Comparative Analysis of Compesation Structure of HPC Ltd. vis-a-vis Other Companies of Same Industry

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

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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


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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Authorization
I, Richa Ranjan (Roll Number- 09BS0001880), (2009-2011) do hereby declare that this project entitled
“Comparative Analysis Of Compensation Structure Of HPC Ltd. viz-a-viz Other Companies From Paper
Industry” submitted to HINDUSTAN PAPER CORPORATION LIMITED, 75-C PARK STREET, KOLKATA-
700091, is a bona-fide record of research work done by me, in partial fulfillment of the requirements of
MBA Program of ICFAI University, Dehradun and has not been published anywhere else prior to this.

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Acknowledgements

The Summer Internship Project with Hindustan Paper Corporation Limited, Kolkata during the 14-weeks
period has been of immense importance to my learning process. The project is an outcome of the
support and encouragement provided by a number of people who contributed their thoughts, expertise
and insights towards the successful completion of this project.

Firstly, I would like to express my deep gratitude to Hindustan Paper Corporation Ltd. for giving me this
valuable opportunity to work on a project of the company. I am grateful to Mr.Cherian Thomas , Head
(HR Dept.) for giving me permission to do this project in his department.

I would like to thanks my Company guide Mr.Govind Kumar, Senior Manager (HR & ES Department) HPC
Ltd. and Faculty guide Dr. Rachana Chattopadhayay IBS Kolkata, who have always supported me.

I would like to extend a deep sense of gratitude to my two more guides Mr. D.P.Satpathy, Manager (HR
& ES Department) and Mr. P.K.Adithian, Senior Executive P.S(HR & ES Department) for their guidance
and suggestions because without them this project wouldn’t have been possible.

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

This guidance, support and co-operation is not only useful for this project only but will be grate constant
source of inspiration for me in the future life.

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Abstract
This study attempts to explore the different compensation structures in different firms of same
industry (the industry in question is Paper Industry). This study also helps us to evaluate the
effectiveness of Collective Bargaining in different firms for setting up compensation for their
workmen.

This project aims to do a comparative analysis of Compensation Management/ Structure for HPC
Ltd. with its counterparts in the same industry, as to draw inferences about the best practices
adopted by HPC Ltd. and other similarly placed companies and to find out the following
hypothesis:-

Ho : “Will HPC Ltd. be able to sustain with this Salary& Wages Structure viz-a-viz Production
realization and number of Employees in the present scenario.”

For this Analysis firstly, I have done proper study on compensation management and then the
compensation structure of HPC Ltd. i.e. revised pay structure effective 1.1.2007, compensation
policies and organizational structure etc. To arrive at conclusion the similar kind of study have
done for other two companies also i.e. Mysore Paper Mills Ltd. and Tamil Nadu Newsprint and
Paper Ltd.

With the help of secondary data what HPC Ltd. and other companies provided, I came to know
that the Methodology/structure used to set up their compensation is “Graded Pay Structure”.
HPC Ltd. has more vertical structure as compare to other two companies.

Percentage (%) to salary & wages to turnover is very high, approximately 19% (2008-09) in case
of HPC Ltd. which should be ideally (7-11)%. Employee Cost/tonne is also high and increasing
day by day. Though HPC Ltd. is paying good salary to its employees/workers as compare to
other companies but it has to take some sincere steps to limit ‘Percentage to salary & wages to
turnover’ to less than 10% and to lower down ‘Employee cost/tonne’.

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

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About Competitor ................................................................................................................................. 34
1. Mysore Paper Mills Limited ........................................................................................................ 34
1.1. Introduction of the MPM Ltd. ..........................................................................................................................34
1.2. Compensation Setup in Mysore Paper Mills Ltd. ..................................................................................35
2. Tamil Nadu Newsprints and Paper Limited ................................................................................. 41
2.1 Introduction of TNPL .................................................................................................................................................41
2.2. Compensation Setup in Tamil Nadu Newsprint and Paper Mills Ltd. ............................................ 42
Comparative Analysis ............................................................................................................................ 47
1. For Workmen............................................................................................................................. 47
2. For Executive ............................................................................................................................. 56
3. Percentage (%) of salary & wages to turnover ............................................................................ 61
4. Employee Cost Per Tonne .......................................................................................................... 64
Conclusion............................................................................................................................................. 67
Recommendations ................................................................................................................................ 68
Bibliography .......................................................................................................................................... 69

