A REPORT ON ORGANISATION STUDY AND PAYROLL

BY VAISHNAVI.M INDIAN INSTITUTE OF e-BUSINESS MANAGEMENT, (IIeBM) WAKAD, PUNE-57

MeBA- 2006-2008

A REPORT SUBMITTED ON PARTIAL FULFILLMENT OF THE REQUIREMENTS OF THE MASTERS IN e-BUSINESS ADMINISTRATION (MeBA) COURSE

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TABLE OF CONTENTS

S.NO DETAILS

PAGE NUMBERS FROM TO 1 3 5 6 7 8 9 10 11 12

I. II. III. IV. V. VI. 1.

Title page Certificates Table of contents Declaration Acknowledgement Synopsis Introduction

1 2 4 6 7 8 9 10 11 12

2. Objectives of the study 3. Terms of reference 4. Methodology

5. Part-I-History & Mission statement 5.1 History 5.2 Mission statement

13 14 20

13 19 20

6. Part-II-Organization study 6.1 Stores and Purchase department 6.2 Accounts and finance department 6.3 Maintenance department

21 24 27 28

23 26 27 28

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DETAILS

PAGE NUMBERS FROM 29 33 35 37 TO 32 34 36 43

6.4 Production department 6.5 Quality Control department 6.6 Commercial department 6.7 Personnel & Administration department

7. Part-III- Payroll administration 7.1 Employees 7.2 Employee remuneration 7.3 Employee cost budget 7.4 Fixed cost & variable cost 7.5 Labour cost 7.6 Payroll processing

44 45 46 54 61 61 62

44 45 53 60 61 61 63

8. Findings and inferences 9. Recommendations 10. Bibliography

64 67 69

66 68 70

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DECLARATION

I hereby declare that this project entitled “ORGANISATION STUDY AND PAYROLL” is the result of the original work done by me under the guidance of.

I also declare that this project report is submitted on partial fulfillment of the requirements for the award of the degree of Masters Of e-Business Administration (Biotech) of Indian Institute of e-Business Management, Pune

The conclusion made in the report are based on the data collected by me while preparing this report

Place: Date:

VAISHNAVI M

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ACKNOWLEDGMENT

This project entitled “ORGANIATION STUDY AND PAYROLL” is the outcome of my summer internship at United Spirits Limited, Cherthala.

First and foremost, I would like to express my sincere thanks to Mr. K K Sasidharan, Personnel and Administration Manager for bestowing on me this rare opportunity to undergo my study in such an esteemed organization. I remember with profound gratitude, the guidance and invaluable help rendered by him to me for the successful completion of this project.

I am also deeply obliged to Mr. Jai Singh, Director, Indian Institute Of e-Business Management, Pune. Without his able guidance, expert advice and encouragement, this work would not have appeared in the present form.

I am also grateful to all my friends and relatives who extended their co-operation and encouragement for doing this project.

Last but not the least, I wish to utilize this opportunity to acknowledge faith in the Almighty. Without His blessings, this project would have reached nowhere.

VAISHNAVI M

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SYNOPSIS

This project was undertaken with a view to study the various elements involved in payroll administration and the functioning of various departments. The study was conducted in United Spirits Limited, Cherthala, Kerala. The study was conducted for a period of two months from May 29th to July 31st, 2007.

Secondary data was collected to study on employee remuneration, employee cost budget calculation etc. The data received was tabulated analyzed and conclusion was drawn based on the findings.

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1. INTRODUCTION
United Breweries Ltd (UBL), the flagship company of the UB Group, is the largest brewing company in India with a national market share of 50 per cent. Its flagship brand, Kingfisher, boasts a 40 per cent national market share. The brand is currently available in 52 countries outside India and leads the way amongst Indian beers in the international market. UBL owns 16 breweries strategically located all over India, where stringent brewing quality specifications are adhered to. UBL has entered into a strategic alliance with Scottish & Newcastle Plc, UK, who hold a 37.5 per cent stake in the company. This alliance will ensure that the Kingfisher beer brand receives a significant boost in overseas markets through S&N’s wide distribution network. The UB Group's spirits business, with 145 brands including 15 millionaire brands makes it the world's 3rd largest drinks group. In the fiscal year 2006-07, United Spirits Ltd. (USL) sold over 66 million cases of different brands. (Each case is of nine litres.) Some of the most popular brands from the UB stable are Bagpiper Whisky, the largest selling in India and also the largest selling whisky in the world; McDowell’s No.1 Brandy, the largest selling brandy in the world; and McDowell’s No.1 Celebration Rum, which is the 2nd largest selling rum in the world. United Spirits Limited (USL), Cherthala is one among UB groups profit making unit with a turnover of Rs 62 crores.

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2. OBJECTIVES OF THE STUDY

2a)Primary objective:
To find out the functioning of various departments of the organization and study in detail elements of payroll administration.

2b)Secondary objective:
To study in detail the procedures involved in calculation of: 1. 2. 3. 4. Employee cost budget Labour cost Percentage of fixed cost and variable cost Payroll processing

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3. TERMS OF REFERENCE

The study and analysis is based on the secondary data.

The main limitation is that certain details like executive remuneration; employee cost budget etc. being confidential in nature could not be presented in full detail in this project.

Since this study was to be completed within a period of just two months, time was also a major limiting factor.

Lack of experience in doing project is also a drawback of the study.

