Comparative Analysis of Compesation Structure

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

From Paper Industry
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A REPORT
ON
COMPARATIVE ANALYSIS OF COMPENSATION

STRUCTURES OF HPC Ltd. viz-a-viz OTHER COMPANIES
FROM PAPER INDUSTRY
By
Richa Ranjan
(09BS0001880)
HINDUSTAN PAPER CORPORATION LIMITED
A REPORT
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Comparative Analysis Of Compensation Structure Of HPC Ltd. viz-a-viz Other Companies
From Paper Industry
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ON
COMPARATIVE ANALYSIS OF COMPENSATION

STRUCTURES OF HPC Ltd. viz-a-viz OTHER
COMPANIES FROM PAPER INDUSTRY
By
RICHA RANJAN
09BS0001880
A report submitted in partial fulfillment of the requirements of
MBA Program of
The ICFAI University, Dehradun
Date of Submission:14/05/2010
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Comparative Analysis Of Compensation Structure Of HPC Ltd. viz-a-viz Other Companies From
Paper Industry
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Authorization
I, Richa Ranjan (Roll Number- 09BS0001880), (2009-2011) do hereby declare that this project entitled
“Comparative Analysis Of Compensation Structure Of HPC Ltd. viz-a-viz Other Companies From Paper
Industry” submitted to HINDUSTAN PAPER CORPORATION LIMITED, 75-C PARK STREET, KOLKATA700091,
is a bona-fide record of research work done by me, in partial fulfillment of the requirements of
MBA Program of ICFAI University, Dehradun and has not been published anywhere else prior to this.
Acknowledgements
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The Summer Internship Project with Hindustan Paper Corporation Limited, Kolkata during the 14-weeks
period has been of immense importance to my learning process. The project is an outcome of the
support and encouragement provided by a number of people who contributed their thoughts, expertise
and insights towards the successful completion of this project.
Firstly, I would like to express my deep gratitude to Hindustan Paper Corporation Ltd. for giving me this
valuable opportunity to work on a project of the company. I am grateful to Mr.Cherian Thomas , Head
(HR Dept.) for giving me permission to do this project in his department.
I would like to thanks my Company guide Mr.Govind Kumar, Senior Manager (HR & ES Department) HPC
Ltd. and Faculty guide Dr. Rachana Chattopadhayay IBS Kolkata, who have always supported me.
I would like to extend a deep sense of gratitude to my two more guides Mr. D.P.Satpathy, Manager (HR
& ES Department) and Mr. P.K.Adithian, Senior Executive P.S(HR & ES Department) for their guidance
and suggestions because without them this project wouldn’t have been possible.
Last but not the least a special & heartfelt thanks to my friends and family members for being a constant
source of support.
This guidance, support and co-operation is not only useful for this project only but will be grate constant
source of inspiration for me in the future life.
Abstract
This study attempts to explore the different compensation structures in different firms of same
industry (the industry in question is Paper Industry). This study also helps us to evaluate the
effectiveness of Collective Bargaining in different firms for setting up compensation for their
workmen.
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This project aims to do a comparative analysis of Compensation Management/ Structure for HPC
Ltd. with its counterparts in the same industry, as to draw inferences about the best practices
adopted by HPC Ltd. and other similarly placed companies and to find out the following
hypothesis:-
Ho : “Will HPC Ltd. be able to sustain with this Salary& Wages Structure viz-a-viz Production
realization and number of Employees in the present scenario.”
For this Analysis firstly, I have done proper study on compensation management and then the
compensation structure of HPC Ltd. i.e. revised pay structure effective 1.1.2007, compensation
policies and organizational structure etc. To arrive at conclusion the similar kind of study have
done for other two companies also i.e. Mysore Paper Mills Ltd. and Tamil Nadu Newsprint and
Paper Ltd.
With the help of secondary data what HPC Ltd. and other companies provided, I came to know
that the Methodology/structure used to set up their compensation is “Graded Pay Structure”.
HPC Ltd. has more vertical structure as compare to other two companies.
Percentage (%) to salary & wages to turnover is very high, approximately 19% (2008-09) in case
of HPC Ltd. which should be ideally (7-11)%. Employee Cost/tonne is also high and increasing
day by day. Though HPC Ltd. is paying good salary to its employees/workers as compare to
other companies but it has to take some sincere steps to limit ‘Percentage to salary & wages to
turnover’ to less than 10% and to lower down ‘Employee cost/tonne’.
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Table Of Contents
Authorization...............................................................................................................................................i
Acknowledgements.....................................................................................................................................ii
Abstract......................................................................................................................................................iii
INTRODUCTION..........................................................................................................................................1
1. Compensation Management..............................................................................................................1
1.1. Components of Compensation System........................................................................................................ 1
1.2. Types of Compensation..................................................................................................................................... 1
1.3. Need of Compensation Management........................................................................................................... 2
2. Setting Up-Compensation Structure..................................................................................................3
2.1. Executive compensation.................................................................................................................................... 4
2.2. Worker’s compensation..................................................................................................................................... 5
3. Collective Bargaining..........................................................................................................................6
4. Different Pay structures.....................................................................................................................8
4.1. Criteria for pay structures................................................................................................................................. 8
5. Scope of the Project...........................................................................................................................9
6. Methodology.....................................................................................................................................9
7. Limitations.........................................................................................................................................9
Background of the company.....................................................................................................................11
1. Mission Of HPC................................................................................................................................12
2. Product portfolio of HPC Ltd............................................................................................................13
3. End users..........................................................................................................................................13
4. Projects............................................................................................................................................14
5. Performance & Achievements of the company...............................................................................14
5.1. Physical (during last 3 years )....................................................................................................................... 14
5.2. Financial(during last 3 years)....................................................................................................................... 15
5.3.The other Achievements to name a few are-.......................................................................................... 15
Compensation set-up in HPC Ltd..............................................................................................................16
1. For Executive- Revised Scales of Pay (2007 pay structure)...............................................................16
2. Negotiation through Collective Bargaining in HPC ltd.......................................................................24
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3. For Workmen-Revised Scale of Pay (2007 pay structure)/ Wage Grades.........................................25

About Competitor.....................................................................................................................................34
1. Mysore Paper Mills Limited.............................................................................................................34
1.1. Introduction of the MPM Ltd........................................................................................................................ 34
1.2. Compensation Setup in Mysore Paper Mills Ltd................................................................................... 35
2. Tamil Nadu Newsprints and Paper Limited......................................................................................41
2.1 Introduction of TNPL........................................................................................................................................ 41
2.2. Compensation Setup in Tamil Nadu Newsprint and Paper Mills Ltd..............................................42
Comparative Analysis................................................................................................................................47
1. For Workmen...................................................................................................................................47
2. For Executive....................................................................................................................................56
3. Percentage (%) of salary & wages to turnover.................................................................................61
4. Employee Cost Per Tonne................................................................................................................64
Conclusion................................................................................................................................................67
Recommendations....................................................................................................................................68
Bibliography..............................................................................................................................................69
List of Illustrations
Figure 1:% Range of each grade for workmen in HPC ltd. ....................................................................... 47
Figure 2: %Range of each grade for workmen in Mysore Paper Mills Ltd. ............................................... 48
Figure 3:%Range of each grade for workmen in Tamil Nadu Newsprints and Paper Ltd. ......................... 49
Figure 4: For TNPL ................................................................................................................................. 61
Figure 5: For MPM ltd. ........................................................................................................................... 62
Figure 6: HPC Ltd. .................................................................................................................................. 62
Figure 7 ................................................................................................................................................. 64
Figure 8 ................................................................................................................................................. 65
Figure 9 ................................................................................................................................................. 65
Table 1: % range in basic pay of HPC ltd. ................................................................................................ 47

Table 2 : % range in basic pay of MPM Ltd. ............................................................................................ 48
Table 3: % range in basic pay of TNPL .................................................................................................... 49
Table 4: for TNPL ................................................................................................................................... 64
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Table 5: for MPM ltd.............................................................................................................................. 64

Table 6: for HPC Ltd. .............................................................................................................................. 65
Appendice-1
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INTRODUCTION
1. Compensation Management
Compensation Management is an integral part of human resource management which
helps in motivating, retaining the employees and improving organizational
effectiveness. Compensation is the remuneration received by an employee in return for
his/her services to the organization. It is an organized practice that involves balancing
the work-employee relation by providing monetary and non-monetary benefits to
employees.
1.1. Components of Compensation System
Compensation systems are designed keeping in minds the strategic goals and
business objectives. Compensation system is designed on the basis of certain factors
after analyzing the job work and responsibilities. Components of a compensation
system are as follows:
1.2. Types of Compensation
Compensation provided to employees can direct in the form of monetary benefits

and/or indirect in the form of non-monetary benefits known as perks, time off, etc.
Compensation does not include only salary but it is the sum total of all rewards and
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allowances provided to the employees in return for their services. If the

compensation offered is effectively managed, it contributes to high organizational
productivity.
1.3. Need of Compensation Management
 A good compensation package is important to motivate the employees to increase the

organizational productivity.
 Unless compensation is provided no one will come and work for the organization.
Thus, compensation helps in running an organization effectively and accomplishing
its goals.
 Salary is just a part of the compensation system, the employees have other
psychological and self-actualization needs to fulfill. Thus, compensation serves the
purpose.
 The most competitive compensation will help the organization to attract and retain
the best talent. The compensation package should be as per industry standards.
2. Setting Up-Compensation Structure
Although money isn't everything, it certainly is one of the top issues potential
employees look at when interviewing new companies. Whether a company offering
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a straight basic salary structure or an incentive-based pay structure may make

or break you in the eyes of top job candidates. Let's look at how each system works.
A standard base pay program offers fixed salary ranges for each position type
for employees performing the standard duties of their jobs. Set up minimum and
maximum levels within those pay ranges to account for variations in experience and
skill levels. When setting the base pay structure, determine where your company
falls within your own industry as well as competing industries that may also offer
job opportunities for your employees. Set up your pay levels to be competitive, or
else you risk losing employees.
Once your base pay structure is in place, most companies then set up a merit pay
program that will take the employee through the salary range for their position at a
performance-driven speed. This comes into play when the employee's managers do
Annual employee performance reviews. The downside of this is that employees
may begin to see it as a given that they will get a salary increase after each
evaluation, and it ceases to be a motivation to perform better in their jobs.
For this reason, more companies are moving toward more of a “reward-based
compensation” style, also called Incentive Compensation.
Incentive-based compensation is becoming much more common because of the

increased emphasis on performance and competition for talent. This type of
compensation structure significantly helps motivate employees to perform well.
Hiring bonuses are also frequently used now, even for new college graduates.
However, a company might want to tie in a specific time period prior to the
employee collecting this bonus for example-: one-half after six months and the
remainder after one year of employment. Otherwise, you could run the risk of the
employee departing after that first check, which would defeat your purpose. So the
incentive compensation may be beneficial, if a company’s business is in an industry
where you really have to compete to get good employees. Setting up
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an incentive-based compensation program requires the same research into the

desired industry as the base pay program.
Nowadays, most of the companies setup their compensation with combination of

Fixed Pay (base pay) and variable pay (incentives, bonuses and other allowances
etc). But sometimes there is a difference between in the way of setting up
compensation in Private sector companies and in the Public sector companies.
Most of the Private companies establish their base pay levels but slightly lower
and build into that base the annual or quarterly (or any other interval)incentives,
bonuses, commissions, or other types of shared cash compensation.
But in the Public sector companies they usually setup large base pay comparatively
bonus and allowances given to the employees.
Compensation for the employees can be categorized into two-
1)For Executives and supervisors and 2) For Workers.
2.1. Executive compensation

Executive compensation is the total remuneration or financial compensation a top
executive receives within a corporation. This includes a basic salary, all bonuses, shares,
and any other company benefits. Over the past three decades, executive compensation
has risen dramatically beyond the rising levels of an average worker's wage. Executive
compensation is an important part of corporate governance, and is often determined by
a company's board of directors. (wikipedia)
A base salary
long-term incentive plans (LTIP) employee benefits

perquisites, or perks.
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2.2. Worker’s compensation

Worker’s compensation has totally different concept from the executive compensation.
Other than basic wage workers' compensation includes-:
Insurance that provides compensation medical care for employees who are injured in
the course of employment. The tradeoff between assured, limited coverage and lack of
recourse outside the worker compensation system is known as "the compensation
bargain." While plans differ between jurisdictions, provision can be made for weekly
payments in place of wages (functioning in this case as a form of disability insurance),
compensation for economic loss (past and future), reimbursement or payment of
medical and like expenses (functioning in this case as a form of health insurance), and
benefits payable to the dependents of workers killed during employment (functioning in
this case as a form of life insurance). (wikipedia) Dearness allowance (DA).

