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Chapter- 1 (INTRODUCTION)

GENERAL INTRODUCTION ABOUT SECTOR


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INDUSTRY PROFILE
Agro Industry:
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a. Origin and development of the industry Agriculture and industry have traditionally been viewed as two separate sectors both in terms of their characteristics and their role in economic growth. Agriculture has been considered the hallmark of the first stage of development, while the degree of industrialization has been taken to be the most relevant indicator of a countrys progress along the development path. Moreover, the proper strategy for growth has often been conceived as one of a more or less gradual shift from agriculture to industry, with the onus on agriculture to finance the shift in the first stage. This view, however, no longer appears to be appropriate. On the one hand, the role of agriculture in the process of development has been reappraised and revalued from the point of view of its contribution to industrialization and its importance for harmonious development and political and economic stability. On the other hand, agriculture itself has become a form of industry, as technology, vertical integration, marketing and consumer preferences have evolved along lines that closely follow the profile of comparable industrial sectors, often of notable complexity and richness of variety and scope. This has meant that the deployment of resources in agriculture has become increasingly responsive to market forces and increasingly integrated in the network of industrial interdependencies. Agricultural products are shaped by technologies of growing complexity, and they incorporate the results of major research and development efforts as well as increasingly sophisticated individual and collective preferences regarding nutrition, health and the environment. While one can still distinguish the phase of production of raw materials from the processing and transformation phase, often this distinction is blurred by the complexity of technology and the extent of vertical integration: the industrialization of agriculture and development of agroprocessing industries is thus a joint process which is generating an entirely new type of industrial sector. This chapter attempts to review some of these issues and assess the actual and potential role of the agroprocessing industry in economic development. It starts by discussing the definition of the sector and reviewing some of the statistical evidence of its economic importance worldwide. It then moves on to a discussion of the role that the agroprocessing industry can play in economic development in the developing countries, before reviewing how conditions for agroindustrial development are currently changing worldwide as a result of changing trade policies and regimes and the evolution of both technology and food consumption patterns. The chapter then underlines the growing internationalization of agroprocessing activities, in particular through the increasing importance of international capital activities, and the role played by multinational corporations in this process. Finally, it discusses elements of a conducive policy environment for promoting the agroprocessing industry and for ensuring that the sector can provide the optimum contribution to economic development. AGRO PROCESSING INDUSTRY:

Types of agro processing: A common and traditional definition of agroprocessing industry refers to the subset of manufacturing that processes raw materials and intermediate products derived from the agricultural sector. Agroprocessing industry thus means transforming products originating from agriculture, forestry and fisheries. Indeed, a very large part of agricultural production undergoes some degree of transformation between harvesting and final use. The industries that use agricultural, fishery and forest products as raw materials comprise a very varied group. They range from simple preservation (such as sun drying) and operations closely related to harvesting to the production, by modern, capital-intensive methods, of such articles as textiles, pulp and paper. The food industries are much more homogeneous and are easier to classify than the non-food industries since their products all have the same end use. Most preservation techniques, for example, are basically similar over a whole range of perishable food products, whether they be fruit, vegetables, milk, meat or fish. In fact, the processing of the more perishable food products is to a large extent for the purpose of preservation. Non-food industries, in contrast to the food industries, have a wide variety of end uses. Almost all non-food agricultural products require a high degree of processing. Much more markedly than with the food industries, there is usually a definite sequence of operations, leading through various intermediate products before reaching the final product. Because of the value added at each of these successive stages of processing, the proportion of the total cost represented by the original raw material diminishes steadily. A further feature of the non-food industries is that many of them now increasingly use synthetics and other artificial substitutes (especially fibres) in combination with natural raw materials. Another useful classification of agroprocessing industry is in upstream and downstream industries. Upstream industries are engaged in the initial processing of agricultural commodities. Examples are rice and flour milling, leather tanning, cotton ginning, oil pressing, saw milling and fish canning. Downstream industries undertake further manufacturing operations on intermediate products made from agricultural materials. Examples are bread, biscuit and noodle making, textile spinning and weaving; paper production; clothing and footwear manufacturing; and rubber manufactures. A further specification is related to the nature of the production process which, in many cases, can range from craft to industrial organization. For example, in some developing countries the same good may be produced both by handloom weavers working in their own home and by large textile factories that have sophisticated machinery and complex systems of organization and that produce a range of industrial products for the domestic and external markets. In such cases, it can be misleading to define agroprocessing industry just on the basis of the goods produced because only the second method of production mentioned has industrial characteristics. 4

Today, however, it is becoming even more difficult to provide a precise demarcation of what should be considered an agro-industrial activity: the impact of innovation processes and new technologies suggests a widening of the range of agro-industry inputs that could be considered, including biotechnological and synthetic products, for example. This implies that agro-industry today continues to process simple agricultural goods while also transforming highly sophisticated industrial inputs that are often the result of considerable investments in research, technology and innovation. Corresponding to this growing complexity of inputs is an increasing range of transformation processes, characterized by physical and chemical alteration and aimed at improving the marketability of raw materials according to the final end use.
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All these factors the growing complexity of inputs, the impact of innovation processes and new technologies, the sophistication and the growing range of the transformation processes makes it increasingly difficult to draw a clear distinction between what should be considered strictly industry and what can be classified as agro-industry. b. Growth and present status of the industry
Agriculture industry From the time of its Independence, agriculture has been the most important deciding factor of Indias economy. backbone of Indias economy. Agriculture segment in India alone was responsible for not less than 18% of Indias GDP in addition to offering jobs to about 60% of Indias entire population. Services related to the agriculture industry in India could make up a bulk of 62% to the countrys GDP. However, irrespective of its immense contribution to the GDP, it only employed 28% of the total population of the nation. The volume of exports has been increasing between 2001 to 2009, making up a 200% increase during this time. On the other hand, for the past three years, imports have not changed much. The enormous growth in the agriculture products segment has helped India significantly increase the production of food. Despite the commendable growth in agriculture and agriculture products mentioned above, there has been a fall in the total volume of exports of agriculture products from India since 2004 to 2009 from 12.7% to 10.23%. Statistics also reveal that the average daily food consumption in India per head is blow 2,500 kilocalorie per day which implies that there is a sizeable room available for growth. In addition, it is also noted that the population of India will be on a steady growth over the next thirty years at the rate of 1 percent per year. However, there are no chances for India to take over Chinas position as a major engine growth in the global agricultural demand owing to the fact that the cultural traditions in the nation advocate and promote vegetarianism, which will hold back the nations demand for animal feeds and meet much below what is noticed in China. Experts in the arena reveal that the Indian Agriculture Industry is poised towards a great revolution that will modernize the whole food chain since the total volume of food production in the sub continent is most likely to double over the next ten years period.

Recent studies show that the value of the total food market in India at present is about Rs.250000 crore (US $ 69.4 billion). In this figure, the size of value-added food products alone makes up Rs.80000 crore (US $ 22.2 billion). Most importantly, the Indian government has sanctioned approval for a number of joint ventures and collaborations with foreign firms besides licensing several industries and fully export units anticipating an investment of about Rs.19100 crore (US $ 4.80 billion) in the segment. Out of this figure, the foreign investments alone are expected to be more than Rs. 9100 crore (US $ 18.2 Billion). The agricultural food industry also is gaining more significance on account of Indias substantial agrarian economy, which is responsible for the countrys 35% of GDP while the sector has also given employment to more than 65 per cent of Indias population. With respect to foreign investments and also a number of joint- ventures and collaborations with foreign firms, the consumer food segment in India has always remained the top priority. Over and above, there are also several other attractive features in the Indian agriculture industry that are capable of luring foreigners with promising benefits like deep sea fishing, aqua culturing, milk and dairy products manufacturing, poultry segments and meat. The notable feature of the Indian agriculture industry can be listed as export prospects, competitive pricing and international standards. These features are responsible for generating enormous trade opportunities in the Indian agriculture industry. In addition, this portal has also served as the gateway for all the exporters and importers in and out of the country to satisfy their requirements and make use of the benefits of buy sell business leads and other trade opportunities connected to the agriculture products industry. With a country of more than a billion people, entrepreneurs can choose from a wide variety of areas in the agriculture products segment in the country ranging across food grains, canned, dairy, processed, fisheries, frozen food, meat, poultry, alcoholic beverages and soft drinks. Agriculture is the backbone of Indias rural economy around which both the socio-economic privileges and deprivations surround. Any small change in the structure of this segment in India will invariably pronounce its impact on the nations present pattern of social equality. During the 50 years period following the independence of the nation, the growth of Indias agriculture was recorded at an impressive rate of 2.7 % per annum of which not less than two-third is brought about by the gains in crop productivity. Since the country attained independence, the nation has been applying a thoroughly need based strategy in the agriculture sector eventually intensifying the same after mid sixties with a chief focus on meeting the nutrition needs of the countrys exploding population so as to make the nation self reliant with respect to food production. In India, agriculture has been able to demonstrate a growth of more than four times during the planned area of development raising the figure from just 51 million tonnes in 1950-51 to 199.1 million tonnes in 1997-98. Starting from sixties, the growth witnessed in the sector is phenomenal aptly aided by several factors like extensive usage of high yielding varieties of seed, fertilizers and pesticides, especially in well irrigated areas.

History and present day status of Agriculture industry In the Indian sub continent, agriculture has a long history of more than 10,000 years with majority of the population solely dependent on the industry. Consequently this sector has played a significant role in the overall socio economic development of the nation. The Annual Report 2009-2010 pertaining to this sector released by the Ministry of Agriculture has revealed that the total geographical area of India is 328.7 million

hectares and about 140.3 million hectares of this is net sown area with 193.7 million hectares found to be the gross cropped area. Among all the nations of the world, India is the largest producer of fresh fruits with some of the top ones in the list including sesame seeds, ginger, turmeric, fennel, badian, jute, cashew nuts, pulses, mangoes, chillies and peppers. India has claimed the second largest population of cattle with about 281million cattle. The country also has reserved the second position in the production of commodities like cashew, garlic, cardamom, onions, tomatoes, coconut, cabbage, cotton seed, fresh vegetables, ground nut, wheat, rice sugarcane, tea, green peas, cauliflower, potato and inland fish. India has been producing tobacco, coconut, rapeseed and tomatoes in huge amount entitling itself to be called as the third largest producer of these products. The Indian Agriculture Research Institute (INRI) established in 1905 has a commendable achievement of bringing about the Indian Green Revolution of the 1970s. The Indian Council of Agricultural Research (ICAR) is today the apex body in agriculture and the connected arena in the country responsible for looking after all the researches and education in the segment. The union minister of Agriculture is also the president of ICAR. The Indian Agriculture Statistics Research Institute supervises and evolves new techniques, and designs the various experiments in addition to analyzing data in agriculture. The organization functions with the chief objective of maximizing the produce from animal and plant breed. Though the Government of India has set up Farmers Commission to evaluate the agriculture program, the farmers in the nation are facing some problems.

