing equipment for

improved quality and increasing productivity and for greater cost effectiveness.

To enlarge market channels for perennial supply of all variety of cultural paper and to

ensure customer satisfaction through value addition and constant up gradation of

quality.

To increase utilization of unconventional raw materials and adopt recycling method to

reduce dependence on forest resources for maintaining ecological balance.

To provide adequate thrust on product diversification and manufacture value-added

items like computer stationery, copier paper, S.S. Maplitho, etc. and create a brand equity

for higher profitability and greater market share. (welcome to the world of paper)

Paper for people......

From Bamboo to Books..!!


Paper Industry

_____________________________________________________________________________________

13 | P a g e

2. Product portfolio of HPC Ltd.

Cream wove

Maplitho

Computer stationary paper

Base paper

Copier paper

Offset printing paper

3. End users

Education sector

Large Govt./institutional buyers

Publishing house

Text book printers, diary and calendar printers

Exercise book converter

Newspaper establishment


Paper Industry

_____________________________________________________________________________________

14 | P a g e

4. Projects

HPC has embarked on a Rs.660 crore Modernization and technological Upgradation

Plan(MTUP) covering CPM and NPM including inter-alia, 30% capacity expansion at

NPM.

HPC recently launched a Rs.719 crore Expansion-cum-Diversification project (EDP)

at HNP seeking to add capacity for production of 1,70,000 tpa finer papers making it

close 3,00,000 tpa capacity mill.

All these plans are underway and will be completed phase-wise by this year.

HPC is also seeking to establish a Rs.2500 crore Greenfield 3,00,000 tpa mill in the

Northern india besides overseeing the Rs. 552 crore scheme for revival of the non-

operational mill under the Nagaland Pulp & Paper Company Ltd. (NPPC), Tuli,

Nagaland by doubling the installed capacity to 66,000 tpa . by 2013, the HPC group’s

turnover would touch Rs. 3000 crore.

5. Performance & Achievements of the company

HPC has been able to display a creditable performance both in physical and financial

terms in the last eleven years. Even in the downturn of the market and recessionary

situation HPC is showing its net profit.

5.1. Physical (during last 3 years )

2006-07 2007-08 2008-09

[in tonnes] HPC HNL HPC HNL HPC HNL

Production 208315 112565 211746 116111 175020 108005

Sales 210737 112565 213224 116111 175091 87474


Paper Industry

_____________________________________________________________________________________

15 | P a g e

5.2. Financial(during last 3 years)

5.3.The other Achievements to name a few are-

Implementation of Enterprise Resource Planning (ERP) solutions across all

business location of the Company.

Establishment of Tissue Culture Laboratory for large-scale production of high-

yielding bamboo species.

Initiation of Clean Development Mechanism(CDM) project for availing Carbon

Emission Reduction(CER) opportunity under the Framework Convention for

Climate Control(UNFCCC).

The Company was awarded ISO certification for QMS and EMS.

2006-07 2007-08 2008-09

[Rs. crore] HPC HNL TOTAL HPC HNL TOTAL HPC HNL TOTAL

Turnover 786 315 1101 842 299 1141 721.07 297.67 1018.74

Profit

Before

Tax

120 45 165 138 18 156 60.73 21.10 81.83


Paper Industry

_____________________________________________________________________________________

16 | P a g e

Compensation set-up in HPC Ltd.

Under the policy of HPC Ltd. They revise their Scales of Pay in every 10 years. That’s why

the previous scale of pay (1997 pay structure) has replaced by the corresponding revised

scales of pay (i.e. existing pay structure) with effect from 1.1.2007.

1. For Executive- Revised Scales of Pay (2007 pay structure) 1.0. Board level Executives

Grade Designation Previous Scale

of Pay

Revised Scale

of Pay

Sch-A CMD Rs.27750-750-31500 Rs. 80000-125000

Sch-B Functional Director Rs.25750-650-30950 Rs. 75000-100000

1.1. Below Board level Executives

1.2. Non-unionised supervisor

Grade Generic Designation PreviousScale of Pay Revised Scale of Pay

E-9 to be notified Rs.23750-600-28550 Rs.62000-80000

E-8 Executive Director Rs.20500-500-26500 Rs.51300-73000

E-7 General Manager Rs.18500-450-23900 Rs.43200-66000

E-6 Deputy General Manager Rs.17500-400-22300 Rs.36600-62000

E-5 Senior Manager Rs.16000-400-20800 Rs.32900-58000

E-4 Manager Rs.14500-350-18700 Rs.29100-54500

E-3 Deputy Manager Rs.13000-350-18250 Rs.24900-50500

E-2 Assistant Manager Rs.10750-300-16750 Rs.20600-46500

E-1 Executive Rs.8600-250-14600 Rs.16400-40500

Grade Generic Designation PreviousScale of Pay Revised Scale of

Pay

S-2 Senior Supervisor Rs.6550-220-11390 Rs.12600-32500

S-1 Supervisor Rs.6000-200-9200 Rs.11500-29600


Paper Industry

_____________________________________________________________________________________

17 | P a g e

2.0. Fitment benefit and fixation of pay in the revised scales of pay

2.1 A uniform Fitment Benefit @ 30% on basic pay plus DA @ 78.2% as on 1.1.2007 would be

provided to all executives and non-unionised supervisors who are on the rolls of the

Corporation on 1.1.2007 and continue to be in the service of the Corporation as on the date

of issue of this Circular.

2.2 Where executives / non-unionised supervisors drawing pay at two or more consecutive

stages in an Previousscale get bunched, then for every two stages so bunched, benefit of one

increment shall be given.

3.0 Rate of Annual Increment

3.1. Annual Increment will be at the rate of 3% of revised basic pay applicable uniformly for all

grades of executives and non-unionised supervisors and will be rounded off to the next

multiple of Rs.10/-.

4.0 Rationalization of Date of Annual Increment

4.1 Dates of annual increments shall be brought to one standard date for all executives and non-

unionised supervisors i.e. the annual date of increment otherwise due from 1.8.2009 to

1.6.2010 shall be advanced to 1.7.2009.

4.2 In case of those whose annual increments are postponed due to imposition of any penalty on

disciplinary grounds under the prevalent Conduct, Discipline and Appeal Rules and

practices and thus draw annual increment in different months (i.e. other than July), the

annual increment of such personnel will be notionally rationalized on 1st July on completion

of the currency of punishment.

4.3 In respect of fresh appointees who join in a month other than in July, their next date of ……….

increment shall be the 1st July, following after completion of probation period.


Paper Industry

_____________________________________________________________________________________

18 | P a g e

5.0 Stagnation Increment

5.1 Maximum three stagnation increments @ 3% will be allowed, one after every two years ,

upon reaching the maximum of the revised pay scale provided the employee concerned gets

a performance rating of ‘Good’ or above.

5.2 Finance Department will provide a list to HR & ES Department every year indicating the

names of employees, who reached the maximum of the scale of pay for verification of

performance rating of such employees and consequently issue of Office Order for release of

each stagnation increment.

6.0 Pay Fixation on Promotion

6.1 One notional increment equal to the increment being drawn by the employee concerned in

the pay scale before such promotion would be granted and pay fixed in the promoted pay

scale and rounded off to the next multiple of Rs.10/-.

7.0 Dearness Allowances (DA)

7.1 100% DA neutralization will be adopted for all the executives and non-unionised supervisors

of HPC who are on IDA pattern of scales of pay. Thus, DA as on 1.1.2007 will become zero

with linked point of All India Consumer Price Index (AICPI) 2001 = 100, which is 126.33 as

on 1.1.2007. The periodicity of adjustment will be once in three months as per Previous

practice. The quarterly DA payable from 1.1.2007 will be as under:

With effect from Rate of DA admissible

(in percentage)


(in percentage)

01.01.2007 0 01.04.2008 6.3

01.04.2007 0.8 01.07.2008 9.2

01.07.2007 1.3 01.10.2008 12.9

01.10.2007 4.2 01.01.2009 16.6

01.01.2008 5.8 01.04.2009 16.9


Paper Industry

_____________________________________________________________________________________

19 | P a g e

7.2 Rate of DA payable during each quarter commencing from 1.7.2009 would be notified from

………..time to time.

7.3 Basic Pay, Dearness Pay and Dearness Allowance already paid from January 2007 to April

……… 2009 under 1997pay structure would be fully adjusted against the arrears as and when ………

……… payable.

8.0 House Rent Allowances (HRA) and House Rent Recovery (HRR)

8.1 With effect from 18.05.2009, those who have not been provided residential accommodation

…….. by the Corporation, will be paid HRA at the following rates on the relevant basic pay in the

…….. revised scale of pay based on classification of places / cities notified by the Government of

…….. India from time to time on the basis of population, subject to fulfillment of other terms and

……. conditions

8.2. House Rent Recovery in respect of those who have been provided with residential

accommodation in the Corporation-owned Township will be made based on the prescribed

rate on relevant basic pay in the revised scale of pay subject to the condition like standard

rent / license fee. The rate of license fee will be double the Previousrate with effect from

18.05.2009, as under:

Categories of Cities

with population Name of the Cities

Rate of HRA

(per month)

‘X’

(above 50 lakh)

Delhi (UA), Mumbai (UA), Kolkata (UA), Chennai (UA),

Bangalore (UA), Hyderabad (UA) 30% of basic pay

‘Y’

(between 5 lakh and

50 lakh)

Ahmedabad, Indore, Guwahati, Patna, Chandigarh,

Lucknow, Jaipur, Thiruvananthapuram, Kochi, Madurai,

etc.