List of Illustrations
Figure 1:% Range of each grade for workmen in HPC ltd. ....................................................................... 47
Figure 2: %Range of each grade for workmen in Mysore Paper Mills Ltd. ............................................... 48
Figure 3:%Range of each grade for workmen in Tamil Nadu Newsprints and Paper Ltd. ......................... 49
Figure 4: For TNPL ................................................................................................................................. 61
Figure 5: For MPM ltd. ........................................................................................................................... 62
Figure 6: HPC Ltd. .................................................................................................................................. 62
Figure 7 ................................................................................................................................................. 64
Figure 8 ................................................................................................................................................. 65
Figure 9 ................................................................................................................................................. 65

Table 1: % range in basic pay of HPC ltd. ................................................................................................ 47
Table 2 : % range in basic pay of MPM Ltd. ............................................................................................ 48
Table 3: % range in basic pay of TNPL .................................................................................................... 49
Table 4: for TNPL ................................................................................................................................... 64
Table 5: for MPM ltd.............................................................................................................................. 64
Table 6: for HPC Ltd. .............................................................................................................................. 65
Appendice-1

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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,

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etc. Compensation does not include only salary but it is the sum total of all rewards
and allowances provided to the employees in return for their services. If the
compensation offered is effectively managed, it contributes to high organizational
productivity.

1.3. Need of Compensation Management

 A good compensation package is important to motivate the employees to increase
the organizational productivity.
 Unless compensation is provided no one will come and work for the organization.
Thus, compensation helps in running an organization effectively and accomplishing
its goals.
 Salary is just a part of the compensation system, the employees have other
psychological and self-actualization needs to fulfill. Thus, compensation serves the
purpose.
 The most competitive compensation will help the organization to attract and retain
the best talent. The compensation package should be as per industry standards.

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2. Setting Up-Compensation Structure

Although money isn't everything, it certainly is one of the top issues potential
employees look at when interviewing new companies. Whether a company offering
a straight basic salary structure or an incentive-based pay structure may make
or break you in the eyes of top job candidates. Let's look at how each system works.

A standard base pay program offers fixed salary ranges for each position type
for employees performing the standard duties of their jobs. Set up minimum and
maximum levels within those pay ranges to account for variations in experience and
skill levels. When setting the base pay structure, determine where your company
falls within your own industry as well as competing industries that may also offer
job opportunities for your employees. Set up your pay levels to be competitive, or
else you risk losing employees.

Once your base pay structure is in place, most companies then set up a merit pay
program that will take the employee through the salary range for their position at a
performance-driven speed. This comes into play when the employee's managers do
Annual employee performance reviews. The downside of this is that employees
may begin to see it as a given that they will get a salary increase after each
evaluation, and it ceases to be a motivation to perform better in their jobs.
For this reason, more companies are moving toward more of a “reward-based
compensation” style, also called Incentive Compensation.

Incentive-based compensation is becoming much more common because of the
increased emphasis on performance and competition for talent. This type of
compensation structure significantly helps motivate employees to perform well.
Hiring bonuses are also frequently used now, even for new college graduates.
However, a company might want to tie in a specific time period prior to the
employee collecting this bonus for example-: one-half after six months and the

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remainder after one year of employment. Otherwise, you could run the risk of the
employee departing after that first check, which would defeat your purpose. So the
incentive compensation may be beneficial, if a company’s business is in an industry
where you really have to compete to get good employees.
Setting up an incentive-based compensation program requires the same research
into the desired industry as the base pay program.

Nowadays, most of the companies setup their compensation with combination of
Fixed Pay (base pay) and variable pay (incentives, bonuses and other allowances
etc). But sometimes there is a difference between in the way of setting up
compensation in Private sector companies and in the Public sector companies.

Most of the Private companies establish their base pay levels but slightly lower
and build into that base the annual or quarterly (or any other interval)incentives,
bonuses, commissions, or other types of shared cash compensation.
But in the Public sector companies they usually setup large base pay comparatively
bonus and allowances given to the employees.

Compensation for the employees can be categorized into two-

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

2.1. Executive compensation
Executive compensation is the total remuneration or financial compensation a top
executive receives within a corporation. This includes a basic salary, all bonuses, shares,
and any other company benefits. Over the past three decades, executive compensation
has risen dramatically beyond the rising levels of an average worker's wage. Executive

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compensation is an important part of corporate governance, and is often determined by a
company's board of directors. (wikipedia)

A base salary
long-term incentive plans (LTIP)
employee benefits
perquisites, or perks.

