SUMMER TRAINING PROJECT REPORT

ON
“Study of Accounting System and Financial Analysis”

Of HMT MACHINE TOOLS LTD.

In the partial fulfilment of requirement of degree of

MASTER OF COMMERCE (M.COM)

(2018-2019)

SUBMITTED TO: SUBMITTED BY:

Prof. PARDEEP WALIA HARPREET KAUR

(5578)

POST GRADUATE GOVT. COLLEGE FOR GIRLS (PGGCG), SEC. 11

(PUNJAB UNIVERSITY, CHANDIGARH)

 DECLARATION

I hereby declare that the project being submitted by me

entitled “Study of Accounting System in HMT MACHINE
TOOLS LIMITED” for the partial fulfillment of requirment for
the degree of master of commerce is an authenticated record
of work carried by me in the first year training period of
M.COM Second semester submitted to POST GRADUATE
GOVT. COLLEGE FOR GIRLS SEC.11 CHANDIGARH.

Harpreet kaur
M.com
5578
 PREFACE

Theoretical knowledge without practical knowledge is of little

value. In order to achieve concrete and positive result along
with theoretical concept the exposure of real life situation
existing in corporate is very much needed to fulfil this need
management course has a provision for the practical training
programme.
I thank my institute to provide us such opportunity having
training period in our course so that students can have real
feeling of industrial life.
It was my fortune to get training in a healthy atmosphere. I
got ample opportunity to view the overall of the Accounts
Departments of HMT MACHINE TOOLS LTD.
Only key information about the work of Accounts
Departments has been provided in this report.
 ACKNOWLEDGEMENT
“Gratitude is the hardest of emotions to express and often does not
find adequate words to convey what ones feel and trying to express
it”.

The present project file is an amalgamated of various

thoughts and experiences. The successful completion of this
project report would have not been possible without the help
and guidance of number of people and especially to my
project guide in the company Mr. Prem Chand (HRD), HMT
MACHINE TOOLS LTD. PINJORE. I take this opportunity to
thank all those who have directly and indirectly inspired,
directed and helped me towards successful completion of
this project report.
I am also immensely indebted to my project guide, MR.
PARDEEP WALIA Assistant Professor, (PGGCG) Sec.11, for his
illumining observation, encouraging suggestions and
constructive criticisms, which have helped me in completing
this research project successfully.
There are several other people who also deserved much
more than a mere acknowledgment at their exemplary help. I
also acknowledge with deep sense of gratitude and
wholehearted help and cooperation intended to me by them.

HARPREET KAUR
CONTENTS
1) CHAPTER – 1
INTRODUCTION

2) CHAPTER – 2
HISTORY

3) CHAPTER – 3
RESEARCH METHODOLOGY

4) CHAPTER – 4
SWOT ANALYSIS

5) CHAPTER – 5
ACCOUNTS DEPARTMENT CLASSIFICATION

6) CHAPTER – 6
WAGES AND PAYROLLS INCENTIVES

7) CHAPTER – 7
FINDINGS
 Chapter – 1

INTRODUCTION
To
HMT MACHINE TOOLS LTD.
 INTRODUCTION

The Third Machine Tool Factory of HMT Limited located at

Pinjore near Chandigarh went into production on 1st October
1963. It was the first HMT Factory to be located away from
HMT complex at Bangalore, where two machine tools factory
had earlier been established.

These factories were designed, build and commissioned by

Indian talent without any foreign assistance in a record
period of 17 months of breaking the ground on May 2, 1962
at a capital investments of Rs. 750 lakhs (inclusive of
township) and was formally inaugurated by Pt. Jawaharlal
Nehru, the Prime Minister of India.