Steel Industry: a. Origin and development of the industry


Steel Industry is a booming industry in the whole world. The increasing demand for it was mainly generated by the development projects that has been going on along the world, especially the infrastructural works and real estate projects that has been on the boom around the developing countries. Steel Industry was till recently dominated by

the United Sates of America but this scenario is changing with a rapid pace with the Indian steel companies on an acquisition spree.

History Of The Steel Industry dates back to the ancient times in Armenia which is approximately around three thousand and five hundred Before Christ. Steel is nothing but the alloy of iron and carbon. But the History Of The Steel Industry in the modern times was initiated during the medium half of nineteenth century (during 1850s to be precise). The initiator of it was a person named Mr. Henry Bessemer of England. At the same time, another person named Mr. William Kelly, a resident of United States, has also started the production of steel and was completely an independent approach from Mr. Bessemer. The process in which the first ever production of steel was carried out came to be known as Bessemer Process. This helped the steel industries to produce steel in large quantities and also at comparatively low costs. History Of The Steel Industry was enriched and modernized through the introduction of OpenHearth process of steel production which made the industries to produce steel out of domestic iron ores. This process was first adopted by the steel industries situated in United States Of America in the year 1888. This time saw rapid innovations in the processes of steel production which got its impetus from the increased want for steel from various industries namely, railway industry, automobile industry, industry involved in construction of bridges, etc. During this time period, the enhanced demand as well as supply of steel pushed the ranking of USA to the first position, in terms of the steel production.

b. Growth and present status of the industry India has traditionally been one of the major producers of steel in the world. Till the 1990s the steel industry of India was regulated and controlled by government policies.

After the economic reforms of the early 1990s, the Indian steel industry has evolved significantly to conform to global standards.

India has set a vision to be an economically developed nation by 2020. The steel industry is expected to play a major role in India's economic development in the coming years. The steel 8

industry of India has a very high growth potential and is expected to register significant growth in the coming decades. India is expected to emerge as a strong force in the global steel market in coming years. The two major aspects that are expected to play a significant role in the growth of the steel industry in India are Abundant availability of iron ore in the country The country has well established facilities for steel production

Steel production in India has grown from 17 MT in 1990 to 36 MT in 2003. It is expected that by 2011, the steel production in India will grow to 66 MT. The major sectors where consumption of steel is expected to grow in the coming years are Construction Housing Ground transportation Hi-tech engineering industries such as power generation, petrochemicals, fertilizers The current scenario of the Indian steel industry indicates that there is huge growth potential in this industry. The per capita-consumption of steel in India, according to latest available estimates, is only 29 kg. This is much less compared to the global average of 140kg. The per capita consumption level of developed nations like the United States of America is 400kg. In this respect, one of the major initiatives that need to be taken is to focus on increasing the consumption of steel in the rural areas of India. The potential for the growth of consumption of steel in the rural areas of India for purposes like rural housing, rural infrastructure, etc is high which needs to be tapped efficiently.

In order to realize the growth potential in the steel industry of India, it is essential to 9

ensure that the industry can remain competitive. One of the major aspects in this regard is the availability of inputs. Shortage of inputs like coke has led to increase in costs earlier. Moreover proper infrastructure facilities like transport infrastructure, power etc are of prime importance in maintaining the competitiveness of the industry. Most developed countries have regulations that are aimed to protect the domestic steel industry. The Indian steel industry has comparatively much lesser protection through regulations. Proper regulatory measures should be adopted by the government to protect the domestic steel industry. c. Future of Industry In the recent past, a major swing has been observed in the global steel production trend with a shift from developed countries to developing countries. During CY 03-05, the CAGR of steel production in developing economies like China (25.5%) and India (9.5%) was much higher than the CAGR of world steel production (8.1%). On the consumption aspect, globally, India has emerged as the 5th largest consumer of steel in CY 05. Indian steel industry is characterized by fragmentation, particularly in the downstream segment, with a large number of unorganized players.

Energy intensiveness of Indian steel industry is highlighted by its consumption of about 10% and 27% of total electricity & coal consumed respectively by the entire Indian industry. Primary producers (Integrated Steel Producers (ISPs)) in the country produce majority of flat products and secondary producers (mini steel plants) produce most of the long products. Globally, 65.4% of crude steel is produced by BF/BOF route, 31.7% by EAF route and rest by Open Hearth method. In India, blast furnace/BOF route dominates with 41% share, followed by induction furnace at 31%, EAF at 25% and COREX at 3%. In FY 06, domestic steel production was apprx. 43 mt. Imports and exports as a % of steel produced stood at 8.8% (3.77 mt) & 10.2% (4.35 mt) respectively.

In FY 06, India consumed about 38 mt of steel, infrastructure sector being the largest consumer. The demand for the flat steel in the country is increasing with the growth in automobile and consumer durable industries. Cost of production of steel depends on 10

technology employed for production and extent of backward integration, sourcing of power and raw material. Typical power consumption per tonne of steel produced ranges between 500-650 Kwh. Raw material accounts for 60- 70% and energy (coal and power) 25-30% of total cost of production. India has self sufficiency in iron ore but for coking coal, coke and scrap it has to depend upon imports. In FY 06, India produced about 166 mt of iron ore out of which 66.3 mt was consumed by domestic steel producers and the rest was exported. The demand growth of scrap is expected to be lower because of substitution by sponge iron. Since2003, India has been the largest sponge iron producer in the world. In 2005, out of total global production of 56.05 mt of sponge iron, India produced around 11.1 mt (19.8%). In line with production target of 110 mt of steel (National Steel Policy) by FY20, many steel producers have announced their capacity expansion plans by signing MOUs with various state governments like Chattisgarh, Orissa and Jharkhand. The steel producers are expected to add around 8 mt of capacity by FY 08. CARE estimates that during 2006-09, demand for steel in the domestic market would grow at a CAGR of 8.4%. HR steel because of its widespread applicability is expected to grow at a CAGR of 17.5%. During this period, major demand drivers would be Consumer durables, Automobiles and Construction. After latent scenario till 2003, international steel prices rose to touch record highs in early 2005, mainly driven by rapid growth in steel demand from developing economies. Domestically, steel prices of flat products follow the international trend. Globally, steel prices are expected to firm up with continued growth in steel consumption. Further, the winds of consolidation have gathered pace with Arcelor-Mittal merger and latest acquisition of Corus by Tata Steel. The Indian steel industry has announced huge capacity expansions. With commissioning of these capacities demand-capacity ratio is expected to decline in FY 09 due to excess capacity. Will this lead to a drop in prices with commissioning of these capacities? With China and India becoming the focus of major global steel companies, will the consolidation of steel industry in these countries continue? For comprehensive analysis and CAREs future outlook on the sector, please refer to the exhaustive report on the Indian Steel Industry by CARE Research. 11

Telecommunication Industry: a. Origin and development of the industry The history of telecommunication began with the use of smoke

signals and drums in Africa, theAmericas and parts of Asia. In the 1790s, the first fixed semaphore systems emerged in Europe; however it was not until the 1830s that electrical telecommunication systems started to appear. This article details the history of telecommunication and the individuals who helped make telecommunication systems what they are today. The history of telecommunication is an important part of the larger history of communication. b. Growth and present status of the industry The telecom industry is growing at a great pace and the growth rate is expected to double with every passing year. There are many new developments in the telecomm sector, including the ingress of 3G technology that the Indian market is witnessing at present. Public and Private Players MTNL, BSNL, VSNL are the major Public Players, whereas Airtel, Idea, Hutch, Tata, Reliance, BPL are the leading Private Players in the country. Some of them are entering foreign markets as well. The Bharti Telecom will be launching its services for the NRIs in the US with the help of Airtel CALLHOME service.

The market shares of the leading public and Private Players

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Investment And Growth

In 2005-2006, the telecom industry witnessed a growth of 21% with a total revenue of Rs. 86,720 crores, and the total investment rising to Rs. 2,00,660 crores. It is projected that the telecom industry will be enjoying over 150% growth in the next 4-6 years. The growth also requires a huge investment by the players in the sector. Bharti Airtel is planning to invest about $8 billion by the year 2010. Liberalization policy and some socio-economic factors are mainly responsible for the immense growth in the sales volumes. The lifestyle of the people has changed. They need to be connected to the other people all the time. With the lowering down of the tariffs the affordability of the mobile phones has increased. The finance sector has also come up with loans for handsets on 0% interest. Mobile services providers are also expanding their coverage area by installing more and more antennas and other equipments. The telecom sector in the country has already adopted the latest technological advancements to cater to the demands of the growing market. Telecom Expo India, Convergence India, VAS India and IPTV India being organized year to year are all efforts in this direction. Budget 2007 has brought disappointment to the telecom sector. Mobile service providers have been asked to cut down their roaming rentals as well as their long distance and international call tariffs. This has led to discontent on the part of the service providers. However, Telecom Regulatory Authority of India (TRAI) is of the opinion that this will lead to increased use of roaming, which will ultimately lead to more revenue generation. Moreover, with cheaper handsets and lesser tariffs, it is expected that by the year 2010 there will be over 500 million subscribers in the Indian telecom market. Also, the telecom industry this year will be focusing more on rural areas to connect them with the urban areas so that the farmers and the small-scale industries can have faster access to information related to weather and market conditions. 13

Employment Status With the coming of more and more projects, the telecom industry is going for high scale recruitments. There is a huge demand for software engineers, mobile analysts, and hardware engineers for mobile handsets. Besides, there are ample opportunities for marketing people whose services are required to capture more and more customer base. The new projects, setting up of new service bases, expansion of coverage areas, network installations, maintenance, etc are providing more and more employment opportunities in the telecom sector. c. Future of Industry The Indian telecommunication sector in India is the third largest sector across the globe and the second largest among the emerging economies of Asia. This rapid growth has been possible due to various proactive and positive decisions of the Government and contribution of both the public and the private sector. The rapid strides in the telecom sector have been facilitated by liberal policies of the Government providing thetelecom equipments an easyaccess to the market and a fair regulatory framework for offering telecom services to the Indian consumers at affordable prices. The sector also witnessed a substantial change in terms of mobile versus fixed phones and public versus private participation. The preference for use of wireless phones has also beenpredominant in the sector. Participation of the private entities in the telecom sector is increasing rapidly, alongside, giving rise to enormous growth opportunities. There is a clear distinction between the Global Satellite Mobile Communication (GSM) and Code Division Multiple Access (CDMA) technologies used within the Indian telecom sector. Market size The sale of mobile devices in India will show of rise of 8.5 per cent in 2012 by growing up to 231 million units from 213 million units last year, according to a research report from Gartner. The research firm says that the Indian mobile handset market is expected to show steady growth through 2015 when end-user sales will surpass 322 million units. The Indian mobile device market is very competitive with more than 150 manufacturers. Smartphone sales in India made up 6 per cent of device sales in the first three quarters of 2011, and this share is expected to increase to 8 per cent in 2012. The Indian mobile device market is driven by the lowest call rates in the world and dominated by low-cost devices, which account for 75 per cent of sales in India in 2011.