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4. METHODOLOGY

Mainly secondary data is used for doing this project, which is collected from: • • • USL leaflets Company’s Memorandum of Settlement In-House magazines 1. Pegasus 2. Drink blitz • • Manuals Annual reports

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5. PART-I- HISTORY AND MISSION STATEMENT

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5.1 HISTORY
5.1.1 It was in the isolated hamlet of varanad, situated in the backwaters of the Vembanadu running through the Cherthala district of Kerala that the late Vittal Mallya ventured into the liquor manufacturing business. 5.1.2 The Cherthala district had been a bottler of imported liquor brands such as Dorville and Honey Bee, but switched entirely to manufacturing when its first unit was commissioned in 1960, and went into production of Indian Made Foreign Liquor (IMFL). 5.1.3 An exclusive portfolio of liquor brands has flowed from Cherthala ever since. Gold Star Brandy, Club Blend whisky and Golden Grape Brandy are just three of the brands introduced over four decades ago, which continues to have loyal followings today 5.1.4 Grape processing and malt distillation started here in 1964. In 1969, Cherthala gave Indian whisky drinkers their first taste of light-bodied Diplomat. 5.1.5 Then, in 1973, McDowell’s No1 whisky arrived. It set the trend for a whole range of whisky blends, including bagpiper which almost instantly became the best seller in its price category. 5.1.6 McDowell’s Premium whisky, the pride of Cherthala, was introduced in 1979, and Rare Old Cask Rum in 1981. Even today these brands have a place of pride among all Indian whiskies and rums and compare most favorably with the best known brands worldwide. Their introduction was followed by the re-launch of Diplomat whisky, re-blended and re-packaged. 5.1.7 Since its acquisition by McDowell in 1951, Cherthala has been instrumental to the success of the company; McDowell is of course, very much older than the distillery. In fact, the company dates back to 1826, when it was founded by Michael McDowell in Madras. 5.1.8 It began as a trading company, importing wines and spirits from the most famous European liquor houses of the time, including Bisquit, Dubouche, Falcon beer and Heineken. Later, it moved into tobacco and tea. Very much later, in 1947, it was taken over by Bathgate & Co. of Calcutta. 5.1.9 Four years later, in 1951, United Breweries Limited became McDowell’s managing agent.
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5.1.10 In the 70’s, McDowell & Co.Ltd, extended its operations countrywide under Vittal Mallya’s able chairmanship. New units were set up, and several running manufacturing and marketing units were taken over. The Hyderabad unit began in 1971, Goa in1973,Hathidah in 1975. United Breweries Limited fast became the holding company of an entire Group and the group itself led the Indian liquor business. 5.1.11 In 1958, Phipson & Co. Ltd. was acquired. In 1961, Carew & Co. Ltd. became a part of the group. In 1973, Herbertsons Ltd., a company established in 1936, was acquired by the UB Group. Herbertsons Ltd. is India’s third largest spirits company today. 5.1.12 Then, in the mid 70’s, it seemed that an official prohibition drive might send the liquor business into a tailspin. But, convinced that the setback would not last, Vittal Mallya moved to strengthen the Group even further. Units in Udaipur, Alwar, Mirganj and Trichur were acquired. 5.1.13 He was right, of course, indeed, the premier position of the Group today is owed almost entirely to his dynamic leadership. 5.1.14 That leadership is a legacy which has been almost remarkably reinvested and multiplied by his son, the current Chairman of the United Breweries Group. 5.1.15 Mr. Vijay Mallya, the current Chairman of the UB Group, took over in 1983. Since then, the Spirits Division has earned a reputation for innovation in product development, manufacturing and marketing strategies. 5.1.16 5.1.17 In 1985, McDowell & Co. Ltd, Cherthala celebrated its 25th year. Consolidated Distilleries Ltd. was started in 1987.

5.1.18 In 1991, the plant was innovated to raise its production capacity from 6000L/day to 12000L/day. New products like Vintage whisky; Celebration Rum, etc were launched. 5.1.19 Carew Phipson Ltd. and Consolidated Distilleries Ltd. were merged with McDowell & Co. Ltd. in 1995. 5.1.20 In 2000, batch fermentation was replaced by continuous fermentation and hence the production rose to 20000L/day. Most popular brand like Brandy and Signature whisky were launched. Triumph Distillers & Vintners (TDV) was acquired in December 2002.
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5.1.21 In 2002, the ETP system-Praj system was introduced. This was first of its kind in India then. 5.1.22 Increasing the holdings in Herbertsons Ltd (HL) (February 2005).

5.1.23 In June 2005, Shaw Wallace and Co.Ltd – the second largest player in Indian Spirits market was acquired by UB group. 5.1.24 Further in 16-10-2006 the name of the company was changed from McDowell to UNITED SPIRITS LIMITED.