Over the HMT successfully diversified into other engineering

areas to manufacture prose’s and press breaks. Die casting
and plastic injection molding machine watches, printing
machines, Lamps and lamp making machinery. Dairy
machinery, tractor bearings.
HMT MACHINE TOOLS, PINJORE

 Pattern Shop
 Production Planning and control
 Foundry
 Material Testing
 Heat Treatment
 Design and Development
 Small Parts
 Heavy Parts
 GPM Assembly
 CNC Assembly
 COMPANY PROFILE
HMT synonymous with excellence in precisions engineering is
a multi-unit product company established as a public sector
enterprise on 1953.Built on the foundation of technical
knowhow acquired from the world leaders on Machine Tools
as Oerlikon, Manurhin, Gildemeister, Liebherr, RinoBeradi,
Fritz Warner, Pegard etc.
HMT’s Machine Tool enterprise has been developed to such
an extent that it can design and develop any kind of machine.
Having established as a Machine Tool manufacture, HMT
later diversified into various other products.
From simple lathe to multi station transfer lines, from stand
lone CNC machines to flexible manufacturing system leading
to factory automation, HMT’s board range of Machine Tools
cover general purpose machine, special purpose machine
meeting application needs to every engineering industry.
Pioneering the concept of CNC machine in India, HMT has the
distribution of being the first company to successfully
manufacture its own CNC systems, in association with
Siemens.
HMT’s commitment to the development of Machine Tools
technology is clearly reflected in the fact that HMT has as
many as seven exclusive Machine Tools unit spread across
the country. Each one is superbly quipped to meet the most
challenging demand for Machine Tools. These units are in
Bangalore, Pinjore, Kalamassery, Hyderabad and Ajmer and
all are ISO 9000 certified.
HMT Limited has 18 manufacturing units. The constituent
subsidiaries are given below while the holding company
retains the Tractors business group. HMT’s Tractors business
commences its operations in 1971 in technical collaborations
with MOTOKOV, Czechoslovakia.
HMT started the operations with the manufacture of 25 HP
reactors at the manufacturing plant in Pinjore, Haryana state.
Over the years, it has developed tractors ranging from 25 HP
to 75 HP.
HMT Ltd. Took over Praga tools limited as one of its
subsidiaries 1988. Praga tools limited was established in May,
1943 as Praga tools corporation limited to manufacture
machine tools with its headquarter at secunderabad. It was
renamed as Praga Tools Limited in 1963. It is mainly involved
in manufacturing of machine tools including CNC machines.

‘To manufacture mother machine to build

modern industrial India’’
The 1960s:
With the success achieved in the initial years in absorbing the
technology and in attaining production competence far
ahead of the original plans, the company launched a bold
plan of diversification and expansion which resulted in the
duplication of the Bangalore unit and setting up of new units
at Pinjore, Kalamassery and Hyderabad.
In 1967, recession struck the Indian engineering industry and
the consumption of machine Tools dipped drastically. The
traumatic years of recession did indeed serve to bring fore to
lateen strengths of HMT, namely the urge to survive and
confidence to innovate with these strength at full play; the
company emerged from the recession.

 With the world’s widest range of Machine Tools and

associated services under a single corporate entity
 With actions plans firmly launched for diversification
into presses and press breakers, printing machine, die casting
and plastic injection molding machines that were considered
to have economic cycles that are different from Machine
Tools.
 With export markets of enormous potential under
active development.

The 1970s:
The 70’s witnessed the fructification of all the diversification
plans as envisaged.
 HMT SET UP
 HMT international limited as a subsidiary company to
channel HMT’s products and technical services abroad.
 HMT took over Machine Tools Corporation at Ajmer as
its sixth machine tool unit.

The 1980’s:
 In the 80’s HMT as a part of vertical integration efforts,
launched units to manufacturer
 CNC system at Bangalore
 Ball screw.

The 1990’s:
 Formation of Machine Tools business group as part of
business reorganization.
 Formation of central reconditioning divisions at
Bangalore.

COMPANY PRODUCTS:
HMT was incorporated in 1953 by the government of India as
a Machine Tools manufacturing company.
The products are:

 WATCHES
 TRACTORS
 PRINTING MACHINERY
 METAL FORMING PRESSES
 PLASTIC PROCESSING MACHINERY

Some of the names of the watches

manufactured are:

 JANATA
 SONA
 JAWHER
 AUTOMATIC DAY AND DATE
 CHINER RAKHEE
 ORGANIZATION NETWORK

For the smooth running of plant various plants are

managed by the management. Each and every activity
is delegated to particular plat. It is impossible to take
decisions on every problem so various takes are
delegated to various plants. These plants are
interrelated to have contacts with one another and it is
easy to share the information they need to coordinate
their job these integrated task terms handle their
problem and make supervision easy.