Shift allowance.
Washing allowance (job specific).
Location Specific allowance like- Hill Tract allowance [HTA] to the forest staff who work
in difficult location of forest.
Incentives on acquiring professional qualification for the willing workers.
Overtime wages payment.
Festival advance and etc [many more benefits and facilities].
Worker’s compensation is not decided by one person or a team it is decided on the mutual
understanding of Trade Union and the management which is done through “Collective
Bargaining”.
3. Collective Bargaining
Collective bargaining is the technique that has been adopted by unions and
managements to reconcile their conflicting interest. In organized labor/industrial
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relations, collective bargaining involves workers organizing together (usually in unions)

to meet, discuss, and negotiate upon the work conditions with their employers. Such
bargaining normally results in a written contract (collective agreement) setting forth the
wages, working hours and other conditions which the parties agree on for a stipulated
period. “A collective agreement functions as a labor contract between an employer
and one or more unions.” (Mr.P.K.Adithian, 1986)
Collective bargaining plays a significant role in improving labour-management relations

and in ensuring industrial harmony. The negotiations for collective bargaining requires
joint sessions of the representatives of labour and management. Through discussions
and interaction, each party learns more about the other, and misunderstandings are
often removed. Collective bargaining helps in resolving out many minor differences; and
there are many instances in which even major disputes have been settled without any
work-stoppage or outside intervention.
Mandatory Bargaining Items

Wages Severance pay
Hours of work Non-discriminatory hiring of all
Discharge Plant rules
Arbitration Safety
Holidays, paid Prohibition against supervisor doing unit work
Vacations, paid Super-seniority of union
Duration of agreement Stewards
Grievance procedure Plant close down and relocation
Lay-off plan Job posting procedure
Reinstatement of workers Plant reopening
Change of payment from Employee physical examination
Hourly base to salary base Agreements for negotiation
Union security and check-off Change in insurance benefits
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Work rule Profit shares plan

Merit wage increase Over-time pay
Work schedule Agency shop
Lunch period Sick leave
Rest period Employer’s insistence on clause giving arbitration.
Pension plans Right to enforce award

Retirement age Company house
Bonus payment Sub-contracting
Price of meals provided by company Discrimination racial
Group insurance(health, accident, policies life) Product ceiling imposed by union
Seniority Change of employee status to independent contractor
Transfer Management strikes clause

No strikes clause Cancellation of seniority on relocation of plant
Piece rates Contract clause providing for supervisor’s keeping
Work load Seniority in units

Discount on company products Shift differentials
Procedures for income tax with-holding
(Murlis)
4. Different Pay structures
A pay structure provides a framework within which an organization defines the

different levels of pay for job or group of job, on the basis of assessments their
relative internal value and of external relativities(market rate). The level of pay in a
structure may have been negotiated for all or some categories of employees.
The most important types of pay structures are as follows:
Graded pay structures.

Broad banding structures.
Job family structures.
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4.1. Criteria for pay structures
Pay structures should:
 Be appropriate to the characteristics and needs of the organization: its culture, size
and complexity; the degree to which it is subjected to change and type and level of
people employed;
 Be flexible in response to internal and external pressures, especially those related to
market rates and skill those related to market rates and skill shortage;
 Facilities operational and role flexibility so that employees can be moved around the
organization between jobs of slightly different sizes, without the need to reflect that
size variation by changing rates of pay;
 Give scope for rewarding high-level performance and significant contributions,
while still provide appropriate rewards and recognition for effective and reliable
‘core’ employees who form the majority in most organization.
 Facilitate rewards for performance and achievement;
 Help to ensure that consistent decision are made on pay in relation to job size,
contribution, skill and competence;
 Clarify pay opportunities, developmental pathways and career ladders;
 Be constructed logically and clearly so that the basic upon which they operate can
readily be communicated to employees;
 Enable the organization to exercise control over the implementation of pay policies
and budgets.
5. Scope of the Project
To know about the best practices adopted by the HPC Ltd. and its private & public
sector counterparts in their compensation structure.
This project also aims to find out the loopholes in the compensation structure of
HPC Ltd. by comparative analysis with other counterparts
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This study will help the company to retain their skilled employees and to attract the
new one.
This study will help us to know whether “HPC Ltd. will be able to sustain with this
Salary& Wage Structure viz-a-viz Production realization and number of Employees in
the present scenario.”
6. Methodology
Collection of secondary data from the different

companies of the same industry [Paper Industry].
Personal study.
7. Limitations
Some of the companies are not ready to entertain and disclose their internal data
regarding their Compensation Structure.
Data provided by all other companies other than HPC Ltd. are inadequate.
INTRODUCTION
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TO
Background of the company

Hindustan Paper Corporation Ltd. (HPC) is a company promoted by the Government of
India (GOI). The company was incorporated as a Private Limited Company in 1970
under the name Hindustan Paper Corporation Ltd and the company set up two units
namely Nagaon Paper Mills (NPM) which started production in October 1985 and
Cachar Paper Mill (CPM) in April 1988.
The company also had three subsidiaries namely Hindustan Newsprint Ltd. (HNL),
Nagaland Paper and Pulp Co. Ltd (NPPC) having a total capacity of 1,66,000 tpa.
The Nagaland Paper and Pulp Co. Ltd. Which had a capacity of 33,000 tpa became sick
and was referred to BIFR. Now it is being revived with doubling capacity i.e. 66,000 tpa.
NPM and CPM are located at Jagiroad, Dist. Moergaon; and Panchgram, Dist. Hailakandi,
in Assam respectively. Both the mills are very close to the source of raw material which is
mainly bamboo.
HPC is one of the largest manufacturers of paper in India (in public sector) with an installed
capacity of 3,00,000 tons per annum (tpa) (including its subsidiaries).
The company is engaged in the manufacture and marketing of various varieties of
cultural paper and newsprint and also small quantities of caustic soda and chlorine.
1. Mission Of HPC
To be a major contributor to the cultural segment in paper industry in terms of volume as

well as quality, production standard, customer services, R&D and technological up
gradation.
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To ensure optimum utilization of existing assets to generate maximum internal

resources for renovation, growth and expansion.
To develop professional management culture consistent with the requirement of the
industry to attract, develop and retain committed and skilled workforce with emphasis
on trust and teamwork.
To preserve the ecological balance and explore eco-friendly production process to strike
a harmonious relationship between nature and industry.
To explore and implement technological up gradation of the existing equipment for
improved quality and increasing productivity and for greater cost effectiveness.
To enlarge market channels for perennial supply of all variety of cultural paper and to
ensure customer satisfaction through value addition and constant up gradation of
quality.
To increase utilization of unconventional raw materials and adopt recycling method to
reduce dependence on forest resources for maintaining ecological balance.
To provide adequate thrust on product diversification and manufacture value-added
items like computer stationery, copier paper, S.S. Maplitho, etc. and create a brand equity
for higher profitability and greater market share. (welcome to the world of paper)
Paper for people......

From Bamboo to Books..!!
2. Product portfolio of HPC Ltd.
Cream wove
Maplitho
Computer stationary paper
Base paper
Copier paper
Offset printing paper
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3. End users
Education sector
Large Govt./institutional buyers
Publishing house
Text book printers, diary and calendar printers
Exercise book converter
Newspaper establishment
4. Projects
HPC has embarked on a Rs.660 crore Modernization and technological Upgradation

Plan(MTUP) covering CPM and NPM including inter-alia, 30% capacity expansion at
NPM.
HPC recently launched a Rs.719 crore Expansion-cum-Diversification project (EDP)
at HNP seeking to add capacity for production of 1,70,000 tpa finer papers making it
close 3,00,000 tpa capacity mill.
All these plans are underway and will be completed phase-wise by this year.
HPC is also seeking to establish a Rs.2500 crore Greenfield 3,00,000 tpa mill in the
Northern india besides overseeing the Rs. 552 crore scheme for revival of the
nonoperational mill under the Nagaland Pulp & Paper Company Ltd. (NPPC), Tuli,
Nagaland by doubling the installed capacity to 66,000 tpa . by 2013, the HPC group’s
turnover would touch Rs. 3000 crore.
5. Performance & Achievements of the company
HPC has been able to display a creditable performance both in physical and financial
terms in the last eleven years. Even in the downturn of the market and recessionary
situation HPC is showing its net profit.
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5.1. Physical (during last 3 years )
2006-07 2007-08 2008-09
[in tonnes] HPC HNL HPC HNL HPC HNL
Production 208315 112565 211746 116111 175020 108005
Sales 210737 112565 213224 116111 175091 87474
5.2. Financial(during last 3 years)
2006-07 2007-08 2008-09
[Rs. crore] HPC HNL TOTAL HPC HNL TOTAL HPC HNL TOTAL
Turnover 786 315 1101 842 299 1141 721.07 297.67 1018.74
Profit 120 45 165 138 18 156 60.73 21.10 81.83

Before
Tax
5.3.The other Achievements to name a few are-

Implementation of Enterprise Resource Planning (ERP) solutions across all
business location of the Company.
Establishment of Tissue Culture Laboratory for large-scale production of
highyielding bamboo species.
Initiation of Clean Development Mechanism(CDM) project for availing Carbon
Emission Reduction(CER) opportunity under the Framework Convention for
Climate Control(UNFCCC).
The Company was awarded ISO certification for QMS and EMS.
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Compensation set-up in HPC Ltd.