2.2. Worker’s compensation
Worker’s compensation has totally different concept from the executive compensation.
Other than basic wage workers' compensation includes-:

Insurance that provides compensation medical care for employees who are injured in
the course of employment. The tradeoff between assured, limited coverage and lack of
recourse outside the worker compensation system is known as "the compensation
bargain." While plans differ between jurisdictions, provision can be made for weekly
payments in place of wages (functioning in this case as a form of disability insurance),
compensation for economic loss (past and future), reimbursement or payment of
medical and like expenses (functioning in this case as a form of health insurance), and
benefits payable to the dependents of workers killed during employment (functioning in
this case as a form of life insurance). (wikipedia)
Dearness allowance (DA).
Shift allowance.
Washing allowance (job specific).
Location Specific allowance like- Hill Tract allowance [HTA] to the forest staff who work
in difficult location of forest.
Incentives on acquiring professional qualification for the willing workers.

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Overtime wages payment.
Festival advance and etc [many more benefits and facilities].

Worker’s compensation is not decided by one person or a team it is decided on the mutual
understanding of Trade Union and the management which is done through “Collective
Bargaining”.

3. Collective Bargaining
Collective bargaining is the technique that has been adopted by unions and
managements to reconcile their conflicting interest. In organized labor/industrial
relations, collective bargaining involves workers organizing together (usually in unions)
to meet, discuss, and negotiate upon the work conditions with their employers. Such
bargaining normally results in a written contract (collective agreement) setting forth the
wages, working hours and other conditions which the parties agree on for a stipulated
period. “A collective agreement functions as a labor contract between an employer
and one or more unions.” (Mr.P.K.Adithian, 1986)

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

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Mandatory Bargaining Items

Wages Severance pay
Hours of work Non-discriminatory hiring of all
Discharge Plant rules
Arbitration Safety
Holidays, paid Prohibition against supervisor doing unit work
Vacations, paid Super-seniority of union
Duration of agreement Stewards
Grievance procedure Plant close down and relocation
Lay-off plan Job posting procedure
Reinstatement of workers Plant reopening
Change of payment from Employee physical examination
Hourly base to salary base Agreements for negotiation
Union security and check-off Change in insurance benefits
Work rule Profit shares plan
Merit wage increase Over-time pay
Work schedule Agency shop
Lunch period Sick leave
Rest period Employer’s insistence on clause giving arbitration.

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

Transfer Management strikes clause
No strikes clause Cancellation of seniority on relocation of plant
Piece rates Contract clause providing for supervisor’s keeping

Work load Seniority in units
Discount on company products Shift differentials
Procedures for income tax with-holding
(Murlis)

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4. Different Pay structures

A pay structure provides a framework within which an organization defines the
different levels of pay for job or group of job, on the basis of assessments their
relative internal value and of external relativities(market rate). The level of pay in a
structure may have been negotiated for all or some categories of employees.

The most important types of pay structures are as follows:

Graded pay structures.
Broad banding structures.
Job family structures.

4.1. Criteria for pay structures

Pay structures should:

 Be appropriate to the characteristics and needs of the organization: its culture, size
and complexity; the degree to which it is subjected to change and type and level of
people employed;
 Be flexible in response to internal and external pressures, especially those related to
market rates and skill those related to market rates and skill shortage;
 Facilities operational and role flexibility so that employees can be moved around the
organization between jobs of slightly different sizes, without the need to reflect that
size variation by changing rates of pay;
 Give scope for rewarding high-level performance and significant contributions,
while still provide appropriate rewards and recognition for effective and reliable
‘core’ employees who form the majority in most organization.
 Facilitate rewards for performance and achievement;

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 Help to ensure that consistent decision are made on pay in relation to job size,
contribution, skill and competence;
 Clarify pay opportunities, developmental pathways and career ladders;
 Be constructed logically and clearly so that the basic upon which they operate can
readily be communicated to employees;
 Enable the organization to exercise control over the implementation of pay policies
and budgets.

5. Scope of the Project

To know about the best practices adopted by the HPC Ltd. and its private & public
sector counterparts in their compensation structure.
This project also aims to find out the loopholes in the compensation structure of
HPC Ltd. by comparative analysis with other counterparts
This study will help the company to retain their skilled employees and to attract the
new one.
This study will help us to know whether “HPC Ltd. will be able to sustain with this
Salary& Wage Structure viz-a-viz Production realization and number of Employees in
the present scenario.”