20% of basic pay.

‘Z’

(less than 5 lakh)

Unclassified Areas (such as Jagiroad, Panchgram,

Newsprint Nagar, etc.) 10% of basic pay

UA = Urban Agglomeration


Paper Industry

_____________________________________________________________________________________

20 | P a g e

Type of

Quarters

Living Area

(Sq. Mtrs.)

previous Rate

(per month)

Revised

Rate(existing)

(per month)

A Upto 50 Rs. 108/- Rs. 216/-

B 51-75 Rs. 142/- Rs. 284/-

C 76-100 Rs. 200/- Rs. 400/-

D (at Mills)

D-1 (at Kolkata) 101-150 Rs. 284/- Rs. 568/-

D (at Kolkata) Above 150 Rs. 415/- Rs. 830/-

9.0 City Compensatory Allowance (CCA)

9.1 Payment of CCA stands dispensed with from 18.05.2009.

10.0 North-East Allowances (NEA)

10.1 Payment of NEA @ 12.5% on basic pay will be made to executives serving in the …………

……….. Corporation’s establishments in Assam / NE Region with effect from 18.05.2009.

10.2 The above NE Allowance will also be made applicable in respect of non-unionised ………..

……….. supervisors serving in Assam / NE Region with effect from 18.05.2009 in lieu of Special …

… Compensatory (Remote Locality) Allowance which will be dispensed with simultaneously.

11.0 Non-Practicing Allowance (NPA)

11.1. NPA @ 25% of basic pay shall be payable to the Medical Officers (Doctors) with effect from

……….. 18.05.2009 who are on the regular rolls of the Corporation.

12.0 Incentive on acquiring professional qualification

12.1 The quantum of incentive being drawn by the employees under pre-revised pay scale . .

……… (1997) will be dispensed with effect from 18.05.2009 and hitherto the Incentive Scheme

……. stands withdrawn.


Paper Industry

_____________________________________________________________________________________

21 | P a g e

13.0 Performance Related Variable Pay (PRVP) Scheme

13.1 The BoD has constituted a Remuneration Committee headed by a Non-Official Part-time

………….Director (Independent Director) and consisting of Director (Finance) and Director

………….(Operations) to conceptualise and operationalise the Performance Related Variable Pay

………….Scheme. The PRVP Scheme based on Performance Management System (PMS) aligned to

………….DPE prescribed parameters is under formulation for implementation w.e.f 1.4.2007. The

………….payment under Performance Related Payment Scheme (PRPS) made for FY 2007-08 will be

………… adjusted against the payment due if any, under the PRVP Scheme that may be put into

………… operation and PRPS will be substituted by PRVP Scheme.

14.0 Elimination of subsidies on Electricity, Canteen, Transport, etc.

14.1 In order to restrict the expenditure on infrastructure facilities, it has been decided that

there will be no subsidy on account of Electricity, Canteen, Transport facilities, etc with

effect from 18.05.2009.

15.0 Car Facilities

15.1 The Company-owned car / hired car would be provided to the CMD / Functional Directors,

Executive Directors and/or Chief Executives of the Mills only. Accordingly, the practice

being followed in the mills for providing vehicles to other executives for picking up and

dropping will be dispensed with and actual cost will be charged as user fee with effect from

18.05.2009.

16.0 Gratuity

16.1 The ceiling for payment of gratuity in respect of executives and non-unionised supervisors

is raised from Rs.3.50 lacs to Rs.10.00 lacs with effect from 1.1.2007.

17.0 PF Contribution

17.1 Deduction of contribution towards Provident Fund shall be made on the revised basic pay

and DA with effect from 1.1.2007.


Paper Industry

_____________________________________________________________________________________

22 | P a g e

18.0 Introduction of the concept of „Cost to Company (CTC)‟

18.1 In terms of DPE OM dated 26.11.2008, the concept of CTC is required to be implemented in

all CPSEs. The entire cost of an executive is explicitly made known by a CPSE; adopting the

system of CTC for the purpose of reporting executive compensation, pay, allowances,

perquisites and retirement benefits should all be monetized and included while reporting

the cost of manpower to the CPSE.

18.2 It is further decided by the Government that where a CPSE has created infrastructure such

………. as township, hospital, school, club etc., the recurring expenditure on maintaining and

…………running these infrastructure facilities would be taken into account. The recurring

…………expenditure should be divided into two parts, based on proportion of total basic pay of

…………executives and non-unionised supervisors and the total basic pay of workmen. The part

………...attributable to the executives and non-unionised supervisors would be reckoned as the

………...expenditure on perquisites and allowances, subject to the condition that the said amount

………...shall be restricted to 10% of basic pay of all executives and non-unionised supervisors

…………within the overall limit of 50% of basic pay.

18.3 The total annualized expenditure towards the instant revision cannot exceed 20% of Profit

…………Before Tax (PBT) for FY 2007-08. The expenditure on running and maintenance of

…………infrastructure has to be within the ceiling of 10% of basic pay

19.0 Other Perks & Allowances

19.1. In terms of DPE OMs referred in (18.1) above, perks and allowances shall be considered for

revision from a prospective date, subject to maximum limit of 50% of revised basic pay.

Other than raising the ceiling of one month’s basic pay and DA for reimbursement of

medical expenses against domiciliary treatment, no modification in Previous allowances

and perquisites will be considered except those mentioned hereinabove. The Previous

perks and allowances viz., reimbursement of conveyances expenses, tuition fee, family

planning incentive, LTC, company leased accommodation (applicable for key officials in pay

grade E-6 and above), night shift allowance for supervisors and tea allowance (wherever

applicable) will continue to be regulated as per Previous entitlement / rates as admissible

under the extant rules till further orders.


Paper Industry

_____________________________________________________________________________________

23 | P a g e

20.0 Payment of Arrears

20.1 Those who ceased to be in the service of the Corporation with effect from 1.1.2007 and upto

the date of issue of this Circular owing to retirement / superannuation , separation on

account of resignation, continued ill-health duly accepted by the Competent Authority or

death while in service will be eligible for payment of arrears on a pro-rata basis, whenever

due.

20.2 The benefit of revised pay and DA and consequential payment of arrears shall not be

…………admissible to those who have ceased to be in the service Corporation on or after 1.1.2007 on

…………the following grounds:

a) Dismissal

b) Removal from services which shall not be a disqualification for future employment

c) Resignation without permission / notice / authorization

d) Resignation when disciplinary action had already been initiated and was in progress.


Paper Industry

_____________________________________________________________________________________

24 | P a g e

2. Negotiation through Collective Bargaining in HPC ltd.

The first meeting between the Management Representatives of HPC and Representatives of the

recognized Unions was held on 17.04.2007 based on Charter of Demands submitted by Unions

who were recognized at that point of time.

Subsequently, based on the discussions held in the meeting, the said unions submitted a

common Charter of Demands vide their letter dated 19.04.2007. Thereafter, meetings were held

on 14.07.2007 and 12.12.2007.

However, regular meetings with the Unions continued for almost one year and the next meeting

was held at Guwahati on 15.12.2008, where the newly elected Union i.e., Cachar Paper Project

Workers’ Union (INTUC), which got recognition through the process of referendum held in

October, 2008, also participated.

As this Union was recognized subsequently, it submitted the Charter of Demand separately vide

letter dated 12.12.2008. However, other Unions insisted on continuing the negotiations based

on the common Charter of Demands submitted by them on 19.04.2007.

Accordingly, the matter was discussed in the meeting and all the four Unions decided

unanimously to continue discussions based only on the common Charter of Demands submitted

on 19.04.2007. It was also clarified to the Unions that the pay, perquisites and benefits would be

monetized and the personnel cost would be based on Cost to Company (CTC). Subsequently, a

series of meetings were held on 07.01.2009, 28.01.2009, 26.02.2009, 26.05.2009 and

01.06.2009 at Guwahati / Kolkata on the common Charter of Demands.

The final discussions between the representatives of the Management and recognized Unions

were held from 08.06.2009 to13.06.2009 at Kolkata and the parties have signed an MoU on

some terms & conditions which would be implemented after obtaining approval of the Board of

Directors of HPC and the GoI i.e. revised Scale of pay [pay structure 2007]. (ltd., 2007)


Paper Industry

_____________________________________________________________________________________

25 | P a g e

3. For Workmen-Revised Scale of Pay (2007 pay structure)/ Wage Grades

1.0. For Workmen

Wage

Grade Previous Scale of Pay Revised Scale of Pay

W-1 Rs 4200-80-4760-85-5780 Rs.7500-16500

W-2 Rs 4300-85-4895-95-6035 Rs.7700-17200

W-3 Rs 4450-95-5115-105-6375 Rs.7900-18100

W-4 Rs 4650-105-5385-115-6765 Rs.8200-19800

W-5 Rs 4850-115-5655-125-7155 Rs.8500-20500

W-6 Rs 5050-125-5925-135-7545 Rs.8900-22000

W-7 Rs 5350-135-6295-145-8035 Rs.9500-24000

W-8 Rs 5650-145-6665-155-8525 Rs.10000-25200

W-9 Rs 5950-160-6430-200-9030 Rs.10700-27600

W-9A Rs.6000-200-9200 Rs.11500-29600

W-9B Rs.6550-220-11390 Rs.12600-32500

2.0 Fixation of Pay in the Corresponding Revised Scales of Pay

2.1 A uniform Fitment Benefit @ 30% on basic pay plus DA @ 78.2% as on 01.01.2007 would

be provided to all workmen who are on the roll of the Corporation on 01.01.2007 and

continue to be in the service of the Corporation as on the date of signing of the

Memorandum of Settlement.


