A STUDY ON

COMPENSATION MANAGEMENT

WITH REFERENCE TO
LEELAKRISHNA AUTO MOBILES Pvt Ltd,
VISAKHAPATNAM
A Project report
Submitted to the Department of Management Studies,
ADITYA DEGREE COLLEGE, KAKINADA.
In a Partial Fulfilment for the Award of the Degree of

BACHELOR OF BUSINESS ADMINISTRATION

BY
SAKALABATTULA.BHAGYALAXMI
[B.B.A FINAL YEAR]
Regd.no: 150378300164
Under the Guidance of

Mr.Md.SHAIDDEN
M.H.R.M. M.B.A. (Ph.D.)

ASSOCIATE PROFESSOR DEPARTMENT OF MANAGEMENT STUDIES

ADITYA DEGREE COLLEGE

Accredited by NAAC with B++ Grade
(AFFLIATED TO ADIKAVI NANNAYA UNIVERSITY)
KAKINADA
(2015-2018)
 DEPARTMENT OF MANAGEMENT STUDIES

ADITYA DEGREE COLLEGE

(AFFILIATED TO ADIKAVI NANNAYA UNIVERSITY)

KAKINADA
(B.B.A. Programme)
CERTIFICATE

This is to certify that the project entitled A Study on

COMPENSATION MANAGEMENT with reference to
LEELAKRISHNA AUTO MOBILES Pvt Ltd, VISAKHAPATNAM is a
bonafide work of S.BHAGYALAXMI submitted in the partial
fulfillment of the requirement for the award of the Degree of Bachelor
of Business Administration by Adikavi Nannaya University
Rajamahendravaram.

PROJECT GUIDE HEAD OF THE DEPARTMENT

External Guide
 DECLARATION
This is to certify that the Report work entitled A STUDY ON “COMPENSATION
MANAGEMENT” with reference to LEELAKRISHNA AUTO MOBILES Pvt Ltd,
VISHAKAPATANAM submitted to Adikavi Nannaya University, Rajamahendravaram is a
record of an original work done by me under the guidance of MR.MD.SHAIDDEN. This
project work is submitted to the fulfillment of the requirements for the award of the Degree of
Bachelor of Business Administration (BBA). The results embodied in this thesis have not
been submitted to any other university or Institute for the award of any Degree or Diploma.

Station:

Date:

S.BHAGYALAXMI.
 CERTIFICATE
This is to certify that the report work entitled, A STUDY ON “COMPENSATION
MANAGEMENT” with reference to LEELAKRISHNA AUTO MOBILES Pvt Ltd,
VISHAKAPATNAM. Is a bonafied work done and submitted by SAKALABATTULA.
BHAGAYALAXMI, ADITYA DEGREE COLLEGE in partial fulfillment of the
requirements for the award of BACHELOR OF BUSINESS ADMINISTRATION
(HUMAN RESOURCE MANAGEMENT) and completed successfully.

Station:

Date:

(MR. MD SHAIDDEN.)
 ACKNOWLDGEMENT

I feel it is my duty and honour to acknowledge all those who have extended their guidance
and warm support in completing my report.

Firstly, it is my privilege to thank SRI.N.SESHA REDDY, chairman, Aditya group of

institutions for providing state-of-the-Art facilities, experienced and talented faculty
members.

Secondly, I thank SRI.B.E.V.L.NAIDU, Principal, Aditya Degree College, Kakinada, for

his continuous support and encouragement in my Endeavour.

Thirdly, I am grateful to SMT.S.SUMA, Head of the Department, Management studies,

Aditya Degree College, Kakinada for giving an opportunity to do my project in an esteemed
organization.

This is a great pleasure for me to be assigned under the guidance of Mr.MD.

SHAIDDEN ,Associate Professor of Aditya degree college Kakinada, I am very grateful to
him for all his kind cooperation and guidance in preparing this project paper. His valuable
suggestions & guidelines helped me a lot to prepare this report in a well-organized manner.

I wish to record deep sense of gratitude and indebtedness to MR. VV.SUNIL ADIRAJU,
HR MANAGER,” LEELA KRISHNA TOYATA” VISHAKAPATNAM, for his most
valid suggestions and assistance in completing my report work successfully for providing all
the facilities and guiding me where ever necessary.

I would also like to thank the authority of LEELAKRISHNA AUTO MOBILES Pvt Ltd,
for helping me by giving an opportunity to work with them.

Finally I would like to express my deep sense of gratitude to my beloved parents without
whose support and encouragement, I would not have finished this work. I also express my
sincere thanks to friends and well-wishers too who helped me in preparing the project work
and made me to present it within time.

S.BHAGYALAXMI
 CONTENTS

CHAPTERS PARTICULARS

Introduction

Need for the study

CHAPTER 1
Scope of the study

Objectives of the study

Methodology of the study

Limitations of the study

CHAPTER 2 Industry profile

CHAPTER 3 Company profile

CHAPTER 4 Theoretical Framework

CHAPTER 5 Data analysis and interpretation

Findings

CHAPTER 6 Suggestions

Conclusion

Bibliography
ANNEXURE
Questionnaire
 CHAPTER-1
INTRODUCTION
 INTRODUCTION

Human Resource Management (HRM) is a relatively new approach to process, which

consist of four main activities, namely, acquisition, motivation, development, as well as
maintenance of human resources.

People are considered the key resource in this approach. It is considered with the people
dimension in management of an organization. Since an organization is a body of people, their
acquisition, development of skills, motivation for higher levels of attainments, as well as
ensuring maintenance of their level of commitment are all significant activities. These
activities fall in the domain of HRM.

Human Resource Management as that branch of management which is responsible on a staff

basis for concentrating on those aspects of operation which are primarily concerned with the
relationship of management to employees and employees to employees and with the
development of the individual and the group.

Human Resource Management is responsible for maintaining good human relations in the
organization. It is also concerned with development of the individuals and achieving
integration of goals of the organization and those of the individuals.

Human Resource Management is a very popular and highly competitive career with graduate
schemes being among the most oversubscribed. Your level of HR focus will vary from
scheme to scheme. With some being based purely within the HR department and others
expanding candidates experience to other functions such as marketing, management and
more.

Human Resource Management has a great scope for specialism and development within a
particular HR function (e.g development, equity and diversity, recruitment and selection, etc.)
and with extra responsibility and remuneration.

In startup companies, trained professionals may perform HR duties. In larger companies, an

entire functional group is typically dedicates to the discipline, with staff specializing in
various HR tasks and functional leadership engaging in strategic decision –making across the
business.
Many great scholars had defines Human Resource Management in different ways and with
different words, but the core meaning of the human resource management deals with how to
manage people or employee in the organization.

According to EDWIN FLIPPO-HRM as “planning, organizing, directing, controlling of

procurement, development, compensation, integration, maintenance and separation of human
resource to the end that individual, organizational and social objectives are achieved”.

According to DECENZO and ROBBINS, “HRM is concerned with the people dimension”
in management. Since very organization is made up of people, acquiring their services,
developing their skills, motivating them to higher levels of performance and ensuring that
they continue to maintain their commitment to the organization is essential to achieve
organization objectives. This is true, regardless of the type of organization- government,
business, education, health or social action.

IMPORTANCE OF HUMAN RESOURCE MANAGEMENT

An organization cannot build a good team of working professionals without good Human
Resources .the key functions of the Human Resources Management team include recruiting
people, training them, performance appraisals. Motivating employees as well as workplace
communication, work place safety and much more. This is the importance Human Resource
Management.
COMPENSATION MANAGEMENT

Employees’ compensation is one of the major determinants of employee satisfaction in an

organization. The compensation policy and the reward system of an organization are viewed
by the employee as indicators of the management’s attitude and concern for them. It is not
just the compensation in tote, but its fairness as perceived by the employees that determines
the success of a wage and salary administration system.

Hence, it very important for the management to design and implement its compensation
system with utmost care and tact. A good wage and salary administration should be able to
attract and retain employees, give them fair deal, keep the organization competitive and
motivate employees to perform their best. Wage and salary determination and its
administration has always remains sensitive issue for an organizational management, since
employees moral, motivation, productivity and their relationship with the management more
or less associated with the compensation management system.

The payment of wages and salary is an inbuilt system with human force of their activity
performed. To what extent the payment of wages & salary is reasonable and adequate in
consonance to the nature of the work performed, is a question mark. The reason attributed, is
the existence of very large labor force and availability of abundant work force whether it is a
farm sector of industrial sector. The supply of labor is more than the demand and with the
result there is exploitation of cheap labor policy. Later the advent of trade unionism helped to
improve the working conditions of labor. Until the Second World War, event the government
adopted a “LAISSEZ- FAIRE” policy in this regard. It was as late as in 1947, that the
industrial unrest become so uncontrollable that a tripartite conference was convened of (1)
central and state govt. (2) employers and (3) employees, which resulted in the industrial trade
resolution. It was realized that increase in production was not possible without the fullest
cooperation between management and labor. This led to appointment of the fair wages
committee and profit sharing bonus sharing committee. Thus, the lot of the worker began to
improve of the living.

Payments made to labor is generally referred to as wages .Money paid periodically two
persons whose output cannot to be easily measured, such as clerical staff as well as
supervisory and managerial staff, is referred to as salaries .Salaries are the spade generally on
a monthly basis and at the times the elements of incentive is introduced in the form of
commission, for example .paid to salesman in addition to their salaries. However, it is in area
of labor that there are several types of methods of wages payment.
 NEED FOR THE STUDY

The provision of wages and salaries beyond the statutory requirement can make the
employees feel that they are carried by the management. This positive feeling can help to
draw a better commitment and coordination from them.

Wages and salaries contribute the economic development by modeling workers in to a

productive, efficient and committed labor force. It is an important factor of industrial
relations. Wages and salary administration must well planed and organized by qualified
leadership aimed at meeting minimum needs of the employees. So, in a long way promotion
Sound industrial relations and building up a strong national economy.
 SCOPE OF THE STUDY

The scope of the study is restricted to Compensation Management at leela Krishna Toyota
Visakhapatnam. This study is restricted with a sample size of 50 employees from various
departments like HR (03), Marketing (15), Service department (25), and Finance (7).
 OBJECTIVES OF THE STUDY

 To study about the company and industry profile of the study with respect to automobiles
segment.
 To find out who handles the compensation department of leela Krishna Automobiles,
Visakhapatnam.
 To find out whether the employees are satisfied with their pay.
 To analyse whether there is different types of compensation for different types of service.
 To study whether the employees get any fringe benefits offered by Leela Krishna Toyota
management, Visakhapatnam.
 To analyse the reason of leela Krishna Toyota for the prompt payment of salaries to their
employees.
 METHODOLOGY OF THE STUDY

Data is the main important source of the project and the aim of this activity, is to provide
sufficient data on the Wages and Salary. This is achieved by means of improvement of
knowledge and practical skills regarding to this study and it conduct short-term surveys on
labor remuneration and survey on wages structure. The data pertaining to the study is both
primary and secondary data.

PRIMARY DATA:

It is the information and data that was directly collected from the sources such as personal
interviews, questionnaires or surveys on the Compensation Management.

This primary data information is collected by interacting with the HR Executive of Leela
Krishna Toyota automobiles pvt.ltd, Visakhapatnam.

The sample size of the questionnaires is 50. That means the information is collected from 50
employees on this study.

