1.

INTRODUCTION

1
1 INTRODUCTION

1.1 Introduction:

Human resource is the pillar for any organization. In order to survive in the
current competitive environment it is mandatory for every company to recruit people with
requisite skill, qualifications and experience. Beyond recruitment, retaining the employees in
the organization is a major issue. For retention of the employees for a perpetual growth of the
company the company needs to meet the various needs of the employees. The company must
ensure a healthy and a beneficial environment to the employees. The welfare of the
employees in various perspectives have to given priorities to satisfy them.

A full fledged training on these topics would give a pragmatic knowledge to the
student. It also reveals the various hurdles in the company that serious affect these important
functions of a HR manager and the various internal and external factors that affect the HR
policies of any company.

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1.2 Objectives Of The Study:

The main objective of the training is to get a practical knowledge about the various
functions of a Human Resource manager in a company. Mainly the recruitment process of the
company, various methods of welfare measures and grievance handling in the company are
observed.
The objectives of the training are to learn about the following matters.

➢ Manpower planning in the company

➢ Identification of the potentiality expected from employees for different jobs in the
company
➢ Identification of the potential workforce
➢ Screening of the candidates for the job
➢ Post Placement training
➢ Salary and other allowances fixation
➢ Meeting the welfare of the employees working in the company
➢ The various government regulations and their implementations in the companies in
real time

1.3 Scope Of The Study:

This training is concentrating on the various HR functions taking place in PRICOL
Limited.

1.4 Limitations Of The Study:

Lack of co-operation from certain departments due to their
work load.

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2. INDUSTRY PROFILE

4
2. INDUSTRY PROFILE

2.1 Current Status of Indian Automotive Industry

On the canvas of the Indian Economy, Auto Industry occupies a prominent place.
Due to its deep forward and backward linkages with several key segments of the economy,
automotive industry has a strong multiplier effect and is capable of being the driver of
economic growth. A sound transportation system plays a pivotal role in the country's rapid
economic and industrial development. The well-developed Indian automotive industry ably
fulfils this catalytic role by producing a wide variety of vehicles: passenger cars, light,
medium and heavy commercial vehicles, multi-utility vehicles such as jeeps, scooters,
motorcycles, mopeds, three wheelers, tractors etc.

Although the automotive industry in India is nearly six decades old, until 1982, only
three manufacturers - M/s. Hindustan Motors, M/s. Premier Automobiles & M/s. Standard
Motors tenanted the motorcar sector. Owing to low volumes, it perpetuated obsolete
technologies and was out of sync with the world industry. In 1982, Maruti Udyog Limited
(MUL) came up as a Government initiative in collaboration with Suzuki of Japan to establish
volume production of contemporary models. After the lifting of licensing in 1993, 17 new
ventures have come up, of which 16 are for manufacture of cars. There are at present 12
manufacturers of passenger cars, 5 manufacturers of MUVs, 9 manufacturers of Commercial

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Vehicles, 12 of two wheelers, 4 of three wheelers and 14 of tractors besides 5 manufacturers
of engine.

The industry comprising of the automobile and the auto component sectors has
shown great advances since delicensing and opening up of the sector to FDI in 1993. The
industry has an investment of a sum exceeding Rs.50,000crore. During the year 2003-04 the
turnover of the automotive sector was around Rs.1,00,000 crore. The industry provides direct
employment to 4.5 lakhs and generates indirect employment of 1 crore. The contribution of
the automotive industry to GDP has risen from 2.77% in 1992-93 to 9% in 2009.

2.2 AUTOMOBILE INDUSTRY

2.2.1 Installed Capacity

The Automobile Manufacturers have put up a robust manufacturing capacity of 95

lakh plus vehicles per annum since 1993. Today India is the world's second largest
manufacturer of two wheelers, fifth largest manufacturer of commercial vehicles and
manufactures largest number of tractors in the world. The country offers fourth largest
passenger car market in Asia today. A supplier driven market, having no more than a handful
of vehicular models two decades ago, now offers more than 150 models and variants by way
of customer options. The installed capacity of the automobile sector during the year 2008 –
2009 is 9,540,000 vehicles, comprising 1,590,000 four wheelers (including passenger cars)
and 7,950,000 two and three wheelers. The sector has shown great advances in terms of
development, spread, absorption of newer technologies and flexibility in the wake of
changing business scenario.

2.2.2 Production

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 One of the largest industries in India, automotive industry has been witnessing
impressive growth during the last two decades. Abolition of licensing in 1991, permitting
automatic approval and successive liberalization of the sector over the years have led to all
round development of this industry. The freeing of the industry from restrictive environment
has, on the one hand, helped it to restructure, absorb newer technologies, align itself to the
global developments and realize its potential and on the other hand, this has significantly
increased industry's contribution to overall industrial growth in the country. During the last
five years, India has turned into a big trade mart for the automobile industry, registering a
growth rate of 15-27 percent.

CATEGORY 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Passenger 989,560 1,209,876 1,309,300 1,545,223 1,777,583 1,838,697

Vehicles
Commercial 275,040 353,703 391,083 519,982 549,006 417,126

Vehicles
Three 356,223 374,445 434,423 556,126 500,660 501,030

Wheelers
Two Wheelers 5,622,741 6,529,829 7,608,697 8,466,666 8,026,681 8,418,626
Grand Total 7,243,564 8,467,853 9,743,503 11,087,997 10,853,930 11,175,479

2.2.3 Export

Export figures of 2008-09 are a testimony to India’s growing status as big trade
mart for the automobile industry. As per the data released by the Society of Indian

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Automobile Manufacturers, the passenger car sales in the overseas markets registered a
growth of 63.01 percent during 2008-09.

2.3 Auto-Component Industry in India

The auto component industry has come of age and now forms an important
component of the Indian economy. In recent years, it has grown more impressively, fetch
double digit growth. More interestingly, it has captured attention as well as business from
leading auto makers of the world. The industry plays a crucial role in the automobile sector.
Manufacturing vehicles typically involve assembling a large number of components out-
sourced from number of ancillaries or component manufacturers. Competitiveness with
quality as a theme has been the watchword for the Indian industry and especially the auto
component industry ever since the Indian economy was opened up to the world in the early
1990s. While economic revival, lower interest rates and better road infrastructure are driving
domestic demand for automobiles and, therefore, components, increasing outsourcing by

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global automobile majors is creating a huge export opportunity for Indian component
manufacturers.

2.3.1 Industry dynamics

The Indian auto components industry started out small in the 1940s supplying
components to Hindustan Motors and Premier Automobiles, two largest manufacturers of
automobiles in India at that time. In the 1950s, the arrival of Telco, Bajaj, Mahindra &
Mahindra led to steadily increasing production. A closed market with high import tariffs
characterized the Indian auto component industry pre 1985. 1985-91 saw significant JVs in
the Indian auto component segment with Japanese manufacturers. After 1991, the delicensing
of the sector led to global auto manufacturers initiating assembly operations in India. This
subsequently led to global Tier I players entering the Indian auto space and the recognition of
the potential in the Indian auto component segment.