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5a) VITTAL MALLYA 5.1.25 All those who knew Vittal Mallya remember him for his simplicity. And his excellent acumen of accounting, a trait which helped the Dhakaborn Mallya invests heavily in shares of the United Breweries in the late 40s with an eye on its eventual acquisition. Old-timers fondly recall how he remembered his son's losing one paisa while playing and registered the amount against his account. 5.1.26 Youngest of the three children of an army doctor [Lt Col Bantwal Ganapathi Mallya], Mallya capped an outstanding academic career with two of India's most prestigious educational institutions (Doon School and Presidency College) and traveled abroad for over two years to gain first-hand, practical knowledge that he believed to be more valuable than formal education. 5.1.27 Mallya initially operated out of Calcutta and married much later after he had become the chairman of United Breweries. He migrated to Bangalore with his wife, Lalitha Ramaiah and son, Vijay in 1958. 5.1.28 Despite ill-health that followed a massive heart attack at a relatively young age of 39, Mallya slowly and steadily built the UB Empire and diversified into a host of allied businesses. His exemplary business acumen was evident when he defied all odds to acquire a host of breweries during the heady days of prohibition of the Janata Party regime of Morarji Desai. 5.1.29 In the 80s, Mallya started handing over the mantle of control - primarily beer and spirits - of the large UB Empire to his son, Vijay, whom he had sent to the United States and England to train with some of the best global corporations. At the same time, he encouraged his son to expand the business beyond the shores of India and subsequently opened offices in New York and London. 5.1.30 Till his death in 1983, Mallya remained the idol of millions who adored him for his tenacity in understanding people both rich and poor. The current UB headquarters is located on Vittal Mallya Road in Bangalore, fondly named after one of its illustrious leaders.

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5b) VIJAY MALLYA 5.1.31 Vijay Mallya, 51, was elected by shareholders as Chairman of UB in 1983, at the age of 28. He previously assisted his father, the former Chairman, who passed away in the same year. 5.1.32 Prior to being entrusted with the responsibilities of a classical Indian corporate conglomerate, Vijay Mallya worked for the American Hoechst Corporation (now Sanofi-Aventis) in the USA and with Jenson & Nicholson in the U.K. Since 1980, he assisted his father, then Chairman of The UB Group in managing the important Brewing and Spirits Divisions and in re-launching the Kingfisher Brand of Beer. In 1983, the sales volume of the UB Spirits division was approximately 2.85 million cases and UB’s beer business trailed behind that of Golden Eagle from Mohan Meakins. Also included in the Group were activities such as Pharmaceuticals, Agrochemicals, Paints, Petrochemicals and Plastics, the manufacture of Electro-mechanical Batteries, the manufacture of food products and carbonated beverages, a fast-food Pizza chain and several medium and small scale industrial units. 5.1.33 Upon assuming the position of Chairman in October 1983, Vijay Mallya initiated the process of defining a corporate structure with performance accountability, inducting professional management and consolidating the unwieldy empire into individual operating divisions. 5.1.34 In 1988, Vijay Mallya became a non-resident Indian to pursue global opportunities and to transform The UB Group into India’s first multinational company. While, in the initial stages, overseas representative offices had been commissioned, the real break came in 1988 when Vijay Mallya, in a leveraged buyout acquired the global Berger Paints Group with operating companies across four continents. The exit strategy for this investment was profitably executed when Vijay Mallya successfully directed five Initial Public Offerings on the London, Singapore (Main Boards), Nairobi, Jamaica and Abidjan Stock Exchanges. The paints business was divested for significant value in 1996.

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5.1.35 Vijay Mallya also founded a software company in the USA in 1993 which was subsequently listed on the NASDAQ in 1996 and which provides a considerable window of opportunity to the vast US market. He also initiated several ventures for the promotion and globalization of UB brands and, in particular, Kingfisher and McDowell. 5.1.36 In 1990, following the Government of India’s liberalised economic policies, Vijay Mallya decided that the UB Group would only retain interests in businesses that were globally competitive and which did not depend upon fiscal tariff protection. He also decided to focus on areas of core competence and transformed the vastly diversified UB conglomerate into a handful of key operating businesses. The 9th of May 2005 saw the launch of Kingfisher Airlines in India, an ambitious US$1.8 billion project. 5.1.37 Vijay Mallya is the Chairman of public companies both in India as well as in the USA. He has been the Chairman of Aventis Pharma India (previously Hoechst) as well as the Chairman of Bayer Crop Science in India (previously Agrevo) for over 20 years, in addition to his Chairmanship of several other corporations.

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5.2 MISSION STATEMENT

5.2.1

UB GROUP-MISSION STATEMENT

We constitute a large, global group based in India. We associate with world leaders in order to adopt technologies and processes that will enable a leadership position in a large spectrum of activities. We are focused on assuming leadership in all our target markets. We seek to be the most preferred employer wherever we operate. We recognize that our organization is built around people who are our most valuable asset. We will always be the partner of choice for customers, suppliers and other creators of innovative concepts. We will continually increase the long-term value of our Group for the benefit of our shareholders. We will operate as a decentralized organization and allow each business to develop within our stated values. We will be a major contributor to our National Economy and take full advantage of our strong resource base. We commit ourselves to the ongoing mission of achieving Scientific Excellence. 5.2.2 UNITED SPIRITS LIMITED-MISSION STATEMENT

Investing in the core brands to meet ever changing consumer expectations. Offering quality products and value for money to the consumers. Constantly controlling costs to be the lowest cost producer. Participating with the Government in policy formulation. Creating an organization that is responsive, positive and driven by business and social needs.

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6. PART-II-ORGANISATION STUDY

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6.0.1

United Spirits Limited, Cherthala has eight departments under its management which are as follows:

1) Stores and Purchases department 2) Accounts and Finance department 3) Maintenance department 4) Bottlery
Production Department

5) Distillery 6) Quality Control 7) Commercial department 8) Personnel and Administration department

Each of these departments and their main functions are described further.

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ORANISATION CHART- UNITED SPIRITS LIMITED, CHERTHALA.