SECONDARY DATA:

Secondary data was collected from the already published sources. The secondary data is
collected from the company website and records of the company.
 LIMITATIONS OF THE STUDY

1. The study is generalised and the respondents are chosen random due to various
factors like busy respondents.
2. The time period was not sufficient for the study.
3. Getting an option for question was found difficult.
4. The sample was restricted to 50 employees.
5. The managers of the organisation are busy with their busy schedule; it was
difficult to collect detailed data.
 CHAPTER-2
INDUSTRY PROFILE
 INDUSTRIAL PROFILE

AUTOMOBILE INDUSTRY

The Indian auto industry is one of the largest in the world. The industry accounts for
7.1 per cent of the country's Gross Domestic Product (GDP). The Two Wheelers segment
with 80 per cent market share is the leader of the Indian Automobile market owing to a
growing middle class and a young population. Moreover, the growing interest of the
companies in exploring the rural markets further aided the growth of the sector. The overall
Passenger Vehicle (PV) segment has 14 per cent market share.
India is also a prominent auto exporter and has strong export growth expectations for
the near future. Overall automobile exports grew 13.01 per cent year-on-year between April-
December 2017. In addition, several initiatives by the Government of India and the major
automobile players in the Indian market are expected to make India a leader in the 2W and
Four Wheeler (4W) market in the world by 2020.

MARKET SIZE
Production of passenger vehicles, commercial vehicles, three wheelers and two
wheelers grew at 11.27 per cent year-on-year between April-December 2017 to 21,415,719
vehicles. The sales of passenger vehicles and two wheelers grew by 5.22 per cent and 40.31
per cent year-on-year respectively, in December 2017.
The auto industry is set to witness major changes in the form of electric vehicles
(EVs), shared mobility, Bharat Stage-VI emission and safety norms. Electric cars in India are
expected to get new green number plates and may also get free parking for three years along
with toll waivers@. India's electric vehicle (EV) sales increased 37.5 per cent to 22,000 units
during FY 2015-16 and are poised to rise further on the back of cheaper energy storage costs
and the Government of India’s vision to see six million electric and hybrid vehicles in India
by 2020.
\
INVESTMENTS
In order to keep up with the growing demand, several auto makers have started
investing heavily in various segments of the industry during the last few months. The
industry has attracted Foreign Direct Investment (FDI) worth US$ 17.91 billion during the
period April 2000 to September 2017, according to data released by Department of Industrial
Policy and Promotion (DIPP).
Some of the recent/planned investments and developments in the automobile sector in India
are as follows:

 The only electric automaker in India, Mahindra and Mahindra Ltd, has partnered with
Uber for deploying its electric sedan e-Verito and hatchback e2o Plus on Uber
platforms in New Delhi and Hyderabad.
 Vedanta Resources Plc is planning to invest around US$ 9 billion in India and create
more than a million direct or indirect jobs in the country.

GOVERNMENT INITIATIVES
The Government of India encourages foreign investment in the automobile sector and allows
100 per cent FDI under the automatic route.
Some of the recent initiatives taken by the Government of India are -

 The Government of Karnataka is going to obtain electric vehicles under FAME

Scheme and set up charging infrastructure across Bengaluru, according to Mr R V
Deshpande, Minister for Large and Medium Industries of Karnataka.
 The Ministry of Heavy Industries, Government of India has shortlisted 11 cities in the
country for introduction of electric vehicles (EVs) in their public transport systems
under the FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric
Vehicles in India) scheme.
 Energy Efficiency Services Limited (EESL), under Ministry for Power and New and
Renewable Energy, Government of India, is planning to procure 10,000 e-vehicles
via demand aggregation, and has already awarded contracts to Tata Motors Ltd for
250 e-cars and to Mahindra and Mahindra for 150 e-cars.
 The government is planning to set up a committee to develop an institutional
framework on large-scale adoption of electric vehicles in India as a viable clean
energy mode, especially for shared mass transport, to help bring down pollution
level in major cities.
ROAD AHEAD
The automobile industry is supported by various factors such as availability of skilled
labour at low cost, robust R&D centres and low cost steel production. The industry also
provides great opportunities for investment and direct and indirect employment to skilled and
unskilled labour.
The Indian automotive aftermarket is estimated to grow at around 10-15 per cent to reach
US$ 16.5 billion by 2021 from around US$ 7 billion in 2016. It has the potential to generate
up to US$ 300 billion in annual revenue by 2026, create 65 million additional jobs and
contribute over 12 per cent to India’s Gross Domestic Product.
Exchange Rate Used: INR 1 = US$ 0.015 as of January 4, 2018

ORGANISED AUTO SECTOR IN INDIA

While the Original Equipment Manufacturers (OEMs) are at the
top of the auto supply chain, it should be noted that there are a few OEMs in India which
supply some components to other OEMs in India or abroad. Most of the Indian OEMs are
members of the Society of Indian Automobile Manufacturers (SIAM), while most of the Tier-
1 auto component manufacturers are members of the Automobile Component Manufacturers’
Association (ACMA). All of them are in the organized sector and supply directly to the
OEMs in India and abroad or to Tier-1 players abroad. Tier-2 and Tier-3 auto component
manufacturers are relatively smaller players.
Though some of the Tier-2 players are in the organized sector,
most of them are in the unorganized sector. Tier-3 manufacturers include all auto component
suppliers in the unorganized sector, including some Own Account Manufacturing Enterprises
(OAMEs) that operate with one working owner and his family members, wherein
manufacturing involves use of a single machine such as the lathe.
Auto-component manufacturers cater not only to the OEMs, but
59 also to the after-sales market. In the recent years, there has been a rapid transformation in
the character of the automotive aftermarket, as a fast maturing organized, skill-intensive and
knowledge driven activity. Hence, the auto industry in India possesses a very diverse and
complex structure, in terms of scale, nature of operation, market structure, etc. While output,
emoluments and Gross Value-Added (GVA) have been growing in both the automobile and
auto-component industries, employment is on the rise in the latter and it is declining in the
former fall in employment despite growth in total emoluments is a matter of concern in the
automobile sector. This also indicates that the real labor costs are increasing. The growth rate
in gross value-added has been quite impressive in both sub-sectors, more so in the automobile
manufacturing sector.

UNORGANISED AUTO SECTOR IN INDIA

The unorganized sector consists of enterprises that are not registered under
certain sections of the Factories Act.20 In this section, data on the unorganized
manufacturing sector from the National Sample Survey Organization (NSSO) is used. The
unorganized auto sector in India has grown in terms of number of enterprises, employment,
output, capital, capital intensity and labor productivity. However, capital productivity has
fallen considerably. Very similar trends are observed in OAME, NDME and DME21 in rural
and urban areas. However, it is evident that the growth of this sector has been quite low in the
rural areas than in the urban areas. Rural-urban disparities are even more striking. It is clear
that the rural unorganized sector is very small compared to its urban counterpart in the auto
industry. However, rural areas still have a major part of OAME. Thus, it could be inferred
that only tiny players, even among the smaller firms under the unorganized sector, prefer
doing business in rural areas.
These observations point 60 towards the importance of making rural
areas more attractive for all industries, including the auto industry, by enhancing
infrastructure and introducing incentives, given the current levels of urban congestion and
corresponding infrastructure bottleneck. While the share of employment of the unorganized
auto sector in the entire auto industry has grown from 16 per cent in 1994-95 to 30 per cent in
2000-01, the share of the unorganized auto sector in total value of auto output has grown only
from 2 per cent to 3 per cent.
The share of the unorganized auto sector in total capital stock
employed in the auto industry has grown from 4 per cent to 8 per cent, during this period. In
2005-06, the number of enterprises in the unorganized sector was about 10 times higher than
that in the organized sector.

EVOLUTION OF THE POLICY FRAMEWORK

The Indian auto policy has generally been in line with the prevailing
industrial policy framework. During the British regime, India had no auto industry to begin
with and all the automobiles were imported from the global auto manufacturers such as
General Motors and Ford Motors. In the 1940s, Hindustan Motors and Premier Motors were
established by Indian entrepreneurs, by importing know-how from General Motors and Fiat
respectively. In the 1950s, a few other companies such as Mahindra and Mahindra, Ashok
Motors (with Technical Collaboration with Leyland Motors) and Bajaj Auto entered the
market for commercial vehicles and two-wheelers. Most of them either imported auto-
components or produced them in-house, till mid-1950s, when India launched import
substitution programme.
This development, followed by the L.K. Jha Committee’s
recommendations in 1960 to develop an indigenous ancillaries sector, resulted in the
evolution of a separate auto-component sector. From being a highly protected segment pre-
1980s, the auto-component industry in India has emerged into a global player, supplying not
only to domestic firms but also to numerous foreign Original Equipment Manufacturers
(OEMs). Till 1991, the Phased Manufacturing Programme (PMP), under which domestic
OEMs had to increase the proportion of domestic inputs over a specific time period, had laid
foundation for the Indian 61 auto-component sector.
However, assured demand for their products had rendered many
players in this sector inefficient. This led to abolition of this programme under the New
Industrial Policy of 1991. Passenger car segment was restricted by licenses, but to licensed
production. Commercial vehicles and two-wheelers were also restricted the extent of
restrictions was less and hence there were quite a few new entrants in these segments in the
1980s, especially in the CV segment. The reforms of 1991, followed by the entry of global
OEMs and Tier-1 suppliers in India, paved the way for expansion of range, technologies and
number of auto-component manufacturers.
This led to a major transition in the Indian auto industry, wherein the
vehicle manufacturers started outsourcing most of their components from the auto component
manufacturers. Ever since the delicensing of passenger car segment in 1993, the Indian auto
industry has grown bigger, with new international players entering the market. Since 2000,
there have been many significant policy developments such as removal of Quantitative
Restrictions (QRs) on auto imports and permission for 100 per cent FDI. Financial
liberalization in the early 1990s enhanced credit availability to consumers and this, in turn,
led to a boost of auto loans in India, which was a key driver of demand for automobiles. This
facilitated the transition of passenger cars from being regarded as luxury goods, accessible
only for the elites, to necessary goods, accessible to a wider section of the society.
 Since 2000, India has been observing a Safety Decade. Efforts have
been made for aligning Indian safety standards with global ones. Roadmap has been prepared
till 2007 for safety standards, while an outline has been drawn till 2010. The National Road
Safety Board is under active consideration by the government, which will be responsible for
road-related measures, vehicle-related measures and research on road safety. One of the
major measures, which is likely to be implemented in the near future, is the measurement of
road-worthiness of vehicles, based on which a regulatory body under the government may be
engaged in certifying, whether a motor vehicle is road-worthy or not, in terms of emissions
and 62 safety. Auto policy, 2002, stresses on the need to provide direction to the growth and
development of the auto industry in India.
This policy document resulted in reduction of duties in the auto-
component sector to a large extent and the automobile sector to some extent and extension of
R&D incentives to the auto sector. R&D thrust by the government can be inferred from the
recent measures such as 150 per cent weighted deduction on R&D expenditure and increased
R&D budget allocation for this sector. In 2005- 06, a few major policy developments relevant
for the auto sector took place in India. Implementation of VAT has taken place in a few
states. Euro III emission norms have been introduced in 11 metro cities and at the same time,
the Euro II norms have been implementation in rest of the cities. These norms have been
delayed for the diesel vehicles due to the unavailability of fuel. Therefore, the government
has decided to implement these norms58 in phased manners in selected northern states.
Finance Bill 2006 reduced excise duty of motor vehicles to 12.5
percent against 15 per cent before and import duty of raw materials to 5- 7.5 per cent against
10 per cent before and has given a thrust to the development of infrastructure, which is the
key factor influencing auto industry, both as a driver of demand59 and as a facilitator of
enhancing competitiveness in manufacturing of auto products. The introduction of above
mentioned norms, in addition to safety and noise norms have led to the increase in the
workload on the Automotive Research Association of India (ARAI) testing facilities.
Keeping this in mind, the Government of India has made various efforts to improve the
testing facilities.
These include the approval of two proposed additional testing
facilities, up gradation of the ARAI & Vehicles Research and Development Establishment
(VRDE), establishment of a world class test track and building of a few additional centers
under the NATRIP in and around the major auto hubs in India. This is an industry-
government joint initiative, involving an investment of Rs. 1,718crore. The additional centers
would be set up in Manesar, Pune, Ahmednagar, Chennai and Indore. More on emission
norms is covered in Section 7.2. For example, when there is a better road network, it is more
likely that demand for automobiles increases among the people. With better roads and power
availability and quality, for example, the firms will be able to reduce their costs of
transportation and production, as well as improve their product quality.
Efforts have also been made to promote alternative fuels. For this, the following three
initiatives have been launched:
1. Agreement with the sugar industry on the off-take of ethanol has been made.
2. An action plan has been prepared to grow and procure bio-diesel at fixed price.
3. Hydrogen energy roadmap has been prepared by Rattan Tata. According to this roadmap,
10lakh hydrogen-fuelled vehicles has been produced by 2010. The accession to the UNWP
(United Nations Working Party) 1998 is another important decision taken by the Indian
Government in 2005-06. This agreement will prove a significant step towards the global
integration of the Indian auto industry. A great deal of progress has been made on bilateral
and regional trade agreements.
The bilateral agreement with Chile and Singapore and regional
agreements with SAFTA (South Asian Free Trade Agreement) and MERCOSUR (Southern
Common Market) have been concluded, while the bilateral discussion with Thailand and
regional discussions with ASEAN and BIMSTEC (Bay of Bengal Initiative for Multi-Sect
oral Technical and Economic Cooperation) have reached the final stage. In August 2006, a
Draft of Automotive Mission Plan Statement was released by the Ministry of Heavy
Industries, in consultation with industry. This was released as a report in December 2006.
This document draws an action plan to take the turnover of the automotive industry in India
to US$145 billion by 2016 with special emphasis on small cars, MUVs, two-wheelers and
auto-components. Measures suggested include setting up of a National Auto Institute,
upgrading infrastructure, cutting the duties of raw materials and fiscal incentives for R&D.
In August 2006, the Working Group on Automotive Industry in the
Ministry of Heavy Industries has brought out a report for the Eleventh Five Year Plan. This
document stresses on the need of speeding up the move towards VAT in the states and GST
at the Centre. Labour regulations, paperwork involved in government-related transactions,
internal trade barriers, infrastructure bottlenecks, raw materials, human capital, increasing
interest rates and threats due to FTAs are, as mentioned in this document, barriers to
competitiveness. This report notes that the effective levy is lower for a Counter Veiling Duty
(CVD) than excise duties locally, because of the fact that excise is made after including the
post-manufacturing expenses64 in the price, while imported Completely Built Units (CBUs)
have the advantage of being levied the CVD before post manufacturing expenses.
In addition, the document recommends various other measures such as
upgrading human resources, mandatory inspection and control and retirement of vehicles
based on road-worthiness. In 2004, Early Harvesting Scheme for Indo-Thailand FTA was
launched for 84 auto-component products. The countries included in this group are
Bangladesh, India, Myanmar Sri Lanka and Thailand. These are the barriers to inter-stte
movements, mainly because of inconsistencies and differences in the fiscal and other policies
of Indian states. This includes selling and distribution costs (advertising, personnel,
incentives, warranty, branding and transportation) and margins.
This ‘CVD anomaly’ is explained in the Report of Working Group on
Automotive Industry, Ministry of Heavy Industries and Public Enterprises (2006). Financial
Bill for 2007-08 has very few measures that affect the auto sector. Cut in import tariffs of
commercial vehicles to 10 per cent is expected to induce further competition in the Indian
commercial vehicles sector. Since CVs are required in the development of infrastructure, duty
reduction on CVs may give a boost to infrastructure. Increase in total tax burden is certain to
occur now, because of the increase in education cuss from 2 per cent to 3 per cent of total
taxes. Extension of R&D incentives for five more years, reduction of Central Sales Taxes
(CST) and increased infrastructural expenditure are positive features of the budget, for auto
sector