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Indian Telecommunication - Major Investments Nokia has unleashed its biggest-ever marketing campaign in India for the launch of its Windowsbased smartphone Lumia, so as to keep itself relevant in a market being swarmed by Google Android phones such as Samsung Galaxy range. This is the first product under the NokiaMicrosoft partnership and Nokia has put in high stakes in the Indian market. Citi India has launched a cash management service which will help its corporate customers collect receivables from their retailers or customers using mobile payment technology. Known as Cash-To-Mobile, this solution will increase the efficiency of collection for the company. It will also help in reducing the cost of transaction and will ensure safe transfer of money. Nokia Siemens Networks has decided to ramp up its India operations in three core areas of mobile broadband, manufacturing and Global Network Operations Centres. "India will be the hub of the transformation that NSN has initiated globally. Investments into India are being ramped up in key focus areas, including global delivery centres and manufacturing. So all of these facilities which gives us global scale and advantage of centralisation is being ramped up, MrSandeepGirotra, head of Nokia Siemens in India, told Business Line. The implementation of India's low-cost telecom model in the African market seems to have paid dividends for the country's largest company in the sector, BhartiAirtel, with the company crossing 50 million subscribers in mobile operations. Bharti acquired Zain's assets in 16 African countries in June 2010, with a subscriber base of 42 million, brought down to an active user base of 36 million. In these 17 months, it has got 14 million users, on the back of low and innovative rate plans, it said. It has 173 million subscribers in the Indian market. Indian Telecommunication - Policy Initiatives The Telecom policy 2011, will replace the existing framework that has been in place since 1999, and it aims to make the country's telecommunications sector more transparent, relax merger and acquisition norms to encourage consolidation and also give more teeth to sector regulator Telecom Regulatory Authority of India (TRAI). The new policies by the Indian Government also proposes to do away with roaming charges, introduce a stronger customer grievance redressal mechanism, recognize telecoms as an infrastructure sector giving it tax concessions, and extend preferential status to 'Made in India' hardware products, thereby strengthening the Indian Telecom Industry for future challenges. Indian Telecommunication - The Road Ahead The Indian telecom sector is one of the fastest growing sectors in the Indian economy during the past 4 years and has witnessed strong competition as a result of which tariffs have decreased by significant margins, promotion of customer and industry friendly policies and regulations. This has led to a healthy competition scenario within the sector. With a target to further increase the opportunities in the sector, the Indian government is taking proactive measures to develop this 15

sector with the help of the various players in this segment. India, with its telecom success story, represents one of the sought after destinations for investment in the telecom sector.

Chapter-2 (PROFILE OF THE ORGANIZATION)

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PROFILE OF THE COMPANY


ORIGIN OF THE ORGANIZATION: Integrated Service Point P Ltd (ISPPL) was established in 1999 by professionals experienced in the field of Agro based commodities, Telecommunication & Steel Structural fabrications. Through several decades of enterprising and continuously pioneering, this familyowned business has evolved into an export house of relatively large economical scale under the ISP Banner. GROWTH, DEVELOPMENT AND PRESENT STATUS OF THE ORGANIZATION:
The company began the journey as a modest EPC Contractor and within a short span of time has been able to emerge as a reputed and reliable EPC contractor in the Telecommunication and Petroleum Sectors.

ISPPL has been in the forefront in laying of Primary Cable, Distribution cable , Optical Fibre Cable , Rehabilitation and Erection of distribution panels, across Tamil Nadu and has offered services to the best in the telecommunication industry like Bharati Airtel, Reliance, BSNL, HCL etc. The company completed target of 60% of telecomm network of Bharati Telenet Ltd (Airtel) in Chennai, Coimbatore and Tiruppur.

ISPPL also ventured into fabrication and has been instrumental in constructions of various retail outlets across South India for all the reputed Oil Companies Viz India Oil Corporation Limited (IOL), HPCL, Reliance etc. The companys quality and timely execution of canopies and hoardings recognized by Reliance Industries Ltd and awarded South India Vendors for all Franchisees of Reliance retail outlet. The company completed execution of canopies and hoardings in Tamil Nadu, Andhra 17

Pradesh, Karnataka and Kerala for Reliance Industries Ltd to the tune of 60 Outlets.

ISPPL has diversified in the recent years with main focus on the import and export of various kinds of agro commodities. We are also into operation of Liquid Cargo Storage Terminals at various Ports in India namely-Chennai (20000 KL), Mumbai (25,000 KL), Karwar (10000 KL) and Vijaydurg (15000 KL). We specialize in export of various agricultural commodities from India. Our network encompasses agri commodity markets in countries like Singapore, Indonesia, Taiwan, Vietnam, Yemen, Sri Lanka, Amsterdam etc. and is rapidly growing in other international markets.

Over the Years our company has developed networks and resources in the local Indian markets for procurement of quality products at competitive cost.

The product portfolio of our company includes Molasses, Sugar, Rice Maize, Soybean Meal, Rapeseed Meal, Groundnut Meal, Castor Seed Meal, Rice Bran Extraction.

Our clients include all the major international traders and manufacturers of animal feed who are leaders in their respective markets. Our strength has been procurement and delivery of uniform quality products as per customer's requirements. Quality checks are conducted at various levels of procurement by the independent surveyors.

We guarantee quality products, timely execution of the orders, proper feedback mechanism to meet the global standards. We are committed to provide superior services to our customers in terms of quality of the products, timely shipments and competitive prices.

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ISPPL has carved a respectable position in the Asian Subcontinent and is extremely proud to flaunt that it has established a very strong competitive edge in the Cane Molasses industry, and thus is one of the biggest exporter and seller of Cane Molasses from India. In fact, the companies export trade turnover has jumped from just above Rs.2 Crores in 2006-07 to Rs100 Crores in the year 201112(upto Dec 1,2011).Primarily due to good working relations with its suppliers, determination, business expertise, and zealous commitment to both honoring contract and customer service, it has obtained and sustained its competitive edge.

Nevertheless, ISP is constantly thinking ahead to stay in tune with the dynamic global demands. In realizing the new developments in the global open market economy, ISP has accelerated the readjustment of its operating strategy. Considering desired opportunities, perfect commercial goodwill, and existing assets, ISP has confirmed a new managing system of three combination:

combination of youth and experience; combination of domestic and international focus; and combination of human resources and technology.

With over a decade of experience, ISPs professional staff is capable of coordinating the importation, exportation, distribution, and marketing of agro commodities in the Middle East, Far East , Europe, Africa, Asian subcontinent and emerging countries.

With a view to emerge as a vibrant and robust export house, we have incorporated a public limited company - ISP EXPORTS INDIA LIMITED. This is a registered public limited company incorporated under the Indian Companies Act

With the Government of India liberalizing trade policies to promote agri business, India is a good base for export operations. Excellent export prospects, competitive pricing of agricultural products and standards that are internationally comparable has created trade opportunities in the agro products. We are being flooded with 19

firm enquiries for supply of various commodities to various export destinations and the company has initiated exploring the concept of corporate farming and plans to take up the same in the land holdings belonging to its associate to the tune of 200 acres.

Being an intermediary between all parties involved in the trading requires a multi-disciplinary approach. ISP is geared for this purpose can undertake in variety of ways which best fits the customer needs. Each company/customer relationship is approached individually with suggested relationships being either contract oriented or consultation base.

As commodity demands increase, ISP will continue to transform into a better international commodity trading in the future. However, it will remain dedicated to:

Addressing global trade opportunities Providing a zealous commitment to honoring contracts Providing a zealous commitment to honoring customer service Supplying customers quality products at the best prices Providing quality trading and marketing Providing personal service to each customer Meeting customer expectations Providing long-term concept and orientation Giving attention to each trade project from start to finish Utilizing effective trading and marketing tools and techniques Willingness to assume responsibility Poviding clear and effective communication Advancing through innovation for customer satisfaction We make it our business to remain knowledgeable about the latest economical and commercial developments in all aspects of global trading and marketing. ISP 20

affords the optimum advantage to its customers. Our traders are successful because we give special attention to areas of commodity trading which require our individual involvement, skill, and judgement.

Our Contact Address

INTEGRATED SERVICE POINT (P) LTD No 32, VOC Colony, Annanagar East Chennai 600 102 (INDIA)

Tel Fax

: +91 44 26633600, 26633800 : +91 44 26633700

Contact Person:Suresh Gatreddi-General Manager H/p E-mail : +91 9382899099 : suresh@isplgroup.com

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ORGANIZATION STRUCTURE:

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The management is assisted by a professional team having hands on experience in various discplines with focused attention by virtue of which the company is registering an impressive growth and also providing an ideal platform to sustain the companys growth plans

1. 2. 3. 4. 5. 6. 7.

G.K.B.Narayana Prasad Suresh Gatreddi Ravi Balakirishnan B.Selvam R.K.Vardarajan V.Stanley

Chief Executive General Manager Sr.Manager Manager Terminal Manager Accounts Officer

R.S.Meenakshi Sundaram Adminsitrative Officer

The following are the Board of Directors who are actively engaged in managing the affair of the company

1. G.Ahoram 2. K.Madhav Sri Apparao 3. K.Ramnath Apparao 4. K.Srikanth Apparao

Managing Director Director ( Startegy & Public Relations) Director (Marketing & Business Dev) Director ( Finance & Admin)

5. K.Sasikanth Satynarayana Director( Operations)

The promoters hail from the family of Zamindar Karlapati Appa Rao, of Appa Rao Gardens, Sydenham Road, Choolai, Chennai.

MARKET PROFILE OF THE ORGANIZATION


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As commodity demands increase, ISP will continue to transform into a better international commodity trading in the future. However, it will remain dedicated to: Addressing global trade opportunities Providing a zealous commitment to honoring contracts Providing a zealous commitment to honoring customer service Supplying customers quality products at the best prices Providing quality trading and marketing Providing personal service to each customer Meeting customer expectations Providing long-term concept and orientation Giving attention to each trade project from start to finish Utilizing effective trading and marketing tools and techniques Willingness to assume responsibility Poviding clear and effective communication Advancing through innovation for customer satisfaction Products of ISP in Market: The product portfolio of our company includes Molasses, Sugar, Rice Maize, Soybean Meal, Rapeseed Meal, Groundnut Meal, Castor Seed Meal, Rice Bran Extraction. Our clients: Our clients include all the major international traders and manufacturers of animal feed who are leaders in their respective markets. Our strength has been procurement and delivery of uniform quality products as per customer's requirements. Quality checks are conducted at various levels of procurement by the independent surveyors.