6. Methodology

Collection of secondary data from the different companies of the same industry
[Paper Industry].
Personal study.

7. Limitations

Some of the companies are not ready to entertain and disclose their internal data
regarding their Compensation Structure.
Data provided by all other companies other than HPC Ltd. are inadequate.

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INTRODUCTION

TO


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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.

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1. Mission Of HPC

To be a major contributor to the cultural segment in paper industry in terms of volume as
well as quality, production standard, customer services, R&D and technological up
gradation.

To ensure optimum utilization of existing assets to generate maximum internal
resources for renovation, growth and expansion.

To develop professional management culture consistent with the requirement of the
industry to attract, develop and retain committed and skilled workforce with emphasis
on trust and teamwork.

To preserve the ecological balance and explore eco-friendly production process to strike
a harmonious relationship between nature and industry.

To explore and implement technological up gradation of the existing equipment for
improved quality and increasing productivity and for greater cost effectiveness.

To enlarge market channels for perennial supply of all variety of cultural paper and to
ensure customer satisfaction through value addition and constant up gradation of
quality.

To increase utilization of unconventional raw materials and adopt recycling method to
reduce dependence on forest resources for maintaining ecological balance.

To provide adequate thrust on product diversification and manufacture value-added
items like computer stationery, copier paper, S.S. Maplitho, etc. and create a brand equity
for higher profitability and greater market share. (welcome to the world of paper)

Paper for people......
From Bamboo to Books..!!

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2. Product portfolio of HPC Ltd.

Cream wove

Maplitho

Computer stationary paper

Base paper

Copier paper

Offset printing paper

3. End users

Education sector

Large Govt./institutional buyers

Publishing house

Text book printers, diary and calendar printers

Exercise book converter

Newspaper establishment

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4. Projects

HPC has embarked on a Rs.660 crore Modernization and technological Upgradation
Plan(MTUP) covering CPM and NPM including inter-alia, 30% capacity expansion at
NPM.
HPC recently launched a Rs.719 crore Expansion-cum-Diversification project (EDP)
at HNP seeking to add capacity for production of 1,70,000 tpa finer papers making it
close 3,00,000 tpa capacity mill.
All these plans are underway and will be completed phase-wise by this year.

HPC is also seeking to establish a Rs.2500 crore Greenfield 3,00,000 tpa mill in the
Northern india besides overseeing the Rs. 552 crore scheme for revival of the non-
operational mill under the Nagaland Pulp & Paper Company Ltd. (NPPC), Tuli,
Nagaland by doubling the installed capacity to 66,000 tpa . by 2013, the HPC group’s
turnover would touch Rs. 3000 crore.

5. Performance & Achievements of the company

HPC has been able to display a creditable performance both in physical and financial
terms in the last eleven years. Even in the downturn of the market and recessionary
situation HPC is showing its net profit.

5.1. Physical (during last 3 years )

2006-07 2007-08 2008-09

[in tonnes] HPC HNL HPC HNL HPC HNL

Production 208315 112565 211746 116111 175020 108005

Sales 210737 112565 213224 116111 175091 87474

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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 high-
yielding bamboo species.
Initiation of Clean Development Mechanism(CDM) project for availing Carbon
Emission Reduction(CER) opportunity under the Framework Convention for
Climate Control(UNFCCC).
The Company was awarded ISO certification for QMS and EMS.

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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
Previous Scale Revised Scale
Grade Designation
of Pay of Pay
Sch-A CMD Rs.27750-750-31500 Rs. 80000-125000
Sch-B Functional Director Rs.25750-650-30950 Rs. 75000-100000

1.1. Below Board level Executives

Grade Generic Designation PreviousScale of Pay Revised Scale of Pay
E-9 to be notified Rs.23750-600-28550 Rs.62000-80000
E-8 Executive Director Rs.20500-500-26500 Rs.51300-73000
E-7 General Manager Rs.18500-450-23900 Rs.43200-66000
E-6 Deputy General Manager Rs.17500-400-22300 Rs.36600-62000
E-5 Senior Manager Rs.16000-400-20800 Rs.32900-58000
E-4 Manager Rs.14500-350-18700 Rs.29100-54500
E-3 Deputy Manager Rs.13000-350-18250 Rs.24900-50500
E-2 Assistant Manager Rs.10750-300-16750 Rs.20600-46500
E-1 Executive Rs.8600-250-14600 Rs.16400-40500