The Automotive Component Manufactures Association (ACMA) classifies the

auto ancillary industry into the following product segments:

• Engine and engine parts: Pistons, piston rings, piston pins, gaskets, carburetors, fuel
Injection pumps, etc.
• Drive transmission and steering parts: Transmission gears, steering gears, crown
Wheels and pinions, axles, wheels, etc.
• Suspension and braking parts: Leaf springs, shock absorbers, brake assemblies, etc.
• Electricals: Spark plugs, starter motors, generators, distributors, voltage regulators,
Flywheel magnetos, ignition coils, etc
• Equipment: Dashboard instruments, headlights, horns, wipers, etc.
• Others: Fan belts, sheet metal parts, plastic moldings, etc.

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 The major players in the auto ancillary industry can be classified between the ones
Catering to the two wheeler industry and the four wheeler industry. MICO, Bharat Forge,
Sundaram Clayton, Sundaram Brakes, Rane Brakes, etc. mainly cater to commercial
vehicles/tractors. There are many companies like Ucal Fuel, Motherson Sumi, PRICOL,
Subros, etc. which supply mainly to car industry. Companies like Munjal Showa, Lakshmi
Auto, Omax Auto, etc. cater to two-wheelers.

2.3.2 Sectoral Performance

The auto-ancillary was the best performing sector among the intermediate goods.
Different segments of the sector such as bearing, casting, fasteners, batteries and tyres have
grown in a range of 25-40%. Global majors are in a very critical condition; they are loosing
their market share because major automobile companies are being attracted by India, China,
& Taiwan. During the recent downturn, global auto manufacturers financial performance was
impacted on account of their high cost structure. This has caused these players to increase
their sourcing (automobiles and components) from low cost countries. High skilled labour,
improving quality standards and lower manufacturing costs improve India’s prospects as a
sourcing destination vis-a-vis countries such as Indonesia, Korea, Brasil, etc. Further Indian
players have formed JV’s with global leaders, which have resulted in transfer of technology
thereby putting them high on the global landscape. Around 44% of total exports are made to
Europe. The marketing mix for exports has changed over the years with contribution from
OEM’s increasing from 35% in 1990 to 80% in 2008.

Exports of domestic automobile components saw a decline last year, with global auto
giants US and Japan being hit because of the slowdown. After grossing a compounded
average growth rate (CAGR) of 25-30 per cent in five years before the slowdown, the auto
components exports industry saw a growth of just 5 per cent in the previous (fiscal) financial
year 2009. A recovery in the market for exports of auto components can only be seen in the
second half of the ongoing financial year (2010), as global markets such as Japan and the US
are showing steady signs of recovery.

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 Quality is the key consideration for global OEM’s and tier-1 players, for their
outsourcing decisions. Over the years, Indian auto component manufacturers have laid stress
on meeting global standards for their products. According to JD power Survey, the problems
per 1000 vehicles have decreased to 290 in 2009 from 572 in 1997.

2.3.3 Future Outlook

Given the significant scale up of capacities by the domestic majors, and their
improving global cost effectiveness, the domestic auto ancillaries are well set to sustainable
scale up their share of the global auto component pie. The players are aggressively focusing
on new client acquisition, inorganic growth in developed countries and cost reduction
measures on fronts like quality, delivery, design and management.

Growth in the domestic market would be driven by sustained growth in supplies to

OEMs as well as acceleration in the demand from replacement market. Moreover, cars, utility
vehicles and CVs made in India are increasingly getting acceptance in foreign markets, thus
driving the demand further. Even Indian two-wheeler majors are targeting markets abroad.
Simultaneously, foreign auto majors like Ford and Hyundai are making India its
manufacturing base for several models. Overall, the short to medium term outlook for the
domestic auto component producers is positive. Automobile industry, which is a key driver
of auto-component industry, is likely to grow at 12-17%. Along with this some other key
drivers including exports, outsourcing, and replacement market are slowing down
competitiveness in global markets in turn boosting the productivity of Indian auto
components industry. Setting up a new plant by existing companies and out-sourcing by the
foreign vendors will result in domestic companies benefiting, either by exporting from
domestic facilities or setting up facilities in those locations. To meet the emerging
opportunities and challenges, Indian vendors are diversifying across products, processes,
clients and markets. Companies that have restricted themselves to domestic business have
seen modest growth and flat margins. A robust business outlook is expected to drive strong

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revenue growth for the auto-component industry. Steel is a major raw material in
manufacturing of parts. Over the past two years, the
domestic steel prices have been increasing. Similarly, other inputs like non-ferrous
metal, fuel, and transport costs have also been increasing. However, the auto ancillaries are
not able to pass on the rise in costs, due to quality and price consciousness of auto majors.
Fortunately, healthy rise in volumes, players move up the value chain, increasing exports
together facilitated them to cushion the rise in costs, and enabled them to maintain margins.

As per an Automotive Component Manufacturers Association of India (ACMA)

report, the turnover of the auto component industry was estimated at over US$ 19.1 billion in
2008-09. The industry's turnover is likely to touch US$ 40 billion by 2015-16. The potential
compounded annual growth rate (CAGR) of the auto component industry is estimated to be
11 per cent in the period 2008-15. Exports from the auto component industry is estimated to
be worth US$ 3.8 billion in 2008-09, recording a rise of 8 per cent over the previous fiscal,
according to an ACMA report.

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 3. ORGANIZATION PROFILE

3. ORGANIZATION PROFILE

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3.1 COMPANY PROFILE

Premier Instruments & Controls Limited was established in 1974 at Coimbatore,

Tamil Nadu, India, and commenced manufacturing operations in 1975 in the precision
engineering field of Automotive Instruments. Today, Pricol is the market leader enjoying
53% of the Automotive Instruments market share.

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 Plant II at Gurgaon near New Delhi, India, was established in 1988 to cater to the
needs of the OEM customers in North India. Plant III and Plant IV were established at
Coimbatore, Tamil Nadu, India, in 1999 for rationalizing Pricol's manufacturing activities. In
1997, Pricol joined hands with DENSO Corporation, Japan, a US $ 17.7 billion Auto
Ancillary company to chalk out its growth and future. Denso Corporation, Japan is the Joint
Venture Partner with Pricol and has invested 12.5% in the equity capital of Pricol.

3.2 Product Portfolio

➢ Automotive Dashboard Instruments and Accessories for two-wheelers, three-

wheelers, four-wheelers, commercial vehicles, tractors, earth-moving equipments and
industrial applications.
✔ Instrument Clusters, Programmable Electronic Speedometers and
Tachometers, Mechanical Speedometers, Mechanical and Electrical Pressure
Gauges, Mechanical and Electrical Temperature Gauges, Ammeters, Battery
Condition Indicators, Voltmeters, Fuel Gauges, Electronic RPM Meters,
Mechanical RPM Meters, Electronic Hour Meters, Combination Meters, Oil
Level Gauges, Quartz Hour Counters, Quartz Clocks, Warning Lamps, etc.