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6.1 STORES AND PURCHASE DEPARTMENT
DEPARTMENTAL STRUCTURE

6.1.1 This department headed by the manager looks after the procurement of raw materials, its storing and maintenance. The management has given 3 month rolling plan to the department. The department is responsible to purchase and store the materials foe production and maintain the records for the same and to prepare GRN and GRR. 6.1.2 The stores and the purchase department can reject the purchased materials if so required, after it has been checked by the quality department. 6.1.3 The department has a sufficient warehouse facility for storing both purchased material and finished goods. For storing the finished goods there is an IMFL go-down with capacity of 40000 cases and which is nearby the department. One case carries 9 liters of blend.

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6.1.4 Molasses is being purchased from different parts of India such as Up, Maharashtra, Tamil Nadu, Andrapradesh, Karnataka, and the company also has an oversea contract with Iran. Furnace oil is purchased from Indian Oil Corporation. Scotch is imported from United Distilleries, Scotland. Grape spirit for the production of whisky is purchased from Goa, Baramathi Distilleries, Maharashtra and the most of other purchases are localized. FIFO method is used for dealing the stock. The firm allows a normal loss of 3% for bottles and 1% for molasses. 6.1.5 The unit has a central Materials Management Division(MMD) at Mangalore to control all purchases of raw materials and packing materials for United spirits limited. The companypurchased the generators from Kirloskar India Ltd., boilers from Westor works, Mumbai and water treatment plant from ION Exchange India Ltd. 6.1.6 Major factories, Which supply Bottles, Labels, Mono carton, PP caps to the company are as follows:(a) Bottles Mahalakshmi Glass Ltd, Mangalore Haldyn Glass Ltd, Mangalore Excell Glass Ltd, Alappuzha (b)Pet Bottles Livia Polimer, Chennai. (c)Lables Print effect, Mumbai Chorma Prints, Chennai Alert Packing House, Mumbai (d)Mono carton Manohar Canisters (e)Master carton Pampa Trade & Commerce, Palarivattam, Ernakulam Super Packing Industries, Aroor (f)Pilfer Proofs Caps Oriental Closures, Mumbai L&T, Mumbai Metal Closures, Mumbai.
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(g)Transport agencies Ashra Transport Best road-Lines East India Transport Agency Kalpaka Transport company Kerala Transport Company Sc Bross Lorry Transport Service Balmurugan Transport Bharath Transport Corporation Sri Sai Krishnan Transport. All these transport agencies are Ernakulum based agencies.

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6.2 ACCOUNTS AND FINANCE DEPARTMENT
DEPARTMENTAL STRUCTURE

6.2.1 Finance is life-blood of any business. Finance department Is headed by the Finance Manager, who looks after the financial dealings of the company.th department is in charge of maintaining all financial documents such as journals, ledgers, income statement, balance sheet. 6.2.2 The company, besides growing revenues, showed an improved profitability ratio as in obvious from the ratio of earnings before interest & tax (EBIT) to sales growing from 3.9% to 4.61%. 6.2.3 The steady improvement in the fixed asset turnover is a measure of the efficiency with which fixed assets are employed. On an increasing revenue base, the gross block of assets has remained more or less constant over the last four years. The company has shown a turnover of Rs 62 crores last year.

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6.3 MAINTENANCE DEPARTMENT
DEPARTMENTAL STRUCTURE

6.3.1Maintenance department is headed by maintenance engineer, who looks after the mechanical and electrical maintenance for the company. United Spirits Limited, cherthala’s maintenance department is entrusted to perform the entire factory maintenance works. Company’s maintenance department is divided into two sections: Mechanical section Electrical section Both these sections together constitute the total of maintenance works. Company is also taking the external bodies on contract basis.

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6.4 PRODUCTION DEPARTMENT
DEPARTMENTAL STRUCTURE

6.4.1

Production department is headed by the Distillery manager who looks after the Distillery section, Bottlery section, Quality Control section and Effluent Treatment Plant for the company.

Various Products of United Spirits Limited, Cherthala 1. Brandy No 1 McDowell Brandy Ceasar Brandy Golden Bee Brandy Golden Amber Brandy VIN Grape Brandy
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2.Whisky Signature whisky Premium whisky No1. McDowell Whisky 3.Rum Old cask Rum(OCR) Celebration Rum (CLR) Tiger rum Ruby rum 4.Vodka Red Riband Vodka Absolute crystal Vodka 5.Gin Blue Riband Gin Forbes Dry Gin 6.4.2 Each day 350 trucks pass through the gates of the 52 manufacturing units of UB group’s spirits division. This is a milestone that is not with in the reach of any competitor in the country. 6.4.3 Each of the group’s owned units are ISO 9001 certified and maintain the highest standards of quality. 6.4.4 Production department is being divided into two separate sections as follows: a) Distillery b)Bottlery 2.5lacs of cases is the average monthly production unit of Cherthala (ENA is the basic component of liquor and is produced in distillery) 6.Raw materials for ENA production 6.4.5 In the past period the company had used raw materials like starchive materials, saccharine materials and cellulose materials. But the company is currently using the saccharine materials, mainly ‘molasses’ for the production of ENA, because of the costly nature of Starchive and cellulose materials. Molasses is the waste from sugar mills.

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7.Production Process 6.4.6 steps: The entire production can be summed up in following 4

8. Distillation 6.4.7 Distillation process plays a vital role in the production of branded liquor. ENA is the basic component for liquor. ENA is produced from distilling molasses. In the distillation process, first stage is fermenting the molasses with the media of yeast. For fermentation, company uses continuous fermentation system.