Paper Industry

_____________________________________________________________________________________

26 | P a g e

3.0 Rate of Annual Increment

3.1 Annual Increment will be at the rate of 3% of revised basic pay applicable uniformly for all

grades of workmen and will be rounded off to the next multiple of Rs.10/-.

4.0 Stagnation Increment

4.1 The rate of stagnation increment will be 3% of the revised basic pay and workmen will be

allowed to draw maximum three stagnation increments, one after every two years, upon

reaching the maximum of the revised pay scale provided the workman gets a performance

rating of ‘Good’ or above.

5.0. Pay Fixation on Promotion

5.1. Accordingly, one notional increment @ 3% in pre-promoted pay scale would be granted and

………..the resultant figure so arrived at after rounding off to next multiple of Rs.10/-, would be the

………..revised basic pay in the promoted grade / scale of pay.

6.0 Dearness Allowance (DA)

6.1 100% DA neutralization (under IDA pattern of pay scales) will be adopted for all the

workmen covered under this Settlement

The quarterly DA payable from 01.04.2007 will be as under:


(in percentage)


(in percentage)

01.04.2007 0.8 01.07.2008 9.2

01.07.2007 1.3 01.10.2008 12.9

01.10.2007 4.2 01.01.2009 16.6

01.01.2008 5.8 01.04.2009 16.9

01.04.2008 6.3 01.07.2009 18.5


Paper Industry

_____________________________________________________________________________________

27 | P a g e

6.2 Basic Pay, Dearness Pay and Dearness Allowance already paid from January 2007 under

1997 pay structure would be adjusted against the arrears payable after implementation of

revised pay structure (2007).

7.0 Local Travelling Expenses (LTE)

7.1 The reimbursement of LTE will be Rs. 20/- per day for those who reside within a radius of

10 Kms and Rs.40/- per day for those who reside beyond the radius of 10 Kms from the

place of duty, on actual attendance basis.

7.2 As regards reimbursement of LTE for attending duty on holidays / weekly off days, the

following procedure will be followed.

a) In case an employee is allowed Compensatory Off in lieu of overtime, he will be

reimbursed LTE at the prescribed rate @ Rs.20/- or Rs.40/- per day as the case may be,

for the day he attends duty.

b) No reimbursement of LTE will be admissible if the employee is paid overtime allowance

on attending duty on any holiday / weekly off day.

7.3 If a workman attends duty on half a day’s Casual Leave, LTE will be admissible at full rate.

8.0 Reimbursement of Conveyance Expenses

8.1 The reimbursement of Conveyance Expenses for maintaining Two-Wheeler (Scooter / Motor

Cycle) will be Rs.1050/- per month for all grades of workmen with effect from 03.08.2009.

8.2 The special conveyance allowance for PWD will be double the rate of LTE as mentioned at

para 7.1 above with effect from 03.08.2009.

9.0 Reimbursement of Education / Tuition Fee for Children

9.1 Reimbursement of Education/Tuition Fee including Vidyalaya Vikas Nidhi (VVN) as prevalent

in Kendriya Vidyalaya and admission fee or any other subject fee (like science/laboratory

fee, computer fee, library fee, music fee and games/sports fee) will be sanctioned at actuals

limited to Rs.350/- per child per month on specific declaration of the workmen supported

by a Certificate from the Head of the Institution. This will apply to students studying in

Nursery to Class XII subject to the condition that this is payable to the institution(s) which


Paper Industry

_____________________________________________________________________________________

28 | P a g e

are authorized to sponsor such children for recognized examinations and it will be limited

to maximum of two children.

9.2 The Reimbursement of Education/Tuition Fee to the employees’ Children with disability will

be limited to Rs.750/- per month per child with effect from August, 2009 subject to

production of necessary fee receipt / certificate of the school.

10.0 House Rent Allowance (HRA)

10.1 With effect from 03.08.2009, those who have not been provided with residential

accommodation by the Corporation, will be paid HRA at the following rates on the relevant

basic pay in the revised scale of pay based on classification of places / cities notified by the

Government of India from time to time on the basis of population, subject to other terms and

conditions.

Categories of Cities

with population Name of the Cities

Rate of HRA

(per month)

‘X’

(above 50 lakh)

Delhi (UA), Mumbai (UA), Kolkata (UA), Chennai (UA),

Bangalore (UA), Hyderabad (UA) 30% of basic pay

‘Y’

(between 5 lakh and

50 lakh)

Ahmedabad, Indore, Guwahati, Patna, Chandigarh,

Lucknow, Jaipur, Thiruvananthapuram, Kochi, Madurai,

etc.

20% of basic pay

‘Z’

(less than 5 lakh)

Unclassified Areas (such as Jagiroad, Panchgram,

Newsprint Nagar, etc.) 10% of basic pay

UA = Urban Agglomeration

11.0 House Rent Recovery (HRR)

11.1 HRR in respect of workmen who have been provided with residential accommodation in the

Corporation-owned Township at different locations (i.e., at Mills & Kolkata) will be made

based on the prescribed rate on relevant basic pay in the revised scale of pay subject to the

condition like standard rent / license fee. The rate of license fee will be double the Previous

rate with effect from 03.08.2009, as under.


Paper Industry

_____________________________________________________________________________________

29 | P a g e

Type of

Quarters

PreviousRate

(per month)

Revised Rate

(per month)

Mills Kolkata Mills Kolkata

A 35 70 70 140

B 75 142 150 284

12.0 City Compensatory Allowance (CCA)

12.1 Payment of CCA stands dispensed with from 03.08.2009

13.0 North-East Allowance (NEA)

13.1 Payment of NEA @ 12.5% on basic pay with effect from 03.08.2009 will be made to all

workmen serving in the Corporation’s establishments in Assam / NE Region in lieu of

Previous special Compensatory (Remote Locality) Allowance which will be dispensed with

simultaneously.

14.0 Shift Allowance

14.1 Shift Allowance will be paid with effect from 03.08.2009 to the workmen of NPM and CPM

who are working in rotating shifts as per the following rates.

Shift Rate

A Rs. 20/-

B Rs. 30/-

C Rs. 80/-

15.0 Washing Allowance

15.1 Washing Allowance at the following rates will be paid with effect from 03.08.2009 to the

workmen who are provided with uniform subject to the condition that they attend duty in

uniform and keep them neat and clean.


Paper Industry

_____________________________________________________________________________________

30 | P a g e

General Category - Rs.150/- per month

Para-Medical Staff - Rs.180/- per month

16.0 Hill Tract Allowance (HTA)

16.1 HTA @ Rs.250/- per month will be paid with effect from 03.08.2009 during harvest season

to the Forest Staff of NPM and CPM working at difficult location of forest areas.

17.0 Cash Handling Allowance (CHA)

17.1 The following rates of CHA as prescribed by the Government of India will be applicable from

03.08.2009 subject to conditions prescribed under the rules.

Amount of average monthly cash

disbursement

Rate of CHA

(per month)

Upto Rs.50,000 Rs 150/-

Over Rs.50,000 and upto Rs. 2 lakh Rs 300/-

Over Rs. 2 lakh and upto Rs.5 lakh Rs 400/-

Over Rs. 5 lakh and upto Rs. 10 lakh Rs 500/-

Over Rs. 10 lakh Rs 600/-

18.0 Family Planning Allowance (FPA)

18.1 the incentive in the form of ‘Family Planning Allowance’ will be paid as follows-

Post /

Grade

Pre-revised

Pay Scales (1997)

Corresponding Revised

Pay Scales (2007)

Rate of Family

Planning Allowance (p.m)

W-1 Rs 4200-80-4760-85-5780 Rs.7500-16500 Rs.230/-

W-2 Rs 4300-85-4895-95-6035 Rs.7700-17200 Rs.240/-


Paper Industry

_____________________________________________________________________________________

31 | P a g e

W-3 Rs 4450-95-5115-105-6375 Rs.7900-18100 Rs.240/-

W-4 Rs 4650-105-5385-115-6765 Rs.8200-19800 Rs.250/-

W-5 Rs 4850-115-5655-125-7155 Rs.8500-20500 Rs.260/-

W-6 Rs 5050-125-5925-135-7545 Rs.8900-22000 Rs.270/-

W-7 Rs 5350-135-6295-145-8035 Rs.9500-23900 Rs.290/-

W-8 Rs 5650-145-6665-155-8525 Rs.10000-25000 Rs.300/-

W-9 Rs 5950-160-6430-200-9030 Rs.10700-27400 Rs.330/-

W-9A Rs.6000-200-9200 Rs.11500-29600 Rs.350/-

W-9B Rs.6550-220-11390 Rs.12600-32500 Rs.380/-

19.0 Incentive on acquiring professional qualification

19.1 The quantum of incentive being drawn by the employees under pre-revised pay scale (1997)

will be dispensed with from 03.08.2009 and hitherto the Incentive Scheme stands

withdrawn.