 BANGALORE
 PINJORE (HARYANA)
 HYDERABAD
 AJMER
 SHRINAHAR
 KALAMASSERY (KERALA)
 RANIBAGH (U.P.)
Chapter – 2

HISTORY
 HISTORY
Hindustan Machine Tools was incorporated in 1953 by
the Government of India as a machine tool manufacturing
company. Over the years, HMT diversified
into watches, Tractors, Printing machinery, metal
forming presses, die casting and plastic processing
machinery, and CNC systems and bearings. HMT is
headquartered at Bengaluru (Bangalore).
Technology was absorbed in all product groups through
collaborations with world-renowned manufacturers and
further strengthened by continuous in-house R&D.
Today, HMT consists of six subsidiaries under the ambit of a
holding company, which also manages the tractor business
directly.
HMT Limited took over Praga Tools Limited as one of its
subsidiaries 1988. Praga Tools Limited was established in May
1943 as Praga Tools Corporation Limited to manufacture
machine tools with its headquarters at Secunderabad. It was
renamed as Praga Tools Limited in 1963. It is mainly involved
in manufacture of machine tools, including CNC machines.

Watch division
In the year 1961, HMT set up a watch manufacturing Unit at
Bangalore in collaboration with M/s Citizen Watch Co., Japan.
The first batch of Hand Wound Wrist Watches manufactured
here was released by the then Prime Minister of
India, Jawaharlal Nehru. The most popular mechanical hand-
wound watch is HMT Janata. There are also other mechanical
watches like HMT Pilot, HMT Jhalak (Semi Skeletal), HMT
Sona, HMT Braille.
In 1972, HMT expanded its watch manufacturing capacity
with a set up alongside the Bangalore Factory to manufacture
additional watches. In 1975, Watch factory at Bangalore was
further expanded to manufacture Main Spring, Hair spring
and Shock absorber components.
HMT set up additional manufacturing facilities to produce
watch components sets at Tumkur and Ranibagh in the year
1978 and 1985 respectively. Watch factory at Tumkur was
partially converted to manufacture Quartz Analog Watches in
collaboration with M/S Citizen Watch Co, Japan. To cater to
the Niche market, a specialised watch case manufacturing
facility was set up at Bangalore in 1983.
Since 1985, HMT Watches had been involved in making Floral
Clocks, Solar Clocks, International Clocks and Tower Clocks,
most popular among them being the Garden clock in
Bangalore. In the year 2000, HMT Watch Business group was
re-structured as HMT Watches Limited, a wholly owned
subsidiary of HMT Limited. In September 2014,
the Government of India decided to shut down HMT
operations in phased manner.
Closure
In September 2016, Government of India closed some
divisions of HMT: HMT Watches Ltd, HMT Bearings, HMT
Tractors, and HMT Chinar Watches Ltd. The main reasons
were that the company was making losses for more than a
decade. During 2012-13, the company had losses of Rs 242
crore on revenues of only Rs 11 crore. In contrast,
competitor Titan's watch business reported sales of Rs. 1,675
crore during the same year. The government also tried
restructuring it in 1999 to improve its finances but the
company continued to make losses. While in the 1980s
several new companies entered the market with newer
designs and more modern production techniques, HMT is
said to have been hobbled by slow decision making and was
unable to compete.[ Machine tools divisions of HMT in
Bangalore, Hyderabad and Kochi (Kalamassery) are still
operational and catering industrial and defence sectors of
India and abroad.
Operating units
HMT Limited had 18 manufacturing units. The constituent
subsidiaries are given below while the holding company
retains the tractors business group.
HMT's tractor business commenced its operations in 1971 in
technical collaboration with M/s MOTOKOV, Czechoslovakia.
HMT started the operation with the manufacture of
25 HP tractor at the manufacturing plant in Pinjore, Haryana
state. Over the years, it has developed tractors ranging from
25 HP to 75 HP.
Machine tools divisions of HMT is still continuing its
operations and introducing state of the art technologies in
Indian industrial market. The Kalamassery unit has entered
manufacturing equipments for Indian Naval defence sector
by manufacturing Directing Gear systems.
 Chapter – 3

RESEARCH
METHODOLOGY
 Research Methodology

Nature of Study Descriptive

Data Used Primary and Secondary

Data
Sources of Primary Data Trainer and Employees
of Company

Sources of secondary Company Records and

Data Annual Reports

Time Duration 5 June to 19 July

Region HMT,Pinjore
 Chapter – 4

SWOT ANALYSIS
 SWOT ANALYSIS

SWOT analysis is the most renowned tool for

audit and analysis of overall strategic position of
the business and environment. Its key purpose is
to identify the strategies that will create a firm
specific business model that will best align an
organisation’s resources and capabililities to the
requirement of the environment in which the firm
operates.