EMISSION AND SAFETY STANDARDS

In India, safety standards were introduced in the 1960s in auto-
components, while the Central Motor Vehicles Rules came into existence in 1989. In 1991,
the first state emission norms came into force for petrol vehicles and in 1992 for diesel
vehicles. From April 1995, fitting of catalytic converters in new petrol-driven passenger cars
was mandated in the four metros and unleaded petrol was also introduced. From April 2000,
unleaded petrol is available in the entire country. As for road safety, numerous awareness
programmes are arranged all over the country, since 2000-10 is a safety decade. In developed
countries, lead was phased out from petrol over a period of more than 10 years, while in India
this was achieved in just six years. The time gap between the introduction of norms in Europe
and India is narrowing down gradually. Euro I was introduced in the EU in 1983, while the
same was introduced to India in 1996. Euro II was introduced in the EU in 1996-97. Bharat
Stage-II norms, which are the Indian counterparts of Euro II, have been introduced for
smaller passenger vehicles (Gross Vehicle Weight < 3.5 tones) in 2000, and for heavier
vehicles (Gross Vehicle Weight > 3.5 tonnes) from 2001 in National Capital Region of Delhi.
For Mumbai, Chennai and Kolkata, these standards were extended to different months in
2001. Later, these norms were extended to the rest of the country in phases by 2005.
However, for some categories of vehicles such as two-wheelers and three-wheelers, new
generation norms are yet to be announced. Bharat Stage-III norms have been implemented in
many Indian states in phases. There are numerous other policy initiatives from the
government and industry to encourage adoption of environment-friendly technologies, such
as hydrogen energy initiative by Tata and a few other government policies enumerated in the
previous subsection.
However, there were some contradictions and policy changes in North-Eastern
states, in terms of implementation of emission norms. The component suppliers of an MUV
major based in Mumbai, covered in our field survey, had adapted their technologies to suit
Bharath-I norms, which were introduced in North-Eastern states in 1997. With the
implementation of Bharat-II norms in this region in 2005, they had adapted their technologies
accordingly. However, it was later found that fuel that is consistent with Bharath-II norms
was not available in sufficient quantity 66 and hence Bharath-I was implemented again,
instead of Bharath-II. Consequently, some of the suppliers had to close down their operations
partly or fully.
Hence the emission norms-related policies should be designed in such a way
that the manufacturers get sufficient time to adapt their processes and technologies. At the
same time, both domestic and foreign firms at all levels should be prepared for the latest
international norms. The dream a carriage that moved on its own was realized only in the
18th century when the first car rolled on the streets. Steam, petroleum gas, electricity or
petrol (sold at the chemist's in the beginning) started being used for driving these funny car s
that looked more or less like horseless carriages.
The Benz Vehicle (1886, Germany)
It is accorded the distinction of being the first gasoline-powered
vehicle. This three-wheeler was the first car equipped with a differential gear and had a
horizontal, four cycle single-cylinder engine. The engine was mounted horizontally behind
the seat, over the rear axle, in a frame-developed form prevailing tricycles. Its 0.9 horsepower
was transmitted to the rear wheels via belt and chain, enabling a top speed of about 15 km/h.
A lever connected to a rack-and-pinion controlled the lone front wheel, which steered the car.
Baker Electric (1899)
For a long period after gasoline-powered cars gained popularity, battery-powered
cars continued to be made in the United States. The Baker was produced from 1899 to 1915.
The unusual suspension of this car consisted of attaching the wheel shafts directly to the
frame, on top of which was mounted a body on springs. The body carried the motor, which
drove the rear wheels by a chain. A lever next to the driving seat controlled its speed. The
Baker Electric was reputedly easy to drive, and could cruise a distance of 80 km when fully
charged, reaching a top speed of 40 km/h.