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CHAPTER- 3 (DISCUSSION ON TRAINING)

STUDENT WORK PROFILE


Name: K. SATYA SUDHIR Designation: HR trainee My Profile: 25

Roles and Responsibilities:

KEY LEARNINGS
Types of compensation Internal equity its components Acts relating to the employees payments and deductions: Payroll processing: Calculation of monthly payroll Factors considered in formulating salary offers

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CHAPTER -4
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( STUDY OF SELECTED RESEARCH PROBLEM)

PAYROLL MANAGEMENT
Human Resource is the most vital resource for any organization. It is responsible for each and every decision taken, each and every work done and each and every result. Employees should be managed properly and motivated by providing best remuneration and compensation as per the industry standards. The lucrative compensation will also serve the need for attracting and retaining the best employees. Compensation is the remuneration received by an employee in return for his/her contribution to the organization. It is an organized practice that involves balancing the workemployee relation by providing monetary and non-monetary benefits to employees. Compensation is an integral part of human resource management which helps in motivating the employees and improving organizational effectiveness. 28

There are several difficult obstacles that you will come across when opening your own business. However, they will become more manageable over time. A certain amount of capital is always required when starting a new business, but without an efficient workforce the business will be unproductive and the capital wasted. It has been stated that a good company is made from good employees, and every international company is well aware of the importance of a capable workforce. At the outset of opening a business, you typically dont have to bankroll a large staff of employees. As a business grows, however, a company is faced with expanding payroll complexity as their staff grows. It is proven that increased compensation draws a higher grade of employees to a business.

DEFINITION: Compensation which includes direct cash payments, indirect payments in the form of employee benefits and incentives to motivate employees to strive for higher levels of productivity is critical component of the employment relationship. Compensation is affected by forces as diverse as labour market factors, collective bargaining, government legislation and top managements philosophy regarding pay and benefits. _Wayne FCascio The standard definition of "payroll management is quite simply the management of wages and salaries of all employees of any business. WAGES AND SALARIES

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The term wages has been defined as all remuneration (whether by way of salary, allowances or otherwise) expressed in terms of money or capable of being expressed which would in terms of employment, express or implied, were fulfilled, be payable to a person employed in respect of his employment.

PAYMENT OF WAGES ACT, 1936 As has been pointed out earlier, this act intends to remedy the evil practices growing out of the freedom of the employers to determine the mode and manner wage payment as they liked. This act deals with removing of the evils done by the employers to the workers, they are as follows:

Ensuring regularity of payment: Ensuring payment in legal tender: Preventing arbitrary deductions: Restricting employers right to impose fine: and Providing remedy to workers: 30

COMPENSATION PACKAGE
It's important to give a lot of consideration to your business's compensation structure because it ultimately reflects how employees are valued. When it comes to employee compensation, most managers are busy asking: "What do I have to pay to?" That is not an easy question to answer. A better question might be: "What do I want my compensation package to say?" Whether you realize it or not, it is already saying a lot. Child care and health benefits say that you value family. Giving longevity bonuses for employees on the anniversaries of their employment with you says that you value employees who stay with the business. Throwing a party at the end of your business's busy season lets the employees and their families know that you appreciate it when your people go the extra mile. No matter what compensation elements you use, they all carry a message. That message is important. Compensation packages can be linked to business structure, employee recruitment, retention, motivation, performance, feedback and satisfaction. Compensation is typically among the first things potential employees consider when looking for employment. It is important, therefore, to give a lot of consideration to your business's compensation structure. After all, for employees, compensation is the equivalent not to how they are paid but, ultimately, to how they are valued. COMPENSATION PACKAGE It's easy to think "dollars per hour" when thinking about compensation. Successful compensation packages, however, are more like a total rewards system, containing nonmonetary, direct and indirect elements. Non-Monetary Compensation can include any benefit an employee receives from an employer or job that does not involve tangible value. This includes career and social rewards such as job security, flexible hours and opportunity for growth, praise and recognition, task enjoyment and friendships.

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Direct compensation is an employee's base wage. It can be an annual salary, hourly wage or any performancebased pay that an employee receives, such as profit-sharing bonuses. Indirect Compensation is far more varied, including everything from legally required public protection programs such as Social Security to health insurance, retirement programs, paid leave, child care or housing. Employers have a wide variety of compensation elements from which to choose. By combining many of these compensation alternatives, progressive mangers can create compensation packages that are as individual as the employees who receive them. The general consensus of recent studies is that pay should be tied to performance to be effective. However, with traditional farming operations, that is not easily done. Business performance can be affected by many factors over which employees have no influence, specificallyweather. Successful managers must search for things employees influence and base performance objectives on these areas. Your operation may benefit from the following: tenure bonuses for long-time employees, equipment repair incentives to encourage good equipment maintenance, or bonuses for arriving to work on time. The more production information data your business has, the easier this is to accomplish. Measures such as feed conversion rates, somatic cell count or mortality can offer great sources for performance incentives. DIRECT COMPENSATION ALTERNATIVES

Basic Pay:

Cash wage paid to the employee. Because paying a wage is a standard A bonus paid when specified performance objectives are met. May

practice, the competitive advantage can only come by paying a higher amount. Incentive Pay: inspire employees to set and achieve a higher performance level and is an excellent motivator to accomplish farm goals.

Stock Options:

A right to buy a piece of the business which may be given to an

employee to reward excellent service. An employee, who owns a share of the business, or just a few animals or acres, is far more likely to go the extra mile for the operation. For example, very few people leave their own gates open.

Bonuses:

A gift given occasionally to reward exceptional performance or for special

occasions. Bonuses can show an employer appreciates his/her employees and ensures that 32

good performance or special events are rewarded. Some indirect compensation elements are required by law: social security, unemployment and disability payments. Other indirect elements are up to the employer and can offer excellent ways to provide benefits to the employees and the employer as well. For example, a working mother may take a lower-paying job with flexible hours which will allow her to be home when her children get home from school. A recent graduate may be looking for stable work and also an affordable place to live. Both of these individuals have different needs and, therefore, would appreciate different compensation elements. In a tight labor market, indirect compensation becomes increasingly important. Businesses that cannot compete with high cash wages can offer very individualized alternatives that meet the needs of the people you want to employ. Such creative compensation alternatives are the small business's competitive advantage. INDIRECT COMPENSATION ALTERNATIVES

Flexible working schedules Elder care Retirement programs Moving expenses Insurance (health, dental, eye) Subsidized housing Paid leave (sick/holiday/personal days) Subsidized utilities Tickets to events (ball games, concerts) Magazine subscriptions Boots and clothing Laundry service Company parties Use of firm vehicles, machinery Farm produce/foods/meals Cellular phones/pagers Child care 33

Use of firm pastures and gardens

DETERMINING THE CASH WAGE Ask ten different people what a fair wage is and you'll get ten different answers. While there are no hard and fast rules in determining a fair wage, the importance of the task is obvious. Research according to Gregory Billikopf indicates that employees expect wages to 1) cover basic living expenses, 2) keep up with inflation, 3) provide some funds for savings or recreation, and 4) increase over time. Discussing wage expectations with employees can help determine what their compensation package should look like. The first thing employers should consider when developing compensation packages is fairness. It is absolutely vital that businesses maintain internal and external equity. Internal equity refers to fairness between employees in the same business while external equity refers to relative wage fairness compared to wages with other farms or businesses. No matter the compensation level, if either internal or external equity is violated, a business will most likely experience employee dissatisfaction and employees with begin to balance their performance through a variety of ways ranging from decreased productivity to absenteeism and eventually to leaving the business. So, what constitutes a fair wage? One approach to determining a fair wage is a market survey. These are typically fast and easy ways to establish compensation guidelines for many businesses. A few phone calls to other employees in similar businesses can determine the "market" value for a specific job. Unfortunately, this technique is not necessarily well suited for agricultural producers. An agricultural manager can do informal surveys of other agricultural producers to determine the "going rate" for labor or modify existing studies of non-agricultural businesses to compare employees not by job title but by skill sets. For example, operating a forklift in a factory and driving a tractor may require similar skills and, therefore, can be compensated similarly. Broadbanding was used in a Cornell University study. Five competency levels were developed to classify employees according to three criteria: authority to make decisions, skill level and supervisory capacity. By using a competency scale, each employee can be crossreferenced by job title and competency level or studied solely within either category. Employees of similar skill levels or competency are taken together in compensation "bands" regardless of 34

job title. These bands then compensate like employees at like rates across the entire organization and serve to maintain both internal and external equity. EVOLUTION OF COMPENSATION Todays compensation systems have come from a long way. With the changing organizational structures workers need and compensation systems have also been changing. From the bureaucratic organizations to the participative organizations, employees have started asking for their rights and appropriate compensations. The higher education standards and higher skills required for the jobs have made the organizations provide competitive compensations to their employees. Compensation strategy is derived from the business strategy. The business goals and objectives are aligned with the HR strategies. Then the compensation committee or the concerned authority formulates the compensation strategy. It depends on both internal and external factors as well as the life cycle of an organization.

Evolution of Strategic Compensation

TRADITIONAL COMPENSATION SYSTEMS In the traditional organizational structures, employees were expected to work hard and obey the bosses orders. In return they were provided with job security, salary increments and promotions annually. The salary was determined on the basis of the job work and the years of experience the employee is holding. Some of the organizations provided for retirement benefits 35

such as, pension plans, for the employees. It was assumed that humans work for money, there was no space for other psychological and social needs of workers. CHANGE IN COMPENSATION SYSTEMS With the behavioral science theories and evolution of labour and trade unions, employees started asking for their rights. Maslow brought in the need hierarchy for the rights of the employees. He stated that employees do not work only for money but there are other needs too which they want to satisfy from their job, i.e. social needs, psychological needs, safety needs, self-actualization, etc. Now the employees were being treated as human resource. Their performance was being measured and appraised based on the organizational and individual performance. Competition among employees existed. Employees were expected to work hard to have the job security. The compensation system was designed on the basis of job work and related proficiency of the employee.

M aslo Need ws

Hierarchy

THE MASLOW THEORY


Abraham Maslow, an eminent U.S. psychologist, gave a general theory of motivation known as Need Hierarchy Theory in his paper published in 1943. 36

According to him 1. People have a wide range of needs which motivate them to work 2. Human needs can be classified into different categories. 3. Human needs can be arranged into hierarchy 4. Human beings start satisfying their needs step by step. 5. A satisfied need does not motivate human behavior. The classification of human needs by Maslow was widely appreciated. He classified the needs as follows:
1. Psychological needs: These needs are related to the survival and maintenance of life.

These include food, clothing, shelter, etc.


2. Safety needs: These consist of physical safety against fire, murder, accident, security

against unemployment, etc.