9.Blending 6.4.8 Blending is a process where different proportion of constituents is mixed up to produce wide range of products. In this process variety of products are produced by mixing of ENA and other ingredients in varying proportions. The main ingredients are ENA, malt spirit, grape spirit, rum spirit, imported Scotch whisky and caramel for different products. Contents of each product are as follows: Brandy - ENA+ grape spirit+ caramel+ essence Whisky - ENA+ malt spirit+ caramel+ essence Rum - ENA+ rum spirit+ caramel+ essence Gin - ENA+ essence Vodka - ENA+ essence

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10.Bottling 6.4.9 During bottling the different blends are filled in their respective bottles. Company is using four different sizes of bottle for bottling, which are as follows: 180ml- Quarter 375ml- Pint 500ml- Half 750ml- Full

The various steps of bottling are as follow:

Bottling section is divided into 12 lines each of which can function for 8 hours per day.

11.Effluent Treatment Plant (ETP) 6.4.10 ETP is also a part of the production department. It is waste management system of the company. The waste generated from the alcohol distillation plant is been dumped in this plant. This waste, known as spent wash is an organic pollutant that can prove destructive to the aquatic life if disposed without proper effluent treatment.

Operation 6.4.11 In this plant the company is nurturing a bacterium known as ‘Methanogenic Bacteria.’ This bacterium feeds on ‘spent wash’ and releases Biogas containing methane and carbon dioxide. Further methane is used for burning the boilers and carbon dioxide escapes into atmosphere. The water that remains is checked for its BOD and COD levels, treated and finally discharged into the Vembanadu Lake.

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6.5 QUALITY CONTROL DEPARTMENT
DEPARTMENTAL STRUCTURE

6.5.1

6.5.2

Unite d Spirits Limited; Cherthala has well advanced quality control systems. Company’s motto is ‘Quality is the most important product.’ From the initial stage to the final stage i.e. from the raw material to the finished goods, the company checks and assures quality. The QC laboratory is fully equipped with advanced technologies to analyze and ascertain the quality of the product. Molasses is classified into three types as per the sugar content in them. 48 per cent Sugar- 1st Quality 45%-48% Sugar-2nd Quality Below 45% Sugar- 3rd Quality But the company is using only the 1st and 2nd quality molasses for distillation. Third quality molasses is generally used for producing the cattle feed products. The quality department is making a routine analysis and censoring of water, other ingredients used for production, analysis of ENA and blends etc. All the packing materials like bottles, PP caps, labels, mono cartons, are thoroughly checked at the receipt in the laboratory. For doing different tests the lab has highly precise and sophisticated instruments like, Bursting Strength Tester(to identify the breakage limit of the car33

6.5.3

ton), Moisturizer Tester(to identify the moister content), Erma tester9for testing the color content), etc. Bottles are checked for weight, capacity, and other dimensions. The caps are checked for outer layers, metal thickness, shape, printed matter, enclosed matter etc. Labels are checked for printed matter, color combination, and shape. Mono cartons and master cartons are checked for shape, legends, logo, printed matter, Bursting strength, moister content etc. ENA and Blends are put across various censoring analysis. After finishing the blending process, a sample should be drawn from each blend for testing its color, velour, etc. The products are categorized on the basis of velour which is being calculated using a yardstick, .i.e. score. The quality experts calculate the score level. The score level of different products is given below: Vodka- 7score Whisky- 6.5score Gin- 6.5score Rum- 5.5score For different products different readings are fixed in the Erma Tester, each blend should show that color. The company has a taste panel that include, superintend of Quality department, Distillery Chief, Bottlery Manager, Plant Manager. The blend is approved for bottling, only if the taste panel approves the blend as OK.

6.5.4

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6.6 COMMERCE DEPARTMENT
DEPARTMENT STRUCTURE

6.6.1

Commerce department is headed by the commercial officer who deals with the dispatching of goods to KSBC. This Department is concerned with dispatching of finished goods in accordance with the orders. The procedure for dispatching of finished goods to KSBC includes the following steps: Step 1 Distillery section manager will check, whether the ordered quantity is being produced. Step 2 Then the plant manager will produce a bill which shows the quantity produced along with batch number to the excise circle officer in the factory. Step 3 Excise officer will check the document and he will send a sample of product to the Trivandrum Govt: Chemical Laboratory along with batch No. to conduct various tests to analyze the food grade and other details. Step 4 After all the tests are done, the laboratory will give a chemical report to the excise Circle Officer in the factory.

•

•

•

•

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Step 5 Excise Circle Inspector gives the permission to dispatch the finished goods along with bill, copy of chemical report to the excise Commissioner of KSBC. Step 6 When the goods are unloaded in the KSBC go down, the Excise Commissioner will send a excise verification certificate (EVC) to the company. The excise department in the factory gives transport certificates, after verification of finished goods. Commerce department is responsible to arrange the vehicles for dispatching with permit, give the way of transporting as pr the instruction of Excise department, prepare bill and maintain the records of dispatch of goods. If pilferage or other abnormal losses occurred, company has to pay to the excise.