Stanley Streamer
The steam car, Stanley Steamer continued production until 1927. It
was quiet, had little vibration, produced sufficient torque, and was easy to handle. Under the
bonnet of this car was a 67 boiler, which provided the pressure to drive a two cylinder engine
located beneath the floor. Because of its abundant torque, the Stanley Steamer did not have a
transmission just one gear engaged the center of its crankshaft, and directly turned the rear
wheels. Manipulating the Steamer's valves, which controlled the flow of fuel, water, and
steam, must have required quite a bit of practice and knowledge. Although it could achieve a
higher top speed than its gasoline-driven rivals, it was hard to start, especially in the cold
weather.
Panhard et Levassor (1891 France)
Two French toolmakers Rene Panhard and Emile Levassor were
the first to propose and commercialize a car having a layout and structure similar to today's
cars. The Panhard et Levassor was the origin of the classic front engine, rear wheel drive
layout, the paradigm that transformed the horseless carriage into the car as we know it today.
It positioned its transmission in line with the engine and clutch, and had a steering wheel
instead of a tiller, and an in-line four cylinder engine. The front engine gave the car a better
balance and made it easier to steer.
Mercedes (1901)
The new Daimler models combined into one machine for the first time
all the vital features of the modern car: a powerful four-cylinder engine, a pressed steel
chassis, a honeycomb radiator, and a recognizably modern gear stick moving in a gate. The
model was named Mercedes, after the daughter of an Austrian, Emily Jellinek, the Daimler
representative in France.
Tin Lizzie or T Model (1907)
Henry Ford's model T, popularly called the Tin Lizzy, was the first
everyman's car .It not only brought motoring to the masses but also was the first mass-
produced car. As result, automobile ownership surged and car s became affordable for the
ordinary wage earner as well. The Model T introduced various features to facilitate driving,
and the transmission was integrated with the engine. Its planetary gears-two forward and one
back-could be shifted without the use of a clutch. In 1906, gasoline-powered cars were
produced that had a style of their own. In these new models, a hood covered the front-
mounted engine. Two kerosene or acetylene lamps mounted to the front served as headlights.
Car s had fenders that covered the wheels and step-up platforms called running boards, which
helped passengers, get in and out of the car.
The passenger compartment was behind the engine. Although drivers of
horse-drawn vehicles usually sat on the right, automotive steering wheels were on them left
in the United States Improvements in engine-powered cars during the 1920s contributed to
their popularity: synchronized-mesh transmissions for easier gear shifting; four-wheel
hydraulic brake systems; improved carburetors; shatterproof glass; balloon tires; heaters; and
mechanically operated windshield wipers.
The Morris and the Austin Seven (1922)
The bull-nosed Morris launched the family car in Britain. In the
1920s, this popular line could be bought for as little as $775, at $115 down and about $9 per
week. Also in 1922, the Austin Seven became the family runabouts. It had all the big car
characteristics contained in a small design. The top speed was 45-50 mph, and averaged 40
miles on a gallon of gasoline. It was a front-engine, rear-drive model using 750cc four-
cylinder side valve, 10.5-horsepower engine, and floor shift three-speed transmission. The
handbrake stopped the front wheels while a more conventional foot pedal stopped the back
ones.
The Volkswagen (1938)
The Volkswagen (German for the "people's car ") went on to rack up
worldwide sales of more than 40 million. A horizontally opposed four-cylinder engine was
designed for the power plant, with a total displacement of 996cc. When mounted in the rear
and driving the rear wheels, this engine, with its low height, permitted the Volkswagen to
have a streamlined, fastback shape. It was air cooled too and came to be loved all over the
world as the beetle.
Aerodynamic Models
From 1930 to 1937, car engines and bodies became large and
luxurious. Many 12- and 16-cylinder car s were built. Independent front suspension, which
made the big car s more comfortable, appeared in 1933. Also introduced during the 1930s
were stronger, more reliable braking systems, and higher compression engines, which
developed more horsepower. Mercedes introduced the world's first diesel car in 1936. Cars
on both sides of the Atlantic were styled with gracious proportions, long hoods, and pontoon-
shaped fenders. Creative artistry merged with industrial design to produce appealing,
aerodynamic cars.
Some of the first car s to fully incorporate the fender into the bodywork
came along just after World War II, but the majority of designs still had separate fenders with
pontoon shapes holding headlight assemblies. During the 1940s, sealed-beam headlights,
tubeless tires, and the automatic transmission were introduced.
SMALL CARS VERSUS BIG CARS
Two schools of styling emerged in the 1950s, one on each side of the
Atlantic. The Europeans continued to produce small, light car s weighing less than 1300 kg
(2800 lb). European sports car s of that era featured hand-fashioned aluminum bodies over a
steel chassis and framework. In America, automobile designers borrowed features for their
car s that were normally found on aircraft and ships, including tailfins and portholes. Cars
were produced that had more space, more power, and smoother riding capability.
Introduction of power steering and power brakes made bigger cars easier to handle. The
Buick Motor Car Company, Olds Motor Vehicle Company (Oldsmobile), Cadillac
Automobile Company, and Ford all built enormous car s, some weighing as much as 2495 kg
(5500 lb).
Austin Mini (1959)
The Austin Mini was introduced in Britain. It became hugely popular. It was
small enough to squeeze through city traffic, easy to park, cheap to run, yet big enough for
four adults. Its success paved the way for a succession of small cars.
The Japanese Cars
In the 1950s and more years since the Japanese began producing cars 70
domestically, Japanese automotive technology has made remarkable progress and come to be
one of the international leaders. In 1980, Japan became the top automobile-producing country
in the world.
Sports Cars
The various car races encouraged the automakers to view car racing as a
sport resulting in the rapid development of automotive technology. As technological
knowledge began to accumulate from car racing, various sports models appeared, allowing
motorists to experience real driving pleasure.
COMPUTERIZED CARS
Today, stepping into the twenty-first century, utilizing new
materials, high-tech electronics, new power sources, and artificial intelligence, the type of car
that automakers are capable of producing cannot even be imagined.
Austin Rover Maestro (1983)
The Austin Rover in Britain introduced the Maestro, with a talking
dashboard designed to alert the driver to engine problems, the latest in the line of electronic
systems added to car s since the 1960s.
Ford Probe IV
The Ford Probe IV prototype, perhaps the world's most aerodynamic four
seater is testing many revolutionary features that may well become the standard in
tomorrow's cars. Among them is the use of computer-controlled pneumatic suspension.
CAR MANUFACTURERS IN INDIA
Car manufacturing in India first began in late 1940s. Earlier a couple of cars
made by foreign technology were manufactured in India. But now, cars made my Indian car
manufacturers dominate the business. The future of car manufacturing in India is bright.
Sensing this, foreign car manufacturers like Ford, Toyota, Hyundai, Suzuki, Honda and
Skoda are spreading their base in the country. Domestic car manufacturers have also
contributed to the growth of the automobile industry in India. The popular car manufacturers
in India are:
Maruthi Suzuki India Ltd.
Established in December 1983, Maruthi Suzuki India Ltd. has ushered a
revolution in the Indian car industry. This car is meant for an average Indian individual which
is affordable as well as has elegant appeal. Maruthi Suzuki India Ltd. is the result of
collaboration of Maruthi with Suzuki of Japan. At this time, the Indian car market had
stagnated at a volume of 30,000 to 40,000 cars for the decade ending 1983. This was from
where Maruthi took over. The company has crossed the milestone of becoming the first
Indian company in March 1994, by manufacturing in totality one million vehicles. It is
known for its mass-production and selling of more than a million cars. Maruthi Suzuki India
Ltd. is the India's largest automobile company which entered in the market with affirmed aim
to render high quality fuel – efficient and low - cost vehicles.
Sales figure in the year 1993 has reached up to 1, 96,820. Maruthi comes
in a variety of models in the 800 segment. Its cars operate on Japanese technology, pliable to
Indian conditions and Indian car users. By the year 1998-99, the company has modernize the
existing facilities and expand its capacity by 1lakh units. Recently to ward off the growing
competition, Maruthi has completed Rs. 4 billion expansion project at the current site, which
has raised the total production capacity to over 3,20,000 vehicles per annum. With the
coming of each and every year, the total production of the company exceed by 4, 00,000
vehicles. In the small car segment it produces the Maruthi 800 and the Zen. The big car
segment includes the Maruthi Esteem and the Maruthi 1000. Along with them, the company
also manufactures Maruthi Omni. Other models include Wagon R and the Baleno.
Headquarter in Gurgaon, on 17 September 2007, Maruthi Udyog was renamed to Maruthi
Suzuki India Limited. Both in terms of volume of vehicles sold and revenue earned, the
company is India’s leading automobile manufacturers and the market leader in the car
segment. Sales recorded in June 2008, is Rs. 4,753.58crores.
Hyundai Moto
Established in year 1996, Hyundai Motor India Ltd. is a sub division of the
giant South Korean multinational, the Hyundai Motor Company. It is Korea's top automobile
manufacturer, capturing the Indian market and giving a strong competition to its rivals in the
same segment. The company success story is based on a profitable Indian - Korean
partnership where Indian skills and workmanship combine with Korean design and
technology to produce one of the best cars. In the year 1997, its sales revenue had touched
8.24 billion. The Hyundai Santro is giving tough competition to other segments and has been
designed in India at the integrated auto-manufacturing unit at Irrungattukatoi near Chennai.
This plant is capable of producing 1, 20,000 cars, 1, 30,000 engine and transmission systems
annually.
It is planned to invest another $1 billion in manufacturing more critical
components by the year 2001. Equipped with latest technology, machinery, international
quality press, body and paint shops all across the world, the company has set more than 70
dealer workshops. The company has incorporated state-of-the-art manufacturing plant near
Chennai that tells about some of the most developed production, quality and testing potentials
in the country. To cater with the differing and growing needs of the market, company hopes
to increase its presence in the Indian market with coming up new models. According to this
company release, the rise in production will help the company increase its export destinations
to 95 countries by the end of this year.
Honda Motors Co. Ltd
Honda Motors Co. Ltd. is the result of joint venture between India's Hero
Group and Honda Motor Company. It is one of the most successful ventures all across the
world. Japan has created world's single largest two wheeler company and Hero Honda
became the first name in early 80s in India. This company has proved all across the world
that vehicles can be driven without any pollution. 73 The company has been acknowledged
by several awards like Auto Tech of the Year" – Glam out PGMFI by Overdrive Magazine
and “Most Trusted Company” , by TNS Voice of the Customer Awards 2006. Along with
this, it comes under one of the most fuel- efficient and largest selling vehicles due to its latest
use of technology and better services.
Hero Honda Co. Ltd. has struggle very hard to fulfill and meet
expectations of its customers. A rich background of delivering high value products at the
most economical price led the world's largest manufacturer of motorcycles to join hands with
the world's largest bicycle manufacturer. This similarity of working environment and system
of operation of Honda Motor Company of Japan and the Hero Group ended up in the
establishment of Hero Honda Motors Ltd. All across the world, Hero Honda has achieved
indigenization of over 95 percent. Outstanding marketing and excellent tactical promotions
are the reasons behind their success and establishment.
Some specific key features include fuel conservation, safety riding
courses and mobile workshops which helped the company to reach in the interiors of the
country. Hero Honda Motors Ltd. is well settled in national market, its main attention focused
towards overseas due to which exports has seen a steady rise. Sales recorded up till June'08 is
around 2,843.53 crore. Achiever, CBZ, CD Dawn, Karizma, Passion, Pleasure and Splendor
are its famous brands on Indian roads. Over the years, the Company has received its share of
accolades, including the National Productivity Council's Award ( 1990-91), and the
Economic Times - Harvard Business School Association of India Award, against 200
contenders.
Tata Motors Limited
Tata Motors Limited is India's largest automobile company, and is revered as
one of the most dynamic, reliable and futuristic automobile manufacturers of the world. Tata
Motor cars and vehicles are favored worldwide for their versatile technology features and
utility. With more than 130 auto models spanning a wide range of passenger cars, commercial
vehicles, and multi-utility vehicles, Tata Motors stands out as a premiere growth booster of
Indian automobile industry. 74 It is India's largest automobile company, the largest
commercial vehicle manufacturer, the second largest passenger car manufacturer in India and
the fifth largest medium and heavy commercial vehicle manufacturer in the world. The
popular brands of the company are Tata Indica, Tata Indigo, Tata Sumo and Tata Safari, Tata
Nano.
Chevrolet cars India
Chevrolet is one of the most trustworthy, luxurious and dependable brand in