3. Social needs: These are also called affiliation needs and include need for love, affection,

belonging or association with family, friends and other social groups.


4. Ego or esteem needs: These are the needs derived from recognition, status, achievement,

power, prestige etc.


5. Self fulfillment or self actualization needs: It is the need to fulfill what a person

considers to be his real mission in life. It helps an individual to realize ones potentialities to the maximum. Maslow is of the opinion that these needs have a hierarchy and are satisfied one by one. When first needs are satisfied then the person moves to the second and when this is satisfied, he moves on to the third and so on. 37

Maslows need priority is simple and logical. It is compatible with the economic theory of demand. The theory contains some fundamental truths. His critics say that it is another simplification of human needs and motivation. The hierarchy of needs is not always fixed. They also say that this theory is not empirically tested. Inspite of all this criticism, Maslow explains inter-personal and intra-personal variations in human behavior. Todays modern compensation systems Today the compensation systems are designed aligned to the business goals and strategies. The employees are expected to work and take their own decisions. Authority is being delegated. Employees feel secured and valued in the organization. Organizations offer monetary and non-monetary benefits to attract and retain the best talents in the competitive environment. Some of the benefits are special allowances like mobile, companys vehicle; House rent allowances; statutory leaves, etc

IMPORTANCE OF COMPENSATION SYSTEM


Compensation and Reward system plays vital role in a business organization. Since, among four Ms, i.e. Men, Material, Machine and Money, Men has been most important factor, it is impossible to imagine a business process without Men. Every factor contributes to the process of production/business. It expects return from the business process such as rent is the return expected by the landlord, capitalist expects interest and organizer i.e. entrepreneur expects profits. Similarly the employee expects remuneration. Labour plays vital role in bringing about the process of production/business in motion. The other factors being human, has expectations, emotions, ambitions and egos. Labour therefore expects to have fair share in the business/production process. Therefore a fair compensation system is a must for every business organization. The fair compensation system will help in the following:

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An ideal compensation system will have positive impact on the efficiency and results produced by employees. It will encourage the employees to perform better and achieve the standards fixed.

It will enhance the process of job evaluation. It will also help in setting up an ideal job evaluation and the set standards would be more realistic and achievable.

Such a system should be well defined and uniform. It will be apply to all the levels of the organization as a general system.

The system should be simple and flexible so that every employee would be able to compute his own compensation receivable.

It should be easy to implement, should not result in exploitation of workers. It will raise the morale, efficiency and cooperation among the workers. It, being just and fair would provide satisfaction to the workers.

Such system would help management in complying with the various labor acts. Such system should also solve disputes between the employee union and management. The system should follow the management principle of equal pay. It should motivate and encouragement those who perform better and should provide opportunities for those who wish to excel.

Sound Compensation/Reward System brings peace in the relationship of employer and employees.

It aims at creating a healthy competition among them and encourages employees to work hard and efficiently.

The system provides growth and advancement opportunities to the deserving employees. 39

The perfect compensation system provides platform for happy and satisfied workforce. This minimizes the labour turnover. The organization enjoys the stability.

The organization is able to retain the best talent by providing them adequate compensation thereby stopping them from switching over to another job.

The business organization can think of expansion and growth if it has the support of skillful, talented and happy workforce.

The sound compensation system is hallmark of organizations success and prosperity. The success and stability of organization is measured with pay-package it provides to its employees

BRIEF HISTORY OF PAYROLL SYSTEM


2600 BC: Clay tablets used by the Babylonians to record how long labourers worked and

wages received.
2000 BC: Cowrie shells (a rare mollusc found near the Maldives Islands) used as

currency in China.
200 BC: Origin of the word "salary". It comes from the word "solarium," meaning "salt-

money". Roman soldiers were paid their allowance in salt, a valuable seasoning and preservative at the time.
30 BC: Augustus Caesar reforms the Roman monetary and taxation systems issuing

coins.
1275 - 92: Marco Polo introduces Europe to paper money after travelling to China.

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1529: First use of the word "payday" in English print. 1800s: Worker's wages begin to be paid by the hour instead of the day in response to

more stringent time-recording requirements.


1890s: First "punch clocks" are developed by Edward G. Watkins for the Heywood

Brothers Company in Heywood, Massachusetts.


1920s: Increased use of cheques by employers for payroll because of the security risks

involved in transporting and storing large amounts of cash.


1950s: First automatic deposit of cheques begins in the U.S. 1970s: Advances in computer technology lead to the increased use of computers for

payroll services.
1978: Founding of the Canadian Payroll Association by a small group of payroll

professionals who decided to challenge proposed revisions to the Record of Employment form.
1995: National Payroll Week founded by the Canadian Payroll Association and members

of the payroll community.

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COMPONENTS OF COMPENSATION SYSTEM

PAY STRUCTURES Once job analysis has been done organizations need to decide upon the pay structures. Pay structure refers to the process of setting up the pay for a job in an organization. The process deals with internal and external analysis to estimate the compensation package for a job profile. Internal equity, External equity and Individual equity are the most popular pay structures. Job description provides the in depth knowledge about the job profile and its worth. Pay structures are the strong determinant of employees value in the organization. It

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helps in analyzing the employees role and status in the organization. It provides for fair treatment to all employees. Pay structures also include the estimation of incentives. The level of incentives also depends on the level of job position in the organizational hierarchy. JOB ANALYSIS Job Analysis is a process to identify and determine in detail the particular job duties and requirements and the relative importance of these duties for a given job. Job Analysis is a process where judgments are made about data collected on a job.

THE JOB; NOT THE PERSON An important concept of Job Analysis is that the analysis is conducted of the Job, not the person. While Job Analysis data may be collected from incumbents through interviews or questionnaires, the product of the analysis is a description or specifications of the job, not a description of the person. The purpose of Job Analysis is to establish and document the 'job relatedness' of employment procedures such as training, selection, compensation, and performance appraisal.

SALARY SURVEYS: Organizations have to bridge the gap between the industry standards and their salary packages. They cannot provide compensation packages that are either less than the industry standards or are very higher than the market rates. For the purpose they undertake the salary survey. The Salary survey is the research done to analyze the industry standards to set up the compensation strategy for the organization. Organizations can either conduct the survey themselves or they can purchase the survey reports from a reputed research organization. These reports constitute the last 2-5 years or more compensation figures for the various positions held by the organizations. The analysis is done on the basis of certain factors defined in the objectives of the research.

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OBJECTIVES OF SALARY SURVEY


To gather information regarding the industry standards To know more about the market rate i.e. compensation offered by the competitors To design a fair compensation system To design and implement most competitive reward strategies To benchmark the compensation strategic

TYPES OF COMPENSATION SURVEYS


There are two types of compensation surveys undertaken by the organizations.

STANDARD SURVEYS Standard surveys are undertaken by organizations on a regular basis. These surveys are conducted annually based on the organizational objectives. These surveys attempt to cover the same companies every year and provide the same time of analysis. The reports are published annually by the research organizations. The organizations willing to formulate their compensations strategies based on the surveys purchase the reports from the research 44

organization. CUSTOM SURVEYS At times, a few organizations need to know some specific information. The surveys which cater this need are known as custom surveys. The organizations either higher research organizations to conduct theses surveys for them or they themselves conduct the survey by sampling few of the competitors on their own. These surveys do not have any time interval. They are undertaken as the need arises. They focus on important issues usually one or two.

SURVEY REPORTS The survey reports consist of the analysis and conclusion drawn from the evaluative data based on the objectives of the study. The reports also include the data, facts and figures to support the analysis and conclusion. The supportive data and annexure provided in the report form the basis for the un-biased conclusion and validation of the analysis. Types of data gathered in a salary survey include: Base salaries Salary Ranges Starting Salary Incentives/Bonuses Allowances and Benefits Working Hours Working Conditions

The results of surveys conducted by third parties (e.g., associations, consultants, survey vendors) can be relatively inexpensive compared to the cost of developing the same results yourself. Surveys conducted by associations and vendors are often have a large number of participants which results in a more accurate analysis. 45

TYPES OF COMPENSATION: 1. Direct compensation 2. Indirect 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, 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. INTERNAL EQUITY ITS COMPONENTS The internal equity method undertakes the job position in the organizational hierarchy. The process aims at balancing the compensation provided to a job profile in comparison to the compensation provided to its senior and junior level in the hierarchy. The fairness is ensured using job ranking, job classification, level of management, level of status and factor comparison. COMPONENTS

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JOB RANKING This method is one of the simplest to administer. Jobs are compared to each other based on the overall worth of the job to the organization. The 'worth' of a job is usually based on judgments of skill, effort (physical and mental), responsibility (supervisory and fiscal), and working conditions. It is very effective when there are relatively few jobs to be evaluated (less than 30) FACTOR COMPARISION A set of compensable factors are identified as determining the worth of jobs. Typically the number of compensable factors is small (4 or 5). Examples of compensable factors are: 1. Skill 2. Responsibilities 3. Effort 4. Working Conditions Next, benchmark jobs are identified. Benchmark jobs should be selected as having certain characteristics.
1. Equitable pay (not overpaid or underpaid)

2. Range of the factors (for each factor, some jobs would be at the low end of the factor while others would be at the high end of the factor).
3. The jobs are then priced and the total pay for each job is divided into pay for each factor.

JOB CLASSIFICATION The primary objective of position classification is to define and describe accurately the current duties and responsibilities of positions for purposes of determining proper compensation and qualification requirements; to facilitate the functioning of other personnel processes, such as developing performance standards and actual performance appraisals based upon the assigned duties of specific positions; identifying career ladders and promotional lines; 47

and translating broad organizational plans into the assignment of duties and responsibilities to individual positions. Classification is based upon the objective elements of a position and does not consider the status of an incumbent. Information relative to the employees length of service, time spent at the maximum salary level of the position, or the quality of his/her performance is not considered in determining the appropriate classification of a position. Factors that are considered include such elements as the nature, scope and level of the duties and responsibilities; the relationship of the position to other positions in the department; supervision given or received; and exercise of independent judgment.

EXTERNAL EQUITY ITS COMPONENTS

EXTERNAL EQUITY Here the market pricing analysis is done. Organizations formulate their compensation strategies by assessing the competitors or industry standards. Organizations set the compensation packages of their employees aligned with the prevailing compensation packages in the market. This entails for fair treatment to the employees. At times organizations offer higher compensation packages to attract and retain the best talent in their organizations. 48

As part of the process of determining external equity, various markets are utilized to fill positions, depending upon the requirements and the level of the vacancy. They are usually as follows: 1. Department head level positions: national markets; 2. Professional and administrative positions below department head level: regional markets; and, 3. Support staff and entry level exempt positions: local markets.