20.0 Funeral Expenses and death Relief Fund

20.1 In case of death of an employee, an amount of Rs.3000/- or as admissible under the

Workmen’s Compensation Act, 1923, whichever is higher, will be paid by the Corporation

on account of Funeral Expenses.

20.2 A matching contribution limited to Rs.100/- per member employee under the Death Relief

Fund (DRF) Scheme as in vogue in the respective units, shall be made by the Corporation.

21.0 Gratuity

21.1 The ceiling for payment of Gratuity will be raised from Rs.3.50 lakh to Rs.10.00 lakh with

effect from 01.01.2007.


Paper Industry

_____________________________________________________________________________________

32 | P a g e

22.0 Gratuitous Payment in case of Death / Permanent Total Disability

22.1 The ceiling of gratuitous payment is of Rs.3 lakh. The monthly total income of dependent

family members will be revised from Rs.4,199/- to Rs.7,499/-. These enhanced ceilings will

be applicable with effect from 03.08.2009.

23.0 Performance Related Variable Payment (PRVP) Scheme

23.1 The PRVP will be directly linked to the performance of the workmen and percentage ceiling

of PRVP will be 20% of the basic pay. The ‘Bell Curve Approach’ will be adopted in grading

the workmen so that not more than 5% workmen are ‘Outstanding / Excellent’, 40% ‘Very

Good’, 45% ‘Good’ and 10% ‘Average’. The workmen rated ‘Poor’ will not be eligible for any

PRVP.

23.2 The PRVP applicable for ‘Outstanding / Excellent’ performers will be 100% of the ceiling

prescribed (i.e, 20% of basic pay). Similarly, in case of ‘Very Good’, ‘Good’ & ‘Average’

performers, the PRVP will be 80%, 60% & 40% respectively of the prescribed ceiling of

20%.

24.0 Festival Advance

24.1 Admissible amount of Festival Advance shall be Rs.5,000/- in accordance with the Previous

practice and regulations.

25.0 School Re-opening Advance

25.1 A recoverable advance of Rs.4,000/- will be sanctioned to the workmen once in a calendar

year whose children are studying upto Class XII. It will be paid to those workmen who have

at least Rs.3,000/- net pay in the previous month.

26.0 Payment of Arrears

26.1 Those who ceased to be in the service of the Corporation with effect from 01.01.2007 and up

to the date of implementation of revised pay structure, owing to retirement /

superannuation, separation on account of resignation, continued ill-health duly accepted by

the Competent Authority or death while in service will be eligible for payment of arrears on

a pro-rata basis, whenever due.


Paper Industry

_____________________________________________________________________________________

33 | P a g e

26.2 The benefit of revised pay and DA and consequential payment of arrears shall not be

admissible to those who have ceased to be in the service of the Corporation on or after

01.01.2007

26.3 As a result of this wage revision with effect from 01.01.2007, there will be no calculation /

arrear payment with regard to overtime wages, TA/DA, LTC and such other allowances as

are related to or connected with the basic pay, except mentioned specifically .


Paper Industry

_____________________________________________________________________________________

34 | P a g e

About Competitor

1. Mysore Paper Mills Limited

1.1. Introduction of the MPM Ltd.

The Mysore Paper Mills Ltd. (MPM) founded by Sri.Krishanaraja Wodeyar Bahadur in 1937 the

Maharaja of erstwhile Mysore State was incorporated on 20th May 1936 under the Mysore

Companies Regulation, VIII of 1917. Later it became a Government company in 1977 under

section 617 of the Companies Act, 1956. The Company has its Registration Office at Bangluru

and its plant located at Bhadravati, Shimoga District, Karnataka state.

The company has an Authorized capital of 150 crs. And paid up capital 120 crs. The share of the

company are listed in the BSE and there are about 17, 000 shareholders.

The company is managed by eminent Board of Director consisting of IAS, IFS and other

professionals. The Chairman & Managing Director of the company is assisted by a team of

professionals in various fields who have expertise in production, finance, marketing etc . with a

dedicated team force.

MPM with 5000 employees has its own township. About 15000 families of the cane growers

who supply sugarcane to the company are directly dependant on this company and many more

depend indirectly . the direct and indirect contribution by MPM to the local economy is about

Rs. 200 Cr. P.A.

Products

Writing Papers,

Newsprint Papers,

Printing & packaging Paper and

Manufacture of Plantation White Sugar.

To produce these products they use Pulpwood like Pines, Acacia, Eucalyptus. (Mysore paper

mills.)


Paper Industry

_____________________________________________________________________________________

35 | P a g e

1.2. Compensation Setup in Mysore Paper Mills Ltd.

A. For Workmen- Current Scale of Pay

A.1. Basic Pay Fixation

The revised basic pay is fixed on the following formula

Pre-revised Basic pay as on 01.03.2007 (A) + Personal pay (B) +Applicable IDA (C) +10%

proposed hike on A+B+C Minus present stat Govt. DA as on 01.03.2007 (Total pay / 1.1225%

taking 12.25% Govt. DA on 01.03.2007).

GRADES Revised Pay Scale For The Current Period

(01.03.2007 to 29.02.2012)

MR CMR

M-0 TG-1 8600-225-9500-250-10500-300-12300-350-14400-400-16800-450-19500

M-1 TG-1 8200-200-8600-225-9500-250-10500-300-12300-350-14400-400-16800

M-3 - M-3/M-2/M-2PG: 7800-200-8600-225-9500-250-10500-300-12300-350-14400-

400-16800

M-2 - (Please see the above row)

- CT-1 7450-175-7800-200-8600-225-9500-250-10500-300-12300-350-14400

- CT-2 7100-175-7800-200-8600-225-9500-250-10500-300-12300-350-14400

M-4 CT-3 6800-150-7100-175-7800-200-8600-225-9500-250-10500-300-12300-350-14400

M-5 CT-4 C4

PG

M-5/CT-4/CT-4PG:6500-150-7100-175-7800-200-8600-225-9500-250-10500-300-

12300

M-6 CT-5 6125-125-6500-150-7100-175-7800-200-8600-225-9500-250-10500

M-7 CT-6 5800-100-6000-125-6500-150-7100-175-7800-200-8600-225-9500

M-8 CT-7 5500-100-6000-125-6500-150-7100-175-7800-200-8600-225-9500

M-9 CT-8 5200-100-6000-125-6500-150-7100-175-7800-200-8600-225-9500

M-10 CT-9 4800-100-6000-125-6500-150-7100-175-7800-200-8600-225-9500

M-11 CT-10 4400-80-4800-100-6000-125-6500-150-7100-175-7800-200-8600-225-9500


Paper Industry

_____________________________________________________________________________________

36 | P a g e

A.2. State Govt. DA rates

From 01.01.2007 to 30.06.2007 - 12.25%

From 01.07.2007 to 31.12.2007 – 17.50%

From o1.07.2008 to 31.12.2008 – 26.75%

From 01.01.2009 - 32.75%

A.3. Superannuation Subscription

Superannuation Subscription given is 7.5% under the current period of settlement.

A.4. Transport Subsidy

The conveyance allowance is given to the employees who own two wheelers. The transport

subsidy for the employees who are staying outside the township at their own request will not

be given for Bus charges. However, 3 months time is granted for them to make alternative

arrangement. Once they own vehicles, they are eligible for conveyance allowance as per the

rule.

A.5. Leaves

a) The Earned Leave or Privilege Leave or Vacation Leave is called single name –Earned Leave

(EL) and it is of 240 days.

b) One day special leave given for those who donate blood on the day of donation will be

treated as physical attendance for allowance purpose.

A.6. Stagnation Increment

Stagnation increment is paid every year at the rate of last increment in the stagnated pay scale.


Paper Industry

_____________________________________________________________________________________

37 | P a g e

A.7. Other Allowances

A.8. Hazardous Allowance

Hazardous Allowances only for workers and employees working within the factory premises

at hazardous places at the rate of Rs. 3 per shift/ day.

A.9. Festival Advance

Festival advance of Rs. 4800 per year for Ugadi and Ganesha festival for Rs. 2400 to each

festival at free of interest recoverable in equal monthly installment for all permanent

employees on roll.

Sl. No. Perks PreviousRate

(per month)

1 City Compensatory allowance per month 200

2 Night shift allowance per shift 40

3 Rope allowance per shift 6

4 Washing allowance per month 35

5 Washing / Cycle allowance per month 20

6 Driver Allowance per month

a. Category- A 275

b. Category-B 225

c. Category-C (tractor driver) 50

7 Chief Cashier allowance per month 150

8 Asst. Cashier allowance per month 125

9 Cash Handling allowance per occasion 75

10 In-charge allowance day/ shift 12/8/5

11 Attendance Bonus: Production

Non-Production

300/200/125

250/175/125


Paper Industry

_____________________________________________________________________________________

38 | P a g e

A.10. Education Advance

The recover able education advance of Rs. 4000/- at 10%p.a. interest shall be paid and

payment shall be made on May 12th of every year or shall be paid on previous day or with the

May salary only for payment employees who are on the roll of the company.