1.2. Non-unionised supervisor

Revised Scale of
Grade Generic Designation PreviousScale of Pay
Pay
S-2 Senior Supervisor Rs.6550-220-11390 Rs.12600-32500
S-1 Supervisor Rs.6000-200-9200 Rs.11500-29600

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

2.1 A uniform Fitment Benefit @ 30% on basic pay plus DA @ 78.2% as on 1.1.2007 would be
provided to all executives and non-unionised supervisors who are on the rolls of the
Corporation on 1.1.2007 and continue to be in the service of the Corporation as on the date
of issue of this Circular.

2.2 Where executives / non-unionised supervisors drawing pay at two or more consecutive
stages in an Previousscale get bunched, then for every two stages so bunched, benefit of one
increment shall be given.

3.0 Rate of Annual Increment
3.1. Annual Increment will be at the rate of 3% of revised basic pay applicable uniformly for all
grades of executives and non-unionised supervisors and will be rounded off to the next
multiple of Rs.10/-.

4.0 Rationalization of Date of Annual Increment

4.1 Dates of annual increments shall be brought to one standard date for all executives and non-
unionised supervisors i.e. the annual date of increment otherwise due from 1.8.2009 to
1.6.2010 shall be advanced to 1.7.2009.

4.2 In case of those whose annual increments are postponed due to imposition of any penalty on
disciplinary grounds under the prevalent Conduct, Discipline and Appeal Rules and
practices and thus draw annual increment in different months (i.e. other than July), the
annual increment of such personnel will be notionally rationalized on 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.

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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
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

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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
Name of the Cities
with population (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.
50 lakh) etc.
‘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
18.05.2009, as under:

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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.

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.

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13.0 Performance Related Variable Pay (PRVP) Scheme

13.1 The BoD has constituted a Remuneration Committee headed by a Non-Official Part-time
………….Director (Independent Director) and consisting of Director (Finance) and Director
………….(Operations) to conceptualise and operationalise the Performance Related Variable Pay
………….Scheme. The PRVP Scheme based on Performance Management System (PMS) aligned to
………….DPE prescribed parameters is under formulation for implementation w.e.f 1.4.2007. The
………….payment under Performance Related Payment Scheme (PRPS) made for FY 2007-08 will be
………… adjusted against the payment due if any, under the PRVP Scheme that may be put into
………… operation and PRPS will be substituted by PRVP Scheme.

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

14.1 In order to restrict the expenditure on infrastructure facilities, it has been decided that
there will be no subsidy on account of Electricity, Canteen, Transport facilities, etc with
effect from 18.05.2009.

15.0 Car Facilities

15.1 The Company-owned car / hired car would be provided to the CMD / Functional Directors,
Executive Directors and/or Chief Executives of the Mills only. Accordingly, the practice
being followed in the mills for providing vehicles to other executives for picking up and
dropping will be dispensed with and actual cost will be charged as user fee with effect from
18.05.2009.

16.0 Gratuity

16.1 The ceiling for payment of gratuity in respect of executives and non-unionised supervisors
is raised from Rs.3.50 lacs to Rs.10.00 lacs with effect from 1.1.2007.

17.0 PF Contribution

17.1 Deduction of contribution towards Provident Fund shall be made on the revised basic pay
and DA with effect from 1.1.2007.

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

18.1 In terms of DPE OM dated 26.11.2008, the concept of CTC is required to be implemented in
all CPSEs. The entire cost of an executive is explicitly made known by a CPSE; adopting the
system of CTC for the purpose of reporting executive compensation, pay, allowances,
perquisites and retirement benefits should all be monetized and included while reporting
the cost of manpower to the CPSE.

18.2 It is further decided by the Government that where a CPSE has created infrastructure such
………. as township, hospital, school, club etc., the recurring expenditure on maintaining and
…………running these infrastructure facilities would be taken into account. The recurring
…………expenditure should be divided into two parts, based on proportion of total basic pay of
…………executives and non-unionised supervisors and the total basic pay of workmen. The part
………...attributable to the executives and non-unionised supervisors would be reckoned as the
………...expenditure on perquisites and allowances, subject to the condition that the said amount
………...shall be restricted to 10% of basic pay of all executives and non-unionised supervisors
…………within the overall limit of 50% of basic pay.