Under the policy of HPC Ltd. They revise their Scales of Pay in every 10 years. That’s why
the previous scale of pay (1997 pay structure) has replaced by the corresponding revised
scales of pay (i.e. existing pay structure) with effect from 1.1.2007.
1. For Executive- Revised Scales of Pay (2007 pay structure)

1.0. Board level Executives
Grad Designation Previous Revised
e Scale of Pay Scale of Pay
Sch-A CMD Rs.27750-750- Rs. 80000-

31500 125000
Sch-B Functional Director Rs.25750-650- Rs. 75000-
30950 100000
1.1. Below Board level Executives
Grade Generic Designation PreviousScale of Revised Scale of

Pay Pay
E-9 to be notified Rs.23750-600- Rs.62000-80000
28550
E-8 Executive Director Rs.20500-500- Rs.51300-73000
26500
E-7 General Manager Rs.18500-450- Rs.43200-66000
23900
E-6 Deputy General Rs.17500-400- Rs.36600-62000
Manager 22300
E-5 Senior Manager Rs.16000-400- Rs.32900-58000
20800
E-4 Manager Rs.14500-350- Rs.29100-54500
18700
E-3 Deputy Manager Rs.13000-350- Rs.24900-50500
18250
E-2 Assistant Manager Rs.10750-300- Rs.20600-46500
16750
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E-1 Executive Rs.8600-250- Rs.16400-40500

14600
1.2. Non-unionised supervisor

Grade Generic Designation PreviousScale of Revised Scale of
Pay Pay
S-2 Senior Supervisor Rs.6550-220- Rs.12600-32500
11390
S-1 Supervisor Rs.6000-200-9200 Rs.11500-29600
2.0. Fitment benefit and fixation of pay in the revised scales of pay
2.1 A uniform Fitment Benefit @ 30% on basic pay plus DA @ 78.2% as on 1.1.2007 would be
provided to all executives and non-unionised supervisors who are on the rolls of the
Corporation on 1.1.2007 and continue to be in the service of the Corporation as on the date
of issue of this Circular.
2.2 Where executives / non-unionised supervisors drawing pay at two or more consecutive stages
in an Previousscale get bunched, then for every two stages so bunched, benefit of one
increment shall be given.
3.0 Rate of Annual Increment

3.1. Annual Increment will be at the rate of 3% of revised basic pay applicable uniformly for all
grades of executives and non-unionised supervisors and will be rounded off to the next
multiple of Rs.10/-.
4.0 Rationalization of Date of Annual Increment
4.1 Dates of annual increments shall be brought to one standard date for all executives and
nonunionised supervisors i.e. the annual date of increment otherwise due from 1.8.2009 to
1.6.2010 shall be advanced to 1.7.2009.
4.2 In case of those whose annual increments are postponed due to imposition of any penalty on
disciplinary grounds under the prevalent Conduct, Discipline and Appeal Rules and
practices and thus draw annual increment in different months (i.e. other than July), the
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annual increment of such personnel will be notionally rationalized on 1 st July on completion

of the currency of punishment.
4.3 In respect of fresh appointees who join in a month other than in July, their next date of ……….
increment shall be the 1st July, following after completion of probation period.
5.0 Stagnation Increment
5.1 Maximum three stagnation increments @ 3% will be allowed, one after every two years ,
upon reaching the maximum of the revised pay scale provided the employee concerned gets
a performance rating of ‘Good’ or above.
5.2 Finance Department will provide a list to HR & ES Department every year indicating the
names of employees, who reached the maximum of the scale of pay for verification of
performance rating of such employees and consequently issue of Office Order for release of
each stagnation increment.
6.0 Pay Fixation on Promotion
6.1 One notional increment equal to the increment being drawn by the employee concerned in
the pay scale before such promotion would be granted and pay fixed in the promoted pay
scale and rounded off to the next multiple of Rs.10/-.
7.0 Dearness Allowances (DA)
7.1 100% DA neutralization will be adopted for all the executives and non-unionised supervisors
of HPC who are on IDA pattern of scales of pay. Thus, DA as on 1.1.2007 will become zero
with linked point of All India Consumer Price Index (AICPI) 2001 = 100, which is 126.33 as
on 1.1.2007. The periodicity of adjustment will be once in three months as per Previous
practice. The quarterly DA payable from 1.1.2007 will be as under:
With effect from Rate of DA admissible With effect from Rate of DA admissible
(in percentage) (in percentage)
01.01.2007 0 01.04.2008 6.3
01.04.2007 0.8 01.07.2008 9.2
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01.07.2007 1.3 01.10.2008 12.9

01.10.2007 4.2 01.01.2009 16.6
01.01.2008 5.8 01.04.2009 16.9
7.2 Rate of DA payable during each quarter commencing from 1.7.2009 would be notified from
………..time to time.
7.3 Basic Pay, Dearness Pay and Dearness Allowance already paid from January 2007 to April
……… 2009 under 1997pay structure would be fully adjusted against the arrears as and when ………
……… payable.
8.0 House Rent Allowances (HRA) and House Rent Recovery (HRR)
8.1 With effect from 18.05.2009, those who have not been provided residential accommodation
…….. by the Corporation, will be paid HRA at the following rates on the relevant basic pay in the
…….. revised scale of pay based on classification of places / cities notified by the Government of
…….. India from time to time on the basis of population, subject to fulfillment of other terms and …….
conditions
Categories of Cities Rate of HRA
with population Name of the Cities
(per month)
‘X’ Delhi (UA), Mumbai (UA), Kolkata (UA), Chennai (UA),
30% of basic pay
(above 50 lakh) Bangalore (UA), Hyderabad (UA)
‘Y’ Ahmedabad, Indore, Guwahati, Patna, Chandigarh,
(between 5 lakh and Lucknow, Jaipur, Thiruvananthapuram, Kochi, Madurai,
20% of basic pay.
etc.
50 lakh)
‘Z’ Unclassified Areas (such as Jagiroad, Panchgram,
10% of basic pay
(less than 5 lakh) Newsprint Nagar, etc.)
UA = Urban Agglomeration
8.2. House Rent Recovery in respect of those who have been provided with residential
accommodation in the Corporation-owned Township will be made based on the prescribed
rate on relevant basic pay in the revised scale of pay subject to the condition like standard
rent / license fee. The rate of license fee will be double the Previousrate with effect from
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18.05.2009, as under:
Revised
Type of Living Area previous Rate
Rate(existing)
Quarters (Sq. Mtrs.) (per month)
(per month)
A Upto 50 Rs. 108/- Rs. 216/-
B 51-75 Rs. 142/- Rs. 284/-
C 76-100 Rs. 200/- Rs. 400/-
D (at Mills)
101-150 Rs. 284/- Rs. 568/-
D-1 (at Kolkata)
D (at Kolkata) Above 150 Rs. 415/- Rs. 830/-
9.0 City Compensatory Allowance (CCA)
9.1 Payment of CCA stands dispensed with from 18.05.2009.
10.0 North-East Allowances (NEA)
10.1 Payment of NEA @ 12.5% on basic pay will be made to executives serving in the …………
……….. Corporation’s establishments in Assam / NE Region with effect from 18.05.2009.
10.2 The above NE Allowance will also be made applicable in respect of non-unionised ……….. ………..
supervisors serving in Assam / NE Region with effect from 18.05.2009 in lieu of Special … …
Compensatory (Remote Locality) Allowance which will be dispensed with simultaneously.
11.0 Non-Practicing Allowance (NPA)
11.1. NPA @ 25% of basic pay shall be payable to the Medical Officers (Doctors) with effect from
……….. 18.05.2009 who are on the regular rolls of the Corporation.
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12.0 Incentive on acquiring professional qualification
12.1 The quantum of incentive being drawn by the employees under pre-revised pay scale . .
……… (1997) will be dispensed with effect from 18.05.2009 and hitherto the Incentive Scheme
……. stands withdrawn.
13.0 Performance Related Variable Pay (PRVP) Scheme
13.1 The BoD has constituted a Remuneration Committee headed by a Non-Official Part-time
………….Director (Independent Director) and consisting of Director (Finance) and Director
………….(Operations) to conceptualise and operationalise the Performance Related Variable Pay
………….Scheme. The PRVP Scheme based on Performance Management System (PMS) aligned to
………….DPE prescribed parameters is under formulation for implementation w.e.f 1.4.2007. The
………….payment under Performance Related Payment Scheme (PRPS) made for FY 2007-08 will be
………… adjusted against the payment due if any, under the PRVP Scheme that may be put into
………… operation and PRPS will be substituted by PRVP Scheme.
14.0 Elimination of subsidies on Electricity, Canteen, Transport, etc.
14.1 In order to restrict the expenditure on infrastructure facilities, it has been decided that there
will be no subsidy on account of Electricity, Canteen, Transport facilities, etc with effect
from 18.05.2009.
15.0 Car Facilities
15.1 The Company-owned car / hired car would be provided to the CMD / Functional Directors,
Executive Directors and/or Chief Executives of the Mills only. Accordingly, the practice
being followed in the mills for providing vehicles to other executives for picking up and
dropping will be dispensed with and actual cost will be charged as user fee with effect from
18.05.2009.
16.0 Gratuity
16.1 The ceiling for payment of gratuity in respect of executives and non-unionised supervisors is
raised from Rs.3.50 lacs to Rs.10.00 lacs with effect from 1.1.2007.
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17.0 PF Contribution
17.1 Deduction of contribution towards Provident Fund shall be made on the revised basic pay and
DA with effect from 1.1.2007.
18.0 Introduction of the concept of „Cost to Company (CTC)‟
18.1 In terms of DPE OM dated 26.11.2008, the concept of CTC is required to be implemented in all
CPSEs. The entire cost of an executive is explicitly made known by a CPSE; adopting the
system of CTC for the purpose of reporting executive compensation, pay, allowances,
perquisites and retirement benefits should all be monetized and included while reporting
the cost of manpower to the CPSE.
18.2 It is further decided by the Government that where a CPSE has created infrastructure such
………. as township, hospital, school, club etc., the recurring expenditure on maintaining and
…………running these infrastructure facilities would be taken into account. The recurring
…………expenditure should be divided into two parts, based on proportion of total basic pay of
…………executives and non-unionised supervisors and the total basic pay of workmen. The part
………...attributable to the executives and non-unionised supervisors would be reckoned as the
………...expenditure on perquisites and allowances, subject to the condition that the said amount
………...shall be restricted to 10% of basic pay of all executives and non-unionised supervisors
…………within the overall limit of 50% of basic pay.
18.3 The total annualized expenditure towards the instant revision cannot exceed 20% of Profit
…………Before Tax (PBT) for FY 2007-08. The expenditure on running and maintenance of …………
infrastructure has to be within the ceiling of 10% of basic pay
19.0 Other Perks & Allowances
19.1. In terms of DPE OMs referred in (18.1) above, perks and allowances shall be considered for
revision from a prospective date, subject to maximum limit of 50% of revised basic pay.
Other than raising the ceiling of one month’s basic pay and DA for reimbursement of
medical expenses against domiciliary treatment, no modification in Previous allowances
and perquisites will be considered except those mentioned hereinabove. The Previous
perks and allowances viz., reimbursement of conveyances expenses, tuition fee, family
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planning incentive, LTC, company leased accommodation (applicable for key officials in pay
grade E-6 and above), night shift allowance for supervisors and tea allowance (wherever
applicable) will continue to be regulated as per Previous entitlement / rates as admissible
under the extant rules till further orders.
20.0 Payment of Arrears
20.1 Those who ceased to be in the service of the Corporation with effect from 1.1.2007 and upto
the date of issue of this Circular owing to retirement / superannuation , separation on
account of resignation, continued ill-health duly accepted by the Competent Authority or
death while in service will be eligible for payment of arrears on a pro-rata basis, whenever
due.
20.2 The benefit of revised pay and DA and consequential payment of arrears shall not be
…………admissible to those who have ceased to be in the service Corporation on or after 1.1.2007 on
…………the following grounds: a)
Dismissal
b) Removal from services which shall not be a disqualification for future employment
c) Resignation without permission / notice / authorization
d) Resignation when disciplinary action had already been initiated and was in progress.
2. Negotiation through Collective Bargaining in HPC ltd.
The first meeting between the Management Representatives of HPC and Representatives of the
recognized Unions was held on 17.04.2007 based on Charter of Demands submitted by Unions
who were recognized at that point of time.
Subsequently, based on the discussions held in the meeting, the said unions submitted a
common Charter of Demands vide their letter dated 19.04.2007. Thereafter, meetings were held
on 14.07.2007 and 12.12.2007.
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However, regular meetings with the Unions continued for almost one year and the next meeting
was held at Guwahati on 15.12.2008, where the newly elected Union i.e., Cachar Paper Project
Workers’ Union (INTUC), which got recognition through the process of referendum held in
October, 2008, also participated.
As this Union was recognized subsequently, it submitted the Charter of Demand separately vide
letter dated 12.12.2008. However, other Unions insisted on continuing the negotiations based
on the common Charter of Demands submitted by them on 19.04.2007.
Accordingly, the matter was discussed in the meeting and all the four Unions decided
unanimously to continue discussions based only on the common Charter of Demands submitted
on 19.04.2007. It was also clarified to the Unions that the pay, perquisites and benefits would be
monetized and the personnel cost would be based on Cost to Company (CTC). Subsequently, a
series of meetings were held on 07.01.2009, 28.01.2009, 26.02.2009, 26.05.2009 and
01.06.2009 at Guwahati / Kolkata on the common Charter of Demands.
The final discussions between the representatives of the Management and recognized Unions
were held from 08.06.2009 to13.06.2009 at Kolkata and the parties have signed an MoU on
some terms & conditions which would be implemented after obtaining approval of the Board of
Directors of HPC and the GoI i.e. revised Scale of pay [pay structure 2007]. (ltd., 2007)
3. For Workmen-Revised Scale of Pay (2007 pay structure)/ Wage Grades