A.11. Death Relief Fund

The management has agreed to pay Rs. 15000/-as DRF to all employees expire while in

service. Out of which on the day of incident / death Rs.5000/- as cash and remaining Rs.

10,000/- by cheque to the concerned family members.

A.12. Stitching Charges

MPM pays the stitchingcharges with increase of 10% for every two years.

A.13. Soap and Towels

Provide good quality soaps and towels at work place to employees.

A.14. House Rent Allowance

HRA at rate of Rs. 275/- shall be provided to only those who have not been provided with

company quarters but workmen at Bangluru and Regional offices will be given at a rate of Rs

1500/- for PG I employees and Rs 1300/- for other catogorory.

A.15. Medical Facilities

Medical facilities provide at hospitals to the spouse, children and dependent parents of the

employee.


Paper Industry

_____________________________________________________________________________________

39 | P a g e

B. For Executives- Current Scale of Pay

Grade Pay Scale (Rs.) on previous pattern

Gr-1 4650-240-5850-270-7200-300-8700-330-10350-360-12150-390-14100-420-16200

Gr-2 5850-270-7200-300-8700-330-10350-360-12150-390-14100-420-16200-450-18450

Gr-3 7200-300-8700-330-10350-360-12150-390-14100-420-16200-450-18450-480-

20850

Gr-4 8700-330-10350-360-12150-390-14100-420-16200-450-18450-480-20850-510-

23400

Gr-5 10350-360-12150-390-14100-420-16200-450-18450-480-20850-510-23400-540-

26100

Gr-6 12150-390-14100-420-16200-450-18450-480-20850-510-23400-540-26100-570-

28950

Gr-7 14100-420-16200-450-18450-480-20850-510-23400-540-26100-570-28950-600-

30150

Gr-8

(DGM)

14750-450-17000-490-19450-530-22100-570-22100-570-24950-610-28000-650-

31250

Gr-9

(JGM)

16000-490-18450-530-21100-570-23950-610-27000-650-30250-690-33700

Gr-10 17750-530-20400-570-23250-610-26300-650-29550-690-33000-730-36650

Gr-11

(Dir/ED)

19250-570-22100-610-25150-650-28400-690-31850-730-35500-770-39350

B.1. Dearness allowance

The DA as announced by the Govt. of Karnataka to ite employees from time to time would

be paid to the officers of the company as at present in the revised pay scales. [as per given

in A.2.].


Paper Industry

_____________________________________________________________________________________

40 | P a g e

B.2. House Rent allowance

a) At Bangluru :- 15.75% of Previous basic + PP

b) Regional offices :- 21.50% of Previous basic + PP

The Previous HRA applicable to officers at Bhadravati, Shimoga and other places remain

unaltered.

B.3. Medical Reimbursement

a) Gr-I to IV Officers : 51% of Previous basic + PP

b) Gr-V and above : 56% of Previous basic + PP

B.4. Night Shift Allowance

Night Shift Allowance is Rs.35/- per shift .

B.5. Leave Encashment

Officers are permitted to encash upto 30 days PL at their credit every year or 60 days PL at

their credit once in a block period of 2 years w.e.f Block period of 2005-06. (mills, 2007)


Paper Industry

_____________________________________________________________________________________

41 | P a g e

2. Tamil Nadu Newsprints and Paper Limited

2.1. Introduction of TNPL

Tamil Nadu Newsprint and Papers Limited(TNPL) was established by the Government of Tamil

Nadu during early eighties to produces Newsprint and Printing & Writing Paper using bagasse,

a sugarcane residue, as primary raw material. The company commenced production in the

year1984 with an initial capacity of 90,000 tonnes per annum

Over the years, the production capacity has been increased to 2,45,000 tonnes per annum and

the Company has emerge as the large bagasse based Paper Mill in the world consuming about

one million tones of bagasse ever year.

The Company is in the process of implementing the Mill Expansion Plan for increase the

capacity to 4,00,000 tonnes per annum from July 2010.

Products

TNPL offers high-quality surface sized and non-surface sized paper to suit the needs

modern high speed printing machines.

TNPL manufactures Printing and writing Papers in substances ranging from 50 GSM to 90

GMS.

As the paper is acid free, it has longer color stability and enhanced permanency in terms of

strength characteristics.

The paper reels have uniform profile with strength properties to cope even with high speed

machines.

The Company caters to the requirements of multifunctional printing processes like- sheet-

fed , web-offset and digital printers. (TNPL)


Paper Industry

_____________________________________________________________________________________

42 | P a g e

2.2. Compensation Setup in Tamil Nadu Newsprint and Paper Mills Ltd. A. For Executives

A.1 Scale of Pay

Grade Basic Pay (Rs.) Director 46500-1500-61500 CGM 41500-1400-55500 GM 36000-1200-48000 DGM 30500-1000-40500 AGM 26000-800-34000 SR.Manager 22500-700-29500 Manager 21500-600-27500 Dy. Manager 18000-500-23000 Asst. Manager 15000-425-19250 Officer 12500-350-16000 Asst. Office 10500-250-13000 GET Rs.14400/- (1st year) , Rs.16200/- (2nd year) AO (T) Rs. 13200/- (1st year) ,Rs. 15000/- (2nd year)

A.2. Dearness Allowance

a). F.D.A – Minimum Rs.5232/- and varies individual to individual.

b). V.D.A –

Basic pay upto Rs.16000=0.40% of basic for every

Basic pay upto from Rs.16001 to Rs. 25000 = 0.36% of basic for every 8 point increase over 2680

points.

Basic pay from 25001 and above 0.36% of basic pay every 8 point increase over 2680 point upto

Rs.25000/- + 0.18% over Rs. 25000/-

A.3. House Rent Allowance (HRA)

Grades Branches Other Places Employees residing in quarters

Amount (Rs.)

AGM & Above 35% 30% For type D 700

DM,Mgr. & Sr.Mgr. 30% 25% For type C 750

AO to AM 25% 25% For type B 800

- - - For type A 850

- - - For TA type 900


Paper Industry

_____________________________________________________________________________________

43 | P a g e

A.4. City Compensatory Allowance (CCA)

Grades Amount (Rs.)

Asst. Officer 650

Officer 800

AM to Manager 1000

Sr. Manager 1200

AGM and DGM 1400

GM and above 1600

A.5. Conveyance Reimbursement

DM and above:

Car = Rs. 3000/-

Scooter/Motorcycle= Rs. 1350/-

Moped = Rs. 750/-

A.O to A.M

Scooter/ Motorcycle = Rs.1350/-

Moped = Rs.750/-

A.6. Children Education Allowance

Grades Amount per child A.O and Officer Rs. 100/-

A.M to D.M Rs. 125/-

Manager and above Rs. 150/-

Subject to maximum of 2 children

A.7. Offsite Allowance

Intake well and Pugalur = Rs. 350/-p.m.

Other offsites and Wind Farm = Rs.700/-p.m.


Paper Industry

_____________________________________________________________________________________

44 | P a g e

A.8. Free Electricity(for company quarter)

Grades No. of units per month DGM and above 300

AGM 120

DM to Sr. Manager 90

Officer and A.M 70

Asst.Officer 50

A.9. Family Planning Incentive

Rs.25000/- and 1 kg Complan and 6 days special leave

A.10. Leave Encashment and Leave Credit

Encashment of Privilege Leave (PL), normally allowed to 15 days per year. However, if an

employee not encashing PL in the previous years the accumulation of 15 days per year is

allowed.

PL : 30 days per annum

PL accumulation day : Maximum 240 days

Sick Leave(SL) :10 days per annum

SL accumulation: No limit

Casual leave(CL): 10 days per annum

A.11. LTC

LTC can be availed once in two years(block yr.)

A.12. Funeral Expenses

Rs.5000/-

A.13. Other Benefits

Festival advance

One pair of shoes & 3 set of socks issued to male employees and chapals to females every year.

Every year 2 sets of uniform are also issued to every employee.

Sweet distribution for Deepawali and Ayudha Pooja.


Paper Industry

_____________________________________________________________________________________

45 | P a g e

B. For Workmen

B.1. Current scale of Pay

Category Existing Pay Scale

Unskilled lower Grade 4320-36-4680-39-4875

Unskilled 5453-43-5885-45-6558

Semi skilled (C) 5688-51-6198-53-6993

Semi skilled (B) 5904-54-6444-56-7284

Semi skilled (A) 6120-58-6700-61-7615

Skilled (B) 6336-75-7086-78-8256

Skilled (A) 6552-83-7382-88-8086-93-8737

Highly skilled 6912-95-7862-100-8662-105-9397

B.2. Dearness Allowance

TNPL has two types of DA - (1) Fixed DA and (2) Variable DA.

B.3. House Rent Allowance (HRA)

HRA will be paid at the rate of 12% of Basic Pay for the workmen who have not been provide

with company accommodation.

B.4. Washing Allowance

Washing allowance is Rs.74 per month.

B.5.Conveyance Allowance

Conveyance allowance is Rs. 340 per month.