STRENGTHS WEAKNESS

OPPORTUNITIES THREATS
Strengths
 Strong brand image.
 Wide variety – Conventional, CNC, Special purpose
and metal forming machine.
 Good infrastructure for manufacturing machine
tools.
 Proven experience for component oriented SP
Msbuilt to international standards.
 Qualified and experiences engineering and
technicians.
 Manufacture of machine tools established through
renowned collaborations and in - house R&D.
 Focus group for strategic segments.
 Country wide sales and services network.
 Adaptability Proven experiences for component –
oriented SPMs.
 Weakness
 Market research is limited by resources lack of
competitive edge vis. Low cost countries (China, Taiwan)
 Reorienting the company to global market taken times
due to past concentration on Indian markets.
 Free access to international markets directly by
manufacturers and other traders increases competitive
pressure.
 Higher interest rate still high in relation to developed
countries making products less competitive.
 Lack of aggressive agent in many countries.
 More of responses time for enquiries and tenders due
to complex purchases procedure.

Opportunities
 Expansions in strategic sectors, will fuel the demand for
Machine Tools.
 Growth in power, nuclear power, Aerospace to fuel
demand for Machine Tools.
 Impetus being given by Government for growth
manufacturing sector.
 Global hub for manufacturing components.
 Tie-up with major players in the field and
diversification to medical equipment manufacturing.

Threats
 Increasing interest rates.
 Lowering of import duty.
 Influx of second hand/reconditioned imported
machines.
 Surplus manpower and employee cost and shortage of
skilled manpower in critical areas.
FINANCIAL PERFORMANCE
The Turnover of the company during the year 2014 –
15 was 172.15 Cr. As compared to 159.02 Cr. of the
year. During the year, the Company incurred a Net Loss
of 134.94 Cr. Incurred during the previous year. Our
Company has faced an acute shortage of working
capital in the initial period from April 2014 to October
2014.The borrowings of the Company as on 31.03.2015
stood at 190.35 cr. including loans from Govt. of India
through HMT Limited, the Holding company.

The net loss for the current period increased due to

1997pay/wage revision impact of 42.36 Cr. Increase in
borrowing cost of Rs.6 Cr. and increases in material
consumption cost over previous year. There was a
reduction in net loss for the previous year due to
waiver of interest of 38.58 Cr. On GOI loan which was
accounted as income.
HUMAN RESOURCES
HMT Machine Tools Limited continues to believe that
Human Resources would be a critical factor for its
growth. The emphasis was on grooming in-house talent
enabling them to take higher responsibilities. Training
and retaining was provided to the employees during
the year. The key focus remained on retaining and
talents grow to meet the growth, aspirations of the
Company.

CORPORATE SOCIAL RESPONSIBILITY

HMT Group has set up Hospitals, Schools and
Playgrounds at various Manufacturing Units for the
Benefits of employees and the local community.
 Chapter – 5

ACCOUNTS DEPARTMENT
CLASSIFICATION
 MAIN DEPARTMENTS

ACCOUNTS DEPARTMENT CLASSIFICATION:

1. Provident Fund

2. Inward Bill Section

3. Expenses

4. Outward Bill Section

5. Main Accounts

6. Wages Section
INWARD BILL SECTION
Inward Bill Section is mainly related to purchases by
the purchase department for manufacturing
department.
Process Purchase departments issues MPR
(Manufacturing Purchase Requisition), when they need
material for manufacturing department.