the Global market of vehicles. A large amount of Chevrolets were imported in India between
1918 and 1928. The company has made a king like entry in India in the year 1928 with its
National Series AB touring. The 171 cubic inches, 24.7hp four cylinder engine of Chevrolet
has proved the reliability of this car. First office of Chevrolet was established at Mumbai and
its assembly plant was in Sewree. General Motors, the parent company of Chevrolet, was the
first in setting up assembly plant in India. It is among the newest brands in India launched by
General Motors Indian operations. Chevrolet was brought to India on 6th June 2003. Since
then, they sold the Chevrolet Optra, Chevrolet Aveo, Chevrolet Tavera, Chevrolet SRV,
Chevrolet Spark and Chevrolet Aveo U-VA. The Forester was imported directly from Fuji
Heavy Industries in Japan until 2005. Optra and Tavera are built at the Halol plant. The latest
brands of Chevrolet are Captive SUV. Chevrolet also is the sole Engine supplier for the
formula racing cars.
Toyota Motors Car
Established on 6th October, 1997, Toyota motors have pulled the vigilant of
Indian customers to its products. With the full devotion and round the clock services, Toyota
tied up with Kirloskar Group by forming Toyota Kirloskar Motor Private Limited. Two
shareholders of Toyota Motors are Toyota Motor Corporation holding share of 89% while
Kirloskar group is having the share of 11%. Headquartered in Japan, Toyota motors are a
multinational corporation, the world's largest 75th automaker. Other offices are located in
Aichi, Nagoya and in Tokyo. In 1982, Toyota Motor Company and Toyota Motor Sales
merged into one company, the Toyota Motor Corporation. After two years, Toyota signed a
joint venture with GM called NUMMI, the New United Motor Manufacturing, Inc, operating
an automobile manufacturing plant in Fremont, California. Toyota Motors has been
appreciated by many awards.
In 1970, it was awarded by Japanese Quality Control Award for being
participating in a wide variety of Motor sports. Later in the year 1990, Toyota Motors began
to branch out from producing mostly compact cars by adding several larger and luxurious
vehicles to its lineup. In 1997, the company began production of the world's best selling
hybrid car, the Toyota Prius. Later in 2002, it has started IMV project, "Innovative
International Multi-purpose vehicle" to optimize global manufacturing and supply systems
for pickup trucks and multipurpose vehicles. In the beginning of year 2007, the company has
developed as the most profitable automaker and largest seller of cars. Revenue of Toyota
Motors in year 2006 is $11 billion along with increasing sales among other countries i.e.
United States.
Mahindra Cars
Mahindra & Mahindra is a part of the Mahindra Group which was established in
1945 to manufacture general-purpose utility vehicles that now services the Indian sub-
continent as well as international markets in Africa, Europe, the Middle East, the US, Latin
America, China and Malaysia. It later moved into manufacturing tractors and light
commercial vehicles, and is today the tenth largest private sector company in India.
Skoda
Skoda India is a part of the International Volkswagen Group. It is one of the
premier automobile manufacturer in Europe, based in Czech Republic. The company
introduced itself on November 16th, 2001. With its Greenfield plant in Aurangabad, the
company has its dealership network spread over Mumbai and Delhi region. The brand Skoda
Auto is globally known for its stylish looks, well 76 built exterior and its constant endeavor
to introduce modern technologies. The company has already introduced 12 luxury models in
Indian market. Skoda Superb and Skoda Laura are the few to be named. Each product of
Skoda India are popularly known for their stylish looks and well built exteriors.
In the year 2005, the company acquires approximately one-fourth of the
Indian market share (i.e., 25%) in luxury car segments. A network of 41 dealerships equipped
with 35 facilities spread across the country was set up in the same year. Skoda India received
awards like 'Most Technologically Advanced Car' for Skoda Laura and 'Best Variant' for
Skoda Superb Turbo Diesel from CNBC-TV18 AUTOCAR AUTO in the year 2006. It has
also received 'Executive Car of the Year' award from NDTV PROFIT CAR INDIA and
'Automotive Technology of the Year' award from OVERDRIVE, both for Skoda Laura.
Audi Cars
AUDI AG/Audi Cars is a German based company with its production units in
five major countries viz. China, Hungary, Belgium, Italy and Germany itself. Audi is a
manufacturer of exquisite cars which are attractive, sophisticated and technically perfect in
every aspect. The success of Audi AG stems from creativity, commitment and enthusiasm.
The company has scattered its wings of success in the field of automobile industry for its
technical expertise and creativity. In the year 2007, Audi has given a total production of
980,880 cars and 1,915,633 engines which shows a growth of 5.9% and 1.4% respectively.
This company has a total sale of 1,200, 701 cars in the same year which was again a growth
of 5.7%. Audi is looking tactfully towards the future and investing its wealth on India. The
luxury car market has tripled during last five years. With the excellent set-up of a dealer
network in India, Audi has already started sketching its footprint in this country from July
2004. Audi has launched its bigger models A6 and A8 in this rat racing market. This is aimed
towards the massively popular Mercedes Benz C Class. Both these cars are good competitors
in the automobile markets around the globe.
Volkswagen
The Volkswagen plant in Chakan occupies a total area of over 2.3million
square meters (575 Acres), with buildings covering about 115 thousand square meters, which
means, the total premises is 2x1kilometres. A workforce of over 3500 people was engaged in
building during its peak construction stages. The plant was built with an investment
commitment of INR 3800Crores (580 million Euros) by Volkswagen India Pvt. Ltd. It is the
largest investment by a German company to date in the Indian growth market. The plant has a
production capacity of 110,000 vehicles a year. The construction of the plant commenced in
2007 and has been built in a record time of 17 months. The Hon’ble Governor of Maharashtra
his Excellency Shri.S.C.Jamir and Prof. Dr. Jochem Heisman officially inaugurated the new
plant on March 31st, 2009 in the presence of nearly 500 international guests.
The Pune plant is one of the most modern in the Volkswagen Group. It has
a high level of vertical integration and a large share of local suppliers. The facility is the only
production plant operated by a German automaker in India that covers the entire production
process from press shop through body shop and paint shop to final assembly. The facility
uses futuristically designed state-of-the-art equipment. For example, the Body shop uses the
Diode Laser Brazing (DLB) technology, whereas the Roof & Side Framer laser technology is
used for welding the roof to the body of the car. The facility is also one of the few
environment friendly manufacturing plants around the area. For Example, the Exhaust of the
Paint shop is re-burnt and the resultant heat and energy is reused. Full-fledged production has
taken off at the plant with the production of the Skoda Fabia in May 2009, followed by a Polo
based model in December 2009. Volkswagen India Pvt. Ltd., in its commitment towards the
economic development of the state of Maharashtra, plans to hire 2500 skilled employees.
BMW Cars
Established on March 7, 1916, BMW (Bayerische Motoren Werke GmbH) has
now become one of the major automobile manufacturers in the international market, and
BMW cars one of the most sough-after brand of luxury vehicles. The company is a
worldwide manufacturer of high performance premium cars and motorcycles, and is known
for classic BMW luxury cars and BMW motorsports cars. It is the parent company of Rolls-
Royce Motor Cars, and also owns and produces the MINI brand.
BMW started operating in India in the year 2006. It has its sales subsidiary in Delhi region,
and an assembly plant for BMW series cars, namely BMW 5 and BMW 3 series, in Chennai.
Since inception, BMW India has stood its ground in a fiercely competitive market, delivered
strong growth performance and achieved an unchallenged market leadership in the luxury car
segment in 2009.
BMW has been engaged in motor sports activities since the dawn of the
first BMW motorcycle. They also manufacture BMW Formula cars, BMW Touring cars and
BMW Sports cars. Exceptional design concept and elegance has always been a part of the
BMW cars, and now they are planning to take the aesthetic appeal to the next level with
BMW Gran Coupé. So, if you are planning to buy BMW cars, do take a note. And before
buying BMW cars, do not forget to update yourself with the upcoming models of BMW
classic cars as well, because BMW India is all set to roll out new 5 Series by July 2010. The
new 5 Series 530i Sedan will be one of the most sophisticated of all BMW petrol cars.
However, BMW M57, produced from 1998, has always remained an all time hit amongst
luxurious BMW diesel cars.
Bugatti
Bugatti cars are famous for the unmatched speed both on raccing track and on
road. Bugatti Automobiles S.A.S. is a France automobile brand which is owned by German
company, the Volkswagen group. The original brand which is considered legend for
exclusive fastest cars failed to regain its status post World War II. The last original model
was launched in 1950 and thereafter in 1960, the business has been shifted to airplane parts.
Very late in 1998, Volkswagen purchased the right to manufacture cars 79 under Bugatti but
the official incorporation was succeeded in 2000 only.
The manufacturing unit is located at Mosheim, Alsace in France. After the
acquisition by Volkswagen Group, it shared the engine modular with Volkswagen cars. After
Volkswagen revived the lost brand, it successfully released some high performance luxury
cars. EB 118 is the first two door coupe which was followed by EB 218 sedan with four
doors meant for the touring. As the demand for luxury car increases in India, the Volkswagen
group introduced the Bugatti brand in India in 2010. Veyron will be the first model to hit
Indian roads. Veyron is expected to touch a top speed of 400 km/hr. Bugatti in India will be
much costly comparing to other Europe countries due to heavy tax. The patent company,
Volkswagen is very much positive about bringing in this brand in India and has the future
plans to launch more models.
Fiat India Pvt Ltd
Fiat India Pvt. Ltd. is an Industrial Joint Venture, incorporated on January
02,1997, between Fiat Group Automobiles and Tata Motors Limited originally. This joint
venture resulted in the formation of Fiat Automobiles Pvt. Ltd. which has manufacturing
locations in 60 countries. It was hoped that this new venture would produce cars which give
good performance, are beautiful and which would be suitable for Indian conditions. Fiat
holds a 50% stack in the company. It owns and controls five internationally renowned brands
like Lancia Automobiles, Fiat Automobiles, Alfa Romeo Automobiles, Abarth and Fiat Light
Commercial Vehicles. The Makers of renowned cars such as the Ferrari, Maserati, Alfa
Romeo and Lancia besides the Fiat branded cars. The other partner of this joint venture,
TATA MOTORS, is the 80 largest automobile company in India, with revenues of 32,426
crores It is a leader in every segment with winning products in the compact, mid-size and
Sports Utility Vehicles.
The state-of-art infrastructure of Fiat India Pvt. Ltd. has an
installed capacity to produce over 100,000 cars and 200,000 engines besides aggregates and
components. The Strategy of FIAT car world is to build family vehicles on the platform as
conceived for emerging market. This is better known as 178 projects and allows an array of
body shapes to serve to the various requirements of the market around the world. The five
body styles include a three and five-door hatchback (Palio), a station wagon (Palio
Weekend), a three-box saloon (Sienna), a van and a pick-up.
Hindustan Motors
Hindustan Motors is one of the leading Electric Motors Manufacturers in
India having ISO 9001 Certification. It is the first Indian Car Company to start production in
India in 1942. Since then, it has emerged as a vast company manufacturing cars like the
sturdy Ambassador, the elegant Contessa, and in collaboration with Mitsubishi of Japan now
manufactures the new Mitsubishi Lancer. The company started production of Land master in
1954 and began producing Ambassador in 1957. Further, its collaboration with General
Motors Corporation of USA, UK, Marion Power Shovel Co, Vauxhall Motors and USA led
to the launch of new products.
With an annual turnover of one billion, Hindustan Motors manufactures Utility Vehicles,
Passenger Cars, Earthmoving Equipment and other power products. Its various
manufacturing units are spread across India - Pithampur in Madhya Pradesh, Uttarpara in
West Bengal, Thiruvallur in Tamil Nadu and Hosur in Pondicherry. The latest model,
Mitsubishi Lancer, is manufactured in their state - of - the - art manufacturing facility at
Thiruvallur, Tamil Nadu. The company launched its new model Ambassador Nova in 1990
and brings out Ambassador 1800 ISZ in 1993. Though the sturdy Ambassador does not find
many takers in India, with people looking to 81 more fancy cars, its export has been steadily
increasing, mainly in the British and Japanese markets. Trucks are being exported to
Bangladesh, Egypt, New Zealand, Sri Lanka and Mauritius. The Earth moving Equipments
are being exported to Oman, Jordan, Iraq, Bangladesh, Mauritius and Libya.
The Passenger Car and Utility Vehicle market is being attended by a 115
strong dealer network, 50 Service and Parts dealers and additional 60 exclusive Parts dealers.
Hindustan Motors has a widely spread network which includes 4 Regional Offices and
Nation-wide Territory Offices all across the globe. Two dealers serve the Earthmoving
Equipment and Power Products market from 25 locations spread across the country. The after
sales service of Hindustan Motors can be classified under three divisions: red, green and blue.
The Red will handle the new Mitsubishi Lancer, Blue, the Ambassador and Contessa Classic,
while the Green caters to the rural market with the Trekker and the HM RTV. The ranges of
cars manufactured by Hindustan Motors conform to the norms of Euro 1 emission. Up
gradation of Ambassador 1800 ISZ with multi-point fuel injection led us to this conformance.
 CHAPTER-3
COMPANY PROFILE
 COMPANY PROFILE