B.6.Conveyance Reimbursement

Workmen possessing and using automobile two wheeler vehicles not less than 49cc will be

given Rs. 365/-.

Workmen possessing and using automobile two wheeler vehicles not less than 98cc will be Rs.

440/-.

B.7. Night Shift Allowance

Night shift allowance paid to workmen posted to work in “C” shift is Rs. 12 per night shift.


Paper Industry

_____________________________________________________________________________________

46 | P a g e

B.8. Miscellaneous Compensatory Allowance

Rs.95/- paid to every workmen every month as a miscellaneous compensatory allowance.

B.9. Electricity Units For Colony Residents

Supply of free electricity of 5 units per month for residents of company’s Housing colony.

B.10. Fire Tender Allowance

Workmen in security Department will be paid Fire Tender Allowance @ Rs. 75/-.

B.11. Special Payment To Workmen in Offsite And Other Areas

Workmen in Windfarm and offsite will be paid offsite allowance of Rs.400/-

Workmen in Intake-well and Pugalur offsite allowance will be paid Rs.225/-

B.12. Family Planning Incentive

Rs. 3000/- shall be paid to eligible workmen.

B.13. Funeral expenses

In the event of death of a workmen while in service, an amount of 5000/- will be paid.

B.14. Employee Benefit Scheme (EBS)

Company’s contribution towards EBS is Rs. 500/-

B.14. Group Insurance

Coverage provided to the workmen under Group Insurance Scheme is Rs. 75000/-

(TNPL, 2006)


Paper Industry

_____________________________________________________________________________________

47 | P a g e

Comparative Analysis

As we came to know from this study that all the three concerned companies i.e. HPC ltd, TNPL and

MPM ltd. follow Graded Pay Structure. A Pay Range is attached to each grade which defines

minimum and maximum rate payable to any job and indicates scope provided for job holders to

progress through the range.

To Analyze the difference in Pay Range of Basic Salary of all the three companies let us see the

following graphs :-

1. For Workmen HPC Ltd.

Grade Minimum(Rs) Maximum(Rs) Gap(Rs) % Range

W-1 7500 16500 9000 120

W-2 7700 17200 9500 123

W-3 7900 18100 10200 129

W-4 8200 19800 11600 141

W-5 8500 20500 12000 141

W-6 8900 22000 13100 147

W-7 9500 24000 14500 153

W-8 10000 25200 15200 152

W-9 10700 27600 16900 158

W-9A 11500 29600 18100 157

W-9B 12600 32500 19900 158

Table 1: % range in basic pay of HPC ltd.

Figure 1:% Range of each grade for workmen in HPC ltd.

90

00

9500

1020

0

1160

0

1200

0

1310

0

1450

0

1520

0

1690

0

1810

0

1990

0

120%

123%

129% 14

1%

141%

147%

153%

152%

158%

15

7%

158%

0 2 4 6 8 10 12

0%

20%

40%

60%

80%

100%

120%

140%

160%

180%

0

5000

10000

15000

20000

25000

W-1 W-2 W-3 W-4 W-5 W-6 W-7 W-8 W-9 W-9A W-9B

Gap

% Range


Paper Industry

_____________________________________________________________________________________

48 | P a g e

Figure 2: %Range of each grade for workmen in Mysore Paper Mills Ltd.

MPM Ltd.


M-0/TG-1 8600 19500 10900 127

M-1/TG-2 8200 16800 8600 105

M-3/ 7800 16800 9000 115

M-2/ 7800 16800 9000 115

CT-1 7450 14400 6950 93

CT-2 7100 14400 7300 103

M-4/CT-3 6800 14400 7600 112

M-5/CT-4 6500 12300 5800 89

M-6/CT-5 6125 10500 4375 71

M-7/CT-6 5800 9500 3700 64

M-8/CT-7 5500 9500 4000 73

M-9/CT-8 5200 9500 4300 83

M-10/CT-9 4800 9500 4700 98

M-11/CT-10 4400 9500 5100 16

Table 2 : % range in basic pay of MPM Ltd.


Paper Industry

_____________________________________________________________________________________

49 | P a g e

Figure 3:%Range of each grade for workmen in Tamil Nadu Newsprints and Paper Ltd.

TNPL


Unskilled Lower Grade 4320 4875 555 13

Unskilled 5453 6558 1105 20

Semi-Skilled(C) 5688 6993 1305 23

Semi-Skilled(B) 5904 7284 1380 23

Semi-Skilled(A) 6120 7615 1495 24

Skilled (B) 6336 8256 1920 30

Skilled (A) 6552 8737 2185 33

Highly Skilled 6912 9397 2485 36

Table 3: % range in basic pay of TNPL


Paper Industry

_____________________________________________________________________________________

50 | P a g e

Basic pay is the most important, secure and fixed component of compensation. After getting the

information about basic pay structure of all the three companies we can say that HPC ltd. and MPM

ltd. have vertical structure as there are 10 to 14 grades. However, TNPL has horizontal structure

having less number of grades as compare to HPC Ltd. and MPM Ltd. which is easier to handle for

TNPL’s administration.

From the above graphs (fig: 1,2,3) regarding with the percentage range of each grade for workmen

of their basic pay we can see, as the grade is increasing in HPC Ltd. and TNPL the gap between

minimum and maximum wage within each grade also increasing. On the other hand there is no

consistency in the gap between minimum and maximum wage in MPM Ltd.

In case of HPC there is a big difference in ‘% Range’ between the lowest (W-1) and highest (W-9)

grades i.e. 120% and 158% respectively.

The reason behind this can be -

To accommodate the employee drawing maximum Basic pay in the pre-revised pay scale in such a

way that after fixation of pay in the revised pay structure they could continue to draw at least three

annual increments. So basically HPC ltd. has formed very good basic pay structure for their

workmen and they have maintained the proper basic pay ratio between the lower most and top

most employee of the organization i.e. 1:10 .


Paper Industry

_____________________________________________________________________________________

51 | P a g e

Comparison of salary and wages of Workmen among all three companies is given below :-

Main Topic Sub Topic Hindustan

paper

corporation

ltd.

Tamil Nadu

newsprint and

paper ltd.

Mysore paper

mills ltd.

Salary

Basic Given in

figure-1

Given in

figure-3

Given in

figure-2

DA Variable DA It has Fixed DA

and Variable

DA both.

Variable DA

Annual

increment

They follow

percentage

based increment

3% of basic pay

of worker

here, it is a fixed

amount of

increment

here, it is a

fixed amount of

increment

Stagnation

Increment

3% of basic pay

of worker one

after every two

years upto three

times only

workers who

reach to

maximum of

scale of pay will

continue to

draw annual

increment on

the respective

anniversary

date.

Ith shall be paid

every year at

the rate of last

increment.

Performance Related payment/

Bonus

Incentive/

Rewards

NA Productivity

linked incentive:

Rs. 10/- per

month

NA


Paper Industry

_____________________________________________________________________________________

52 | P a g e

Bonus Performance

related variable

payment is

there.

Bonus also

there as per

Bonus Act.

Payment of

bonus depends

on Profit

generated in that

particular

financial year

Attendance

bonus-

Production

bonus:

Rs.300/200/125

Non-prod.

Bonus :

Rs.250/175/125

Perk and

Allowance/Benefits/reimbursement

Conveyance

Reimbursement/

Allowance

Reimbursement

for two wheeler

: Rs 1050/-

conveyance

allowance: Rs

340/-

conveyance

reimbursement:

two wheelers

not less than

49cc = Rs.365/-

& 98cc=

Rs.440/-

not mentioned

but they give

bus charges and

to the

employees who

own two

wheeler

Night Shift

Allowances

For shift 'C'=

Rs. 80/- per

shift

For shift 'C' =

Rs.12/- per shift

Rs. 40/- per

shift

Magazines/HRD

Allowances

NA (Not

available)

NA NA

LTC/LLTC by train only

once in a block year

NA NA

Canteen subsidy NA NA Provide

Leave

Encashment

300 day 240 day

Washing

Allowance

General

category =

Rs.150/- pm

Para-Medical

staff = Rs. 180/-

pm

Rs.74/- Rs.35/-

Electricity /Water

Subsidies

Electricity: NA Water :

Rs.20 /-

free electricity : 5 units p.m for

residents of

Company's

housing colony


Paper Industry

_____________________________________________________________________________________

53 | P a g e

Family Planning

Incentive

some amount of

money paid

from

W-1 to W-9B

within the range

of Rs230/- to

Rs. 380/- per

month.

Rs.3000/- NA

City

compensatory

allowance

NA NA Rs. 200/-

Location based

allowance

North-East

allowance : at

the rate of

12.5%

Hill Tract

allowance: at

the rate of

Rs.250/- per

month during

the harvest season in the

forest.

NA

Cash Handling

allowance

(CHA)

Upto

Rs.50,000/- =

Rs 150/- p.m

Over Rs.

50,000/- and upto Rs 2 lakh =

Rs. 300/-

Over Rs.2lakh

and upto

Rs.5lakh =

Rs.400/-

Over Rs.5lakh/-

and upto

Rs.10lakh = Rs

500/-

Over Rs.10

lakh= Rs 600/-

CHA : Rs.75/-

Asst. cashier

allowance p.m=

Rs.150/-

Social Amenities & benefits

HRA HRA is location based

city type 'X'=

30% of basic

pay

cty type 'Y' =

20% of basic

pay

cty type 'Z' =

10% of basic

pay

HRA will be paid at the rate

of 12% of basic

pay.