ADMINISTRATION OF PAYROLL SYSTEM


Payroll is administered on monthly basis and annual basis. While administrating the monthly payroll basic salary, HRA, conveyance, and other special allowances such mobile, etc are considered. There are some deductions which are provident fund (12%) of the salary, taxes and other deductions.

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COMPONENTS OF MONTHLY PAYROLL Deductions such as tax and loan/advances taken by the employee from organizations are deducted only where applicable. Dearness Allowance and House rent allowance is provided at a fixed rate stated by the employment law. Provident fund is deducted from the gross salary of employee on the monthly basis as per the employment law, which is provided later to the employee. Organizations also contribute the same amount to the provident fund of the employee.

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DIRECT COMPENSATION:
Direct compensation refers to monetary benefits offered and provided to employees in return of the services they provide to the organization. The monetary benefits include basic salary, house rent allowance, conveyance, leave travel allowance, medical reimbursements, special allowances, bonus, Pf/Gratuity, etc. They are given at a regular interval at a definite time.

BASIC SALARY Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a day, a week, a month, etc. It is the money an employee receives from his/her employer by rendering his/her services. HOUSE RENT ALLOWANCE Organizations either provide accommodations to its employees who are from different state or country or they provide house rent allowances to its employees. This is done to provide them social security and motivate them to work. CONVEYANCE 51

Organizations provide for cab facilities to their employees. Few organizations also provide vehicles and petrol allowances to their employees to motivate them.

LEAVE TRAVEL ALLOWANCE These allowances are provided to retain the best talent in the organization. The employees are given allowances to visit any place they wish with their families. The allowances are scaled as per the position of employee in the organization. MEDICAL REIMBURSEMENT Organizations also look after the health conditions of their employees. The employees are provided with medi-claims for them and their family members. These medi-claims include health-insurances and treatment bills reimbursements. BONUS Bonus is paid to the employees during festive seasons to motivate them and provide them the social security. The bonus amount usually amounts to one months salary of the employee. SPECIAL ALLOWANCE Special allowance such as overtime, mobile allowances, meals, commissions, travel expenses, reduced interest loans; insurance, club memberships, etc are provided to employees to provide them social security and motivate them which improve the organizational productivity.

INDIRECT COMPENSATION:
Indirect compensation refers to non-monetary benefits offered and provided to employees in lieu of the services provided by them to the organization. They include Leave Policy, Overtime Policy, Car policy, Hospitalization, Insurance, Leave travel Assistance Limits, Retirement Benefits, Holiday Homes. 52

LEAVE POLICY it is the right of employee to get adequate number of leave while working with the organization. The organizations provide for paid leaves such as, casual leaves, medical leaves (sick leave), and maternity leaves, statutory pay, etc.

OVERTIME POLICY Employees should be provided with the adequate allowances and facilities during their overtime, if they happened to do so, such as transport facilities, overtime pay, etc.

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HOSPITALIZATION The employees should be provided allowances to get their regular check-ups, say at an interval of one year. Even their dependents should be eligible for the medi-claims that provide them emotional and social security. INSURANCE Organizations also provide for accidental insurance and life insurance for employees. This gives them the emotional security and they feel themselves valued in the organization. LEAVE TRAVEL The employees are provided with leaves and travel allowances to go for holiday with their families. Some organizations arrange for a tour for the employees of the organization. This is usually done to make the employees stress free. RETIREMENT BENEFITS Organizations provide for pension plans and other benefits for their employees which benefits them after they retire from the organization at the prescribed age. HOLIDAY HOMES Organizations provide for holiday homes and guest house for their employees at different locations. These holiday homes are usually located in hill station and other most wanted holiday spots. The organizations make sure that the employees do not face any kind of difficulties during their stay in the guest house. FLEXIBLE TIMINGS Organizations provide for flexible timings to the employees who cannot come to work during normal shifts due to their personal problems and valid reasons.

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ANNUAL PAYROLL:
Annual payroll consists of leave travel allowances, incentives, annual bonuses, meal vouchers/reimbursements, and medical reimbursements

Components of annual payroll

Allowances, incentives, bonuses and reimbursements are based on organizational policies. Some organizations provided the allowances on a fixed rate say 10% or 12% of the basic salary. Some organizations go for performance based incentives. Calculation of gross salaries and deductible amounts is a tedious task which involves risk. Some of the organizations use the traditional manual method of payroll processing and some go for the advanced payroll processing software. An organization opts for any of the following payroll processing methods available

Acts relating to the employees payments and deductions: 55

There are several acts framed and passed for the well being and welfare of the employees and workers. These acts are relating to the employees provident fund, employees state insurance, payment of gratuity, payment of bonus etc. These are explained hereunder: The Employees Provident Funds Act 1952 This is applicable to every establishment which is a factory engaged in an industry specified in schedule-1 and in which 20 or more persons are employed. Provident Fund returns to be sent on or before 25th in Form-5, form-10 and form-12(A) Annual returns to be sent on or before 30th April in Form-3A and Form-6A. Employees State Insurance Act 1948 It provides for certain benefits to employees in case of sickness, maternity and employment injury and for certain other matters in relation. The wage limit for coverage of this act is Rs.7500/Remittance of E.S.I contribution by way of challans on or before 21st of every month. Payment of Gratuity Act, 1972 Provisions of this act apply to all employees who have put in minimum of 5 years continuous service. Gratuity payable at the rate of 15 days salary/wage for each completed year of service the maximum amount of gratuity payable being Rs.3,50,000/-. Workmens Compensation Act 1923 For all areas where ESI coverage is not extended, provisions of workmens compensation at will apply. This act comprehensively covers all liabilities of partial/full disability and for temporary/permanent disablement, and for loss of life, in industrial accidents, as per schedule provided therein. This liability can be immunized by taking a policy with LIC or any other National Insurance Company. 56

Payment of Bonus Act, 1965 The maximum applicable limit of salary is Rs.3500/- and eligibility will be based on Rs.2500/per month. Therefore, maximum bonus payable, which is 20% of Basic + DA, is Rs.6000/- per year. Forms A B C are to be maintained to give a clear indication of bonus payable, available surplus, set-off, set-on, development rebate, depreciation etc.

PAYROLL PROCESSING:

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VARIOUS PAYROLL PROCESSES MANUAL SYSTEM Manual payroll system is the traditional payroll system which involves pen and ink, adding machine, spreadsheet, etc instead of computers, software and other computerized aids. The process was very popular when there were no computerized means for payroll processing. Now-a-days it is only few small scale organizations in the remote areas that use the manual payroll. Sometimes the construction industry and manufacturing industry also use the manual payroll systems for the contractual labour, as theses contracts are on daily/weekly basis. There is full control in the hands of owner. But the process is tedious, time consuming and risky as it is more prone to errors. ACCOUNTANT Accountant is a professional having a degree/diploma course in finance/accountancy. He/she is responsible for all the activities related to payroll accounting. He/she has the sound knowledge of accounting principles and globally accepted standards. The process adds costs to the organization. It involves paying someone who is responsible for calculating the salaries of others. The financial control regarding salary goes in the hand of accountant.

PAYROLL SOFTWARE
In todays computerized environment, payroll system has also developed itself into automated software that performs every action needed by the payroll process. It helps in calculating the payable amounts and deductions very easily. It also helps in generating the pay slips in lesser time. Automated calculations result in no errors. Data is validated automatically byt he software. It needs professionals to make use of the software for its efficient working. 58

In global competitive environment organizations need to focus on cost-cutting strategies and high qualitative results. Organizations has to deal with tax filling, they have to adhere to the state employment law. These complexities have force the organizations to outsource their payroll processes. Outsourcing helps an organization to stay focused on the business operations. It results in cost-effectiveness and time saving. The organizations are relieved from law regulations and tax formalities.

PAYROLL OUTSOURCING
Payroll outsourcing involves a third party (an outsourcing company) in the calculations of salaries and deductions. The outsourcing organization is responsible for all the activities of the payroll accounting. It saves time and cost for the organization. If there is more number of employees (say more than 900-1000) in the organization, payroll outsourcing would be very much beneficial. The data is provided to the consultants/outsourcing firms. The various payroll functions undertaken by the outsourcing organizations are as follows: Analysis of Payroll records, payroll taxes Medical claim processing Employee Insurance & Provident fund processing Quality Audit procedures & planning

COST-EFFECTIVE Payroll outsourcing results in cost effective benefits. A market study has revealed that outsourcing payroll process is cheaper than administrating the process internally. Organizations have to set an additional department for the purpose resulting in the salaries of those responsible for performing the activities of payroll process. It also includes the cost associated with payroll checks, bank accounts and other charges, record maintenance, computerized aids such as payroll software, etc. 59

REASONS FOR OUTSOURCING PAYROLL


TIME SAVING
Payroll outsourcing saves a lot of time for management. Time spent on activities associated with payroll process can now be utilized for more strategic roles. The organizations can focus on their strategic decisions and business operations.

LESS LEGAL ADHERENCE


Organizations are not bound for any legal formalities. Outsourcing companies are responsible for following rules, regulations and filing the tax returns. They look after changes in the tax slabs and state jurisdictions. This provides management a great relief and enables them to focus on business operations.

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PROFIT GENERATION
Organizations can make use of new opportunities and utilize the time and money on new business ventures and generate more profits.

ERROR FREE
Payroll outsourcing results in error free reports. Internal payroll process is more prone to errors, but the service providers recruit professionals and they make sure there are no mistakes.

QUALITATIVE RESULTS
The expertise and technological advancements results in qualitative results. There are no delays and no errors.

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REASONS FOR PAYROLL OUTSOURCING


The survey also reported that 53% of the participant organizations outsource their payroll processes and from those who outsourced 25% believes that it results in more focused strategic decisions. Most of the organizations agreed that it is cost-effective measure.

CALCULATION OF MONTHLY PAYROLL


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Basic pay + + + = House Rent Allowance Dearness Allowance Other Allowances Gross Pay .

Tax Loans/advances Provident Fund Employee State Insurance Net Pay.

BASICSALARY Salary is the amount received by the employee in lieu of the work done by him/her for a certain period say a day, a week, a month, etc. It is the money an employee receives from his/her employer by rendering his/her services.

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HOUSE RENT ALLOWANCE Organizations either provide accommodations to its employees who are from different state or country or they provide house rent allowances to its employees. This is done to provide them social security and motivate them to work. DEARNESS ALLOWANCE It is the amount of increment in the salary when the prices in general are increased. The government decides the number of points or percentage of allowance to be provided for the employees and it is calculated on the basic pay. OTHER ALLOWANCES Other allowances include bonus, incentives, overtime or any other earnings made by the employee.

PROVIDENT FUND This is applicable to every establishment which is a factory engaged in an industry specified in schedule-1 and in which 20 or more persons are employed. Every employee gets a deduction for the provident fund.

EMPLOYEE STATE INSURANCE Every employee gets a deduction for the employee state insurance. The amount from these deductions is paid back in case an employee falls sick or in case of accidents or the amount will be completely paid back at the time of retirement of the employee.