•

6.6.2

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6.7 PERSONNEL AND ADMINISTRATION DEPARTMENT
DEPARTMENTAL STRUCTURE

• • • • • • • • • • •

The major functions of Personnel and Administrative department include:Recruitment Selection Payroll administration Training and Development Disciplinary activities Employee welfare Trade unions Performance appraisal Public relations Industrial relations and Administration

6.7.1

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A) RECRUITMENT AND SELECTION For workers and staff category 6.7.2 As of now United Spirits Limited, Cherthala has no vacancies. However, when need arises the staff and workers category are recruited via headhunting, media advertisement etc. Selection of workers and staff category are done by the selection committee of the company. This committee includes Personnel and administration manager, Unit head, and GM works. The company is also taking workers on contract basis. The retention of these workers is decided by the management. For executive category 6.7.3 The executive category’s recruitment and selection is done at the Head Office in Bangalore. In this category the company has a structured procedure for doing aptitude test, group discussion, physical examination, and personal interview. Company is also following the campus recruitment mode.

B) PAYROLL ADMINISTRATION 6.7.4 Pay roll administration and its procedures are discussed in detail in further pages.

C) TRAINING AND DEVELOPMENT 6.7.5 United Spirits Limited is giving both, on-the job training and off-the job training to the employees. 6.7.6 In the year 2003, System Analysis Program (SAP) was implemented. For its operation company had given training to the employees. 6.7.7 In 2004, the company has given a managerial training to the executives, titled as ‘QUALITY LEADERSHIP.’ 6.7.8 In 2006, December, Quality Circle training were conducted and three quality circles were formed which are functioning very well till date.

D) DISCIPLINARY ACTIVITIES
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6.7.9

The P&A department of the company takes care of all the disciplinary actions.

E) EMPLOYEE WELFARE 6.7.10 Employee benefit and services include any benefits that the employee receives in addition to direct remuneration. United Spirits Limited, Cherthala offers the following benefits to its employees: a)Working dress 6.7.11 Two pairs of working dress (2T/cotton sari and 2T/cotton shirts) are issued to the permanent workmen every year. 6.7.12 It is agreed that all permanent female workers will be given two sets of working dress (2T/cotton sari and 2 Blouse piece) 6.7.13 The workmen are to wear their uniform provided to them before punching in for duty. Without working dress entry will not be permitted to any section/department. b)Stitching charges 6.7.14 The stitching charges will be determined with the prevailing rate for each item at Cherthala at the time of disbursement of working dress or management will arrange the stitching of the uniform. c)Washing allowances 6.7.15 An amount of Rs 40/- per month is given to those who are provided with working dress. d)Toilet soap and towel 6.7.16 One ‘Life buoy gold’ soap and one towel (Karalla towel or ‘thorth’ which will cost not more than Rs 12/-) will be provided to all permanent workmen per month for washing purpose. e)Umbrella 6.7.17 One folding umbrella each are given to all permanent workmen and staff members per year.

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f)Foot wear 6.7.18 All permanent workmen and staff are given one pair of shoes every year. It is also agreed that ladies can have the option for getting either shoes or three pairs of Hawai chapels every year. Those who are given shoes are to wear them while on duty failing which disciplinary action shall be taken. g)Bata for drivers and other workmen 6.7.19 It is agreed that bata for drivers and other workmen on outstation duty are as follows: BREAK FAST Cherthala Alleppy, Ernakulum, & other major towns in the state. Rs 18/Rs 30/Rs 15/LUNCH/DINNER Rs 25/-

It is further agreed that wherever, the duty of the workmen/driver demands overnight stay, he will be paid an allowance of Rs 105/- for a full night stay (.i.e. 24 hrs duty) and in the event the workmen/driver returns to Head Quarters between 10pm and 12 midnight will be paid a sum of Rs 45 as allowance and it is agreed that they will not claim any OT or compensation off for the same. It is also agreed that whenever drivers go for overnight stay and return to head quarters after 12 midnight and 6 am they may report for duty 4 hours late and they will not be utilized for driving work on the day. It is agreed by the unions that in the event of the above the said drivers will do the job of the office attendants. Whenever a driver is required to work on a Sunday or holiday, he will be given a compensatory off on his return to Head Quarters. h)Leave travel allowance (LTA) 6.7.20 An LTA of Rs 350 is disbursed to 9 permanent workmen on muster roll seniority basis every month through salary. i)Health care 6.7.21 The workmen who are not covered under the ESI are paid 5% of their salary (basic+ FDA + VDA earned) for medical expenses per month. If an employee outside the purview of ESI Act meets with employment injury an amount equivalent to 100% of his monthly salary (basic+ FDA+ VDA) will be given to him based on the certificate issued by the OHC medical officer as compensation and the same will not attract any other benefits.

40

j) Canteen subsidy 6.7.22 A sum of RS 8/- per day is applicable to all workmen. The payment of the same shall be made to the canteen committee on the basis of muster roll strength and the total number of working days will be calculated by excluding Sundays, scheduled and unscheduled holidays and days on which general work is stopped due to reasons beyond the control of the management. However, subsidy will be paid to the workers who are engaged for OT for a full shift except in the case of the substitute duty. . k)Night shift allowance 6.7.23 Night shift allowance of Rs 8.75/- per shift is paid to permanent workmen who actually work in the 4pm-12mn and 12mn-8am shifts. l)Casual leave 6.7.24 10 days casual leave will be granted to all permanent workmen and staff members in a calendar year. Casual leave will not be allowed to accumulate. It is also agreed that whenever a person takes a half day leave in the forenoon he shall take permission from the department head for attending duty in the afternoon. m)Sick leave 6.7.25 It is agreed that all permanent workmen and staff will be given 10 days sick leave with full pay (basic+ FDA+ VDA) in a year. Sick leave will not be allowed to accumulate. Sick leave for more than 3 days at a stretch will not be granted without a medical certificate from a medical officer. n)Privilege leave (PL) 6.7.26 The eligibility for PL to workmen is as per the Factories Act and Rules thereto. Eligibility of PL for who had not worked for 240 days in a calendar year will be in accordance with the provisions of the Factories Act. Further it is agreed that the workmen will be allowed to accumulate unavailed PL to a maximum of 30 days with a facility for encashment of unavailed PL of the immediately preceding year. o)National and Festival Holidays 6.7.27 13 national holidays and festivals as specified below are declared in a calendar year 1. Republic day 2. Varanad temple festival 3. Vishu 4. Good Friday 5. May day
41