HRA will be paid at the rate

of Rs. 275/-

For Bangluru

workmen: Rs.

1500/-

For PG-I

: Rs. 1300/-


Paper Industry

_____________________________________________________________________________________

54 | P a g e

Education/

Tuition Fee

School Re-

opening

advance:

Rs 4000/- for

children

studying upto

class XII.

Reimbusement of tution fee:

Rs. 350/- p.m.

per child upto

two children

only.

NA Facility of

education

advance is

provided : Rs.

4000/- at p.a.

interest shall be

paid.

One time education

incentives for

children of

workmen on

scoring 60%

marks in X and

XII

Housing Quarters from

company

provided

Quarters from

company

provided

Quarters from

company

provided

Medicals One month's

basic + DA of

October

They provide Medical

facilities

provided at MPM Hospital

to the spouse

and children

including the

employee.

Uniform Uniform

provided

Two sets of

uniform will be provided to

workers.

NA

Funeral

expenses

Rs 3000/- Rs 5000/- Rs. 5000/-

Death Relief

Fund

A matching

contribution

limited to Rs

100/- per

member

contribution of

unit.

NA Rs. 10,000/-

shall be paid to

the family

members.

Gratuitous

Payment

Rs. 3 Lakh NA NA

Retiral Benefits

Insurance Group

insurance: Rs

62000/-

Group

insurance: Rs.

75000/-

NA

PF/CPF 12% not mentioned not mentioned


Paper Industry

_____________________________________________________________________________________

55 | P a g e

Gratuity max. Rs. 10

lakhs

not mentioned

but for the

purpose of computing even

the training

period of

worker under

company's

training will be

reckoned as

service.

not mentioned

Medical Benefits

/ Facilities

Post retirment

medical benefits

through medi-

claim for

employee and

spouse coverage

Rs. 2 lakhs

NA NA

Company's

contribution to

Pension

8.33 % of max.

pay of Rs.

6500/-

Superannuation

Subscription

yet not decided NA 7.50%

Any Other Items

EBS NA Rs. 500/-

Miscellaneous

compensatory

allowance

Rs.95/- per

month


Paper Industry

_____________________________________________________________________________________

56 | P a g e

2. For Executive

Main Topic Sub Topic Hindustan paper

corporation ltd.

Tamil Nadu

newsprint and

paper ltd.

Mysore paper

mills ltd.

Salary

Basic No need to

compare

No need to

compare

No need to

compare

DA Variable DA It has Fixed DA

and Variable DA

both.

Variable DA

Annual increment They follow

percentage based

increment

3% of basic pay

of worker

here, it is a fixed

amount of

increment

here, it is a fixed

amount of

increment

Stagnation

Increment

3% of basic pay

of employee one

after every two

years upto three

times only

employee who

reach to maximum

of scale of pay will

continue to draw

annual increment

on the respective

anniversary date.

Ith shall be paid

every year at the

rate of last

increment.

Performance Related payment/

Bonus

Incentive/rewards

/PLI

Performance

related variable

payment is there.

Production linked

incentive= Rs.100/-

PLI- variable %

on basic based on

range of

production:

Production Depts.

= Rs.1175/-

(100%)

Non-production

Depts= Rs.590/-

(50%)


Paper Industry

_____________________________________________________________________________________

57 | P a g e

Perk &

Allowance/Benefits/reimbursement

Conveyance

Reimbursement/

Allowance

ED = Rs.3000

GM= Rs.2400

DGM= Rs.2000

Sr.Mgr &

Mgr.= Rs.1800

AM & DM =

Rs.1500

Executives = Rs

560

Conveyance

reimbursement:

DM & above- Car

= Rs.3000/- p.m.

For All-

Scooter/motorcycle

= Rs. 1350/- p.m.

Moped = Rs. Rs.

750/- p.m.

Conveyance

allowance : NIL

conveyance

allowance

permonth:

Gr.IV& above(4

wheeler)=

Rs.2115/-

for all grades(2

wheeler)=Rs.480-

755/-

for

shimoga/Tarikere

=Rs.14/-per day

Night Shift

Allowances (NSA)

upto Dy.Manager =

Rs.35/- per night

shift

NSA: Rs. 35/- per

shift.

Magazines/HRD

Allowances

NA A.O to D.M =

Rs.125/-

Manager to AGM

= supply of two

newspapers.

DGM and above

= supply of three

newspapers.

Gr.I to VII =

Rs.150/-p.m.

For GM/ED/Dir. =

need based

LTC/LLTC LTC can be

availed once in

two years but no

encashment

LTC can be availed

once in two years.

One month

(Basic+DA) of

LTC availed month

or actual expenses

whichever is less.

Gr-I = Rs.6125

Gr-VI=Rs.9625

Gr-II= Rs.6565

Gr-VII=Rs.10500

Gr-III=Rs.7000

DGM=Rs.11375

Gr-IV=Rs.7875

GM =Rs.12250

Gr-V =Rs.8750 ED/Dir.=Rs.13125

Leave Encashment maximum to 300

days

maximum to 240

days

can encash upto

30 days PL at their

credit every or 60

days PL at their

credit once in a block year of 2

years.

Washing

Allowance

NA NA NA

Electricity /Water

Subsidies

NA Electricity:

No. of units p.m.

DGM &

above = 300

AGM = 120

DM to Sr.Mgr = 90

Officers &

A.M= 70


Paper Industry

_____________________________________________________________________________________

58 | P a g e

Asst. officer = 50

Family Planning

Incentive

grades have

different rate of

amount.

Rs. 2500/- (1 kg

complan)

City compensatory

allowance

NA Asst.officer =

Rs.650/-

officer = Rs. 800/-

AM to Manager =

Rs. 1000/-

at Bangluru =

Rs.125/-p.m.

at Regional office

= 150/-p.m.

Location based

allowance

North-East

allowance:

Payment of NEA

@ 12.5% on

basic pay will be

made to

executives serving

in the

Corporation’s

establishments in

Assam / NE

Region only.

NA

Offsite allowance NA Intake well &

Pugalur = Rs.350/-

p.m

other offsites &

wind farm =

Rs.700/-p.m

NA

Social Amenities & benefits

HRA HRA is location based:

City type 'X'=

30% of basic pay

City type 'Y' =

20% of basic pay

City type 'Z' =

10% of basic pay

Grade : Branches other

place

AGM & above :

35% 30%

DM,Mgr &

Sr.Mgr: 30%

25%

AO & AM :

25% 25%

At Bangluru = 15.75% of basic +

PP

Regioanal offices

=21.50% of

basic+PP

Education/ Tuition

Fee

Rs.120 for each

child.

Children education

allowance:

A.O & officer =

Rs.100/- p.m. per

child.

A.M to D.M =

Rs. 125/- p.m. per

child.

Mgr. & above =

Rs. 150/- p.m per

child

For employee

reimbusement of

one proff. Inst.

Subscription fee:

For Gr.IV & V =

50% of

subscription fee

paid.

For Gr.VI &

above= 100% of

subscription fee

paid.


Paper Industry

_____________________________________________________________________________________

59 | P a g e

Housing Quarter is

provided as per

the designation

and availability.

Quarter is provided

as per the

designation and

availability.

at Bdtv. :

Furnished quarter

on nominal rent

subjected to

availability.

Temporary

accommodation

will be provided in officers' Hostel.

Medicals One month basic

salary for a year

for domiciliary

treatment full

reimbursement of

hospitalization for referral hospitals.

Medical

reimbusement:

Gr.I to IV officers

= 51% of basic+

PP

Gr.V and above = 56% of baisc +

PP

Uniform Every year two sets

of uniform are

issued to all

employees.

NA

Funeral expenses Rs.3000 Rs. 5000/-

Death Relief Fund A matching

contribution

limited to Rs

100/- per member

contribution of

unit.

See the subtopic :

"Insurance"

Rs.60000/- under

MPM life cover

scheme.

Retiral Benefits

Insurance Group insurance:

Rs 62000/-

Group

insurance:Premium

fully paid by the

company. In the

event of death, his

nominee will get

Rs. 75000/-

Personal accident

insurance:

premium fully paid by company. In the

event of death, his

nominee will get

96 months' Basic +

DA .

Group savings

linked insurance:

Rs.40000/-

(premium: Rs.40/-

p.m.)

Personal accident

insurance

coverage: for all

officers = Rs.5 lakh(50% of

premium p.a. will

be be borne by the

company).

PF/CPF 12% of basic +

DA

12% of basic + DA 12% of basic +

DA

Gratuity Rs.10 lakh NA 15 days' salary for

every complete

Service 5 yr.


Paper Industry

_____________________________________________________________________________________

60 | P a g e

Medical Benefits /

Facilities

Post retirment

medical

benefits through

medi-claim for

employee and

spouse

coverage Rs. 2

lakhs

NA Medical

allowance:Rs 25/-

p.m.