1.0. For Workmen
Wage Previous Scale of Pay Revised Scale of Pay
Grade
W-1 Rs 4200-80-4760-85- Rs.7500-16500

5780
W-2 Rs 4300-85-4895-95- Rs.7700-17200
6035
W-3 Rs 4450-95-5115-105- Rs.7900-18100
6375
W-4 Rs 4650-105-5385-115- Rs.8200-19800
6765
W-5 Rs 4850-115-5655-125- Rs.8500-20500
7155
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W-6 Rs 5050-125-5925-135- Rs.8900-22000

7545
W-7 Rs 5350-135-6295-145- Rs.9500-24000
8035
W-8 Rs 5650-145-6665-155- Rs.10000-25200
8525
W-9 Rs 5950-160-6430-200- Rs.10700-27600
9030
W-9A Rs.6000-200-9200 Rs.11500-29600
W-9B Rs.6550-220-11390 Rs.12600-32500
2.0 Fixation of Pay in the Corresponding Revised Scales of Pay
2.1 A uniform Fitment Benefit @ 30% on basic pay plus DA @ 78.2% as on 01.01.2007 would be
provided to all workmen who are on the roll of the Corporation on 01.01.2007 and continue
to be in the service of the Corporation as on the date of signing of the Memorandum of
Settlement.
3.0 Rate of Annual Increment
3.1 Annual Increment will be at the rate of 3% of revised basic pay applicable uniformly for all
grades of workmen and will be rounded off to the next multiple of Rs.10/-.
4.0 Stagnation Increment
4.1 The rate of stagnation increment will be 3% of the revised basic pay and workmen will be
allowed to draw maximum three stagnation increments, one after every two years, upon
reaching the maximum of the revised pay scale provided the workman gets a performance
rating of ‘Good’ or above.
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5.0. Pay Fixation on Promotion
5.1. Accordingly, one notional increment @ 3% in pre-promoted pay scale would be granted and
………..the resultant figure so arrived at after rounding off to next multiple of Rs.10/-, would be the
………..revised basic pay in the promoted grade / scale of pay.
6.0 Dearness Allowance (DA)
6.1 100% DA neutralization (under IDA pattern of pay scales) will be adopted for all the
workmen covered under this Settlement
The quarterly DA payable from 01.04.2007 will be as under:

With effect from Rate of DA admissible With effect from Rate of DA admissible
(in percentage) (in percentage)
01.04.2007 0.8 01.07.2008 9.2
01.07.2007 1.3 01.10.2008 12.9
01.10.2007 4.2 01.01.2009 16.6
01.01.2008 5.8 01.04.2009 16.9
01.04.2008 6.3 01.07.2009 18.5
6.2 Basic Pay, Dearness Pay and Dearness Allowance already paid from January 2007 under
1997 pay structure would be adjusted against the arrears payable after implementation of
revised pay structure (2007).
7.0 Local Travelling Expenses (LTE)
7.1 The reimbursement of LTE will be Rs. 20/- per day for those who reside within a radius of
10 Kms and Rs.40/- per day for those who reside beyond the radius of 10 Kms from the
place of duty, on actual attendance basis.
7.2 As regards reimbursement of LTE for attending duty on holidays / weekly off days, the
following procedure will be followed.
a) In case an employee is allowed Compensatory Off in lieu of overtime, he will be

reimbursed LTE at the prescribed rate @ Rs.20/- or Rs.40/- per day as the case may be,
for the day he attends duty.
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b) No reimbursement of LTE will be admissible if the employee is paid overtime allowance

on attending duty on any holiday / weekly off day.
7.3 If a workman attends duty on half a day’s Casual Leave, LTE will be admissible at full rate.
8.0 Reimbursement of Conveyance Expenses
8.1 The reimbursement of Conveyance Expenses for maintaining Two-Wheeler (Scooter / Motor
Cycle) will be Rs.1050/- per month for all grades of workmen with effect from 03.08.2009.
8.2 The special conveyance allowance for PWD will be double the rate of LTE as mentioned at
para 7.1 above with effect from 03.08.2009.
9.0 Reimbursement of Education / Tuition Fee for Children
9.1 Reimbursement of Education/Tuition Fee including Vidyalaya Vikas Nidhi (VVN) as prevalent
in Kendriya Vidyalaya and admission fee or any other subject fee (like science/laboratory fee,
computer fee, library fee, music fee and games/sports fee) will be sanctioned at actuals
limited to Rs.350/- per child per month on specific declaration of the workmen supported by
a Certificate from the Head of the Institution. This will apply to students studying in Nursery
to Class XII subject to the condition that this is payable to the institution(s) which
are authorized to sponsor such children for recognized examinations and it will be limited to
maximum of two children.
9.2 The Reimbursement of Education/Tuition Fee to the employees’ Children with disability will
be limited to Rs.750/- per month per child with effect from August, 2009 subject to
production of necessary fee receipt / certificate of the school.
10.0 House Rent Allowance (HRA)
10.1 With effect from 03.08.2009, those who have not been provided with residential
accommodation by the Corporation, will be paid HRA at the following rates on the relevant
basic pay in the revised scale of pay based on classification of places / cities notified by the
Government of India from time to time on the basis of population, subject to other terms and
conditions.
Categories of Cities Rate of HRA
with population Name of the Cities
(per month)
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‘X’ Delhi (UA), Mumbai (UA), Kolkata (UA), Chennai (UA),

30% of basic pay
(above 50 lakh) Bangalore (UA), Hyderabad (UA)
‘Y’ Ahmedabad, Indore, Guwahati, Patna, Chandigarh,
(between 5 lakh and Lucknow, Jaipur, Thiruvananthapuram, Kochi, Madurai,
20% of basic pay
etc.
50 lakh)
‘Z’ Unclassified Areas (such as Jagiroad, Panchgram,
10% of basic pay
(less than 5 lakh) Newsprint Nagar, etc.)
UA = Urban Agglomeration
11.0 House Rent Recovery (HRR)
11.1 HRR in respect of workmen who have been provided with residential accommodation in the
Corporation-owned Township at different locations (i.e., at Mills & Kolkata) will be made
based on the prescribed rate on relevant basic pay in the revised scale of pay subject to the
condition like standard rent / license fee. The rate of license fee will be double the Previous
rate with effect from 03.08.2009, as under.
Type of PreviousRate Revised Rate

Quarters (per month) (per month)
Mills Kolkata Mills Kolkata
A 35 70 70 140
B 75 142 150 284
12.0 City Compensatory Allowance (CCA)
12.1 Payment of CCA stands dispensed with from 03.08.2009
13.0 North-East Allowance (NEA)
13.1 Payment of NEA @ 12.5% on basic pay with effect from 03.08.2009 will be made to all
workmen serving in the Corporation’s establishments in Assam / NE Region in lieu of
Previous special Compensatory (Remote Locality) Allowance which will be dispensed with
simultaneously.
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14.0 Shift Allowance
14.1 Shift Allowance will be paid with effect from 03.08.2009 to the workmen of NPM and CPM
who are working in rotating shifts as per the following rates.
Shift Rate
A Rs. 20/-
B Rs. 30/-
C Rs. 80/-
15.0 Washing Allowance
15.1 Washing Allowance at the following rates will be paid with effect from 03.08.2009 to the
workmen who are provided with uniform subject to the condition that they attend duty in
uniform and keep them neat and clean.
General Category - Rs.150/- per month
Para-Medical Staff - Rs.180/- per month
16.0 Hill Tract Allowance (HTA)
16.1 HTA @ Rs.250/- per month will be paid with effect from 03.08.2009 during harvest season
to the Forest Staff of NPM and CPM working at difficult location of forest areas.
17.0 Cash Handling Allowance (CHA)
17.1 The following rates of CHA as prescribed by the Government of India will be applicable from
03.08.2009 subject to conditions prescribed under the rules.
Amount of average monthly cash Rate of CHA
disbursement
(per month)
Upto Rs.50,000 Rs 150/-
Over Rs.50,000 and upto Rs. 2 lakh Rs 300/-
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Over Rs. 2 lakh and upto Rs.5 lakh Rs 400/-
Over Rs. 5 lakh and upto Rs. 10 lakh Rs 500/-
Over Rs. 10 lakh Rs 600/-
18.0 Family Planning Allowance (FPA)
18.1 the incentive in the form of ‘Family Planning Allowance’ will be paid as follows-
Post / Pre-revised Corresponding Rate of Family
Revised
Grad Pay Scales (1997) Planning Allowance
e Pay Scales (2007) (p.m)
W-1 Rs 4200-80-4760-85- Rs.7500-16500 Rs.230/-
5780
W-2 Rs 4300-85-4895-95- Rs.7700-17200 Rs.240/-
6035
W-3 Rs 4450-95-5115-105- Rs.7900-18100 Rs.240/-
6375
W-4 Rs 4650-105-5385-115- Rs.8200-19800 Rs.250/-
6765
W-5 Rs 4850-115-5655-125- Rs.8500-20500 Rs.260/-
7155
W-6 Rs 5050-125-5925-135- Rs.8900-22000 Rs.270/-
7545
W-7 Rs 5350-135-6295-145- Rs.9500-23900 Rs.290/-
8035
W-8 Rs 5650-145-6665-155- Rs.10000-25000 Rs.300/-
8525
W-9 Rs 5950-160-6430-200- Rs.10700-27400 Rs.330/-
9030
W-9A Rs.6000-200-9200 Rs.11500-29600 Rs.350/-
W-9B Rs.6550-220-11390 Rs.12600-32500 Rs.380/-
19.0 Incentive on acquiring professional qualification
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19.1 The quantum of incentive being drawn by the employees under pre-revised pay scale (1997)
will be dispensed with from 03.08.2009 and hitherto the Incentive Scheme stands
withdrawn.
20.0 Funeral Expenses and death Relief Fund
20.1 In case of death of an employee, an amount of Rs.3000/- or as admissible under the