6. Ramzan 7. Bakreed 8. Independence day 9. Thiru Onam 10. 3rd Onam 11. Mahanavami 12. Gandhi jayanthi 13. Christmas It is also agreed that compensatory holiday will be given whenever any of the mentioned holidays fall on Sundays. p)Festival advance 6.7.28 It is agreed that one month salary (basic+ FDA+ VDA) will be given as festival advance during Onam to all permanent workmen and staff members. It is also agreed that this festival advance shall be recovered from the monthly salary into 10 equal installments. The recovery will start from the same month if the payment is made on or before 15th and recovery will start from the subsequent month if the payment of advance is made after 15th of that month. q)Vehicle loan 6.7.29 It is agreed that towards the cost of a new vehicle a maximum of Rs 17500/- or 50% of the value of the vehicle, whichever is less and in the case of a second hand vehicle (not more than 5 years old) an amount of Rs 13500/- or 40% of the depreciated value of the vehicle, whichever is less will paid as advance to permanent workman/staff of the company as per the conditions specified below: a) He/she should have completed 10 years of uninterrupted service with the company b) The amount so advanced will be recovered within four years without interest .i.e. in 48 monthly installments. c) No workmen/staff shall be given second loan for a vehicle during his service. However if there are no fresh applicants during an year the applications submitted by workmen/staff who have closed their loan account with the company will be considered provided the new applicant is given on expiry of 10 years after closing the earlier account. d) The amount in the case of new vehicle will be advanced only by cheque in favor of the dealer. e) The advance will be given to 10 workers and 3 staff members per year against applications received and on basis of seniority. f) The vehicle has to be hypothecated to the company within 15 days from the receipt of the cheque. If it is not done the company will recover the en42

tire advance amount with 18% interest from the salary/other payments due to the concerned employee.

F)TRADE UNIONS 6.7.30 United Spirit Limited, Cherthala has four recognized unions, namely: 1. McDowell & UB Employees Union 2. McDowell & UB Mazdoor Sangh 3. McDowell Staff Union 4. McDowell Employee Association These trade unions were formed after many bilateral discussions and finally in a meeting held on 17-12-2003 by the District Labour Officer, Alleppy, a settlement under section 12(3) of the ID Act 1947 was arrived at on the following terms.

r)Terms of settlement 6.7.31 This settlement consists of four articles relating to the following: i. Wages. ii. Other benefits. iii. Bonus and essential and continuous services. iv. General matters. 6.7.32 The settlement also consists of 4 annexure on the subjects as follows: i. ii. iii. iv. Production/productivity and production incentive scheme for workmen/staff. Special provision relating to staff category. Special provision relating to loading and unloading operations. Procedure for grievance redressal.

H)PERFORMANCE APPRAISAL 6.7.33 United Spirits Limited has its performance appraisal committee in Bangalore. This committee contains 6 members including the Personnel & Administration head of United Spirits Limited, Cherthala and it is only for the executive category.

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7 PART- III- PAYROLL ADMINISTRATION

44

7.1EMPLOYEES
7.1.1 The employees of United Spirits Limited, Cherthala can be broadly classified into four categories: 1. Workers 2. Staff. 3. Executives. 4. Managers. Details regarding the remuneration and incentive schemes for the executive and manager category being confidential are not stated in this project. However, wages salaries and incentives of the staff and workers category are elaborated below. A)Labour strength 7.1.2 a)Staff DEPARTMENT Stores and purchase Accounts and finance Maintenance Bottlery Quality control Commercial Distillery Personnel and administration Total number of Staff= 10 b)Workers DEPARTMENT Stores and purchase Accounts and finance Maintenance Bottlery Quality control Commercial Distillery Personnel and administration Total number of workers= 269 NO: OF WORKERS 11 Nil ETP- 7 Maint/Elect -15 197 1 2 32 4 NO: OF STAFF 1 Vacant 1 2 Nil 3 1 2 The company has a total labour strength of 279 employees.

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7.2EMPLOYEE REMUNERATION
7.2.1 Remuneration is the compensation an employee receives in return for his or her contribution to the organization. Remuneration occupies an important role in the life of an employee. For the employer too, employee remuneration is significant because of its contribution to the cost of production. A)ELEMENTS OF REMUNERATION 7.2.2 Typical remuneration of an employee comprises- wages and salary, incentives, fringe benefits, perquisites, and non monetary benefits. a) Wages and salary Wages represent hourly rates of pay and salary refers to monthly rate of pay, irrespective of number of hours put in by an employee. 7.2.3 1. STAFF Scales of pay There are five scales of pay for the staff category along with a promotion criteria as here in mentioned: Selection grade – grade I-A Rs 600-55-875-65-1200-75-1575-85-2000-100-2500-115-3075-130-3725-145-4450160-5250-175-6125-190-7025. Grade I Rs 550-45-775-55-1050-65-1375-75-1750-90-2200-105-2725-120-3325-135-4405150-5605-165-6430. Grade II Rs 500-35-675-40-875-45-1100-50-1350-60-1650-70-2000-80-2400-90-2940-1003540-110-4200-120-4920. Grade III Rs 450-30-600-35-775-40-975-45-1200-50-1450-55-1725-60-2025-65-2545-703105-75-3705-80-4345. Grade IV Rs 400-25-525-30-675-35-850-40-1050-45-1275-50-1525-55-1800-60-2100-652425-70-2775-75-3150-80-3550-85-3975-90-4425.
46