✔ Speedometer Cables.
✔ Switches and Sensors such as Speed Sensors, Pressure Sensors, Temperature
Sensors, Fuel Level Sensors, Pressure Switches, Oil Level Switches.
✔ Four-wheeler items such as Wind Shield Washer Motor Kits, Cigarette
Lighters, Heater Ventilation Air Condition Control Units, Idle Speed Control
Valves.
✔ Two-wheeler items such as Handle Bar Switches, Auto Decompression Units,
Chain Tensioner Assemblies, Auto Fuel Cocks, Gears & Pinions, Hub Drives.

➢ Oil Pumps for two-wheelers and industrial engines Disc Brakes for two-wheelers.

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 ➢ Electronic Textile Counters and Controls, Fare Meters, Engine Monitoring Systems,
Data Acquisition and Control Systems Electronic Road Speed Limiters for
Commercial Vehicles Precision Machined Components Sintered Components.

3.3 Pricol Export

Pricol exports about 12% of its turnover to the USA, Canada, Mexico, South
America, Europe, Turkey, Egypt, Middle East, Asia, Australia, New Zealand, etc.

3.4 Research & Development

Pricol spends, on an average, 3% of its turnover on research and

development. Pricol is an ISO 9001 company since 1993 and certified for QS 9000 since
December 2001. Pricol has initiated Total Quality Management (TQM), Total Productive
Manufacturing (TPM), Supply Chain Management (SCM), Enterprise Resource Planning
(SAP R3 ERP), and Collaborative Product Commerce (CPC - Windchill) to render faster and
efficient service to customers.

3.5 Corporate Vision

“Strive for excellence in all we do through socially and environmentally
acceptable means”

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3.6 Corporate Mission
“Pricol have market leadership through customer delight. We will be a responsible
corporate citizen and share the benefits with society. We will make our customers,
employees, suppliers and share-holders feel proud of our association and want a long-term
relationship with us”.

3.7 Corporate Core Values

➢ Respect and concern for individuals
➢ Customers, Employees and Suppliers - Partners in the Value Chain
➢ Encourage innovation and improvement; accept noble failures
➢ Continuous learning

3.8 TPM Policy

“Establish an excellent Total Productive Manufacturing system with total

involvement of all employees to achieve effective utilization of all resources.”

3.9 Quality Policy

“Pricol provide value and satisfaction to customers on products and services. This is
achieved through systematic training and motivation of employees”

3.10 Environmental Management System (EMS) Policy

Pricol is a responsible corporate citizen in all its business operations and systems to
promote the health and well being of people and environment. This shall be achieved through

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its occupational Safety, Health and Environmental (SHE) policy and objectives with Total
Employee Involvement (TEI).

1. Safety

Achieve zero accidents through eternal vigilance, technology, employee

education/motivation / participation and prevent loss of precious resources of people,
machines and materials.

2. Health

Promote Employee Welfare and Quality of Work Life (EW & QWL) to achieve the
physical, emotional, mental and spiritual health in their personal and professional lives
through education and habit formation.

3. Environment

Carry out eco-friendly manufacturing and management practices that will comply
with environmental legislation / regulations, minimize wastes and create environment
preservation awareness amongst employees and the community. It shall be continually
improved through the P-D-C-A spiral in daily management with strategic and operational
intent.

3.11 Pricols Customers

Two Wheelers, Three wheelers & ATV’s:

Bajaj Auto, India Royal Enfield, India

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Beldeyama, Turkey Suzuki, India

Derbi Nacional, Spain Suzuki, Malaysia

Egyptian Light Transport, Egypt Suzuki, Philippines

Hero Honda, India Suzuki, Thailand

Honda, India TVS Motors, India

Kinetic Engineering, India Victory, USA

Kinetic Motors, India Yamaha, Europe

Piaggio, Italy Yamaha, India

Cars, SUV’s & MUV’s

Fiat, India Mahindra & Mahindra, India

Ford, India Mahindra Renault, India

General Motors, India Maruti Udyog, India

Hindustan Motors, India Saipa, Iran

Honda Siel Cars, India Tata Motors, India

Magyar Suzuki, Hungary Toyota Kirloskar Motors, India

Trucks & Buses:

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Ashok Leyland, India Mahindra & Mahindra, India

Askam, Turkey Oshkosh, USA

BMC, Turkey Pierce, USA

Eicher Motors, India Swaraj Mazda, India

Force Motors, India Tata Motors, India

Tractors & Construction Equipments

AGCO, USA L&T CASE, India

BEML, India Mahindra & Mahindra, India

Carraro, India Massey Ferguson, UK

CAT, India New Holland Tractors, India

Doosan, Korea Punjab Tractors, India

Eicher Tractors, India SAME Deutz Fahr, India

Escorts Claas, India SAME Deutz, Italy

Escorts Construction Equipments, India Simplicity, USA

Escorts Tractors, India Standard Tractors, India

Indo Farm Tractors, India Tafe Motors & Tractors, India

International Tractors, India TATRA Udyog, India

JCB, India Telcon, India

JCB, UK Terex Vectra, India

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John Deere, India Terex, UK

John Deere, USA Tractors & Farm Equipments, India

Sintered Components

Applicomp, India Rane, India

Ashok Leyland, India Roots, India

GE Transport System, USA Technoplast, Germany

Godrej, India Tecumseh, India

Lucas TVS, India TVS Motors, India

Mico Bosch, India Valeo, USA

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 4. HUMAN RESOURCE DEPARTMES

4. HUMAN RESOURCE DEPARTMENT

PRICOL’S human resource management systems and processes aim to

create a responsive, customer-centric and market-focused culture that enhances
organizational capability and vitality, so that each business is internationally competitive and
equipped to exploit emerging market opportunities.

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4.1 Structure of Human Resource Department

EXECUTIVE HR

VICE PRESIDENT HR

SENIO R M ANAG ER

SENIOR DEPUTY M ANAG ER

ASSISTANT M ANAGER

SENIO R O FFICERS

JUNIO R O FFICERS

4.2 Recruitment and Selection

Pricol’s Recruitment objectives:

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 ➢ To effectively manage the manpower recruitment in coherence with long term and
short term manpower planning of the organization through a standard recruitment and
selection policy.
➢ To proactively and systematically identify the recruitment needs in time. To ensure that
all the recruitment are within the manpower budget and as per the laid down policy.
➢ The recruited people with required level of skilled and aptitude for learning and
growth

Scope of recruitment:

This policy shall apply to all PERMANENT management position in the company including
the workmen.