LEELA KRISHNA TOYOTA

LOCATION
DEALER OF LEELA KRISHNA TOYOTA

MR. M SUBRAHMANYAM GARU

VISION:

Toyota will lead the way to the future of mobility, enriching lives around the world
with the safest and most responsible ways of moving people. Through our commitment to
quality, constant innovation and respect for the planet, we aim to exceed expectations and be
rewarded with a smile. We will meet our challenging goals by engaging the talent and
passion of people, who believe there is always a better way.

MISSION:

Placing customer satisfaction first, integrating sales with service and service parts in a
single convenient location, we contribute to speedy and efficient service, allowing customers
to experience the convenience and pleasure of owning Toyota automobile.

PRINCIPLES:
• Always be faithful to your duties, thereby contributing to the Company and to the
overall good.

• Always be studious and creative, striving to stay ahead of the times.

• Always be practical and avoid frivolousness.

 • Always strive to build a homelike atmosphere at work that is warm and friendly.

SPECIAL FEATURES:
1. Toyota’s qualified manpower
 Recruited from the best technical institutes supported by Toyota under T-TEP
initiative.
 Toyota technicians are continuously groomed through Toyota global training system
to ensure any problem in your car is fixed right, first time.
 Toyota service advisors are trained to high Toyota standards and are always willing to
assist you.
2. Toyota’s quick onsite service
 Free 3 years of 24*7 roadside assistance.
 Get assistance on fuel, repair, battery, medical and many more anywhere anytime.
ACHIEVEMENTS:
CS Achievements:
 Zero Complaint award 2015.
 Customer First award 2015.
 Best CCP award Sept, 2015.
 SSI-2016 All India 1st in J.D Power Internal Study.
 Scored 750, 830 & 824 CSI J.D Power Internal Study 2016.

Business Achievements:
 Three Star award for 2015
 Runner up sales award for Innova 2015.
 Runner up sales award for Corolla 2015.
 Double Crown Dealer Award 2016.
 Consistent Two Star (**) CS award for the years 2013, 2015,2016.
 Single Star award for 2010 & 2015.

Kaizen Awards:
 Best Kaizen Ideas award for 2011, 2012, 2013, 2014 & 2015.
 Best Kaizen Marathon presentation Award for 2015.
 2nd Highest Kaizen Ideas promoted in 2015 in India
Skills Champion Awards:
 Stood as 2nd Runner up in Zonal Skills contest in 2015 Body Category.
 Stood as 1st Runner up in Zonal Skills contest in 2015 SA Category.
 Stood as Winner in Zonal skills contest in 2014 Paint Category & 1st Runner up in
Body Category.
 Stood as 1st Runner up in National Skills Contest 2014 in Paint Category & 2nd
Runner up in Body category.

LOGO

Design elements of Toyota logo:

The use of the overlapping ovals is a reflection of the company’s commitment to it is
customers and a pledge of reliability and satisfaction.

Shape of the Toyota Logo:

The Toyota logo comprises of horizontally stretched elongated ellipses. The three
ellipses represent the customer’s trust; the product and the great strides.

Color of the Toyota Logo:

The stretched ovals are portrayed in red or metallic colors with a white background
depending on the purpose.
Font of the Toyota Logo:
The Toyota logo font is inscribed in simple roman style, simple enough to attract the
customer’s attention. The font is simple yet elegant and gives the Toyota logo the look that
inspires beauty and confidence.

TOYOTA ATTITUDE
 "Customer First" policy.
 "The priority in receiving benefits from automobile sales should be in the order of the
customer, then the car dealer and, lastly, the manufacturer.
 Toyota understands that cultivating superior human resources is essential to ensuring
reliable quality.
 Realizing that dealers and distributors strengthen the bond between the customer and
manufacturer.

TOYOTA BELIEVE
 We believe everyday as an opportunity to improve.

 We believe that if you can dream it you can do it.

 We believe a better tomorrow starts today.

 We believe in respecting others.

 We believe in trying to make a difference.

 We believe in working together.

 We believe good things stand the test of time.

 We believe in going the extra mile.

HR POLICIES

1. Leave Policy
2. Attendance Policy
3. Uniform Policy
4. Travel policy
 5. Compensation & Salary
6. Best Practices
1. LEAVE POLICY

Leaves:-

• 12 Casual Leaves, 12 Sick Leaves

• Year to attend to their personal and urgent requirements. CL, Permission should be
signed by the H.O.D Sales/Service.

• And if Saturday and Monday will avail leaves means Sunday will be countable.

Unscheduled absence:-

• If an employee does not report to work for 3 days without notice and the absence is
not approved by the supervisor then the absence will be defined as Unauthorized
Absence. The days of UA will be considered as Leave-without-Pay.

Absconding:-

• If an employee does not inform his absence for three working days it will be termed
as ‘Absconding’.

• On the third day of absence a Notice will be issued to the employee, intimating
immediate reporting to office. On the fifth day of absence a show-cause-notice will be
issued to the employee. On the eighth day of absence a Termination letter will be
issued to the employee.

2. ATTENDANCE POLICY

• Every employee shall punch in and out his attendance through the time office at the
time of entering and leaving the office premises and also informed to security in &
out timings.

• An employee is expected to report to work on time every day. The work timings are
as under

• Service Dept : 9.00 AM to 6.00 PM (Lunch 1.00 PM to 2.00 PM)

 • Sales & other Dept : 9.30 AM to 6.30 PM (Lunch 1.30 PM to 2.30 PM)

• If an employee is late to office more than thrice in a month it will be considered as

half day’s Casual Leave

Use of ID card:-

All employees are provided with an identity card.

This contains employee’s particulars:

1. Identification of the employees.

2. Entry and Exit from the unit.

3. Attendance recording.

4. Emergency contact.

3. UNIFORM POLICY

• Proper staff uniform adds reputation & dignity to the office & show high status in the
market which adds to the personality of the staff.

• All staff members are again requested to adhere to the instructions of the above
circular strictly.

• Clothes should be clean and tidy. Please wear clean & ironed clothes every day.

• Disciplinary action may be initiated against the offenders w.e.f. 1st of the next month.

• Dress code violator’s manager/supervisor has authority to reprimand and fine the
violator with a loss of half a day pay for who cross 2 days

4. TRAVEL POLICY

Travel allowance and daily allowance subjected to the different cadres as per the
organization for OUTSTATION/MEETINGS/TRAININGS.

Local conveyance for SALES, SERVICE, and OTHER executive who go out on
official work will be paid on KM based (Rs. 2.00)
 The above payment of local conveyance is paid subjected to the approval of the
concerned head of the dept on the conveyance bill or vouchers.

5. TRAININGS AND COMPENSATION POLICY

Trainings Include –

 On-the-job training,

 Coaching,

 Classroom training

 Self trainings

 Team Trainings

Compensation & Salary:-

 Salary is paid before 2ndof every month.

 Salary is to be treated as confidential information and no communication is to be done with
colleagues and other staff

Employee State Insurance:-

All employees will be covered under the employees state insurance Act of 1948.
There will be a deduction of 1.75% from the employees gross salary including all allowances
and 4.75% will be contributed by company.

Provident Fund:-

Provident Fund @ 12 % will be restricted to 6500/- of basic pay, as per the Company Norms

6. BEST PRACTISES.

Kaizen zone:-

Everyone is encouraged to come up with small improvement suggestions on a regular basis.

This is not a once a month or once a year activity. It is continuous.

Kaizen is based on making little changes on a regular basis: always improving productivity,
safety and effectiveness while reducing waste.
Performer of the month:-

In all the departments in organization.

PRODUCTS:

1.INNOVA CRYSTA
FEATURES

Styles:

1) User-friendly touch screen and audio

2) Smart phone holder with USB port and AUX-IN

3) Roof ornament

4) Rear AC auto cooler with digital display

 2.ETIOS LIVA

FEATUERS

1) Standardised dual front SRS air bags

2) New ISOFIX child seat lock

3) Powerful 1.4 Diesel engine

4) Refined 1.21 DOHC Petrol engine

5) Best- in- Class boot space

3.COROLLA ALTIS

Feature

1) Stylish LED tail lamps

2) Rear seat 60:40 split

3) New flaxen interiors

4) Elegant instrument panel with soft touch dashboard
 CHAPTER-4
THEORETICAL FRAME WORK
 THEORETICAL FRAME WORK

Introduction:

Compensation management has become one of the issues both for employees and employers
around the world due to its importance. Naturally, employees want to get more remuneration
for their work as where employers want to pay as minimum as they can. So regarding the
compensation there is a conflict between employees and employers in many of the
organizations. Compensation is the remuneration an employee receives for his or her
contribution to the organization. It occupies an important place in the life of employee. His or
her standard of living, status in the society, motivation, loyalty and productivity depend upon
the remuneration he or she receives. For the employer too, employee compensation is
significant because of its contribution to the cost of production. The HR specialist has a
difficult task of fixing wages and wage differentials acceptable to employee and their leaders.
Remuneration is another term synonymously used with the compensation.

Compensation Management: In today’s intensely competitive and global marketplace,

competitive advantage lies not just in differentiating a product or service or in becoming the
low cost leader but in also being able to tap the company’s special skills or core
competencies. Therefore skilled and efficient employees of a company are now considered as
one of the core competencies of the company. Especially for power industry; skilled, efficient
and motivated employees are must which requires specialized, technical and scientific
knowledge and expertise. To attain such objectives HR plays a vital role and one of the most
used tools by HR in order to ensure motivation for each and every employee is a satisfactory
“Compensation Package”. Employees need to be compensated for their efforts based on
volume of time or volume of production. Compensation refers to all forms of financial
rewards received by employees. It arises from their employment. It occupies an important
place in the life of the employee. It is a considerable cost to the employer. Compensation
dissatisfaction can lead to absenteeism, turnover, job dissatisfaction, low performance, strikes
and grievances. Majority of labor-management disputes relate to compensation.
Compensation is a key factor in attracting and keeping the best employees and ensuring that
the organization has the competitive edge in an increasingly competitive world. The
Compensation Management component enables to differentiate between the remuneration
strategies and those of competitors while still allowing flexibility, control and cost
effectiveness. It provides a toolset for strategic remuneration planning that reflects the
organization culture and pay strategies and it empowers line managers within a framework of
flexible budget control. Compensation Management allow to control bottom-line
expenditures and offer competitive and motivating remuneration, be it fixed pay, variable
pay, stock options, merit increases, or promotion – in other words, total compensation.
Compensation has an impact on attracting, retaining and motivating the executive. Disparities
in compensation pattern often lead to dissatisfaction among executives. To make the
executives comfortable to the extent possible and further to keep them from turning hostile,
private companies have been giving in recent years, bigger and more frequent rises in
salaries. Companies have started looking at executive compensation more proactively so that
they can expect better performance from them. The compensation system results from the
allocation and transfer of a portion of the income of an organization to its employees for their
monetary claims on goods and services. Monetary claims on goods and services are wages or
salaries paid to an employee in the form of money. As a medium of exchange, money enables
an employee to purchase goods and services available in the marketplace. Wages and salaries
in the form of money may be subdivided further into payments earned and acquired at the
present time and payments earned but not acquired until some future time-deferred payments.
Compensation or reward management is concerned with the formulation and implementation
of strategies and policies which are to reward people fairly, equitably and consistently in
accordance with their value to the organizations and to help the organization to achieve its
strategic goals. It deals with the design, implementation and maintenance of reward systems
which aim to meet the needs of both the organization and its shareholders.

The Definition of Compensation Management:

In simple terms, compensation is everything that a company offers its employees in

return for their talent and time. When organized the right way, compensation dollars can be
strategically leveraged to reduce turnover, boost employee engagement and attract top talent.
The purpose of compensation management is to make the most of company dollars in a way
that rewards employees for their work.
 Objectives of Compensation Management

1. To Attract Top Talent

Rai University states that one of the primary goals of compensation should be to recruit
qualified talent. When you have a competitive compensation plan in place, you’ll be better
able to attract top industry talent.
2. To Retain & Reward Personnel
Don’t lose your top talent to your competitors because employees believe that the
grass will be greener elsewhere. Find out market values for your employees and pay
accordingly. You can also set up pay-for-performance models to drive performance by
encouraging associates to reach new goals and push farther.
3. To Boost Motivation
When structured effectively, your compensation plan can drive motivation across
your teams. Employees who know that they’re being fairly compensated for their work feel
appreciated and are therefore more likely to stay engaged, committed, and productive. A
well-developed compensation plan can also increase job satisfaction.
4. To Be Compliant
Compensation isn’t just about being fair within the industry; it must also comply with federal
regulations, such as the Fair Labour Standards Act. While adhering to standards can
complicate your compensation management, it will help protect your company against
litigation and ensure fairness across the board for your personnel.
5. To Maximize ROI
It requires some fine tuning, but compensation management is most effective when you get
the biggest bang for your buck. In other words, if you can create a compensation plan that
stays within budget while also driving productivity through pay-for-performance and other
motivational tactics, you’re creating a plan that’s both equitable for the company and
advantageous for hardworking employees.