Reimbursement :

on self vouchers

given rates per

annum-:

GrI to IV & MTs

= 51% of basic

pay

Gr.V & above =

56% of basic pay

Superannuation Subscription/Benefit

yet not decided NA 9% of basic pay

Any Other Items

EBS NA Contribution

Rs.165/- p.m with

an annual increase

of Rs. 10/- in every

November.

NA


Paper Industry

_____________________________________________________________________________________

61 | P a g e

3. Percentage (%) of salary & wages to turnover

Tamil Nadu Newsprint And Paper Limited

Figure 4: For TNPL

Mysore Paper Mills Limited

5.79

6.59

6.33

6.91

5.00

5.50

6.00

6.50

7.00

2005-06 2006-07 2007-08 2008-09

% of sal. & wages to turnover


In crore/ years 2005-06 2006-07 2007-08 2008-09

Sales 892.91 962.98 1070.38 1172.39

Compensation to

Employees

51.68 63.43 67.76 80.99

% of salary & wages to

turnover

5.79 6.59 6.33 6.91

In crore/ years 2005-06 2006-07 2007-08 2008-09

Sales 378.78 419.88 402.59 431.5

Compensation to

Employees

68.98 67.11 82.95 70.42

% of sal. & wages

to turnover

18.2110988 15.983138 20.6040885 16.3198146


Paper Industry

_____________________________________________________________________________________

62 | P a g e

Figure 5: For MPM ltd.

Hindustan Paper Corporation Limited

In crore/ years 2005-06 2006-07 2007-08 2008-09

Sales 742.24 786.25 841.85 721.07

Compensation to

Employees

85.49 93.71 115.67 139.75

% of salary & wage to

turnover

11.52 11.92 13.74 19.38

Figure 6: HPC Ltd.

18.2115.98

20.60

16.32

0.00

5.00

10.00

15.00

20.00

25.00

2005-06 2006-07 2007-08 2008-09



11.52 11.9213.74

19.38

0.00

5.00

10.00

15.00

20.00

25.00

2005-06 2006-07 2007-08 2008-09

% of sal. & wage to turnover

% of sal. & wage to …


Paper Industry

_____________________________________________________________________________________

63 | P a g e

% of salary & wages to turnover = [Compensation to Employees(Rs.) ÷ Sales (Rs.)] X 100

Percentage of salary & wages to turnover signifies the ratio of expenditure on compensation and

total sales of the company, it can be calculated by following formula:-

The ideal percentage(%)of salary and wages to turnover for a potentially rich company which is

growing in nature should be within 7 to 11 percentage as per the industry’s norms.

As we can analyze from the above graphs [figure-4,5,6] that TNPL has most appropriate ‘percentage

of salary & wages to turnover’ in all the mentioned years i.e. from 2005 to2009 specially in 2008-09

it has approximately 7% which shows their stable compensation proportion with respect to their

sales. Where as MPM Ltd. and HPC Ltd. are not in the good position because of having very high ‘

percentage of salary & wages’ to turnover during past few years.

In the case of MPM ltd. at least they have succeeded to lower down their compensation to

employees and a constant increment in sales. But in HPC ltd. the situation is not favorable for last 2

years because there is constant increment in Compensation to employees with low sales which is

not a good signal for a company.


Paper Industry

_____________________________________________________________________________________

64 | P a g e

4. Employee Cost Per Tonne

Tamil Nadu Newsprint And Paper Limited

Years 2005-06 2006-07 2007-08 2008-09

Production (tonnes) 230079 231161 245471 254903

Compensation to

Employees(cr)

51.68 63.43 67.76 80.99

Employee cost/tonne 2246 2744 2760 3177

Table 4: for TNPL

Figure 7: Employee cost/tone -TNPL

Mysore Paper Mills Limited

Years 2005-06 2006-07 2007-08 2008-09

Production (tonnes) 102681.1 116281.8 118403.7 109292.7

Compensation to

Employees(cr)

68.98 67.11 82.95 70.42


Table 5: for MPM ltd.

2246

27442760

3177

0

500

1000

1500

2000

2500

3000

3500

2005-062006-072007-082008-09

Employee cost/tonne

Emp. cost/tonne


Paper Industry

_____________________________________________________________________________________

65 | P a g e

Figure 8: Employee cost/tone –MPM Ltd.

Hindustan Paper Corporation Limited

Years 2005-06 2006-07 2007-08 2008-09

Production (tonnes) 207068 208315 211746 175020

Compensation to Employees(cr) 85.49 93.71 115.67 139.75


Table 6: for HPC Ltd.

Figure 9: Employee cost/tone –HPC Ltd.

6718

5571

70056443

0

2000

4000

6000

8000

2005-06 2006-07 2007-08 2008-09

Employee cost/tonne

Emp.cost/tonne

4128

4498

5462

7984

0

2000

4000

6000

8000

10000

2005-062006-072007-082008-09

Employee cost/tonne

Emp. cost/tonne


Paper Industry

_____________________________________________________________________________________

66 | P a g e

Employee Cost Per tonne can be calculated by following formula :-

To balance the employee cost with respect to production is very important for any company.

As we can see from the above graphs (fig- 9,8,7) that TNPL and MPM Ltd. both are on a right

track as their production is increasing with a slow pace of increment in compensation to

employee as a result TNPL has been able balance w.r.to production and MPM ltd. has lower

down its employee cost which must be beneficial for the company . Whereas, in case of HPC

Ltd. their production has decreased and compensation to employees has increased drastically

as a result employee cost per tone increased so much.

Employee cost per tone = Compensation to employee ÷ Production


Paper Industry

_____________________________________________________________________________________

67 | P a g e

Conclusion

After a careful study of the finding of this research we came to know following facts about

Hindustan Paper Corporation Limited.

They follow Graded Pay Structure

From the comparison of Compensation Structure of all the three companies, HPC ltd. has

best basic pay structure, allowances and incentives schemes for their employees/workmen.

This analysis reveals that there is a big difference in ‘% Range’ between the lowest and

highest grades eg. For workmen (W-1)120% and (W-9)158% to accommodate the

employee drawing maximum Basic pay in the pre-revised pay scale in such a way that after

fixation of pay in the revised pay structure they could continue to draw at least three annual

increments.

Percentage (%) of salary & wages to turnover is very high, approximately 19% (2008-09)

which should be ideally 7% to11%, which is not a favorable situation.

Employee Cost/tonne is also high and increasing day by day which is not at all good signal

for the HPC ltd. in this competitive market.

Though HPC Ltd. is paying very good salary to its employees/workers as compare to other

companies and more employees oriented but it is a time to become a production oriented company.

It has to take some sincere steps to limit ‘Percentage to salary & wages to turnover’ to less than

10% and to lower down ‘Employee cost/tonne’ otherwise, the salary and wages of the HPC Ltd. can

not be absorbed by physical and financial performance of the company.


Paper Industry

_____________________________________________________________________________________

68 | P a g e

Recommendations

Since, HPC Ltd. need to lower down its Employee cost so that the company can run smoothly with

this compensation structure. As layoff of the employees is the best way to control the Employee

Cost but being a public sector company HPC can’t follow the policy of layoffs.

So, I would like to suggest some ways through which HPC Ltd. may come out from its current

situation in future which are as follows:-

HPC Ltd. should try to increase its sales and production (at least above 2,00,000 tonnes).

Restrict recruitment only to scarce category i.e. pulp and Paper Tech. & Chemical Engg.

Reduce personnel strength in non-cores area and if possible redeploy surplus manpower to

cores area.

Curtail expenditure on overtime engagement.

Variable cost should be reduce to generate more revenue.

HPC Ltd. should diversify its business in other areas example: Copy paper.

HPC Ltd. can increase the proportion of variable pay (allowance/bonus/Incentives) and can

decrease the proportion of fixed pay (basic).


Paper Industry

_____________________________________________________________________________________

69 | P a g e

Bibliography

ltd., H. (2007). Memorandum of settlement of HPC Ltd. kolkata.

mills, M. p. (2007). Memorandum of settlemet. Mysore.

Mr.P.K.Adithian. (1986). Collective Bargaining Agreement. kolkata.

Murlis, M. A. 1. Reward management (hand book) by Michael Armstrong and Helen Murlis[Authors.

Mysore paper mills. (n.d.). Retrieved April 3rd, 2010, from http://www.mpm.co.in/

Mysore paper mills. (n.d.). Retrieved march 3rd, 2010, from http://www.mpm.co.in/

TNPL. (n.d.). Retrieved march 20th, 2010l, from http://www.tnpl.com/Index.aspx

TNPL. (2006). memorandum of settlement TNPL.

welcome to Hindustan paper corporation limited. (n.d.). Retrieved february 25th, 2010, from

http://www.hindpaper.in/

welcome to the world of paper. (n.d.). Retrieved February 25th, 2010, from http://www.hindpaper.in/

wikipedia. (n.d.). Retrieved march 20th, 2010, from wikipedia:

http://en.wikipedia.org/wiki/Executive_compensation

wikipedia. (n.d.). Retrieved march 20th, 2010, from wikipedia:

http://en.wikipedia.org/wiki/Workers%27_compensation

comparative analysis of compesation structure of hpc ltd. vis-a-vis other companies of same industry

Education

case of hpc

compensation policies

organizational structure

vertical structure

salary wages structure

mysore paper mills

graded pay structure

project wouldnt