Identification of vacancies:

1. Total permanent manpower strength/budget for organization has been

sanctioned by the board of directors.
2. All the recruitment has necessarily to be made within the approved
budget/strength only.
3. Vacancies against the sanctioned budget may arise due to:
• Retirement
• Turnover
• Natural Separation
4. whenever a vacancy arise, the concerned department has to fill up the prescribed
manpower requisition form clearly indication the job description and
specification, time frame and send it to HR department

Recruitment Sources:

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The sources of recruitment may be broadly divided into two categories: internal sources
and external sources. On receipt of the Manpower Requisition (MPR) form HR
department will initiate action of sourcing the candidates as under:

1. Internal sources: As a matter of policy, the organization will encourage to fill

up the vacancies from within the existing people if they are fulfilling the
criteria and found suitable.

• In order to invite application from internal sources, notice/circular for

all such vacancies will be put up on the notice board.
• The conditions fulfilling the requirement may apply against internal
notification to HR department through their department.
2. Other sources: Other sources can be tapped for recruitment only when suitable
candidates are mostly available internally. Other sources may include the
following:
• internal data bank
• local employment exchange
• advertisement through newspaper
• Placement agencies.
Methods Of Recruitment: The following are the most commonly used method of recruiting
people.

1. Internal Method
2. Direct Method
3. Indirect Method

4.2.1 INTERNAL METHOD:

Promotion And Transfers:

PRICOL Prefer to fill vacancies through promotion or transfers from within wherever
possible. Promotion involves movement of an employee from a lower level position to higher
level position accompanied by changes in duties, responsibilities, status and value and value.

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It may lead to changes in duties and responsibility, working conditions, etc., but not
necessarily salary. Internal promotions and transfers certainly allow people greater scope to
experiment with their career, kindling ambitions and motivating them to take a shot at
something they might otherwise never have considered. The system, of course, works best for
young executives who are willing to take risks.

Job Position:

Job position is another way of hiring people from within. In this method, the
organization publicizes job openings on bulletin boards, electronic media and similar outlets.
Hindustan lever introduced its version open job position in early 2002 and over 40 positions
have since been filed through the process. HLL even allows its employee to under take career
shifts, for example from technical position system.

Employee Referals:

Employee referral means using personal contacts to locate job opportunities. It is a

recommendation from a current employee regarding a job applicant. The logic behind
employee referral is that “ it takes one to know one” employee working in the organization in
this case, are encouraged to recommend the name of their friends working in other organization
for a possible vacancy in the near future. In fact, this has become a popular way of recruiting
people in the highly competitive information technology industry now a day. Companies offer
rich rewards also to employees whose recommendation are accepted after the routine screening
and examining process is over- and job offers extended to the suggested candidates.

4.2.2 Direct Method

Campus Recruitment

It is a method of recruiting by visiting and participating in college campuses and their

placement centers. Here the recruiter’s visits reputed educational institutions such as IITs, IIMs
colleges and universities with a view to pickup job aspirants having a requisite technical of
professional skills. Job seekers are provided information about the jobs and the recruiter’s

26
inturen get a snap shot of job seekers through constant interchange of information with
respective institutions. A preliminary screening is done within the campus and the short listed
students are then subjected to the reminder of the selection process. In view of the growing
demand for young managers, most reputed organizations visit regularly and even sponsor
certain popular activities with a view to earn goodwill in the job market. Advantage of this
method include: the placement centre helps locate applicants and provides resumes to
organization; applicants can be prescreened; applicants will not have to be lured away from a
current job and lower salary expectation.

4.2.3 Indirect Method

Advertisement

This includes advertisement in news papers; trade, professionals and technical journals; radio
and TV etc. In recent time this medium became just as colorful lively and imaginative as
consumer advertising. The ad generally gives a brief outline of the job responsibilities,
compensation package, prospects in the organization etc. This method is appropriate when (a)
the organization intends to reach a large target group and (b) the organization wants a fairly
good no. of talented people who are geographically spread out.

Head Hunters

There is an influx of executive search agencies also known as head hunters who specialize in
selection of professionals for very senior or top posts, where applicants are in short supply and
employers have no time to go round in search of the best talents. Such vacancies are fewer and
far between and organizations prefer hiring a head hunter who maintains confidentiality of the
employer and are specialize in recruiting the best talent strictly as per the job specification. But,
these specialists bodies charges hefty professional fees. However, the high cost is outweighed
by the benefit of recruiting the best talent without going through the cumbersome and time
consuming process of internal recruitment system.

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4.2.4 SELECTION PROCEDURE

Screening of Application :

• All application received from various sources will be screened by the

concerned department and HR based on the job description and
specification and the applicant profile.
• Shorting of prima facile suitable candidates who should be called for
test/interview shall be prepared.
• The ratio between the number of vacancy and the number of
candidate to be called for test/interview should normally be 1:5.
Test:
• Depending on the requirement of the job if required, management may
conduct written/aptitude/psychometric/physical or any other test as
deem fit.
• Short listed application will be send formal letter for appearing test at
least 15 days in advance.
• Qualifying criteria for the test will be determined by the management
depending on the nature and requirement of the job.
Interview:

• All the candidates short listed for interview will be informed through a
formal call letter for attending interview at least 15 days in advance.
• The candidate will be interview by the interview panel.
Final Selection And Appointment:
• Recommendation of the interview panel will be put up before the Executive
HR by the HR Department for his approval.

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 • Candidates for the officer and above after interviewed by the panel will be
finally interview by the MD.
• Selection of candidates will be strictly on the basis of merit.
• Appointment letter will be issued to the finally selected candidates after duly
approved by Executive HR. However, in case appointment letter can initially
be issued to the candidates and the detailed formal appointment letter can be
issued at the time of joining.
• Before letter of appointment is issued to candidates HR department will
ensure the following:
1. Check and verify all the personal details furnished by the candidates.
2. Verify the certificates and other credentials.
3. Make necessary reference/antecedents verifications whenever
required.
Joining Formalities:

(a) Employees joining shall first report in the HR department

will facilitate in completing the joining formalities such
as filling of joining report and other necessary forms.
(b) HR department will ensure that the candidates will be
allowed to join subject to their being found medically fit.

4.3 Placement and Induction:

After the selecting the candidate, he/she is placed in the suitable job. At PRICOL
this is handled by the HR department, the candidate is assigned with a specific rank and
responsibility. The candidates selected work on probation for a given period of time, after
which their services are confirmed. The probationary period ranges from 6 months to two year.
The performance of the candidate is evaluated at the end of the probationary period. The
candidates are made permanent employees only if their work is satisfactory.

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 Induction or orientation is the task of introducing the new employees to the
organisation and its policies, procedures and rules. At PRICOL, all the new employees are
given induction training program so that they will become familiar to their working conditions
and also the employees in the particular unit. This is given by the respective departments. All
the queries of the new employees are answered during this induction program.