Workmen’s Compensation Act, 1923, whichever is higher, will be paid by the Corporation on
account of Funeral Expenses.
20.2 A matching contribution limited to Rs.100/- per member employee under the Death Relief
Fund (DRF) Scheme as in vogue in the respective units, shall be made by the Corporation.
21.0 Gratuity
21.1 The ceiling for payment of Gratuity will be raised from Rs.3.50 lakh to Rs.10.00 lakh with
effect from 01.01.2007.
22.0 Gratuitous Payment in case of Death / Permanent Total Disability
22.1 The ceiling of gratuitous payment is of Rs.3 lakh. The monthly total income of dependent
family members will be revised from Rs.4,199/- to Rs.7,499/-. These enhanced ceilings will
be applicable with effect from 03.08.2009.
23.0 Performance Related Variable Payment (PRVP) Scheme
23.1 The PRVP will be directly linked to the performance of the workmen and percentage ceiling
of PRVP will be 20% of the basic pay. The ‘Bell Curve Approach’ will be adopted in grading
the workmen so that not more than 5% workmen are ‘Outstanding / Excellent’, 40% ‘Very
Good’, 45% ‘Good’ and 10% ‘Average’. The workmen rated ‘Poor’ will not be eligible for any
PRVP.
23.2 The PRVP applicable for ‘Outstanding / Excellent’ performers will be 100% of the ceiling
prescribed (i.e, 20% of basic pay). Similarly, in case of ‘Very Good’, ‘Good’ & ‘Average’
performers, the PRVP will be 80%, 60% & 40% respectively of the prescribed ceiling of
20%.
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24.0 Festival Advance
24.1 Admissible amount of Festival Advance shall be Rs.5,000/- in accordance with the Previous
practice and regulations.
25.0 School Re-opening Advance
25.1 A recoverable advance of Rs.4,000/- will be sanctioned to the workmen once in a calendar
year whose children are studying upto Class XII. It will be paid to those workmen who have
at least Rs.3,000/- net pay in the previous month.
26.0 Payment of Arrears
26.1 Those who ceased to be in the service of the Corporation with effect from 01.01.2007 and up
to the date of implementation of revised pay structure, owing to retirement /
superannuation, separation on account of resignation, continued ill-health duly accepted by
the Competent Authority or death while in service will be eligible for payment of arrears on
a pro-rata basis, whenever due.
26.2 The benefit of revised pay and DA and consequential payment of arrears shall not be
admissible to those who have ceased to be in the service of the Corporation on or after
01.01.2007
26.3 As a result of this wage revision with effect from 01.01.2007, there will be no calculation /
arrear payment with regard to overtime wages, TA/DA, LTC and such other allowances as
are related to or connected with the basic pay, except mentioned specifically .
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About Competitor
1. Mysore Paper Mills Limited

1.1. Introduction of the MPM Ltd.
The Mysore Paper Mills Ltd. (MPM) founded by Sri.Krishanaraja Wodeyar Bahadur in 1937 the
Maharaja of erstwhile Mysore State was incorporated on 20 th May 1936 under the Mysore
Companies Regulation, VIII of 1917. Later it became a Government company in 1977 under
section 617 of the Companies Act, 1956. The Company has its Registration Office at Bangluru
and its plant located at Bhadravati, Shimoga District, Karnataka state.
The company has an Authorized capital of 150 crs. And paid up capital 120 crs. The share of the
company are listed in the BSE and there are about 17, 000 shareholders.
The company is managed by eminent Board of Director consisting of IAS, IFS and other
professionals. The Chairman & Managing Director of the company is assisted by a team of
professionals in various fields who have expertise in production, finance, marketing etc . with a
dedicated team force.
MPM with 5000 employees has its own township. About 15000 families of the cane growers
who supply sugarcane to the company are directly dependant on this company and many more
depend indirectly . the direct and indirect contribution by MPM to the local economy is about
Rs. 200 Cr. P.A.
Products
Writing Papers,
Newsprint Papers,
Printing & packaging Paper and
Manufacture of Plantation White Sugar.
To produce these products they use Pulpwood like Pines, Acacia, Eucalyptus. (Mysore paper
mills.)
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1.2. Compensation Setup in Mysore Paper Mills Ltd.
A. For Workmen- Current Scale of Pay
GRADES Revised Pay Scale For The Current Period

(01.03.2007 to 29.02.2012)
MR CMR
M-0 TG-1 8600-225-9500-250-10500-300-12300-350-14400-400-16800-450-19500
M-1 TG-1 8200-200-8600-225-9500-250-10500-300-12300-350-14400-400-16800
M-3 - M-3/M-2/M-2PG: 7800-200-8600-225-9500-250-10500-300-12300-350-14400-

400-16800
M-2 - (Please see the above row)
- CT-1 7450-175-7800-200-8600-225-9500-250-10500-300-12300-350-14400
- CT-2 7100-175-7800-200-8600-225-9500-250-10500-300-12300-350-14400
M-4 CT-3 6800-150-7100-175-7800-200-8600-225-9500-250-10500-300-12300-350-14400
M-5 CT-4 C4 M-5/CT-4/CT-4PG:6500-150-7100-175-7800-200-8600-225-9500-250-10500-300-

PG 12300
M-6 CT-5 6125-125-6500-150-7100-175-7800-200-8600-225-9500-250-10500
M-7 CT-6 5800-100-6000-125-6500-150-7100-175-7800-200-8600-225-9500
M-8 CT-7 5500-100-6000-125-6500-150-7100-175-7800-200-8600-225-9500
M-9 CT-8 5200-100-6000-125-6500-150-7100-175-7800-200-8600-225-9500
M-10 CT-9 4800-100-6000-125-6500-150-7100-175-7800-200-8600-225-9500
M-11 CT-10 4400-80-4800-100-6000-125-6500-150-7100-175-7800-200-8600-225-9500
A.1. Basic Pay Fixation
The revised basic pay is fixed on the following formula
Pre-revised Basic pay as on 01.03.2007 (A) + Personal pay (B) +Applicable IDA (C) +10%
proposed hike on A+B+C Minus present stat Govt. DA as on 01.03.2007 (Total pay / 1.1225%
taking 12.25% Govt. DA on 01.03.2007).
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A.2. State Govt. DA rates
From 01.01.2007 to 30.06.2007 - 12.25%
From 01.07.2007 to 31.12.2007 – 17.50%
From o1.07.2008 to 31.12.2008 – 26.75%
From 01.01.2009 - 32.75%
A.3. Superannuation Subscription
Superannuation Subscription given is 7.5% under the current period of settlement.
A.4. Transport Subsidy
The conveyance allowance is given to the employees who own two wheelers. The transport
subsidy for the employees who are staying outside the township at their own request will not
be given for Bus charges. However, 3 months time is granted for them to make alternative
arrangement. Once they own vehicles, they are eligible for conveyance allowance as per the
rule.
A.5. Leaves
a) The Earned Leave or Privilege Leave or Vacation Leave is called single name –Earned Leave
(EL) and it is of 240 days.
b) One day special leave given for those who donate blood on the day of donation will be
treated as physical attendance for allowance purpose.
A.6. Stagnation Increment
Stagnation increment is paid every year at the rate of last increment in the stagnated pay scale.
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A.7. Other Allowances
Sl. No. Perks PreviousRate

(per month)
1 City Compensatory allowance per month 200
2 Night shift allowance per shift 40
3 Rope allowance per shift 6
4 Washing allowance per month 35
5 Washing / Cycle allowance per month 20
6 Driver Allowance per month
a. Category- A 275
b. Category-B 225
c. Category-C (tractor driver) 50
7 Chief Cashier allowance per month 150
8 Asst. Cashier allowance per month 125
9 Cash Handling allowance per occasion 75
10 In-charge allowance day/ shift 12/8/5
11 Attendance Bonus: Production 300/200/125
Non-Production 250/175/125
A.8. Hazardous Allowance
Hazardous Allowances only for workers and employees working within the factory premises
at hazardous places at the rate of Rs. 3 per shift/ day.
A.9. Festival Advance
Festival advance of Rs. 4800 per year for Ugadi and Ganesha festival for Rs. 2400 to each
festival at free of interest recoverable in equal monthly installment for all permanent employees
on roll.
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A.10. Education Advance
The recover able education advance of Rs. 4000/- at 10%p.a. interest shall be paid and
payment shall be made on May 12th of every year or shall be paid on previous day or with the
May salary only for payment employees who are on the roll of the company.
A.11. Death Relief Fund
The management has agreed to pay Rs. 15000/-as DRF to all employees expire while in
service. Out of which on the day of incident / death Rs.5000/- as cash and remaining Rs.
10,000/- by cheque to the concerned family members.
A.12. Stitching Charges
MPM pays the stitchingcharges with increase of 10% for every two years.
A.13. Soap and Towels
Provide good quality soaps and towels at work place to employees.
A.14. House Rent Allowance
HRA at rate of Rs. 275/- shall be provided to only those who have not been provided with
company quarters but workmen at Bangluru and Regional offices will be given at a rate of Rs
1500/- for PG I employees and Rs 1300/- for other catogorory.
A.15. Medical Facilities
Medical facilities provide at hospitals to the spouse, children and dependent parents of the
employee.
B. For Executives- Current Scale of Pay