18.3 The total annualized expenditure towards the instant revision cannot exceed 20% of Profit
…………Before Tax (PBT) for FY 2007-08. The expenditure on running and maintenance of
…………infrastructure has to be within the ceiling of 10% of basic pay

19.0 Other Perks & Allowances

19.1. In terms of DPE OMs referred in (18.1) above, perks and allowances shall be considered for
revision from a prospective date, subject to maximum limit of 50% of revised basic pay.
Other than raising the ceiling of one month’s basic pay and DA for reimbursement of
medical expenses against domiciliary treatment, no modification in Previous allowances
and perquisites will be considered except those mentioned hereinabove. The Previous
perks and allowances viz., reimbursement of conveyances expenses, tuition fee, family
planning incentive, LTC, company leased accommodation (applicable for key officials in pay
grade E-6 and above), night shift allowance for supervisors and tea allowance (wherever
applicable) will continue to be regulated as per Previous entitlement / rates as admissible
under the extant rules till further orders.

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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.

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2. Negotiation through Collective Bargaining in HPC ltd.

The first meeting between the Management Representatives of HPC and Representatives of the
recognized Unions was held on 17.04.2007 based on Charter of Demands submitted by Unions
who were recognized at that point of time.
Subsequently, based on the discussions held in the meeting, the said unions submitted a
common Charter of Demands vide their letter dated 19.04.2007. Thereafter, meetings were held
on 14.07.2007 and 12.12.2007.
However, regular meetings with the Unions continued for almost one year and the next meeting
was held at Guwahati on 15.12.2008, where the newly elected Union i.e., Cachar Paper Project
Workers’ Union (INTUC), which got recognition through the process of referendum held in
October, 2008, also participated.
As this Union was recognized subsequently, it submitted the Charter of Demand separately vide
letter dated 12.12.2008. However, other Unions insisted on continuing the negotiations based
on the common Charter of Demands submitted by them on 19.04.2007.
Accordingly, the matter was discussed in the meeting and all the four Unions decided
unanimously to continue discussions based only on the common Charter of Demands submitted
on 19.04.2007. It was also clarified to the Unions that the pay, perquisites and benefits would be
monetized and the personnel cost would be based on Cost to Company (CTC). Subsequently, a
series of meetings were held on 07.01.2009, 28.01.2009, 26.02.2009, 26.05.2009 and
01.06.2009 at Guwahati / Kolkata on the common Charter of Demands.

The final discussions between the representatives of the Management and recognized Unions
were held from 08.06.2009 to13.06.2009 at Kolkata and the parties have signed an MoU on
some terms & conditions which would be implemented after obtaining approval of the Board of
Directors of HPC and the GoI i.e. revised Scale of pay [pay structure 2007]. (ltd., 2007)

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

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

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

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

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

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

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

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

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

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

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

2.0 Fixation of Pay in the Corresponding Revised Scales of Pay

2.1 A uniform Fitment Benefit @ 30% on basic pay plus DA @ 78.2% as on 01.01.2007 would
be provided to all workmen who are on the roll of the Corporation on 01.01.2007 and
continue to be in the service of the Corporation as on the date of signing of the
Memorandum of Settlement.

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3.0 Rate of Annual Increment

3.1 Annual Increment will be at the rate of 3% of revised basic pay applicable uniformly for all
grades of workmen and will be rounded off to the next multiple of Rs.10/-.

4.0 Stagnation Increment

4.1 The rate of stagnation increment will be 3% of the revised basic pay and workmen will be
allowed to draw maximum three stagnation increments, one after every two years, upon
reaching the maximum of the revised pay scale provided the workman gets a performance
rating of ‘Good’ or above.

5.0. Pay Fixation on Promotion

5.1. Accordingly, one notional increment @ 3% in pre-promoted pay scale would be granted and
………..the resultant figure so arrived at after rounding off to next multiple of Rs.10/-, would be the
………..revised basic pay in the promoted grade / scale of pay.

6.0 Dearness Allowance (DA)

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

The quarterly DA payable from 01.04.2007 will be as under:

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

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6.2 Basic Pay, Dearness Pay and Dearness Allowance already paid from January 2007 under
1997 pay structure would be adjusted against the arrears payable after implementation of
revised pay structure (2007).

7.0 Local Travelling Expenses (LTE)

7.1 The reimbursement of LTE will be Rs. 20/- per day for those who reside within a radius of
10 Kms and Rs.40/- per day for those who reside beyond the radius of 10 Kms from the
place of duty, on actual attendance basis.