The induction program consists of the following:

• Organization
1. Company’s history
2. Employee’s title and department
3. Executives of the company
4. Probationary period
5. Policy and rules
6. Codes of conduct
7. Safety measures

• Employee benefits
1. Salary
2. Holidays (festival and national)
3. Training
4. Counseling
5. Insurance, retirement policies and other benefits

• About the job

1. Tasks
2. Job location
3. Safety measures
4. Job objectives
5. Shifts

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• Introductions
1. To department head
2. To co- workers
3. To trainers
At PRICOL, the internal mobility of the employees takes place. It’s common among the
worker and staff level, when more man power is required in the other departments during
certain projects.

4.4 Training and Development:

4.4.1Training

The new employees are given training regarding the specific tasks to which they
have assigned. At PRICOL, the new employees are given adequate training before they are
allowed to work independently. They are evaluated continuously throughout their training
program. HR department monitors all the new employees and evaluates their performance.
This training makes the employees more productive and more useful to the organisation.
The new employees participate in the training program under the responsibility of

Head – HR or Respective Functional Head.

The types of training given at PRICOL are:

➢ Skills training:

The employees are trained in such a way that their existing skills are improved and
they handle the situation and the machinery more efficiently. This training is provided
to both the new and existing training

31
 ➢ Refresher training

The employees are trained about the new technologies that have emerged in the recent
time. The company organises special training programs once in 3 months to update
the employee’s knowledge and help them to face the future challenges.

➢ Cross-functional training

It involves the training employees to perform operations in area other than their
assigned job. This is done to improve the efficiency of the workers in different
departments and also to follow flexible scheduling.

4.4.2 Training Assessment

All the training programs provided to the employees at PRICOL are assessed
continually. HR department plays a major role in organizing these programs and makes sure
that the objective of the training program is attained. The need for the training program is
determined depending on the productivity and objectives of the company, company’s
performance, the skills required for performing a particular tasks and the individual’s ability
to do the assigned job. The training program given to the employees at PRICOL is 8 hours
per day and the type of training depends on the analysis using the skill matrices.

4.4.3. Education & Training - Self development:

Methodology

32
 ➢ Multi - skilling employees
➢ Use of 5 Senses for observation and judgement
➢ Improving knowledge, skill and morale
➢ Class room training, Seminars
➢ On the job training

Objective

➢ To foster excellent personnel and have these personnel display their potential to the
utmost degree
➢ To develop knowledge and skill competent personnel
➢ To habituate to continuous education & training, as an organizational initiative

5 Stage of Skills

Level 0 Don't know (not educated)

Lack of knowledge
Level 1 Know only in theoretical sense
Shortage of training
Level 2 Can partially do it
Shortage of training
Level 3 Can do it with self-confidence
State of having bodily learned it
Level 4 Can teach others
State of completely mastered it

Training Method

➢ Identification of training methodology

➢ Consolidation of training needs identified
➢ Identification of Faculty - Internal & External

33
 ➢ Develop Knowledge Bank
➢ Organize training material
➢ Preparation of Training Calendar
➢ Organize Training Programs
➢ Evaluate Training
➢ Re-train based on the evaluation

4.5 Grievance Handling And Discipline :

4.5.1 Grievance Handling:

An organization is a joint place where various people of different characteristics

work under a common roof. As such, existence of difference of opinion has become a
common subject nowadays with the employees getting dissatisfied with various aspects of
their work environment, such as the attitude of the manager, policy of the company, working
conditions, or behavior of colleagues. Employers & superiors mostly try to ignore or suppress
grievances for as long as possible. But they cannot be suppressed for long as Grievance acts
as rust which corrodes the very fabric of organization. An aggrieved employee is a potent
source of indiscipline and bad working. Thus, grievance is one emotion that plays a vital role
in any organization.

A grievance can be defined as any sort of dissatisfaction, which needs to be

redressed in order to bring about the smooth functioning of the individual in the organization.
Real or imaginary, legitimate or ridiculous, rated or unvoiced, written or oral, it however
finds expression in some form of the other.

In employment law, a grievance is a formal, itemized complaint to

management that it has treated one or more employees unfairly or has violated the contract or
collective bargaining agreement.

4.5.2 Grievance Procedure:

34
 In PRICOL there exist six (6) Satellite Vendor Units (SVU’s). These units are
engaged in the production of various mechanical and electronicsl products for various pricol
customers. The employees in these SVU’s are grouped into three groups. These groups are
operator groups, staff group, and shop floor group. A common goodwill meeting is
conducted every month for each group at a particular date. A panel is formed by the HR
department for conducting the common goodwill meeting. The panel consists of one HR
representative, one production head of that particular SVU’s and one shop floor
representative. The panel members are called window person. The employees can raise their
grievance in the common goodwill meeting. The employees can raise their grievance
regarding the working conditions, any wages dispute and any pending in their payments. But
they are restricted to raise against the policy matters of the company, settlements and issues
affecting the entire factory or a particular department.

The panel members will maintain a register for grievance handling. When a
employee raises his grievance his name, employee code number, department to which he
belongs, nature of the grievance and person who is responsible are noted in the register. Some
of the grievance raised by the employee will be solved at the shop floor on the same day
itself. After the meeting is over the panel members displays the grievance raised by the
employee in the common notice board. The time taken by the panel to solve the grievance is
before the commencement of the next common goodwill meeting. If the panel is not able to
solve the problem within the next commencement of goodwill meeting (i.e.), within one
month then a proper explanation is given to employye as well as it is displayed in the
common notice board.

4.5.3 Discipline:

In spite of the best efforts of the employer to select good employees and maintain
them well, employees may create problems in the work place. Such problems affect their
performance as well as the performance of other employees. In effect it would affect the

35
efficiency and effectiveness of the organization. Common problems include absenteeism,
frequent quarrels with other employees, refusal to accept work related orders, alcoholism and
drug abuse, non compliance with safety measures etc. These problems are viewed seriously.
PRICOL follow rules and standards of accepted work behavior. Most employees exercise self
discipline. They are well within the requirements prescribed. Normally, employees do not
desire to be isolated. Therefore, they prefer to meet the expectations of the organization.

There are quite a few employees who are not self disciplined. They do not meet the
rules and standards of accepted behavior. Disciplinary action is initiated when employees do
not conduct themselves according to these. Usually some punishment is initiated against the
employee. The idea is that the disciplinary action would condition the employee to correct
unaccepted work behavior.

4.5.4 Types Of Discipline Problems:

There are several problems that arise in the workplace. Not all of these are
considered important enough to initiate disciplinary action. The most important ones are:

➢ Attendance
➢ Dishonesty
➢ On the job behaviors
➢ Undesirable actions outside the organization

Attendance

It is one of the serious problems that managers face. Attendance is a

serious problem as it affects performance. It occurs because employees goals are not aligned
to the to that of the organization. If this is done there is probability of reducing its occurrence.
Employees also tend to use all of the leave that is available to them. Especially misuse of

36
sick leave that is allowed to the employee is noticed. Employees report sick even if they are
not. This because they believe that not using the leave is in effect not enjoying their
privileges. In fact they believe that sick leave is time off earned by them. A change in attitude
towards employment is also observed. Employees don’t appear to take their jobs seriously.
They are therefore willing to absent themselves frequently. Moreover, some employees find
it difficult to balance home and work life. Therefore, they tend to absent from work. With the
introduction of flextime, organizations have been able to tackle some of the issues
contributing to absenteeism. In other cases much remains to be done.