Grade Pay Scale (Rs.) on previous pattern
Gr-1 4650-240-5850-270-7200-300-8700-330-10350-360-12150-390-14100-420-16200
Gr-2 5850-270-7200-300-8700-330-10350-360-12150-390-14100-420-16200-450-18450
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Gr-3 7200-300-8700-330-10350-360-12150-390-14100-420-16200-450-18450-480-
20850
Gr-4 8700-330-10350-360-12150-390-14100-420-16200-450-18450-480-20850-510-
23400
Gr-5 10350-360-12150-390-14100-420-16200-450-18450-480-20850-510-23400-540-
26100
Gr-6 12150-390-14100-420-16200-450-18450-480-20850-510-23400-540-26100-570-
28950
Gr-7 14100-420-16200-450-18450-480-20850-510-23400-540-26100-570-28950-600-
30150
Gr-8 14750-450-17000-490-19450-530-22100-570-22100-570-24950-610-28000-650-
(DGM) 31250
Gr-9 16000-490-18450-530-21100-570-23950-610-27000-650-30250-690-33700
(JGM)
Gr-10 17750-530-20400-570-23250-610-26300-650-29550-690-33000-730-36650
Gr-11 19250-570-22100-610-25150-650-28400-690-31850-730-35500-770-39350
(Dir/ED)
B.1. Dearness allowance
The DA as announced by the Govt. of Karnataka to ite employees from time to time would
be paid to the officers of the company as at present in the revised pay scales. [as per given
in A.2.].
B.2. House Rent allowance
a) At Bangluru :- 15.75% of Previous basic + PP
b) Regional offices :- 21.50% of Previous basic + PP
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The Previous HRA applicable to officers at Bhadravati, Shimoga and other places remain
unaltered.
B.3. Medical Reimbursement
a) Gr-I to IV Officers : 51% of Previous basic + PP
b) Gr-V and above : 56% of Previous basic + PP
B.4. Night Shift Allowance
Night Shift Allowance is Rs.35/- per shift .
B.5. Leave Encashment
Officers are permitted to encash upto 30 days PL at their credit every year or 60 days PL at
their credit once in a block period of 2 years w.e.f Block period of 2005-06. (mills, 2007)
2. Tamil Nadu Newsprints and Paper Limited

2.1. Introduction of TNPL
Tamil Nadu Newsprint and Papers Limited(TNPL) was established by the Government of Tamil
Nadu during early eighties to produces Newsprint and Printing & Writing Paper using bagasse,
a sugarcane residue, as primary raw material. The company commenced production in the
year1984 with an initial capacity of 90,000 tonnes per annum
Over the years, the production capacity has been increased to 2,45,000 tonnes per annum and
the Company has emerge as the large bagasse based Paper Mill in the world consuming about
one million tones of bagasse ever year.
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The Company is in the process of implementing the Mill Expansion Plan for increase the
capacity to 4,00,000 tonnes per annum from July 2010.
Products
TNPL offers high-quality surface sized and non-surface sized paper to suit the needs
modern high speed printing machines.
TNPL manufactures Printing and writing Papers in substances ranging from 50 GSM to 90
GMS.
As the paper is acid free, it has longer color stability and enhanced permanency in terms of
strength characteristics.
The paper reels have uniform profile with strength properties to cope even with high speed
machines.
The Company caters to the requirements of multifunctional printing processes like- sheet-
fed , web-offset and digital printers. (TNPL)
2.2. Compensation Setup in Tamil Nadu Newsprint and Paper Mills Ltd.
A. For Executives A.1 Scale of Pay
Grade Basic Pay (Rs.)
Director 46500-1500-61500
CGM 41500-1400-55500
GM 36000-1200-48000
DGM 30500-1000-40500
AGM 26000-800-34000
SR.Manager 22500-700-29500
Manager 21500-600-27500
Dy. Manager 18000-500-23000
Asst. Manager 15000-425-19250
Officer 12500-350-16000
Asst. Office 10500-250-13000
GET Rs.14400/- (1st year) , Rs.16200/- (2nd year)
AO (T) Rs. 13200/- (1st year) ,Rs. 15000/- (2nd year)
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A.2. Dearness Allowance
a). F.D.A – Minimum Rs.5232/- and varies individual to individual. b).
V.D.A –
Basic pay upto Rs.16000=0.40% of basic for every
Basic pay upto from Rs.16001 to Rs. 25000 = 0.36% of basic for every 8 point increase over 2680
points.
Basic pay from 25001 and above 0.36% of basic pay every 8 point increase over 2680 point upto
Rs.25000/- + 0.18% over Rs. 25000/- A.3. House Rent Allowance (HRA)
Grades Branches Other Places Employees Amount
residing in (Rs.)
quarters
AGM & Above 35% 30% For type D 700
DM,Mgr. & Sr.Mgr. 30% 25% For type C 750
AO to AM 25% 25% For type B 800
- - - For type A 850
- - - For TA type 900
A.4. City Compensatory Allowance (CCA)

Grades Amount (Rs.)
Asst. Officer 650
Officer 800
AM to Manager 1000
Sr. Manager 1200
AGM and DGM 1400
GM and above 1600
A.5. Conveyance Reimbursement
DM and above:
Car = Rs. 3000/-
Scooter/Motorcycle= Rs. 1350/-
Moped = Rs. 750/-
A.O to A.M
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Scooter/ Motorcycle = Rs.1350/-
Moped = Rs.750/-
A.6. Children Education Allowance

Grades Amount per child
A.O and Officer Rs. 100/-
A.M to D.M Rs. 125/-
Manager and above Rs. 150/-
Subject to maximum of 2 children
A.7. Offsite Allowance
Intake well and Pugalur = Rs. 350/-p.m.
Other offsites and Wind Farm = Rs.700/-p.m.
A.8. Free Electricity(for company quarter)

Grades No. of units per month
DGM and above 300
AGM 120
DM to Sr. Manager 90
Officer and A.M 70
Asst.Officer 50
A.9. Family Planning Incentive
Rs.25000/- and 1 kg Complan and 6 days special leave
A.10. Leave Encashment and Leave Credit
Encashment of Privilege Leave (PL), normally allowed to 15 days per year. However, if an
employee not encashing PL in the previous years the accumulation of 15 days per year is
allowed.
PL : 30 days per annum
PL accumulation day : Maximum 240 days
Sick Leave(SL) :10 days per annum
SL accumulation: No limit
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Casual leave(CL): 10 days per annum
A.11. LTC
LTC can be availed once in two years(block yr.)
A.12. Funeral Expenses
Rs.5000/-
A.13. Other Benefits
Festival advance
One pair of shoes & 3 set of socks issued to male employees and chapals to females every year.
Every year 2 sets of uniform are also issued to every employee.
Sweet distribution for Deepawali and Ayudha Pooja.
B. For Workmen
B.1. Current scale of Pay
Category Existing Pay Scale
Unskilled lower Grade 4320-36-4680-39-4875

Unskilled 5453-43-5885-45-6558
Semi skilled (C) 5688-51-6198-53-6993
Semi skilled (B) 5904-54-6444-56-7284
Semi skilled (A) 6120-58-6700-61-7615
Skilled (B) 6336-75-7086-78-8256
Skilled (A) 6552-83-7382-88-8086-93-8737
Highly skilled 6912-95-7862-100-8662-105-9397
B.2. Dearness Allowance
TNPL has two types of DA - (1) Fixed DA and (2) Variable DA.
B.3. House Rent Allowance (HRA)
HRA will be paid at the rate of 12% of Basic Pay for the workmen who have not been provide
with company accommodation.
B.4. Washing Allowance
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Washing allowance is Rs.74 per month.
B.5.Conveyance Allowance
Conveyance allowance is Rs. 340 per month.
B.6.Conveyance Reimbursement
Workmen possessing and using automobile two wheeler vehicles not less than 49cc will be
given Rs. 365/-.
Workmen possessing and using automobile two wheeler vehicles not less than 98cc will be Rs.
440/-.
B.7. Night Shift Allowance
Night shift allowance paid to workmen posted to work in “C” shift is Rs. 12 per night shift.
B.8. Miscellaneous Compensatory Allowance
Rs.95/- paid to every workmen every month as a miscellaneous compensatory allowance.
B.9. Electricity Units For Colony Residents
Supply of free electricity of 5 units per month for residents of company’s Housing colony.
B.10. Fire Tender Allowance
Workmen in security Department will be paid Fire Tender Allowance @ Rs. 75/-.
B.11. Special Payment To Workmen in Offsite And Other Areas
Workmen in Windfarm and offsite will be paid offsite allowance of Rs.400/-
Workmen in Intake-well and Pugalur offsite allowance will be paid Rs.225/-
B.12. Family Planning Incentive
Rs. 3000/- shall be paid to eligible workmen.
B.13. Funeral expenses
In the event of death of a workmen while in service, an amount of 5000/- will be paid.
B.14. Employee Benefit Scheme (EBS)
Company’s contribution towards EBS is Rs. 500/-
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B.14. Group Insurance
Coverage provided to the workmen under Group Insurance Scheme is Rs. 75000/-
(TNPL, 2006)
Comparative Analysis
As we came to know from this study that all the three concerned companies i.e. HPC ltd, TNPL and
MPM ltd. follow Graded Pay Structure. A Pay Range is attached to each grade which defines
minimum and maximum rate payable to any job and indicates scope provided for job holders to
progress through the range.
To Analyze the difference in Pay Range of Basic Salary of all the three companies let us see the
following graphs :-
1. For Workmen
HPC Ltd.
Grade Minimum(Rs) Maximum(Rs) Gap(Rs) % Range
W-1 7500 16500 9000 120
W-2 7700 17200 9500 123
W-3 7900 18100 10200 129
W-4 8200 19800 11600 141
W-5 8500 20500 12000 141
W-6 8900 22000 13100 147
W-7 9500 24000 14500 153
W-8 10000 25200 15200 152
W-9 10700 27600 16900 158
W-9A 11500 29600 18100 157
W-9B 12600 32500 19900 158
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MPM Ltd.
M-0/TG-1 8600 19500 10900 127
M-1/TG-2 8200 16800 8600 105
M-3/ 7800 16800 9000 115
M-2/ 7800 16800 9000 115
CT-1 7450 14400 6950 93
CT-2 7100 14400 7300 103
M-4/CT-3 6800 14400 7600 112
M-5/CT-4 6500 12300 5800 89
M-6/CT-5 6125 10500 4375 71
M-7/CT-6 5800 9500 3700 64
M-8/CT-7 5500 9500 4000 73
M-9/CT-8 5200 9500 4300 83
M-10/CT-9 4800 9500 4700 98
M-11/CT-10 4400 9500 5100 16
Table 2 : % range in basic pay of MPM Ltd.
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Figure 2: %Range of each grade for workmen in Mysore Paper Mills Ltd.
TNPL
Unskilled Lower Grade 4320 4875 555 13
Unskilled 5453 6558 1105 20
Semi-Skilled(C) 5688 6993 1305 23
Semi-Skilled(B) 5904 7284 1380 23
Semi-Skilled(A) 6120 7615 1495 24
Skilled (B) 6336 8256 1920 30
Skilled (A) 6552 8737 2185 33
Highly Skilled 6912 9397 2485 36
Table 3: % range in basic pay of TNPL
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Figure 3:%Range of each grade for workmen in Tamil Nadu Newsprints and Paper Ltd.
Basic pay is the most important, secure and fixed component of compensation. After getting the
information about basic pay structure of all the three companies we can say that HPC ltd. and MPM
ltd. have vertical structure as there are 10 to 14 grades. However, TNPL has horizontal structure
having less number of grades as compare to HPC Ltd. and MPM Ltd. which is easier to handle for
TNPL’s administration.
From the above graphs (fig: 1,2,3) regarding with the percentage range of each grade for workmen
of their basic pay we can see, as the grade is increasing in HPC Ltd. and TNPL the gap between
minimum and maximum wage within each grade also increasing. On the other hand there is no
consistency in the gap between minimum and maximum wage in MPM Ltd.
In case of HPC there is a big difference in ‘% Range’ between the lowest (W-1) and highest (W-9)
grades i.e. 120% and 158% respectively.
The reason behind this can be -
To accommodate the employee drawing maximum Basic pay in the pre-revised pay scale in such a
way that after fixation of pay in the revised pay structure they could continue to draw at least three
47 | P a g e
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annual increments. So basically HPC ltd. has formed very good basic pay structure for their
workmen and they have maintained the proper basic pay ratio between the lower most and top
most employee of the organization i.e. 1:10 .
Comparison of salary and wages of Workmen among all three companies is given below :-
Main Topic Sub Topic Hindustan Tamil Nadu Mysore paper

paper newsprint and mills ltd.
corporation ltd. paper ltd.
Salary
Basic Given in figure- Given in Given in figure-
1 figure-3 2
DA Variable DA It has Fixed Variable DA