The wage limit for coverage of this act is Rs.7500/64

Division of Salary Basic pay Special Allowances Conveyance = = = 60% 15% 25% 100

COMPONENTS IN BASIC PAY Provident fund ESI PROVIDENT FUND Provident fund is further divided into pensionable amount and employee fund. For example the Provident Fund is 12%, 8.33% is calculated to pension and the remaining 3.67% is deducted for the employee fund. EMPLOYEE STATE INSURANCE As a contribution for employee state insurance 1.75% is deducted from the employee basic pay and to this 4.75% is contributed by the management. On the whole 12% is deducted from the basic pay of the employee and 12% is added by the management in case of private firms and by the government in case of government organizations. These deductions are mandatory for every employee. Provident Fund 12% from employer 12% from employee 24% A total of 24% of basic pay is added to the provident fund of the employee which he/she gets after retirement. For example: If an employees total salary is 10000, his basic will be 60% i.e. 6000/-. 65

Out of which 12% i.e., 720/- will be deducted and added to provident fund and the employer also contributes 12% i.e., 720/- to the employee provident fund. Hence each month an amount of 1440/- is added as the provident fund which will be provided to him after his retirement. Total salary Basic pay 12% of 6000 + 12% from employer = = 10000 6000 (60% of 10000) = 720/= 720/1440/The total amount of pay is transferred to the employee in which ever component or division it is provided like bonus, overtime, allowances, etc except that of provident fund.

FACTORS CONSIDERED IN FORMULATING SALARY OFFERS: The primary consideration for evaluating education, experience, and skills, is the relevance of the candidate's credentials to the requirements of the specific position. Brown does not compensate for credentials that exceed a position's requirements unless they have a direct bearing on the candidate's ability to perform the job. All salary offers should be developed in collaboration with the Human Resources Department. FORMULATING SALARY OFFERS To determine appropriate salary offer/promotional increase, the hiring supervisor should: evaluate the salary requirements of the candidate; evaluate relevant background, skills and experience; request that a Human Resources representative and/or the Director of

Compensation and Organizational Services review internal and external equity considerations and placement within the salary range; review departmental budget considerations; discuss and finalize the recommended amount with the Human Resources 66

representative and/or Director of Compensation and Organizational Services;

Make no offer or promise of an offer until authorized to do so by Human

Resources. Employees in good standing may not be paid less than the salary grade level minimum. Lateral transfers (movement between jobs with the same grade level) should be reviewed with Human Resources on a case-by-case basis to determine appropriate salary. DIFFERENCE BETWEEN WAGE AND SALARY: Wages Timing: Paid weekly Basis of Calculation: Hrly basis Salaries Paid monthly Months work

Method : Cash(changing due to crime rate) Cheque/Electronic transfer Paid to Whom: blue collar workers white collar employees

FEATURES All elements associated with the payroll processing are user-defined through Payroll control files. Pay Systems Pay Types Pay Types :Payroll processing groups : Method of pay, hourly, salaried, etc. : Method of pay, hourly, salaried, etc.

Destination Ledger : All payroll parameters associated with a particular destination ledger: Cost Accounting, Equipment, Work Order and General Ledger Pay Cycle codes Bank codes : Weekly, biweekly, semi-monthly or monthly : Parameters associated with a payroll bank account

1. Payroll expenses can be recognized in the Cost Accounting, Equipment, General Ledger, or Work Order sub ledgers based on either the date worked, or the pay period 67

ending date. In the General Ledger, payroll journals are dated with either the pay period ending date, or the check date. 2. Multiple pay calculation types are available including: Hourly paid Fixed salary Variable salary

3. Employees can transfer between employer companies and retain the same employee number when the employer companies have the same federal identification number. 4. Specialized processing for calculating workers compensation insurance premiums. 5. Payroll recognizes that workers compensation can be both an employer contribution and an employee deduction in some states. 6. Recognizes that different states have different methods for computing the insurable base 7. Different companies can apply their unique experience factor which impacts the computation of the workers compensation insurance premium. 8. Date dependent rates for earnings, contributions, and deductions; Payroll can accurately calculate an employee's pay when the employee group (union) rates change during a pay period. 9. Employee purchase type deduction transactions can be entered directly or generated from the Accounts Payable or Inventory modules. 10. Multiple methods determine the General Ledger expense account associated with an employee's payroll based on the subledger distribution or user-defined override parameters. 11. Multiple states taxing for an employee in the same payroll calculation, if earnings are divided between cost centers located in separate states. 12. Tax routines are available for all states 68

13. Facilitates user maintenance of withholding tax tables

14. Payroll expenses are separated into three categories: Earnings add to gross pay Deductions subtract from gross pay Contributions are employer paid expenses that do not directly affect an employee's pay Earning code definitions for all types of earnings.

15. Automatic inclusion of "extra earnings" (not entered on an employee's timecard) based on the employee group (union), and the cost center to which these earnings are charged. 16. Deduction code definition for all types of deductions. 17. Automatic inclusion of deductions based on the employee's group (union), and the cost center to which the earnings are charged. 18. Easy definition of employee specific deductions such as garnishments, voluntary deductions, etc. 19. Deductions can be targeted for specific pay periods, e.g., the third payroll of the month 20. Contribution code definition for all types of contributions. 21. Automatic inclusion of contributions based on the employee's group (union), and the cost center to which the earnings are charged. 22. An employee's time can be charged to a specified destination ledger at an hourly rate which represents the actual payroll cost, the average annual hourly rate for salaried employees, or a standard costrate. The standard cost rate can be defined at the employee, employee group, grade, or class level. 23. Employees can be accessed by employee number or by keywords built from the employee's name. 69

24. Department codes associate an employee to a department.


25. Timecard parameters facilitate the customization of the timecard entry programs to match

the. requirements of each customer. 26. Automatic generation of timecard transactions for "overhead" type employees. 27. Entry of "add pay" type transactions to cover employee bonuses, subsistence pay, etc. 28. For transportation operations, a method of entering operator work schedules which enables an operator sign-in worksheet from which timecard entries are generated automatically. 29. User-defined selections for determining which employees are to be included in a payroll calculation process. For example, you can select employees who are being terminated, in order to calculate only the termination payments. 30. Absenteeism codes for tracking and categorizing time off. 31. User-defined selections for determining which employees are to be included in a payroll calculation process. For example, you can select employees who are being terminated, in order to calculate only the termination payments. 32. Manually computed payroll checks can be entered. The Payroll system accepts the manually computed contribution and deduction amounts, rather than adjusting federal withholding, and computes all other payroll expenses that are not manually computed. 33. This method ensures that the sum of the employee's check stubs balances with the yearend earnings (W2) statement. 34. Check distribution codes facilitate the distribution of payroll checks to employees. 35. Multiple payrolls can be processed for an employee on the same pay period ending date. 36. Complete validation of all payroll transactions before initiating the payroll computation process minimizes potential errors based on user entered data elements. 70

37. User-defined vacation accrual expense can be computed. 38. Contributions and deductions can automatically create invoices in the Accounts Payable module. 39. Payments can be made by either check or direct deposit, using an easily customized format for the checks or the remittance advice notice. 40. Direct deposit of an employee's pay to more than one bank account. 41. Magnetic media reporting of direct deposits. 42. Offset entries can be generated to an employee's "home" department when his hours are expensed to other destination ledgers. 43. Specialized processing for calculating accrued payroll entries to the General Ledger when a pay period spans more than one fiscal period. 44. On-line inquiry for employee benefits depicts values accrued versus values taken, e.g., sick leave or vacation. 45. Retroactive reporting capability is available for any payroll computation report PAYROLL CARD A payroll card is a plastic card allowing an employee to access their pay by using a debit card. A payroll card can be more convenient than using a check casher, because it can be used at participating automatic teller machines to withdraw cash, or in retail environments to make purchases. Some payroll cards are cheaper than payday loans available from retail check cashing stores, but others are not. Most payroll cards will charge a fee if used at an ATM more than once per pay period. The payroll card account may be held as a single account in the employer's name. In that case, the account holds the payroll funds for all employees using the payroll card system. Some payroll card programs establish a separate account for each employee, but others do not.

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Many payroll cards are individually owned dda (demand deposit accounts) that are owned by the employee. These cards are more flexible, allowing the employee to use the card for paying bills, and the accounts are portable. Most payroll card accounts are FDIC-insured, but some are not.

PAYROLL FREQUENCIES Companies typically generate their payrolls on regular intervals, for the benefit of regular income to their employees. The regularity of the intervals, though, varies from company to company, and sometimes between job grades within a given company. Common payroll frequencies include: daily, weekly, bi-weekly (once every two weeks), semi-monthly (twice per month), and to somewhat of a lesser extent, monthly. Less common payroll frequencies include: 4-weekly (13 times per year), bi-monthly (once every two months), quarterly (once every 13 weeks), semi-annually (twice per year), and annually.

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Pay roll system in ISP Groups

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OBJECTIVES

1. To study the components of wages and wage policies and how the wages influencing the aspects of employees work life. 2. To study the impact of conditions of work on payroll. 3. To evaluate the aspects of payroll system and suggest measures in improving it. 4. To find out the important dimensions of compensation in relation to the organization. 5. To excavate how compensation is important in motivating the employees 6. To know about the various denominations of employee pay 7. To make an overall analysis of how the payroll is designed for the employees 8. To know calculation of employers gross pay, payroll deductions and net pay

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SCOPE OF THE STUDY


The project has been done in Integrated Service Point P Ltd , Chennai . The payroll system of the industry has been studied. The study explores about various ingredients involving and impacting the method of payments. The study plunges into the facts of payroll administration of industry and tried to excavate the specifics of payroll system in industry. LIMITATIONS:

This study is conducted for a short period and therefore the study may not be detailed and fully fledged.

The simple doesnt cover all employees in the organization due to logical constraints The study was conducted with the data available and analysis was made accordingly.

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RESEARCH METHODOLOGY OF THE STUDY: The research mainly connotes on the wage and compensation policy and its influence on the employee. The research pivotally studies the aspects, dimensions and pitfalls in wage and compensation policy of industry. The present study is mostly depending on the primary and secondary sources of the data. The source of the primary is collected data through questionnaire or survey method and the secondary data was taken from various journals, textbooks, magazines web sources and books.

METHOD OF DATA COLLECTION: The data was collected through two ways primary data and secondary data.The primary data was collected through the questionnaires, distributed to employees of all departments and through interaction with our guide. The secondary data was collected through previous records, through internet and through companys website.

DATA ANALYSIS: The data was analyzed through the feedback collected from the employees in a random sample design method.

HYPOTHESIS: Communication of expected performance standards to the employees is very much effective. All the employees of Integrated Service Point P Ltd are aware of the PAYROLL PROCESS followed by the company.