Dishonesty

Generally, dishonesty attracts the severest forms of disciplinary action. It usually

leads to the dismissal of the employee. Dishonesty takes the form of stealing, lying or
falsifying key information. This is because the PRICOL believes that even a single incident
of dishonesty may point to the possibility of the person repeating it over again. They are
therefore unwilling to give them a chance again. PRICOL’s organization cultures do not
tolerate dishonesty. It is often believed that dishonesty must be punished.

On the job behaviors

PRICOL do not tolerate some forms of on the job behavior. Insubordination,

quarrelling, failure to use safety a gears , alcoholism and drug abuse are a few of them. These
problems are an indication that the employee is unwilling to abide by the rules of the
organization. As these behaviors are unacceptable ,corrective action is initiated. As these
problems can be addressed and wiped out through appropriate corrective action, they attract
a lesser form of disciplinary action.

Undesirable actions outside the organization

Activities done outside the organization can also affect on the job performance.
Sometimes, such behavior negatively affects the image of the organization. Engaging in

37
criminal actions, revealing business secrets to competitors, accepting grafts for doing jobs,
etc. are some examples of bad job behaviors. When the employees off the job behavior is
bad, the organization may find it embarrassing. In such situations, it can take appropriate
disciplinary action against the employee. The severity of the problem decides the
punishment.

3.5.5 Disciplinary Actions

The disciplinary actions followed by PRICOL are

➢ Oral Warning
➢ Written warning
➢ Suspension
➢ Demotion
➢ Pay cut
➢ Dismissal

4.5.6 Domestic Enquiry:

When the management of the company finds that an act of misconduct committed
by an employee, warrants disciplinary procedure should be conducted in order to conclude
whether the act committed by the employees is a misconduct or not. Management can
arrange to conduct the disciplinary procedure from within the company or by the officers
from outside the company. Enquiry conducted from within the company by the internal
officers is called domestic enquiry.

Management appoints the company officers as domestic enquiry officer.

Sometimes, the immediate superior of the employees is appointed as domestic enquiry
officer. Sometimes, the personnel manager in charge of discipline may act as an enquiry
officer from other than the personnel department and the department to which the employee
belongs, may be appointed as the enquiry officer.

38
 The domestic enquiry officer enquires into the issue by:

➢ Calling the employee for explanation

➢ Considering the explanation of the employee
➢ Issuing a show-cause notice
➢ Holding a full-fledged enquiry
➢ Considering the witness reports, documents, events etc. and
➢ Considering the enquiring reports

After the enquiry is over, the domestic enquiry officer, submits his final report to the
HR-President. HR-President implements the report, if it is satisfied with the enquiry.

4.5.7Auditor Enquiry:

Auditor enquiry is conducted by the management when the management finds a

legal misconduct by the employee. An enquiry officer outside the organization is appointed
by the management. The enquiry officer will proceed the enquiry and submits his report to
the management. Usually the enquiry officer appointed by the management will be from the
legal background (ie) practicing lawyer. A management representative will be appointed on
behalf of the management. A show-cause notice will be issued to the delinquent employee by
the auditor seeking his explanation. The show-cause contains the detailed information
regarding the nature of misconduct involved by the employee, time and date of when he/she
has to appear in front of the enquiry officer.

The delinquent employee has the rights to defend him. He may bring an
representative on behalf of him to represent in front of the enquiry officer. The representative
for the delinquent employee should be an co-worker. An outsider is not allowed to represent
the delinquent employee in front of the enquiry officer. The management representative (MR)
has to prove the charges against the delinquent employee by providing the witness in front of
the enquiry officer. The witness brought by the management representative is called
Management witness (MW). The delinquent employee has the rights to cross examine the
management witness at the same day itself.

39
 The delinquent employee can bring his witness in front of the enquiry officer.
The witness brought by the defense counsel is called Defense witness (DW). The
management representative can cross examine the defense witness. All these proceeding will
be recorded by a typist. After hearing both the management representatives and the Defense
counsel the enquiry officer will decide whether the employee is guilty or not. The report will
be submitted to the management HR-President. The HR President will implement the report
if the employee is found guilty. He will then issue an second show-cause notice to the
delinquent employee. If the delinquent employee accepts the charges then lesser punishment
will be given to him.

4.6 Employee Relations:

Employees are among an organization's most important audiences

with the potential to be its most effective ambassadors. Employee Relations are practices or
initiatives for ensuring that Employees are happy and are productive. Employee Relations
offers assistance in a variety of ways including employee recognition, policy development
and interpretation, and all types of problem solving and dispute resolution.

An effective employee relation involves creating and cultivating a motivated

and productive workforce. People are generally motivated from within, but what can you do
to help foster the type of environment where employees thrive, enabling your company to
outperform the competition. “Employee Relations” starts with determining the type of
workplace the company wants. It starts by considering what the company wants its
employees to say about working for the company. In a competitive market, it is important to
that employees don’t feel that they might be treated more fairly elsewhere. After all retention
is one of the major functions of HRM.

By considering what the company wants employees to say about working for it
gives shape to the company’s culture. The company culture conveys organization's core
values to its employees, customers, vendors, and community.

40
 In addition to the workplace climate, the company also considers the types of
processes or systems it wants to employ within the workplace to support the company culture
and enhance the working relationship that exists between the company and its workforce.
Such systems could include communications, policies, training, and development.

Also, an essential step in building effective Employee Relations is to evaluate the

human, financial and other resources available that reinforce the values and guiding
principles the company wants echoed throughout the organization. For example, what type of
supervisors and managers does it believe can bring out the best in people and projects?
Traditionally Employee Relations programs were centered around labor union relations.
Today, Employee Relations does not necessarily involve unions. However, it does involve
cultivating the leadership style and workplace practices that help make union organizing
activities a less attractive option for employees.

Establishing workplace and management principles set the stage for fostering a
successful work climate and establishing your company's culture. Effective Employee
Relations is about establishing processes that address and nurture that culture.

Employee Relations Programs At PRICOL:

In order to maintain an effective employee relationship PRICOL organizes the

following programs they are

➢ Summer camp for children’s of PRICOL employees.

➢ Employee retirement functions.
➢ Employee goodwill meeting.

4.7 Wages and Salary Administration:

4.7.1 Wage System:

41
The wages for the workers at Pricol Ltd. are paid in the following manner:

➢ They follow the Time based system on a daily basis. i.e. a prefixed rate per 8 man
hour shift.
➢ In addition, the workers receive Overtime wages at 1.5 times their rate for every extra
hour worked.
➢ Those working in the night shifts receive additional allowances like Night Shift
Allowance and Food allowance.
➢ The workers can avail of incentives in the form of additional remuneration in
accordance with the Piece rate system followed by the company.
➢ Other benefits the workers receive include Stautory benefits like Provident Fund
where the Worker and the Company contributes 12% of the basic wage each.
➢ Employee State Insurance (ESI) is also provided to the workers at 6.75% of gross
wages; 1.75% and 4.75% contributed by the both the employee and employer
respectively.
➢ They also receive Bonus at 8.33% as per Government norms, disbursed usually before
the Diwali, to a maximum of Rs. 3500/-.