7.2 As regards reimbursement of LTE for attending duty on holidays / weekly off days, the
following procedure will be followed.

a) In case an employee is allowed Compensatory Off in lieu of overtime, he will be
reimbursed LTE at the prescribed rate @ Rs.20/- or Rs.40/- per day as the case may be,
for the day he attends duty.
b) No reimbursement of LTE will be admissible if the employee is paid overtime allowance
on attending duty on any holiday / weekly off day.

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

8.0 Reimbursement of Conveyance Expenses

8.1 The reimbursement of Conveyance Expenses for maintaining Two-Wheeler (Scooter / Motor
Cycle) will be Rs.1050/- per month for all grades of workmen with effect from 03.08.2009.

8.2 The special conveyance allowance for PWD will be double the rate of LTE as mentioned at
para 7.1 above with effect from 03.08.2009.

9.0 Reimbursement of Education / Tuition Fee for Children

9.1 Reimbursement of Education/Tuition Fee including Vidyalaya Vikas Nidhi (VVN) as prevalent
in Kendriya Vidyalaya and admission fee or any other subject fee (like science/laboratory
fee, computer fee, library fee, music fee and games/sports fee) will be sanctioned at actuals
limited to Rs.350/- per child per month on specific declaration of the workmen supported
by a Certificate from the Head of the Institution. This will apply to students studying in
Nursery to Class XII subject to the condition that this is payable to the institution(s) which

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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
Name of the Cities
with population (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
50 lakh) etc.
‘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.

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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.

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.

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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/-

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 Revised Rate of Family

Grade Pay Scales (1997) Pay Scales (2007) Planning Allowance (p.m)

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

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

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

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

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

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

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

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

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

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

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

19.0 Incentive on acquiring professional qualification

19.1 The quantum of incentive being drawn by the employees under pre-revised pay scale (1997)
will be dispensed with from 03.08.2009 and hitherto the Incentive Scheme stands
withdrawn.

20.0 Funeral Expenses and death Relief Fund

20.1 In case of death of an employee, an amount of Rs.3000/- or as admissible under the
Workmen’s Compensation Act, 1923, whichever is higher, will be paid by the Corporation
on account of Funeral Expenses.

20.2 A matching contribution limited to Rs.100/- per member employee under the Death Relief
Fund (DRF) Scheme as in vogue in the respective units, shall be made by the Corporation.

21.0 Gratuity

21.1 The ceiling for payment of Gratuity will be raised from Rs.3.50 lakh to Rs.10.00 lakh with
effect from 01.01.2007.

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22.0 Gratuitous Payment in case of Death / Permanent Total Disability

22.1 The ceiling of gratuitous payment is of Rs.3 lakh. The monthly total income of dependent
family members will be revised from Rs.4,199/- to Rs.7,499/-. These enhanced ceilings will
be applicable with effect from 03.08.2009.

23.0 Performance Related Variable Payment (PRVP) Scheme

23.1 The PRVP will be directly linked to the performance of the workmen and percentage ceiling
of PRVP will be 20% of the basic pay. The ‘Bell Curve Approach’ will be adopted in grading
the workmen so that not more than 5% workmen are ‘Outstanding / Excellent’, 40% ‘Very
Good’, 45% ‘Good’ and 10% ‘Average’. The workmen rated ‘Poor’ will not be eligible for any
PRVP.

23.2 The PRVP applicable for ‘Outstanding / Excellent’ performers will be 100% of the ceiling
prescribed (i.e, 20% of basic pay). Similarly, in case of ‘Very Good’, ‘Good’ & ‘Average’
performers, the PRVP will be 80%, 60% & 40% respectively of the prescribed ceiling of
20%.

24.0 Festival Advance

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

25.0 School Re-opening Advance

25.1 A recoverable advance of Rs.4,000/- will be sanctioned to the workmen once in a calendar
year whose children are studying upto Class XII. It will be paid to those workmen who have
at least Rs.3,000/- net pay in the previous month.

26.0 Payment of Arrears

26.1 Those who ceased to be in the service of the Corporation with effect from 01.01.2007 and up
to the date of implementation of revised pay structure, owing to retirement /
superannuation, separation on account of resignation, continued ill-health duly accepted by
the Competent Authority or death while in service will be eligible for payment of arrears on
a pro-rata basis, whenever due.

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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.