 Based on MPR, Tender is issue and quotation are

received.
 Comparative statements are analysed to find out
lowest bidder.
 Purchase order is then issued. PO is a legal
document with purchase details like order
quantity, price, time of purchase etc.
 Material received from suppliers.
 Stores then received the material.
 Material inward slip is then issued.
PROCESS OF STORES:

 Material received is inspected first.

 Either accepted or rejected.
 In case of accepted 7 copies of MI Slip are made
and send to:

 PURCHASE
 INSPECTION
 STORES
 SUPPLIERS
 COSTING
 IB
 BANK CELL SECTION
 OUTWARD BILL SECTION
 This section is mainly concerned with maintaining sales
(credit) from debtors.
(90 days credit is given to A- category dealers, 60 days to
other or advance payments)

Debtors turnover ratio = credit sales

Average inventory

Average Debtor = Opening debtor + Closing debtors

2
Debt Collection Period = Net credit sales
Average debtors

(Machine Tools overview: total Machine tool

production = 3.5 lakh)

 Another function is sales tax, which is 3% in Haryana

and 3% outside Haryana.
MAIN ACCOUNTS
Centralised accounting is followed in which all section
prepare their accounts books and then stores at a
central location.
Trial Balance - Ledger – Balance Sheet
Cost centres:
Material Cost, Labour Cost, MHR (machine hour rate) is
find out to ascertained Total Labour cost based on the
usage of machine.
Installed Capacity of HMT = 7*30*12*850*200
7 = (no. of working hours a day)
30 = (no. of days a month)
12 = (no. of months a year)
850 = (no. of employees of HMT)
200 = (standard time to manufacturing one tractor)

BREAK- EVEN POINT

Break-even point based on standard costing system.
Also, there are unit costing system and standard
costing. HMT does not follow margin costing system.
How to calculate break-even point?

On the basis of volume (no. of units) = Fixed Cost

Contribution per unit

Fixed Cost = Sales – Variable cost

Contribution per unit of machine

Material cost per unit of machine = 72%
Labour Consumption = 30%
Administrative Cost = 6%
Marketing and Selling Cost = 10%
Total Cost = 118%

But 118% is more than 100% so, remaining 18% is the

loss costing based on selling price.
WAGE SECTION
Office Time:
 Employees are given punch card and token
numbers, which they punch in the machine at the time
of coming to the office and while going back.
These machines are installed at various locations in the
premises.
 Leave record is maintained by this department.
 Payroll is also maintained by this department.

LEAVES:
There are 120 leaves as maximum limit which can be
carry forward.
180 is the limit for above Deputy Manager Level.

Types of leaves
 Casual - maximum 10 up to Deputy Manager Level.
 Maximum 7 above Deputy Manager Level.
(Note: these cannot be carry forward)
 Sick – maximum 10 for all (can be carry forward)
 Earned – maximum 30 for all (can be carry
forward)

TYPES OF SALARY
 Gross Salary
 Net Salary

Gross Salary:
Statutory Deduction: PF contribution (12% of gross
salary of employees + 12% contribution by the govt.)
Non Statutory Deduction: All savings through company
like LIC premium, Home Loan instalments.

Gross Salary = Basic + Canteen + Subsidy + Incentives

Employee who comes under ESI:

Salary up to Rs. 10000, 2.255 contribution by the
employee + 2.25 by ESI.
 Chapter – 6

WAGES

AND

PAYROLLS INCENTIVES
 Wages and Payrolls..
Incentives added in salary according to Wage
revision 1992:

1. Preamble:
 The previous settlement of the wage of the workmen
which was effective from 1.1.1992 for a period of 5 years
expired on 31.12.1992. The unions representing the various
units of HMT Machine Tools Limited submitted their
character of demands for the revision of wages and other
related issues on different dates.
 The negotiation for wage revision could on the due date
since the company did not fulfil the parameters prescribed in
the DPE Guidelines for effective revision in the wage/pay
scale.
 Te Ministry of heavy industries and Public Enterprise
Departments of heavy industries, vide letter no. 5-2(5)/2013
dated 20.5.2014 converged the decisions of the Cabinet
Committee on Economic Affairs (CCEA) for implementing
1997 revision in wage/pay scale in HMT Machine Tools
Limited, in relaxation of DPE guidelines on the subject, on the
following:
 The wages/pay revision of 1997 would be implemented
strictly on accordance with the DPE guidelines issued
vide no. 2(11)/96-DPE (HC) dated 14.01.1999 and with
effect from 28.02.2014.
 Wage revision will be effected after adjustment of the
10% interim received on the existing basic pay.
 HRA, CCA, Leased Accommodation and rent recovery
will be completed on revised basic pay from the date of
issue of presidential directives, as per DPE guidelines
and in the line with HMT Limited policies.
 The court cases pending in my court against HMT
Machine Tools Limited with regard to the implementation of
1997 wage revision, if any, are withdrawn.
 The representatives of unit employees unions
appreciated the present difficult financial situation of the
company and have agreed to extend=d the while hearted
support and co-operations to further intensity the efforts to
achieve financial viability of the company has also to
generate revenue resources by augmenting production and
productivity.