4.7.2 Salary System:

The staff and other managerial employees receive their prefixed Salary every
month, depending on their qualification and experience. They generally are not availed of any
allowances. However, their salaries are revised every year after their performance appraisals.

In addition to the above, both the workers and staff are automatically enrolled
into the Pension scheme, which they can avail after a minimum of 10 years of service. They
are entitled to receive the full pension benefits after a minimum of 25 years of service and
after attaining an age of 58 years.

42
4.8 Statutory And Non-Statutory Welfare:

4.8.1 Statutory Welfare Schemes:

The statutory welfare schemes practiced in PRICOL includes the following:

1. Drinking Water: At all the working places safe hygienic drinking water is provided.

2. Facilities for sitting: In every organization, especially factories, suitable seating

arrangements are provided.

3. First aid appliances: First aid appliances are provided and are readily assessable so
that in case of any minor accident initial medication can be provided to the needed
employee.

4. Latrines and Urinals: A sufficient number of latrines and urinals are provided in the
office and factory premises and are also maintained in a neat and clean condition.

5. Canteen facilities: Cafeteria or canteens are provided to the employer so as to

provide hygienic and nutritious food to the employees.

6. Spittoons: In every work place, such as ware houses, store places, in the dock area
and office premises spittoons are provided in convenient places and the same are
maintained in a hygienic condition.

7. Lighting: Proper and sufficient lights are provided for employees so that they can
work safely during the night shifts.

43
 8. Washing places: Adequate washing places such as bathrooms, wash basins with tap
and tap on the stand pipe are provided in the port area in the vicinity of the work
places.

9. Changing rooms: Adequate changing rooms are provided for workers to change
their cloth in the factory area and office premises. Adequate lockers are also provided
to the workers to keep their clothes and belongings.

10. Rest rooms: Adequate numbers of restrooms are provided to the workers with
provisions of water supply, wash basins, toilets, bathrooms, etc.

4.8.2 NON STATUTORY SCHEMES:

The various non statutory welfare schemes practiced in PRICOL include the following:

1. Personal Health Care (Regular medical check-ups): PRICOL provide the facility
for extensive health check-up.

2. Flexi-time: The main objective of the flextime policy is to provide opportunity to

employees to work with flexible working schedules. Flexible work schedules are
initiated by employees and approved by management to meet business commitments
while supporting employee personal life needs

3. Employee Assistance Programs: Various assistant programs are arranged like

external counseling service so that employees or members of their immediate family
can get counseling on various matters.

4. Harassment Policy: To protect an employee from harassments of any kind,

guidelines are provided for proper action and also for protecting the aggrieved
employee.

5. Maternity Leave – Employees can avail maternity or adoption leaves. P

44
6. Medi-claim Insurance Scheme: This insurance scheme provides adequate insurance
coverage to employees for expenses related to hospitalization due to illness, disease or
injury or pregnancy.

7. Employee Referral Scheme: Employee referral scheme is implemented to encourage

employees to refer friends and relatives for employment in the organization.

45
 5. INDUSTRY ANALYSIS

5 INDUSTRY ANALYSIS

5.1 Market Size:

The global automotive component manufacturing industry is estimated to have

a market size of around $1.2trillion. Ford Motors, Delphi Corporation, Caterpillar, Cummins,
International Truck and Engine Corporation and last but not the least General Motors (GM)
are some of the leading global automobile components manufacturers of the world. With
importations of components worth $69 billion a year, the US stands at the top of all the auto
component markets the world over.

The Indian auto component industry is one of India's sunrise industries with
tremendous growth prospects. From a low-key supplier providing components to the
domestic market alone, the industry has emerged as one of the key auto components centers
in Asia and is today seen as a significant player in the global automotive supply chain. India

46
is now a supplier of a range of high-value and critical automobile components to global auto
makers such as General Motors, Toyota, Ford and Volkswagen, amongst others. As per an
Automotive Component Manufacturers Association of India (ACMA) report, the turnover of
the auto component industry was estimated at over US$ 19.1 billion in 2008-09 with a
growth rate of 6.1% against financial year 2007-08.

The auto-component industry has been making rapid strides towards

achievement of world-class Quality Systems by imbibing ISO 9000/ISO 14001/QS 9000/TS
16949 Quality Systems. Till now 564 companies in ACMA membership have been certified
to ISO 9001/9002, 186 companies awarded to ISO 14001, 397 companies have been certified
with TS 16949, 60 companies have been certified with OHSAS 18001, 11 companies won
the Deming prize, 1 company won Japan Quality Medal and 15 companies won the JIPM
Excellence award. These 564 companies contributing 77% comes under the organized
sector, whereas there are about 6300 unorganized players in the form of SME’s contributing
23% to the Indian Auto-component industry output.

There are about 107 key players in Tamilnadu’s Auto Component Industry
with an investment of about Rs.36000 million ($ 800 million). The output is US $ 1,2 billion
out of which the exports are US $ 140 million. The auto component industry in Tamilnadu

47
provides employment to about 45,000 people. More than 50% of the companies are ISO
certified while 26% are QS certified

It is estimated that there are about 5000 auto-component SME’s in

Coimbatore apart from major players like Pricol, LGB, Elgi Equipments and Roots. These
5000 SME’s turnover is around Rs. 500 crore.

5.2 Competitive Analysis:

The Indian automobile component market has encountered swift growth for
the past 5 years, which is driven by a quantum leap in the demand for vehicles and a sharp
rise in exports. Though the automobile parts industry is highly fragmented, however industry
is capable enough to fulfill the rising indigenous demand and compete in the global forum
that paved the way for national component manufacturers to become the original equipment
manufacturer (OEM) and Tier 1 supplier. The output of the industry was estimated at 19
billion with the growth rate of 6.1 per cent for the financial year 2008-09, whereas The global
output for automobile components is estimated to reach $742.8 billion in 2010. As per
McKinsey Report, Indian Auto Parts Industry is anticipated to grow up to USD 33-40 Billion
by 2015 including exports revenue. This will raise India’s share in the global auto component
market from 1 per cent to 3 per cent by 2015-2016. The growth rate is slow because of
various financial and legal issues. In Coimbatore region alone there are nearly 5000 auto-
component SME’s. The competition is very strong this makes the week company to fall by
wayside.