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Chapter 5 (ANALYSIS)

DATA ANALYSIS & INTERPRETATION


1. ARE YOU AWARE OF THE BASIS OF FIXATION OF YOUR SALARY?

80 70 60 50 40 30 20 10 0 1 YES 2 NO

Percentage

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Options Yes No Total

No. of respondents 15 05 20

percentage 75 25 100

Source: Data collected from the employees through questionnaire. Analysis: 75% of the employees are aware of the basis on which their salary is fixed. 25% of the employees answered that they are not known on what basis it is fixed. Interpretation: The fixation of the salary is based on certain aspects like qualifications, experience, skills, designation, job description etc. It is expected that the employees must know the basis on which their salary is fixed. 75% indicates that the employees are quite aware of the salary fixation. 2. ARE YOU AWARE OF YOUR SALARY ELEMENTS?

100 80 60 40 20 0 1 YES 2 NO Percentage

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Options Yes No total

No. of respondents 19 01 20

percentage 95 05 100

Source: Data collected from the employees through questionnaire. Analysis: 95% of the employees in the organization feel convenient about the way of the payment of their salary. 5% of the employees are unaware about the details. Interpretation: Employees must feel convenient about the details of what they are paid in different heads and know the different denominations under which their salary is being paid. This also helps them to know if there are any mistakes in calculating their salaries. It is a good indication for the future of employees that 95% of the employees are aware of the details of their salary payment.
3. DO YOU THINK EMPLOYEES MUST HAVE A BANK A/C AND SALARIES BE

DIRECTLY DEPOSITED INTO THE BANK?

60 40 20 0 1 YES 2 NO Percentage

Options Yes

No. of respondents 10 80

percentage 50

No total

10 20

50 100

Source: Data collected from the employees through questionnaire. Analysis: 50% of the employees opinion is that their salaries must be deposited into the bank directly and the other 50% say that it is not mandatory to have a bank account and the remuneration can be given to hand. Interpretation: In the modern system, the employees can be made to open a bank account for easy transfer of salaries by the management to the employees. But 50% of the employees feel that their salaries must be directly given to hand to avoid the problems of transactions which indicate that half of the employees are adaptive to the modern systems. 4. DO YOU THINK COMPENSATION PAID FOR EXTRA HOURS IS ADEQUATE?

80 60 40 20 0 1 YES 2 NO Percentage

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Options Yes No total

No. of respondents 14 06 20

Percentage 70 30 100

Source: Data collected from the employees through questionnaire. Analysis: 70% of the employees agree that their contribution to the organization and the compensation paid to them is adequate, while the remaining 30% disagree with the quiery. Interpretation: Compensation is the remuneration received by an employee in return his/her contribution to the organization. So, it must be ensured that this must be done properly. Here 70% of the employees agree that their contribution & compensation is adequate and feel that they themselves have to improve in certain aspects of their performance.
5. DO YOU THINK THE COMPENSATION PACKAGE AVAILABLE IN THIS

INDUSTRY IS ABLE TO MOTIVATE TH EMPLOYEES?

100 80 60 40 20 0 1 YES 2 NO Percentage

Options

No. of respondents 82

percentage

Yes No Total

18 02 20

90 10 100

Source: Data collected from the employees through questionnaire. Analysis: 90% of the employees agree that the management gives them a good compensation package and is able to motivate the employees to increase the organizational effectiveness. The remaining 10% disagree this. Interpretation: The compensation package decides the importance of a particular person or employee in the organization. It also decides his responsibilities and duties to be performed towards the organization. So a good compensation package is important to motivate the employees to increase the org. effectiveness, which is quite effective in Integrated Service Point P Ltd
6. IS COMPENSATION OF Integrated Service Point P Ltd IS SATISFACTORY

WHEN COMPARED WITH ITS CORE COMPETITORS.?

80 60 40 20 0 1 YES 2 NO

Percentage

Options

No. of respondents

percentage

83

Yes No Total

15 05 20

75 25 100

Source: Data collected from the employees through questionnaire. Analysis: 75% of the employees agree that their compensation is satisfactory as compared with the competitors of Integrated Service Point P Ltd and 25% disagree. Interpretation: Compensation is decided based on many factors like industry standards, cost of living of that particular area, compensation of competitors etc. The employees of Integrated Service Point P Ltd agree that the compensation paid to them is quite satisfactory as compared to their competitors and the remaining 25% are not totally aware of the competitors packages. However they are satisfied with what the company is paying to them.
7. IS THE PRESENT COMPENSATION SYSTEM OF INTEGRATED SERVICE

POINT P LTD IS ABLE TO ATTRACT AND RETAIN TALENTED EMPLOYEES?

100 80 60 40 20 0 1 YES 2 NO

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Options Yes No total

No. of respondents 15 05 20

percentage 75 25 100

Source: Data collected from the employees through questionnaire. Analysis: The % of employees who agree that the present system of Integrated Service Point P Ltd is able to attract right talent and retain them is 85% and 15% disagreeing with the statement. Interpretation: In the present scenario every organization has to take special measures regarding the compensation packages, so that they retain their assets, their employees. The consent of 85% of the employees indicates that the organization has the capabilities to attract and retain the right talent. The organization is also able to change its compensation system with different allowances and is able to fulfill the employee needs and demands. 8. ARE YOU SATISFIED WITH PROMOTIONS OR GROWTH PROSPECTS IN INDUSTRY?

100 80 60 40 20 0 1 YES 2 NO

Percentag e

85

Options Yes No total

No. of respondents 16 04 20

percentage 80 20 100

Source: Data collected from the employees through questionnaire. Analysis: 80% of the employees agree that the increments provided to them according to their performance are quite satisfactory and 20% explain that they are not satisfactory with the increments. Interpretation: Increments and allowances provide as an encouragement for the employees to work more efficiently. So it must be ensured that the management provides adequate allowances and increments according to the work performed by the employee in the organization. This creates a sort of encouragement and the employee belongingness towards the organization. 80% indicates that a major part of employees agree that the organization is able to provide increments in proportionate to their performance which is also a good indicator of retention. 9. DO YOU THINK THAT THERE IS INTERNAL EQUITY AVAILABLE IN THIS ORGANIZATION?

80 60 40 20 0 1 YES 2 NO

Percentage

86

Options Yes No total

No. of respondents 15 05 20

percentage 75 25 100

Source: Data collected from the employees through questionnaire. Analysis: 75% of the employees say that there is internal equity in the organization. Whereas the remaining 25% of the employees say that there is no internal equity. Interpretation: The management of every organization must ensure internal equity to its employees. Internal equity is meant to provide equal pay to similar jobs.75% of the employees agree that there is internal equity in the organization 10. DO YOU FEEL ANY KIND OF STRESS, STRAIN DUE TO WORK LOAD?

100 80 60 40 20 0 Yes No Opinion Total Percentage

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Options Yes No Total

No. of respondents 40 60 100

Percentage 80 20 100

Source: Data collected from employees and workers through questionnaire. Analysis: From the above data we can analyze that most of the employees do not feel stress and strain due to work load. Interpretation: From the above analysis we can interpret that 60% of the employees feel no stress and strain due to work load. 40% of the employees say that it is dissatisfying.

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Chapter-6 (SUMMARY AND CONCLUSIONS)

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SUGGESTIONS
Managers face many decisions every day. Finding the time to build and implement an equitable wage structure can be difficult. To make the process easier, consider the following checklist: I. Decide what you want your compensation package to do. 1. Recruit new employees 2. Motivate current employees 3. Reward well-performing employees 4. Minimize risk of violating federal laws 5. Build employee loyalty 6. Any combination of the above

II. Determine your internal wage structure; either 1. Evaluate the jobs 2. Evaluate the employees 3. Create competency groupings

III. Talk to your employees about their indirect compensation needs: 90

1. Health insurance 2. Paid vacation 3. Housing 4. Child care 5. Retirement planning

IV. Structure your total rewards system, including: 1. Indirect compensation based on your employee's needs and your compensation objectives
2. Direct compensation based on labor market information and your compensation

objectives

V. Implement your new system, remembering to: 1. Communicate with your employees about their needs 2. Review your compensation package regularlymakes sure it is fair, equitable and competitive 3. be flexible and innovative to maintain a competitive advantage 4. Maintain both internal and external equity Successful agricultural producers rely on common sense when it comes to management decisions. Employee compensation should not be different. If you want employees to be innovativereward them for new ideas. If you want employees to stay for a long time instead of training new employees every seasonoffer bonuses or tie their wages to their tenure. If you need employees that show up on time, work hard, and can be trusted with the most challenging

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of tasksrecruit those people; reward those people; promote those people. The future of your business could depend on it.

CONCLUSIONS
Every organization to sustain in the industry has to satisfy some of the basic needs and demand of its employees. Satisfied and motivated employees are the source of the achieving the organization goals and objectives. In order top the use maximum potential of the human resource, the organization has to provide then the best compensation system. Therefore, every organization needs to update and improve the compensation packages of the employees make better productivity. There is a cordial atmosphere of co-operation and co-ordination between the employees and employers. The flow of communication is flexible and clear. They plan for the career development of the employees since they join. Therefore, they give the potential employment and give them enhance to grow both internally and externally. The employees are given reasonable autonomy for their job. This makes them feel more responsible and challenging and work hard for achieving it. There exists a strong bond among the employees, which helps them to work as team and make group accomplishments. Though there are some limitations like office layout, seating arrangements and lack of seriousness of workers, it is sustained in the industry and challenging the competition. Integrated Service Point P Ltd is striving hard to reduce the limitations by practicing better PAYROLL interventions and make it ever better place to work. It is the process of updating and modernizing the working conditions in tune with the private organizations. Finally, we conclude that Integrated Service Point P Ltd are providing its employees best quality of work life, which influence their performance and their productivity. 92

APPENDICES

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QUESTIONNAIRE
1) Are you aware of the basis of fixation of your salary?
A) yes

B) no

2) Are you aware of your salary elements?


A) yes

B) no into

3) Do you think employees must have a bank A/c and salaries be directly deposited the bank?
A) yes

B) no

4) Do you think compensation paid for extra hours is adequate? A )yes B) no

5) Do you think the compensation package available in this industry is able to motivate the

employees?
A) yes

B) no

6) Is compensation of RAJVIR is satisfactory when compared with its core competitors?


A) yes

B) no

7) Is the present compensation system of RAJVIR is able to attract and retain talented

employees?
A) yes

B) no

8) Are you satisfied with promotions or growth prospects in industry?


A) yes

B) no

BIBLIOGRAPHY

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Essentials of Human Resource Management Human Resource and Personnel Management Personnel Management Human resource and Industrial Relations

: : : :

Ashwathappa William Wrether Edwin B Filippo Subba Rao

WEBSITES:
www.google.com www.ask.com www.hrsite.com

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