2. Coverage:
This settlement will cover all regular employees in wage
grade (WG) from WG 1 to WS 1 who ever on rolls of HMT
Machine Tools Limited Pinjore as on 28.02.2014 and continue
to be on the rolls of the company (except in death/retired
employees cases) as on the date of this settlement.

3. Duration of Settlement:
The management offered the settlement to be for10
years from the date of signing of the settlement, however,
the unions insisted that the same should be from 1.1.1997
and may continue till another settlement replaces it, as being
followed in the other similarly placed PSUs who have
implemented 1997 wage revision. Accordingly, the
settlement will be effective for 10 years from 01.01.1997 as
per DPE guidelines and will continue to be in the force
thereafter unless terminated by either party as per the
provisions of Industrial Disputes Act 1947.

4. Fitment Benefit:
A fitment benefit of 25 % of basic and personal pay (PP),
if any, drown on 31.12.1996 will be added to the basic as on
31.12.1996.

5. Services Weightage:
The workmen who are on the rolls of the company as on
1.1.1997, and continue to be on the rolls of the company as
on the day of signing MOS will be paid service weight age
amount for every completed year of services as on
31.12.1996, subjected to an minimum guaranteed service
weight age of 666/- provided that the amount of service
weightage determined will not undergo any chance any time
when the workmen complete further years of services. The
amount of services weightage will remain fixed till the next
wage settlement amount will be computed as per the table
given below:
 Completed years of Rate ( /PM) per
service as on 31.12,1996 computed years of
service

Up-to 15 years 6/- per year of service

16-25 years 7/- per year of service

Above 25 years 8/-per year of service

For computation of the years of service, the service of

more than Six months will be rounded off to one year and
less than Six months will be ignored. The service weightage
amount arrived at as above will be considered as basic for all
purpose except promotions.
6. Fixation:

A + B + C = D

Basic on DA drown 25 % Aggregate

31.12.19 on pre- fitment amount
96 plus revised benefit of
personal basic as ‘A’
pay, if on
any 1.1.1997
related to
AICPI
1708
including
54

The resultant amount so arrived will be fixed at the revised

basic if it corresponds with a stage in the revised wage scale
offered above. If the resultant amount does not correspond
with a stage in the revised wage grade, the wage will be fixed
at the next higher stage available in the revised wage scale.
7. Fixation of the wage in respect to those
who are appointed on or after 1.1.1997:
Workmen appointed in the company on or after 1.1.1997
would be deemed to have been appointed in the minimum of
revised scales of wage and no. fitment amount would a be
admissible.

8. Protection of increment:
In case where quantum of increment drawn in the revised
(1997) grades of wages is paid less than quantum of
increment drawn in the pre-revised grade of wages (1992) on
the date of settlement, the difference between the quantum
of the increments would be protected, as personal pay
(PP).The PP so arrived for this purpose, except promotion.
This PP will be merged with the basic from the effective date
of the next wage revision.
For eg: women in WS-1 draw 360/- as increment in the pre-
revised scale as on the date of signing of this settlement is
205/- , the difference of 155/- only need to be protected and
treated as PP.

9. House Rent Allowance:

HRA would be pay able to the work men on the revised scale
of wage with effect from 28.02.2014, in the line with govt.
Directives.