5.3 Technology Issues:

While many organized players in auto-component industry are able to upgrade

their technology but SME sector auto component companies have not been able to upgrade
technology due to various reasons. In the highly competitive markets, this has started
impacting

48
their business adversely. The government should encourage Automobile companies to work
with the SME auto component manufacturers (as a part of their commitment to the industry)
in upgrading their manufacturing facilities and capabilities. ACMA has started an initiative in
this direction by putting up a system in place where in experienced professionals from large
auto component manufacturing companies work full time for a year closely with a number of
auto component manufacturers guiding them to improve the productivity, meet quality
standards and manage cost. This initiative is helping small and medium auto component
manufacturer’s move up the value chain.

5.4 Finance Related Issues:

5.4.1 Availability of Capital and Cost of the Capital

In the wake of entry of global auto component manufacturers in India, technology

up-gradation involving huge investments has become a necessity for the SME auto
component companies. Many Indian SMEs in auto component sector are facing challenges in
getting credit and credit at a low cost. Many companies are finding it difficult to get
necessary financial resources from banks or venture capitalists. Inability of these companies
in getting credit has led to difficulties for such companies. The companies need to upgrade
their technology in order to remain competitive in global market.
The manufacturers feel that the rate of interest for working capital should be less.
The finance is available at high interest rate (nearly 12%), which is very high in comparison
to other countries. The rate of interest has relationship with the level of modernization, high
technology adoption and professional management of the companies. The challenge of
getting credit from banks is not so acute for the companies having processes and advanced
technology, which manufactures high quality products for major OEMs. Initiatives to rate the
SMEs could help the better SMEs over come this challenge. Banks have been reported to be
open to not only providing funds quickly but also offer good deal on interest rate to SMEs
getting better rating by the SME Rating Agency of India Limited (SMERA). SMEs in auto-
component sector can also benefit from the scheme.

49
5.4.2 Duty drawback and incentives

Auto component exporters find duty drawback a cumbersome process. It requires

dealing with too many procedures and offices. For relatively small players, at times the
expenditure incurred on follow-up is higher than the duty drawback amount. The
Government takes a long time to refund duty drawbacks and incentives. Right now it takes
anywhere between 3 months to 6 months to get duty drawback amount. The industry is
looking for less time in getting duty drawbacks and other incentives/refunds from the
government offices. This will help them have enough capital for their requirements thereby
reducing the cost of working capital and business expansion.

5.4.3 Currency Fluctuations

A recent phenomenon that has impacted export earnings of automotive component

manufacturers is the appreciating Rupee. The component manufactures’, who have entered
into fresh negotiations with their customers, have started insisting on building in currency
fluctuation clauses to counter further changes in the Indian Rupee.

The contracts currently under negotiations are building in currency fluctuation

clauses. Previously this was not a common practice, particularly since no one anticipated this
kind of appreciation of the rupee. Most automotive component manufacturers working under
old contracts are asking their customers to revise pricing based on rupee appreciation. Some
of the Indian auto components makers are rushing to re-open key supply contracts with their
U.S.-based customers as the rising rupee is sending the entire industry into a tailspin.
According to the Automotive Component
Manufacturers’ Association of India, exports to US companies are worth over INR 2,000
Crores. As Indian auto component makers work in a very competitive environment with thin
margins, many companies, which do not have currency fluctuation clause built into the old

50
agreements, are now trying to re-negotiate the contracts. But there are other manufacturers
who are trying to shift their focus to the Euro.

Indian automotive component companies are trying to balance out this impact by
focusing on European exports while decreasing its exports to the U.S. Even though the Euro
is emerging as the most preferred currency for Indian exports, there could be hurdles to move
away from the U.S. Dollar. Some companies who have their exports in Pounds and Euros
have not been impacted due to the appreciating Rupee. The dual trap of high interests and the
appreciating Rupee have squeezed the margins of the exporters.

The currency fluctuation and the appreciation of the Indian Rupee in comparison to
the Dollar have affected the profitability of Indian companies dependent on the U.S market.
Since China is not having the floating rate currency system for the Industry, the Chinese
industry is insulated from these fluctuations.

5.4.4 Frequent changes in DEPB rates

The duty entitlement passbook (DEPB) scheme is regarded as a positive initiative

of the Government. Exporters keep the available benefits from this duty in mind while
negotiating the orders with the foreign customers and any change in it affects the profitability
of the company. There is also a time lag between applying for it and getting the benefit. The
cost of agents and time cost nullifies its benefits. As a result, quite often, it remains only a
notional income.

5.5Manpower/ Human Resource Related Issues:

51
5.5.1 Availability of trained manpower and productivity

A large chunk of available manpower from the automotive industry is going to either
the service industry or to the new manufacturing units that have come in recent past.
Retention of skilled manpower is proving to be a challenge. If companies do not plan ahead,
there may be disruptions in production. The quality requirements from the industry are
changing with the global requirements and achieving skill development for a new set of
employees on a regular basis is a challenge.

For improving productivity, need for skill development and attitudinal training of
work force is being increasingly felt by the industry. Production heads of auto component
manufactures feel that job security has vitiated the work culture at the lower level. The
workforce at lower level spends time less productively during working hours. Some experts
have also echoed similar views.

5.5.2 Rising wage cost:

Minimum wages in several states has gone up by over thirty percent in the last two
years. This has severe implications on the profitability of the companies employing low wage
earning workers. The implications are equally relevant for automated manufacturing systems
because of the cascading effect of minimum wages among the middle level and senior level
employees.

5.5.3 Labour laws:

SMEs in auto-component sector feel that the current labour laws have resulted in
poor productivity in India. These companies expect productivity friendly labour laws. The
general feeling is that Chapter 5B of the industrial dispute act should be done away with.
Under provisions of this act, companies can not retrench more than 100 workers with out
prior permission from the Government even if the company does not have enough work for
them. At few places, the Government is pressurizing companies to make the contract labour

52
permanent, which the companies cannot afford. The Government of India is already working
on a policy to mitigate the situation.

53
6. Conclusion

54
6. Conclusion:

The study was conducted with the view to understand the role of HR department
in Pricol and has given us an exposure to the practical applications of the HRM concepts. It
has helped me in understanding the importance of HRD in an organization. The maintenance
of the valuable assets, the human resource is a tedious task that involves a lot of
industriousness, dedication, presence of mind and people skills. This study has improved my
confidence by its successful completion to undertake such studies in the future.

55
56
 BIBLIOGRAPHY

BIBLIOGRAPHY

Text books :

C.B.Mamoria, (2008) Personnel Management (2nd edition), Himalaya Publishing House,

New Delhi.

L.M. Prasad, (2008) Organizational Behaviour, (4th Revised Edition), Sultan Chand & sons,
New Delhi.

V.S.P Rao, (2008) Human Resource Management, (2nd Edition), Excel Books.

Websites:

http://www.pricol.com/companyprofile.html

http://www.acma.org/autocomponentindustry.html

http://citehr.com/employeewelfarearticle.html

57
http://wikipedia.com/indian-automobileindustry.html

http://www.indiainbusiness.nic.in/industry-infrastructure/autoindustry.html

58
APPENDICES

59