Compensation management software can simplify planning processes to help you achieve all
of the objectives listed above without overburdening HR. In addition, you can tailor it to your
organization to prioritize the objectives that are most important to you.
NEED OF COMPENSATION MANAGEMENT:

The main motive of compensation management is to full fill the needs of both employees and
the employer. The employers want to pay as little as possible to keep their costs low.
Employees want to get as high as possible. The compensation management tries to balance
between these two with following specific needs:

1. Attracting and Retaining Personnel: From organization's point of view, every

organization wants new talent and skill from outside ,for this purpose the compensation
management targeted at attracting and retaining right human resource at right place in the
organization time to time.

2. Motivating Personnel: Compensation management targeted at motivating human beings

or employees for higher productivity. Compensation can be designed or planned to inspire or
encourage people through financial and non- financial compensation.

3. Optimizing Cost of Compensation: Compensation management targeted at Optimizing

cost of compensation by maintaining relation between performance and compensation of
every employee.

4. Consistency in Compensation: Compensation management tries to obtain consistency in

both internal and external for remunerating employees. Internal consistency consist payment
on the basis of criticality of jobs and employees' performance on jobs. External consistency
involves similar remuneration for a job in all organizations.

Principles of compensation management :

• Compensation management is a sensitive and crucial aspect of human resource

management as its adequacy or inadequacy can affect, either positively or
negatively, the competitiveness of the organization due to higher attrition rat es,
low commitment etc.

• Ability to pay – Organization should pay their employees as per their financial
capacity and capability. If an organization pays more than its ability, then the
organization may get bankrupt.

• Ability to pay – On the other hand, if the organization pays much below its
ability to pay, then such organizations are unlikely to attract / retain competent
employees, which will ultimately adversely affect the effectiveness of the
organization.

• Internal and external equity – Organization must compensate their employees

according to their qualification, experience, skills, knowledge, job
responsibilities and performance. This is called internal equity.

• Internal and external equity – Organizations must pay their employees a

compensation which is at least comparable to their competitors or industry
standards. This is called external equity.

• Performance orientation – Compensation should be in commensuration with

individual and organizational perfo rmance. Performance linkage is essential for
creating a performance driven work culture.

• Non discriminatory – Organizations must pay their employees without any

discrimination on the ground of race, religion, gender, nationality and ethnicity.

• Legal Compliance – Organizations must pay as per the relevant laws of the
land. For example in India, the Minimum Wages Act, 1948.

• Simplicity and Flexibility – Compensation system should be simple to design,

understand and administer. Compensation plans and poli cies must be flexible to
adapt with ease to the changing profile of the workforce.

• Foster employee development – Compensation should be such so as to motivate

employees to acquire, sharpen and develop their skills and competencies in
conjunction with changing technology, innovations and organizational
requirements.

Concept of Compensation Management:

Compensation could be defined as the reward of any work or service offered by an

individual to any organization or institution. To some, compensation may reflect the value of
their personal skills and abilities, while to others it may refer to be return on the educational
qualification or the training they have acquired. To some, it may be their worth in specific
role or a job, based on their qualification, training, skills and expertise that they possess. The
form of compensation, the type of compensation and the disbursement pattern of the
compensation thus they become a part of employment agreement.

Types of Compensations:

There are two types of compensation. They are as follows 1.Direct compensation. 2.
Indirect compensation.

Types of Compensation

Direct compensation Indirect compensation

1. Direct Compensation: Direct compensation refers to the monetary benefits offered

and provided to employees in return of the services they provide to the organization.
The monetary benefits include basic salary, house rent allowance, conveyance, leave
travel allowance, medical reimbursements, special allowances, bonus, provident
fund/gratuity, etc. They are given at a regular interval at a definite time.

Medical Reimbursement: Organizations also look after the health conditions of their
employees. The employees are provided with medi-claims for them and their family
members. These medi-claims include Health-insurances and treatment bills
reimbursements.

Special Allowance: Special Allowance such as overtime, mobile allowance, meals,

commissions, travel expenses, reduced interest loans, insurance, club membership, etc.,
are provided to employees to provide them social security and motivate them which helps
in improving the organizational productivity.

Bonus: Bonus is paid to the employees during festive seasons to motivate them and
provide them social security. The bonus amount usually amounts to one month’s salary of
the employee.
Leave Travel Allowance: These allowances are provided to retain the best talent in the
organization. The employees are given allowances to visit any place they wish with their
families. The allowances are scaled as per the position of employee in the organization.

Conveyance: Organizations provide cab facilities to their employees. Few organizations

also provide vehicles and petrol allowances to their employees to motivate them.

House Rent Allowance: Organizations either provide accommodations to its employees

who are from different state or country or they provide house rent allowance to its
employees. This is done to provide them social security and motivate them to work.

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

2. Indirect Compensation: Indirect compensation refers to non-monetary benefits

offered and provided to employees in lieu of the services provided by them to the
organization. They include Leave Policy, Overtime Policy, Hospitalization, Insurance,
Leave Travel Assistance Limits, Retirement Benefits, Holiday Homes and flexible
timings.

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

Hospitalization: The employees should be provided with the adequate allowances to get
their regular check-ups, say at an interval of one year. Even their dependents should be
eligible for the medi-claims that provide them emotional and social security.

Insurance: Organizations also provide accidental insurance and life insurance for
employees. This gives them the emotional security and they feel themselves valued in the
organization.

Leave Travel: The employees are provided with the leaves and travel allowances to go
for holiday with their families. Some organizations arrange a tour for the employees of
the organization. This is usually done to make employees stress free.
 Retirement Benefits: Organizations provide pension plans and other benefits for their
employees which benefits them after they retire from the organization at the prescribed
age.

Holiday Homes: Organizations provide holiday homes and guest house for their employees
at different locations. These holiday homes are usually located at the hill station and other
most wanted holiday spots. The organizations make sure that the employees do not face any
kind of difficulties during their stay in the guest house.

Flexible Timings: Organizations provide flexible timings to the employees who cannot
come to work during normal shifts due to their personal problems and valid reasons.

Leave policy: It is the right of the employee to get adequate number of leave while working
with the organization. The organizations provides paid leaves like casual leaves, medical
leaves (sick leaves) and maternity leaves, statutory pay etc. Broadly, the compensation
includes wages, salaries, financial and non-financial benefits. Wage and salary are the main
components of compensation and all the workers and employees are getting wages or
salaries. Only few of the workers and employees who are working in few of the industries
and organizations are getting other financial benefits and non-financial benefits. Based on the
nature of work, wages is fixed, but apart from nature of work, there are different factors such
as time, required skills for work, efficiency, etc. will play significant role in fixation of wages
and salaries. It is difficult task for the HRD to determine wages and salaries of workers and
employees. In this regard, many of the theories were already propounded by many of the
economic and management thinkers on wages and salary determination as under.

Aims of Compensation Management The following are the important aims of

compensation management. I. Reward people according to what the organization values and
wants to pay for. ii. Reward people for the value they create. iii. Reward the right things to
convey the right message about what is important in terms of outcomes and behaviors. iv.
Develop a performance culture. v. Motivate people and obtain their commitment and
engagement. vi. Help to attract and retain the high quality people the organization needs. 76
vii. Create total reward processes which recognize the importance of both financial and non
financial rewards. viii. Align reward practices with both business goals and employee values
and ix. Operate in ways which are as follows –
1)Fair

2)Equitable

3)Consistent

4)Transparent

Fair: A fair reward system is one in which people are treated justifiably in accordance with
what is due to them and their value to the organization. Fairness means that the reward
system operates according to the principles of distributive and procedural justice. Distributive
justice is provided to people what they believe that rewards have been distributed in
accordance with the value of their contribution, that they receive what was promised to them
and that they get what they need. Procedural justice conforms to the ways in which
managerial decisions are made. The following are the five factors which affect procedural
justice:

1) The viewpoint of employees is given proper consideration.

2) Personal bias towards employees is suppressed.
3) The criteria for decisions are applied consistently to all the employees.
4) Employees are provided with early feedback, about the outcome of decision.
5) Employees are provided with adequate explanations of why decisions have been
made.
Equity: Equity is achieved when people are rewarded appropriately in relation to
others within the organization. Equitable reward processes ensure that relativities
between jobs are measured as objectively as possible and that equal pay is provided
to employees for their work of equal value.
Consistent: Consistent means decisions on pay should not differ randomly among
different people or at different times.
Transparent: Transparency means that people understand how reward processes
operate and how they are affected by them. The reasons for any decisions are
explained to them at the time they are made.

Theories of Compensation Management: There are three main theories that are used by
human resources professionals when developing compensation management plans:

1. Reinforcement Theory
2. Equity Theory

3. Agency Theory

Reinforcement theory is similar to that of operant conditioning. If a person is rewarded for

a particular behavior, he or she is more likely to perform those actions again. You can
probably think about a time when you did something that made your parents or teacher happy
and you were rewarded in some way. The positive reaction motivated you to do the same
actions again because you would anticipate getting the same or a similar reward.

Equity theory suggests that employees' actions will be changed based on their perception of
how they are paid in comparison to their co-workers. For example, if you and Billy work the
same number of hours and have the same type of job and a similar level of work experience,
you would expect to be paid fairly and about the same salary. However, if you discovered
that Billy was paid more than you are, then your productivity will probably decrease so that
you are only working up to the level that is fair based on your new perception of your
compensation.

Agency theory attempts to use pay in order to get the different interests of people involved
with the company to become one in the same. There are many categories of people within a
company and each has their own set of priorities:

 Employees wish to have a safe workplace, to be paid fairly based on their level of
effort and maybe even share in company profits if the company is successful. (After
all, the company could not make profits without employees.)
 Management seeks to increase the productivity of employees and to be paid fairly
based on their level of expertise within the organization.
 Stockholders want the company to maximize profits by reducing costs (including
labour expenses) while increasing the value and reputation of the company.

As you can see, the priorities of each group can be in direct conflict. The agency
theory of compensation management can make it a priority to maximize productivity,
performance and the reputation of the company so that employees, management and
stockholders all ultimately have the same goals.
 Advantages:

Compensation Advantage was founded in 1994 to support organizations as they worked to

improve the effectiveness of employee compensation programs that support retention of top
performers. The firm has become the premier compensation consulting provider in Middle
Tennessee. Areas of support include:

 Market priced base pay salary structure development

 Market pricing jobs
 Job documentation (job descriptions)
 Determining FLSA Exemption status
 Specialty market surveys
 Team bonus program development
 Management bonus program development
 Sales incentive program development
 Employee recognition programs
 Total compensation program assessment
 Performance management programs
 Pay equity assessments

Disadvantages:

 Some workers are more productive than the others. This helps them to earn more
when the earning capacity among workers differs; it results in jealousy among
them.
 Workers tend to sacrifice quality for the sake of quantity. This results in the
production of sub-standard goods.
 In order to produce more workers will disregard safely regulations. This may
result in injury to workers and break down of machinery.
 Workers tend to over work and these results in under mining their health.
 Workers very often ask for compensation when ever production flow is disrupted
due to fault of management.
 Such tensions often create difficult managerial problems which may eventually
affect output.
 CHAPTER-5
DATA ANALYSIS AND INTERPRETATION
 DATA ANALYSIS

1) Main objective of your concern for the payment of wages and Salaries.