Classification of Rate of HRA

cities/town
‘A’, ‘B1’, ‘B2’ 30% of basic

‘C’ 7.5% of basic

Unclassified 5%of basic

If, any point of time, there is a change in the classification of

cities/rates by the govt. Of India, the same would be notified
with due approval.
10. House Rent Recovery:
Rent recovery on revised wage scales would be computed as
per the practice prevailing or on the basis of standard rent
being fixed by company from time to time, whichever is
lower. HRA Leased Accommodation and Rent Recovery would
be computed on revised basics of wage scales w.e.f
28.02.2014 and in the line with HMT Limited policies.

11. Dearness allowance (DA):

DA would be paid for the increase in AICPI above quarterly
index average of 1708 prevailing on 1.1.1997 and revised
from time to time (on quarterly basis) and applied to the
revised basic.

12. City Compensatory Allowance (CCA):

City Compensatory Allowance would be paid as per existing
rules subject to the maximum ceilings prescribed for various
cities as under:
Basic ‘A1’ ‘A’ Class ‘B1’ ‘B2’
(P.M) Class Cities Class Class
Cities Cities

Below 90 65 45 25
Rs.4000

4001- 125 95 65 35
5250
5251- 200 150 100 65
6499
6000 & 300 240 180 120
above

13. INTERIM Relief Paid:

The Interim Relief (IR) paid @ 10% of Pre-revised basic shall
stand discontinued with the implementation of the revised
wage scale w.e.f. 20.02.2014 and date of signing of the
settlement will be adjusted against 1997 wage arrears (i.e
from 28.02.2014 to the date of signing the agreement). The
recovery of the IR already paid prior to 28.02.2014 will be
discounted separately.

14. Stagnation Increment:

 Employees who reach the maximum of the revised scale
of wages on or after 28.02.2014 will be allowed to drawn rate
in the respective revised wage scale subject to a maximum of
3 annual increments.
 The union repetitive pointed out that due to delay in the
implementing the revised wages, most of the senior
workmen will be reaching the stagnation level immediately
on in the near future and keeping in view their left over
service, requested for a scheme of grant of special pay to
such stagnated workmen which will mutually discussed
separately, at an appropriate time any forum, based on
merit.

15. Family Planning Incentive:

 In respect of workmen who himself/herself or his/her
spouse underwent family planning operation on or after
1.1.1997 and was allowed monthly cash incentive under the
 family welfare programme in the 1992 wage scale will be
allow the monthly cash incentives. However in case the
revised rate of increment is less than the special increment
drawn, the same will be protected.

 In respect of workmen himself/herself or his/her spouse

underwent family planning operations prior to 1.1.1997 will
be allowed to draw monthly cash incentive equivalent to the
lowest rate of increment in the revised wage scale
corresponding to the scale against which the individual has
earned the monthly incentive in the pre-revised scale. (For
eg. An employee WG4 has drawn family planning increment
in the pre revised scale; he is entitled to draw the same at the
lowest rate of increment in WG4 on the revised scale).

16. Payment of Arrears:

 The management made it clear that no arrears arising
out of the wage revision could be considered in the view of
the company’s fund position and govt. Directives for
prospective implementation from 28.02.2014. On the
insistence of the union representatives, it is noted that issues
of arrears arising out of the wage revision from 1.1.1997 to
the date of implementation will be discussed between the
workmen representatives and management depending upon
substantial improvement in Performa and profit, and
subjected to the approval of the competent authority,
without adversely affecting the financial position of the
company in any form and subjected to the pre-condition in
the DPE guidelines.
 However, for the period between 28.02.2014 and the
date of signing the settlement, the arrears will be paid in the
staggered manner, depending upon the availability of funds
and without affecting the operations of the unit.