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B. For Executives- Current Scale of Pay

Grade Pay Scale (Rs.) on previous pattern
Gr-1 4650-240-5850-270-7200-300-8700-330-10350-360-12150-390-14100-420-16200
Gr-2 5850-270-7200-300-8700-330-10350-360-12150-390-14100-420-16200-450-18450
Gr-3 7200-300-8700-330-10350-360-12150-390-14100-420-16200-450-18450-480-
20850
Gr-4 8700-330-10350-360-12150-390-14100-420-16200-450-18450-480-20850-510-
23400
Gr-5 10350-360-12150-390-14100-420-16200-450-18450-480-20850-510-23400-540-
26100
Gr-6 12150-390-14100-420-16200-450-18450-480-20850-510-23400-540-26100-570-
28950
Gr-7 14100-420-16200-450-18450-480-20850-510-23400-540-26100-570-28950-600-
30150
Gr-8 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.].

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B.2. House Rent allowance

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

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

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

B.3. Medical Reimbursement

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

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

B.4. Night Shift Allowance

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

B.5. Leave Encashment

Officers are permitted to encash upto 30 days PL at their credit every year or 60 days PL at
their credit once in a block period of 2 years w.e.f Block period of 2005-06. (mills, 2007)

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2. Tamil Nadu Newsprints and Paper Limited
2.1. Introduction of TNPL
Tamil Nadu Newsprint and Papers Limited(TNPL) was established by the Government of Tamil
Nadu during early eighties to produces Newsprint and Printing & Writing Paper using bagasse,
a sugarcane residue, as primary raw material. The company commenced production in the
year1984 with an initial capacity of 90,000 tonnes per annum

Over the years, the production capacity has been increased to 2,45,000 tonnes per annum and
the Company has emerge as the large bagasse based Paper Mill in the world consuming about
one million tones of bagasse ever year.

The Company is in the process of implementing the Mill Expansion Plan for increase the
capacity to 4,00,000 tonnes per annum from July 2010.

Products
TNPL offers high-quality surface sized and non-surface sized paper to suit the needs
modern high speed printing machines.
TNPL manufactures Printing and writing Papers in substances ranging from 50 GSM to 90
GMS.
As the paper is acid free, it has longer color stability and enhanced permanency in terms of
strength characteristics.
The paper reels have uniform profile with strength properties to cope even with high speed
machines.
The Company caters to the requirements of multifunctional printing processes like- sheet-
fed , web-offset and digital printers. (TNPL)

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

A.1 Scale of Pay

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

A.2. Dearness Allowance

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

b). V.D.A –

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

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

Basic pay from 25001 and above 0.36% of basic pay every 8 point increase over 2680 point upto
Rs.25000/- + 0.18% over Rs. 25000/-

A.3. House Rent Allowance (HRA)

Grades Branches Other Places Employees 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

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A.4. City Compensatory Allowance (CCA)

Grades Amount (Rs.)
Asst. Officer 650
Officer 800
AM to Manager 1000
Sr. Manager 1200
AGM and DGM 1400
GM and above 1600

A.5. Conveyance Reimbursement

DM and above:

Car = Rs. 3000/-

Scooter/Motorcycle= Rs. 1350/-

Moped = Rs. 750/-

A.O to A.M

Scooter/ Motorcycle = Rs.1350/-

Moped = Rs.750/-

A.6. Children Education Allowance

Grades Amount per child
A.O and Officer Rs. 100/-
A.M to D.M Rs. 125/-
Manager and above Rs. 150/-

Subject to maximum of 2 children

A.7. Offsite Allowance

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

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

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A.8. Free Electricity(for company quarter)

Grades No. of units per month
DGM and above 300
AGM 120
DM to Sr. Manager 90
Officer and A.M 70
Asst.Officer 50

A.9. Family Planning Incentive

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

A.10. Leave Encashment and Leave Credit

Encashment of Privilege Leave (PL), normally allowed to 15 days per year. However, if an
employee not encashing PL in the previous years the accumulation of 15 days per year is
allowed.

PL : 30 days per annum

PL accumulation day : Maximum 240 days

Sick Leave(SL) :10 days per annum

SL accumulation: No limit

Casual leave(CL): 10 days per annum

A.11. LTC

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

A.12. Funeral Expenses

Rs.5000/-

A.13. Other Benefits

Festival advance

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

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

Sweet distribution for Deepawali and Ayudha Pooja.

44 | P a g e

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