Attributes Respondents Percentage (%)

To retain present employee 5 10
To attract qualified and 38 76
competent
To project good image 7 14
All of these 0 0
Total 50 100
Source: primary data

Graphical representation:

Objective
80
76%
70

60

50

40
percentage
30

20 14%
10%
10
0%
0
To retain present To attract qualified To project good All of these
employee and competent image

INTERPRETAION: From the above graph I observed that 10% of employees said that
to retain present employees, 76% of employees to attract qualified and competent, 14% of
employee to project good image,0% of employees all of the above.
2) Day of salary you receive.

Attributes Respondents Percentage

On first day of the next 48 96
month
Before tenth day 2 4
No fixed date 0 0
Total 50 100

Source: primary data

Graphical representation:

Day of salary receive

120

100 96%

80

60
percentage
40

20
4%
0%
0
on first day of the next before tenth day no fixed date
month

INTERPRETAION: From the above graph I observed that 96% of employees said that
they get salary on first day of the next month, 4% of employees said that they get salary
before tenth day,0% of employees said no fixed date.
3) Cash is paying important role in employee compensation.

Attributes Respondents Percentage

Yes 39 78
No 11 22
Total 50 100
Source: primary data

Graphical representation:

cash is important role

90
78%
80

70

60

50

40 percentage

30
22%
20

10

0
Yes No

INTREPRETATION: From the above graph I observe that 78% of employees said yes,
22% employees said that cash is not an important role in employee compensation..
4) You satisfy with the wages and salary administration in Leela Krishna
Toyota, Visakhapatnam.

Attributes Respondents Percentage

Yes 42 84
No 8 16
Total 50 100
Source: primary data

Graphical representation:

Satisfaction with wages and salaries

90
84%
80

70

60

50

40 percentage

30

20 16%

10

0
Yes No

INTERPRETATION: From the above graph I observed that 84% of employees said
that, they are satisfying with their wages and salaries in leela Krishna toyata Visakhapatnam.
16% of employees said that employees are not satisfying with their wages and salaries in
leela Krishna toyata.
 4) Do you get fringe benefits?

Attributes Respondents Percentage

Yes 38 76
No 12 24
Total 50 100
Source: primary data

Graphical representation:

Fringe benefits
80 76%
70

60

50

40
percentage
30
24%
20

10

0
Yes No

INTERPRETATION: From the above graph I observed that 76% of employees get
fringe benefits, 24% of employees not getting fringe benefits.
6) Do you get performance rewards?

Attributes Respondents Percentage

Yes 48 96
No 2 4
Total 50 100
Source: primary data

Graphical representation:

Performance rewards
120

100 96%

80

60
percentage

40

20
4%
0
Yes No

INTERPRETATION: From the above graph I observed that 96% of employees said
that they get performance rewards, 4% of employees said that they are not getting
performance rewards.
7) You get bonus or not.

Attributes Respondents Percentage

Yes 49 98
No 1 2
Total 50 100
Source: primary data

Graphical representation:

Yearly bonus
120

98%
100

80

60
percentage

40

20
2%
0
Yes No

INTERPRETATION: From the above graph I observed that 98% of employees are
getting bonus, 2% of employees are not getting bonus.
8) Basis of company provides compensation to their employees.

Attributes Respondents Percentage

Base pay 42 84
Commissions 3 6
Travel/Meal/Housing 5 10
allowance
Any other 0 0
Total 50 100
Source: primary data

Graphical representation:

Basis of compensation
90 84%
80
70
60
50
40
30
20 10% percentage
10 6%
0%
0

INTERPRETATION:

From the above graph I observed that 84% employees select base pay, 6% of
employees select commissions, 10%of employees select travel/meal/housing
allowances, and 0% of employees select any other.
9) Kind of compensation you prefer.

Attributes Respondents Percentage

Monetary 48 96
Rewarding 1 2
Motivation 1 2
Holidays packages 0 0
Total 50 100
Source: primary data

Graphical representation:

Compensation prefered by employee

120

100 96%

80

60
percentage

40

20
2% 2% 0%
0
Monetary rewarding motivation holiday packages

INTERPRETATION: From the above graph I observed that 96% of employees prefer
monetary, 2% of employees prefer rewarding, 2% of employees prefer motivating,
and 0% employees prefer holiday packages.
10) Like to leave the organization, get chance higher wages or salary in
other organization.

Attributes Respondents Percentage

Yes 25 50
No 25 50
Total 50 100
Source: primary data

Graphical representation:

Employee will leave the organization when he gets higher

pay from another
60
50% 50%
50

40

30
percentage

20

10

0
Yes No

INTERPRETATION: From the above graph I observed that 50% of employees said
yes, 50% of employees said no.
11) TOYATA is providing better compensation package to the employees.

Attributes Respondents Percentage

Yes 45 90
No 5 10
Total 50 100
Source: primary data

Graphical representation:

Good compensation package is provided

100
90%
90
80
70
60
50
percentage
40
30
20
10%
10
0
Yes No

INTERPRETATION: From the above graph I observed that 90% of employees said
yes, 10% of employees said no.
12) Different type of compensation for different type of service.

Attributes Respondents Percentage

Yes 42 84
No 8 16
Total 50 100
Source: primary data

Graphical representation:

Different compensation for different service

90
84%
80

70

60

50

40 Percentage

30

20 16%

10

0
Yes No

INTERPRETATION: From the above graph I observed that 84% of employees said that
compensation is for different type of services, 16% of employees said that not
getting compensation for different types of service.
13) Compensation based more on group performance and less on
individual contribution.

Attributes Respondents Percentage

Yes 40 20
No 10 80
Total 50 100
Source: primary data

Graphical representation:

Compensation is based on group performance

90
80%
80

70

60

50

40 percentage

30
20%
20

10

0
Yes NO

INTERPRETATION: From the above graph I observed that 20% of employees said that
compensation based more on group performance and less on individual contribution,
80% of employees said that compensation is not based on group performance.
14) Procedure of receiving formal feedback by employees on company
policies, compensation, benefits, employee attitudes.

Attributes Respondents Percentage

Yes 46 92
No 4 8
Total 50 100
Source: primary data

Graphical representation:

Procedure for receiving feedback

100 92%
90
80
70
60
50
percentage
40
30
20
8%
10
0
Yes NO

INTREPRETATION: From the above graph I observed that 92% of employees said
yes, 8% of employees said that there is no formal procedure for receiving feedback.
15) Organization employee receive efficient performance appraisal.

Attributes Respondent Percentage

Yes 49 98
No 1 2
Total 50 100
Source: primary data

Graphical representation:

Efficient performance appraisal

120

98%
100

80

60
Efficient performance appraisal

40

20
2%
0
Yes No

INTERPRETAION: From the above graph I observed that 98% of employees said yes,
2% of employees said that employee not receiving efficient performance appraisal.
 CHAPTER-6
FINDINGS, SUGGESTIONS, CONCLUSION
FINDINGS

 76% of the respondents felt that the main objective of their concern for the payment
of such wages and salaries is to attract qualified and competent.
 96% of the respondents said that they get their salary on the first day of the next
month and 4% said that they receive it before tenth day.
 84% of the respondents felt satisfied with the wages and salary administration in your
concern whereas 16% felt dissatisfied.
 76% of the respondents said that they are receiving the fringe benefits.
 96% of the respondents said that they are receiving performance rewards and 4% said
no.
 98% of the respondents said that they were given bonus where 2% said no.
 84% of the respondents said that the company provides compensation on the base pay
basis.
 96% of the respondents prefer monetary benefits, 2% prefer rewarding, 2% prefer
motivation and 1% prefer holiday packages.
 50% of respondents prefer to leave the organisation if they get a chance at higher
wage or salary in other organisation and 50% did not prefer to leave.
 90% of the respondents think that TOYATA is providing better compensation
package to the employees and 10% don’t feel better.
 84% of the respondents feel that there are different types of compensation for
different type of services.
 78% of respondents feel that cash is still king in employee compensation.
 80% of respondents don’t feel compensation is based more on group performance and
less on individual contribution.
 92% of respondents feel that there is a procedure of receiving formal feedback.
 98% of the respondents feel that they receive effective performance appraisal.
SUGGESTIONS

 As a growing organisation, it makes sense to develop an improved compensation

strategy. The compensation provided must be satisfying the employees in the
organization.
 The organisation needs to attract the best candidates who can innovate and lead your
company in the industry.
 The compensation plan should offer more than just a competitive salary.
 Employees must be given the resources to maintain health on-site, so that they tend to
make an effort to be more aware of their personal health.
 Providing generous pay for performance with regular performance meetings each
quarter works better than a once-per-year evaluation.
CONCLUSION

Most employees don’t just work for the love of their job. People also want a decent salary
and other incentives that will reward them for their hard work.

Compensation includes monetary and non-monetary components. Compensation often

includes an employee’s base salary and additional benefits, such as health insurance,
retirement plans and performance bounces. The compensation packages a business offers to
employees affects the company’s recruitment rate, retention rate and employee satisfaction.

So proper compensation system plays a major role in the success of the organization and to
maintain the reputation of the company for the longer period of time in case of well
established companies like TOYATA. It is also a key element for the individual’s (employee)
satisfaction leading to increase in productivity and efficiency.
 ANNEXURE
BIBILIOGRAPHY
QUESTIONNAIRE
 BIBILIOGRAPHY

www.leelakrishnatoyota.com

Wikipedia

www.cartrade.com

www.hr.com

BOOKS:

TITLE AUTHOR YEAR EDITION PUBLISHING

PERSONNEL P.SUBBA RAO Mumbai-2000 Himalaya Publishing
MANAGEMENT House
HUMAN MR.L.M.PRASAD 2013 Himalaya Publishing
RESOURCE House
MANAGEMENT
QUESTIONNAIRE

I Bhagya Lakshmi, a Student of Aditya Degree College, Kakinada doing my

summer project as a part of our Curriculum designed by Adikavi Nannaya
University, Rajamahendravaram. I have selected a topic on compensation
Management in your Esteemed Organization as a part of my project work. I
kindly request you to spare your valuable time and fill the questionnaire and this
will be used purely for academic purpose only.

Name: Age:

Gender: Department:

Designation:

1. What is the main objective of your concern for the payment of such Wages
and Salaries?

a) To retain present employee b) To attract qualified and

competent

c) To project good image d) All of these

2. On which day you get your salary?

a) On fast day of the next month b) Before tenth day

c) No fixed date

3. Cash is paying important role in employee compensation?

a)Yes b) No

4. Are you satisfy with the wages and salary administration in your concern?

Yes/No

If No State Reasons:
5. Do you get Fringe benefits?

Yes /No

If Yes Mention:

6. Do you get performance rewards?

Yes/ No

If Yes How:

7. Where you given bonus are not?

Yes/No

8. On what basis company provide compensation to their employees?

a) Base Pay b) Commissions

C) Travel/Meal/Housing Allowance d) Any other

9. What kind of compensation you prefer?

a) Monetary b) Rewarding

c) Motivation d) Holiday packages

10. Would you like to leave the organization if you get chance at higher wage or
salary in other organization?

Yes/No

11. What do you think that TOYATA is providing better compensation package
to the employees?

a) Yes b) No
If “NO” than which organization do you think?

12. Is there different type of compensation for different type of services?

a) Yes b) No

13. Is Compensation based more on group performance and less on individual

contribution?

a) Yes b) No

14. Is there any procedure of receiving formal feedback by employees on

Company policies, compensation, benefits, and employee attitudes?

a) Yes b) No

15. In your organization employee receive effective performance appraisal?

a) Yes b) No

!!!!!!!!!!!!!!!!!!!!! THANKYOU!!!!!!!!!!!!!!!!!!!!

S.BHAGYALAXMI.

III BBA.

ROLL NO:38