17. Others:
 Anomalies, if any, arising out of this wage revision will be
discussed separately.
 The employee union agrees not to re-open any of the
matters or raise any fresh demand (s) which would involve
additional financial burden on the company, others those
 mentioned in the classes above, during currency of this
settlement.
 This settlement shall be in force and binding on the parties
for 10 years from 1.1.1997 as per DPE guidelines and
thereafter continue to remain binding on the parties until
it is terminated by either party by giving two month’s
notice in writing of its intention to do so.
 Contents in History Sheet
BP: Basic Pay

PP: Personal Pay

DA: Dearness Allowance

HRA: House Rent Allowance

CCA: City Compensatory Allowance
FPI: Family Planning Allowance
NPA: Non Practice Allowance
CA: Scooter/Car Allowance
WA: Washing Allowance
SA: Sunday Allowance
PF: Provident Fund
GD: Employee Grade
VDR: Death Relief Fund
CD: Canteen Subsidy Rate
Acc No.: Account Number
DOCI: Date of Last Increment
VPF: Voluntary Provident Fund
CPF: Company Contribution
EPF: Employee Provident Fund
EPF: Employee Pension Scheme
PFL: Temporary Loan (CPS – Contribution)
PLWFA: Punjab Labour Welfare Act
CONV.: Convenience
WMCHG: Water Mater Charges
RADV: Recoverable Advance
PLI: Postal Life Insurance
HBA: House Building Advance
THSOC: Thrift Society (Loan)
Revision of scales of pay of the Officer
holding Posts below the Board Level (PSI
through PS X)

 SCALES OF PAY:

The scales of Pay are as under

Grade Existing New

PS 1 3000-205-3735-270-5055 5630-150-8000

PS 2 3500-150-6200 6550-200-11350

PS 3 4000-175-6200 8600-200-14600

PS 4 4900-200-6300-250-6875 9075-200-14600

PS 5 5400-275-6300-250-6850 12500-350-18250

PS 6 5500-250-7500-275-8425 13450-375-18700

PS 7 8250-300-9650 15200-400-20600

PS 8 9600-350-10500 18200-450-27900

PS 9 10600-400-12500 20600-500-26500

PS 10 11500-500-17500 23750-600-28500
 HOUSE RENT ALLOWANCE:
Classification of Rate of HRA
cities/town

‘A’ 30% of basic

‘A’, ‘B’, ‘B2’ 25% of basic

‘C’ 7.5% of basic

Unclassified 5% of basic

 HOUSE RENT RECOVERY:

Rent recovery on revised pay scale would be computed as per
prevailing before 1.1.1997, or on the basis of standard rent to
be fixed by the company, whichever is lower.
Accordingly, HRA, leased accommodation and rent recovery
would be computed on revised Pay Scales, the amount to be
paid or received would be effective from the date of
implementation of revised scales of pay, i.e. 28.02.2014.
 DEARNESS ALLOWANCE:
DA would be paid for the increase in AICPI above quarterly
index average of 1708 of prevailing on 1.1.1997 and revised
from time to time (on quarterly basis) and applied to revised
scales of pay.

 GRATUITY:
Gratuity would be regulated in accordance with the Payment
of Gratuity Act 1972 as amended from time to time.
Gratuity can be calculated and payable on the basis of revised
Pay and DA effective from the date of implementation i.e.,
28.02.2014.

 FRINGE BENEFITS:
Fringe benefits and rate of perks such as conveyance
reimbursement, transport subsidy, canteen subsidy etc. will
be as per present practice.
 PAYMENT OF ARREARS:
Arrears on account of pay revision (Basic + DA + CPF) from
28.02.2014 till the date of issue of this order will be payable
in a staggered manner depending upon the availability of
funds and without affecting the operations of Units
concerned.
 Chapter – 7

FINDINGS
 FINDINGS
 Organization scoring high in administration expert
role scored low in strategic partner role. However
organizations scoring high in strategic partner role did
not score low in the administrative expert role.
 The analysis of variance among the organizations
regarding the strategic and operational role showed
that there is significant difference in these roles across
organizations.
 There was a significant difference in the
perception about the four roles among the employee
and the wages staff.
 Another intrusting findings of the study was that
the employees rate wage as seen as a change agent
low, whereas the wage staff rate it as moderate level.
 Employees are not satisfied with the wages section
of the company.
 Company provides good working conditions.
 Company creates good relationship between
employees and employer.
 No Trade Union.
 Company gives job opportunities.
 Company provides less customer service.
 Less advertisement in mass media.
 Company provides no credit facility.
 High rate of Absenteeism among employees.
 High raw material cost.
 Most of the workers are moderately satisfied with
their job.
 Majority of the workers are male worker.
 In production department many machine are too
old. These machine are installed at the time of
establishment so there maintenance and repair cost
affect the production cost.