DA and
Variable DA
both.
Annual They follow here, it is a fixed here, it is a
increment percentage amount of fixed amount of
based increment increment increment
3% of basic pay
of worker
Stagnation 3% of basic pay workers who Ith shall be paid
Increment of worker one reach to every year at
after every two maximum of the rate of last
years upto three scale of pay will increment.
times only continue to
draw annual
increment on
the respective
anniversary
date.
Performance Related payment/
Bonus
Incentive/ NA Productivity
Rewards linked incentive: NA
Rs. 10/- per
month
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Bonus Performance Payment of Attendance

related bonus depends bonus-
variable on Profit Production
payment is generated in that bonus:
there. Bonus particular Rs.300/200/125
financial year Non-prod.
also there as
Bonus :
per Bonus Act.
Rs.250/175/125
Perk and
Allowance/Benefits/reimbursement
Conveyance Reimbursement conveyance not mentioned
Reimbursement/ for two wheeler allowance: Rs but they give
Allowance : Rs 1050/- 340/- bus charges and
conveyance to the
reimbursement: employees
two wheelers who own
not less than two
49cc = Rs.365/- wheeler
& 98cc=
Rs.440/-
Night Shift For shift 'C'= For shift 'C' = Rs. 40/- per shift
Allowances Rs. 80/- per shift Rs.12/- per shift
Magazines/HRD NA (Not NA NA
Allowances available)
LTC/LLTC by train only NA NA
once in a block
year
Canteen subsidy NA NA Provide
Leave 300 day 240 day
Encashment
Washing General Rs.74/- Rs.35/-
Allowance category =
Rs.150/- pm
Para-Medical
staff = Rs. 180/-
pm
Electricity Electricity: NA free electricity :
/Water Water : 5 units p.m for
Subsidies Rs.20 /- residents of
Company's
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housing colony
Family Planning some amount Rs.3000/- NA

Incentive of money paid
from
W-1 to W-9B
within the range
of Rs230/- to Rs.
380/- per month.
City NA NA Rs. 200/-

compensatory
allowance
Location based North-East NA
allowance allowance : at
the rate of
12.5%
Hill Tract
allowance: at the
rate of Rs.250/-
per month
during the
harvest season in
the forest.
Cash Handling Upto CHA : Rs.75/-
allowance Rs.50,000/- = Asst. cashier
(CHA) Rs 150/- p.m allowance
Over Rs. p.m=
50,000/- and Rs.150/-
upto Rs 2 lakh =
Rs. 300/- Over
Rs.2lakh and
upto Rs.5lakh =
Rs.400/- Over
Rs.5lakh/- and
upto Rs.10lakh
= Rs
500/- Over
Rs.10 lakh=
Rs 600/-
Social Amenities & benefits
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HRA HRA is HRA will be HRA will be

location based paid at the rate paid at the rate
city type 'X'= of 12% of of Rs. 275/- For
30% of basic basic pay. Bangluru
pay cty type 'Y' workmen: Rs.
= 20% of basic 1500/-
pay cty type 'Z' For PG-I
= 10% of basic : Rs. 1300/-
pay
Education/ School NA Facility of

Tuition Fee Reopening education
advance: Rs advance is
4000/- for provided : Rs.
children 4000/- at p.a.
studying interest shall be
upto class paid.
XII. One time
Reimbusement education
of tution fee: incentives for
Rs. 350/- p.m. children of
per child upto workmen on
two children scoring 60%
marks in X and
only.
XII
Housing Quarters from Quarters from Quarters from
company company company
provided provided provided
Medicals One month's They provide Medical
basic + DA of facilities
October provided at
MPM Hospital
to the spouse
and children
including the
employee.
Uniform Uniform Two sets of NA
provided uniform will be
provided to
workers.
Funeral Rs 3000/- Rs 5000/- Rs. 5000/-
expenses
Death Relief A matching NA Rs. 10,000/-
Fund contribution shall be paid to
limited to Rs the family
100/- per members.
member
contribution of
unit.
Gratuitous Rs. 3 Lakh NA NA
Payment
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Retiral Benefits
Insurance Group Group NA
insurance: Rs insurance: Rs.
62000/- 75000/-
PF/CPF 12% not mentioned not mentioned
Gratuity max. Rs. 10 not mentioned not mentioned

lakhs but for the
purpose of
computing even
the training
period of
worker under
company's
training will be
reckoned as
service.
Medical Post retirment NA NA
Benefits / medical
Facilities benefits through
mediclaim for
employee and
spouse
coverage
Rs. 2 lakhs
Company's 8.33 % of max.
contribution to pay of Rs.
Pension 6500/-
Superannuation yet not decided NA 7.50%
Subscription
Any Other Items
EBS NA Rs. 500/-
Miscellaneous Rs.95/- per

compensatory month
allowance
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2. For Executive
Main Topic Sub Topic Hindustan paper Tamil Nadu Mysore paper
corporation ltd. newsprint and mills ltd.
paper ltd.
Salary
Basic No need to No need to No need to
compare compare compare
DA Variable DA It has Fixed DA Variable DA
and Variable DA
both.
Annual increment They follow here, it is a fixed here, it is a fixed
percentage amount of amount of
based increment increment increment
3% of basic pay
of worker
Stagnation 3% of basic pay employee who Ith shall be paid
Increment of employee one reach to maximum every year at the
after every two of scale of pay rate of last
years upto three will continue to increment.
times only draw annual
increment on the
respective
anniversary date.
Performance Related payment/
Bonus
Incentive/rewards / Performance Production linked PLI- variable %
PLI related variable incentive= Rs.100/- on basic based on
payment is range of
there. production:
Production Depts.
= Rs.1175/(100%)
Non-production
Depts=
Rs.590/(50%)
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Perk &
Allowance/Benefits/reimbursement
Conveyance ED = Rs.3000 Conveyance conveyance
Reimbursement/ GM= Rs.2400 reimbursement: allowance
Allowance DGM= Rs.2000 DM & above- Car permonth:
Sr.Mgr & = Rs.3000/- p.m. Gr.IV& above(4
Mgr.= Rs.1800 For All- wheeler)=
Scooter/motorcycle Rs.2115/- for all
AM & DM =
= Rs. 1350/- p.m. grades(2
Rs.1500 wheeler)=Rs.480-
Moped = Rs. Rs.
Executives = Rs 755/- for
750/- p.m.
560 shimoga/Tarikere
Conveyance =Rs.14/-per day
allowance : NIL
Night Shift upto Dy.Manager = NSA: Rs. 35/- per

Allowances (NSA) Rs.35/- per night shift.
shift
Magazines/HRD NA A.O to D.M = Gr.I to VII =
Allowances Rs.125/- Rs.150/-p.m. For
Manager to AGM GM/ED/Dir. =
= supply of two need based
newspapers.
DGM and above
= supply of three
newspapers.
LTC/LLTC LTC can be LTC can be availed Gr-I = Rs.6125
availed once in once in two years. Gr-VI=Rs.9625
two years but no One month Gr-II= Rs.6565
encashment (Basic+DA) of Gr-VII=Rs.10500
LTC availed Gr-III=Rs.7000
month or actual DGM=Rs.11375
expenses Gr-IV=Rs.7875
whichever is less. GM =Rs.12250
Gr-V =Rs.8750
ED/Dir.=Rs.13125
Leave Encashment maximum to 300 maximum to 240 can encash upto 30
days days days PL at their
credit every or 60
days PL at their
credit once in a
block year of 2
years.
Washing Allowance NA NA NA
Electricity /Water NA Electricity:

Subsidies No. of units p.m.
DGM &
above = 300
AGM = 120
DM to Sr.Mgr = 90
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Officers &
A.M= 70
Asst. officer = 50
Family Planning grades have Rs. 2500/- (1 kg

Incentive different rate of complan)
amount.
City compensatory NA Asst.officer = at Bangluru =
allowance Rs.650/- officer = Rs.125/-p.m.
Rs. 800/- AM to at Regional office =
Manager = 150/-p.m.
Rs. 1000/-
Location based North-East NA
allowance allowance:
Payment of NEA
@ 12.5% on
basic pay will be
made to
executives
serving in the
Corporation’s
establishments in
Assam / NE
Region only.
Offsite allowance NA Intake well & NA
Pugalur = Rs.350/-
p.m
other offsites &
wind farm =
Rs.700/-p.m
Social Amenities & benefits
HRA HRA is location Grade : At Bangluru =
based: Branches other 15.75% of basic +
City type 'X'= place PP
30% of basic pay AGM & above : Regioanal offices
City type 'Y' = 35% 30% =21.50% of
20% of basic pay DM,Mgr & basic+PP
City type 'Z' = Sr.Mgr: 30%
10% of basic pay 25%
AO & AM :
25% 25%
Education/ Tuition Rs.120 for each Children For employee
Fee child. education reimbusement of
allowance: A.O & one proff. Inst.
officer = Subscription fee:
Rs.100/- p.m. per For Gr.IV & V =
child. 50% of
A.M to D.M = subscription fee
55 | P a g e
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Rs. 125/- p.m. per paid.

child. For Gr.VI &
Mgr. & above = above= 100% of
Rs. 150/- p.m per subscription fee
child paid.
Housing Quarter is provided Quarter is provided as at Bdtv. :
as per the per the designation Furnished quarter on
designation and and availability. nominal rent
availability. subjected to
availability.
Temporary
accommodation will
be provided in
officers' Hostel.
Medicals One month basic Medical
salary for a year for reimbusement: Gr.I
domiciliary to IV officers
treatment full = 51% of basic+
reimbursement of PP
hospitalization for Gr.V and above
referral hospitals. = 56% of baisc +
PP
Uniform Every year two sets of NA
uniform are issued to
all employees.
Funeral expenses Rs.3000 Rs. 5000/-

Death Relief Fund A matching See the subtopic : Rs.60000/- under
contribution limited "Insurance" MPM life cover
to Rs 100/- per scheme.
member
contribution of unit.
Retiral Benefits
Insurance Group insurance: Rs Group Group savings
62000/- insurance:Premium linked insurance:
fully paid by the Rs.40000/(premium:
company. In the Rs.40/p.m.)
event of death, his
nominee will get Rs. Personal accident
75000/- Personal insurance coverage:
accident insurance:
for all officers =
premium fully paid
Rs.5 lakh(50% of
by company. In the
premium p.a. will
event of death, his
be be borne by the
nominee will get 96
company).
months' Basic +
DA .
PF/CPF 12% of basic + 12% of basic + DA 12% of basic +

DA DA
Gratuity Rs.10 lakh NA 15 days' salary for
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every complete
Service 5 yr.
Medical Benefits / Post retirment NA Medical

Facilities medical allowance:Rs 25/-
benefits through p.m.
medi-claim for Reimbursement :
employee and on self vouchers
given rates per
spouse
annum-:
coverage Rs. 2 GrI to IV &
lakhs MTs = 51% of
basic pay
Gr.V & above =
56% of basic pay
Superannuation yet not decided NA 9% of basic pay

Subscription/Benefit
Any Other Items
EBS NA Contribution NA
Rs.165/- p.m with
an annual increase
of Rs. 10/- in every
November.
57 | P a g e
Paper Industry
_____________________________________________________________________________________
3. Percentage (%) of salary & wages to turnover
Tamil Nadu Newsprint And Paper Limited
In crore/ years 2005-06 2006-07 2007-08 2008-09
Sales 892.91 962.98 1070.38 1172.39
Compensation to 51.68 63.43 67.76 80.99

Employees
% of salary & wages to 5.79 6.59 6.33 6.91
turnover
% of sal. & wages to turnover

7.00 6.91
6.50 6.59
6.33
6.00 % of sal. & wages
5.79 to turnover
5.50
5.00
2005-06 2006-07 2007-08 2008-09
Figure 4: For TNPL
Mysore Paper Mills Limited
In crore/ years 2005-06 2006-07 2007-08 2008-09
Sales 378.78 419.88 402.59 431.5
Compensation to 68.98 67.11 82.95 70.42

Employees
% of sal. & wages 18.2110988 15.983138 20.6040885 16.3198146
to turnover
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Paper Industry
_____________________________________________________________________________________
% of sal. & wages to turnover

25.00
20.00 20.60
18.21
15.00 15.98 16.32
10.00 % of sal. & wages

to turnover
5.00
0.00
2005-06 2006-07 2007-08 2008-09
Figure 5: For MPM ltd.
Hindustan Paper Corporation Limited
In crore/ years 2005-06 2006-07 2007-08 2008-09
Sales 742.24 786.25 841.85 721.07
Compensation to 85.49 93.71 115.67 139.75

Employees
% of salary & wage to 11.52 11.92 13.74 19.38
turnover
% of sal. & wage to turnover
25.00
20.00 19.38
15.00
13.74
11.52 11.92 % of sal. &
10.00
wage to…
5.00
0.00
2005-06 2006-07 2007-08 2008-09
Figure 6: HPC Ltd.
59 | P a g e
Paper Industry
_____________________________________________________________________________________
Percentage of salary & wages to turnover signifies the ratio of expenditure on compensation and
total sales of the company, it can be calculated by following formula:-
% of salary & wages to turnover = [Compensation to Employees(Rs.) ÷ Sales (Rs.)] X 100
The ideal percentage(%)of salary and wages to turnover for a potentially rich company which is
growing in nature should be within 7 to 11 percentage as per the industry’s norms.
As we can analyze from the above graphs [figure-4,5,6] that TNPL has most appropriate ‘percentage
of salary & wages to turnover’ in all the mentioned years i.e. from 2005 to2009 specially in 2008-09
it has approximately 7% which shows their stable compensation proportion with respect to their
sales. Where as MPM Ltd. and HPC Ltd. are not in the good position because of having very high ‘
percentage of salary & wages’ to turnover during past few years.
In the case of MPM ltd. at least they have succeeded to lower down their compensation to
employees and a constant increment in sales. But in HPC ltd. the situation is not favorable for last 2
years because there is constant increment in Compensation to employees with low sales which is
not a good signal for a company.
4. Employee Cost Per Tonne
Tamil Nadu Newsprint And Paper Limited
Years 2005-06 2006-07 2007-08 2008-09
Production (tonnes) 230079 231161 245471 254903
Compensation to 51.68 63.43 67.76 80.99

Employees(cr)
Employee cost/tonne 2246 2744 2760 3177
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Paper Industry
_____________________________________________________________________________________
Table 4: for TNPL
Employee cost/tonne
3500
3000 2744 3177
2760
2500
2000 2246
1500 Emp. cost/tonne
1000
500
0
2005-062006-072007-082008-09
Figure 7: Employee cost/tone-TNPL
Mysore Paper Mills Limited

Years 2005-06 2006-07 2007-08 2008-09
Production (tonnes) 102681.1 116281.8 118403.7 109292.7
Compensation to 68.98 67.11 82.95 70.42

Employees(cr)
Table 5: for MPM ltd.
Employee cost/tonne
8000
6718 7005
6000 6443
5571
4000
Emp.cost/tonne
2000
0
2005-06 2006-07 2007-08 2008-09
Figure 8: Employee cost/tone–MPM Ltd.
61 | P a g e
Paper Industry
_____________________________________________________________________________________
Hindustan Paper Corporation Limited
Years 2005-06 2006-07 2007-08 2008-09
Production (tonnes) 207068 208315 211746 175020
Compensation to Employees(cr) 85.49 93.71 115.67 139.75

Table 6: for HPC Ltd.
Employee cost/tonne
10000
8000 7984
6000
4128 5462
4000 Emp. cost/tonne
4498
2000
0
2005-062006-072007-082008-09
Figure 9: Employee cost/tone –HPC Ltd.
62 | P a g e
Paper Industry
_____________________________________________________________________________________
Employee Cost Per tonne can be calculated by following formula :-
Employee cost per tone = Compensation to employee ÷ Production
To balance the employee cost with respect to production is very important for any company.
As we can see from the above graphs (fig- 9,8,7) that TNPL and MPM Ltd. both are on a right
track as their production is increasing with a slow pace of increment in compensation to
employee as a result TNPL has been able balance w.r.to production and MPM ltd. has lower
down its employee cost which must be beneficial for the company . Whereas, in case of HPC
Ltd. their production has decreased and compensation to employees has increased drastically
as a result employee cost per tone increased so much.
63 | P a g e
Paper Industry
_____________________________________________________________________________________
Conclusion
After a careful study of the finding of this research we came to know following facts about
Hindustan Paper Corporation Limited.
They follow Graded Pay Structure

From the comparison of Compensation Structure of all the three companies, HPC ltd. has
best basic pay structure, allowances and incentives schemes for their employees/workmen.
This analysis reveals that there is a big difference in ‘% Range’ between the lowest and
highest grades eg. For workmen (W-1)120% and (W-9)158% to accommodate the
employee drawing maximum Basic pay in the pre-revised pay scale in such a way that after
fixation of pay in the revised pay structure they could continue to draw at least three annual
increments.
Percentage (%) of salary & wages to turnover is very high, approximately 19% (2008-09)
which should be ideally 7% to11%, which is not a favorable situation.
Employee Cost/tonne is also high and increasing day by day which is not at all good signal
for the HPC ltd. in this competitive market.
Though HPC Ltd. is paying very good salary to its employees/workers as compare to other
companies and more employees oriented but it is a time to become a production oriented company.
It has to take some sincere steps to limit ‘Percentage to salary & wages to turnover’ to less than
10% and to lower down ‘Employee cost/tonne’ otherwise, the salary and wages of the HPC Ltd. can
not be absorbed by physical and financial performance of the company.
Recommendations
Since, HPC Ltd. need to lower down its Employee cost so that the company can run smoothly with
this compensation structure. As layoff of the employees is the best way to control the Employee
Cost but being a public sector company HPC can’t follow the policy of layoffs.
So, I would like to suggest some ways through which HPC Ltd. may come out from its current
situation in future which are as follows:-
HPC Ltd. should try to increase its sales and production (at least above 2,00,000 tonnes).
Restrict recruitment only to scarce category i.e. pulp and Paper Tech. & Chemical Engg.
64 | P a g e
Paper Industry
_____________________________________________________________________________________
Reduce personnel strength in non-cores area and if possible redeploy surplus manpower to
cores area.
Curtail expenditure on overtime engagement.
Variable cost should be reduce to generate more revenue.
HPC Ltd. should diversify its business in other areas example: Copy paper.
HPC Ltd. can increase the proportion of variable pay (allowance/bonus/Incentives) and can
decrease the proportion of fixed pay (basic).
Bibliography
ltd., H. (2007). Memorandum of settlement of HPC Ltd. kolkata.
mills, M. p. (2007). Memorandum of settlemet. Mysore.
Mr.P.K.Adithian. (1986). Collective Bargaining Agreement. kolkata.
Murlis, M. A. 1. Reward management (hand book) by Michael Armstrong and Helen Murlis[Authors.
Mysore paper mills. (n.d.). Retrieved April 3rd, 2010, from http://www.mpm.co.in/
Mysore paper mills. (n.d.). Retrieved march 3rd, 2010, from http://www.mpm.co.in/
TNPL. (n.d.). Retrieved march 20th, 2010l, from http://www.tnpl.com/Index.aspx
TNPL. (2006). memorandum of settlement TNPL.
welcome to Hindustan paper corporation limited. (n.d.). Retrieved february 25th, 2010, from
http://www.hindpaper.in/ welcome to the world of paper. (n.d.). Retrieved February 25th, 2010, from
http://www.hindpaper.in/
wikipedia. (n.d.). Retrieved march 20th, 2010, from wikipedia:

http://en.wikipedia.org/wiki/Executive_compensation
65 | P a g e
Paper Industry
_____________________________________________________________________________________
wikipedia. (n.d.). Retrieved march 20th, 2010, from wikipedia: http://en.wikipedia.org/wiki/Workers%27_compensation
66 | P a g e

Comparative Analysis of Compesation Structure

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Comparative Analysis Of Compensation Structure Of HPC Ltd.

viz-a-viz Other Companies

COMPARATIVE ANALYSIS OF COMPENSATION

HINDUSTAN PAPER CORPORATION LIMITED

COMPARATIVE ANALYSIS OF COMPENSATION

HINDUSTAN PAPER CORPORATION LIMITED

A report submitted in partial fulfillment of the requirements of

The ICFAI University, Dehradun

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

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

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

1.1. Components of Compensation System

1.2. Types of Compensation

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

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

1.3. Need of Compensation Management

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

2. Setting Up-Compensation Structure

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

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

an incentive-based compensation program requires the same research into the

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

Compensation for the employees can be categorized into two-

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

2.1. Executive compensation

long-term incentive plans (LTIP) employee benefits

2.2. Worker’s compensation

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

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

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

Mandatory Bargaining Items

Work rule Profit shares plan

Pension plans Right to enforce award

Transfer Management strikes clause

Work load Seniority in units

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

The most important types of pay structures are as follows:

Graded pay structures.

4.1. Criteria for pay structures

Pay structures should:

5. Scope of the Project

Collection of secondary data from the different

HINDUSTAN PAPER CORPORATION LIMITED

Background of the company

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

To ensure optimum utilization of existing assets to generate maximum internal

Paper for people......

2. Product portfolio of HPC Ltd.

Computer stationary paper

Offset printing paper

Large Govt./institutional buyers

Text book printers, diary and calendar printers

Exercise book converter

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

5. Performance & Achievements of the company

5.1. Physical (during last 3 years )

2006-07 2007-08 2008-09

[in tonnes] HPC HNL HPC HNL HPC HNL

Production 208315 112565 211746 116111 175020 108005

Sales 210737 112565 213224 116111 175091 87474

5.2. Financial(during last 3 years)

2006-07 2007-08 2008-09

Profit 120 45 165 138 18 156 60.73 21.10 81.83