Settlement of wages and salary for:

The permanent staff members in Grade IV shall be considered for promotion to Grade III on satisfactory completion of nine years of service in Grade IV. Likewise, the permanent staff members in Grade III shall be considered for promotion to Grade II on satisfactory completion of 6 years of service in Grade III, and to Grade I after satisfactory completion of 6 years of service in Grade II. The promotion to the Grade I A (selection grade) from Grade I will be exclusively at the discretion of the management.

Fixed Dearness Allowance (FDA) 7.2.4 FDA of Rs 1094/- is paid to all permanent staff per month.

Variable Dearness Allowance (VDA) 7.2.5 All permanent staff are paid VDA at the rate of Rs 4.90 per point over 400 points cost of living index to Alleppy published by the Directorate of Economics and Statistics-Government of Kerala. For e.g. VDA calculation for the month of May 2007 is shown below: Cost of living index published for the month of May 2007 was = 1421 1421-400 = 1021 1201 * 4.90 = Rs 5002.90

Conveyance allowance 7.2.6 Conveyance allowance of Rs 378/- per month is paid to all staff members.

House Rent Allowance (HRA) 7.2.7 HRA is paid to all staff except for those who are provided with accommodation by the company. HRA is paid at the rate of 21% of Salary (Basic pay+ FDA).

47

2. WORKERS Scale of pay 7.2.8 There are 6 scales of pay for workers category, along with promotion criteria as follows: Grade I-A Rs 300-15-375-20-475-25-600-30-750-35-925-40-1125-45-1350-50-160055-1875-60-2175-65-2500-70-2850-75-3225-80-3625-85-4050-90-4500. Promotion to this Grade will be for workers who have completed seven years of service in Grade I.

Grade I Rs 265-10-315-12-375-15-450-20-550-25-700-30-850-35-1025-40-1225-45-1450-501700-55-1975-60-2275-65-2600-70-2950-75-3325-80-3725-85-4150. Promotion to this Grade will be for those workers who have completed a minimum 7 years of service in Grade II. Grade II Rs 235-8-315-10-415-15-550-20-650-25-775-30-925-35-1100-40-1300-45-1525-501775-55-2050-60-2350-65-2675-70-3025-75-3400-80-3800. Promotion to this Grade will be in completion of 7 years of service in Grade III. Grade III Rs 205-6-265-8-345-10-395-12-455-15-530-20-630-25-755-30-905-35-1080-401280-45-1505-50-1755-55-2030-60-2330-65-2655-70-3005. Promotion to this Grade is on completion of 7 years of service in Grade III-A Grade III-A Rs 190-5-240-7-310-9-355-11-410-13-475-16-555-18-645-20-745-25-870-30-102035-1195-40-1395-45-1620-50-1870-55-2145-60-2445-65-2770-70-3120-75-3495-803895. All recruits having SSLC and above will be confirmed in this grade and workmen in Grade IV will be eligible for promotion to this Grade only after completion of 8 years of service in Grade IV without any change in the nature of the work they are performing in Grade IV. Grade IV
48

Rs 175-4-215-6-275-8-315-10-365-12-425-15-500-20-600-25-725-30-965-35-131540-1715-50-1965-55-2240-60-2540-65-2865-70-3215-75-3590-80-3990. Workmen who are below SSLC are confirmed in this Grade. Sweepers, gardeners, cleaners, personal attendants, and other miscellaneous workers are presently in Grade IV and will be promoted to Grade III-A after 8 years of completion of their service in this grade. Fixed Dearness Allowance (FDA) 7.2.9 FDA of Rs 1234/- per month is paid to all permanent workers. VDA 7.2.10 VDA is paid at the rate of Rs 4.90 per point over 400 points cost of living index to Alleppy published by the Directorate of Economics and StatisticsGovernment of Kerala. Conveyance Allowance 7.2.11 An amount of Rs 108/- is paid per month to all permanent workers as conveyance allowance. HRA 7.2.12 HRA is paid at the rate of Rs 149/- per month to all permanent workmen.

SALARY CALCULATION STAFF (Rs) 400 1094 5002.90 313 378 7187.90 WORKERS(below SSLC) (Rs) 175 1234 5002.90 149 108 6668.90 WORKERS(above SSLC) (Rs) 190 1234 5002.90 149 108 6683.90

Basic Pay FDA VDA HRA Conv. Allowance TOTAL=

b) Incentives 7.2.13 Incentives, also called ‘payment by result’ are paid in addition to wages and salaries. Incentives may depend upon productivity, sales, profit, or cost of reduction efforts. United Spirits Limited has an incentive scheme depending on productivity.

49

Production incentive scheme 7.2.14 For distribution of Percentage incentive, workmen are divided into two categories as follows: 1. General 2. Bottlery All employees in Bottlery are eligible for incentive for bottling category; all others are in General category, including staff. For the calculation of incentive amount there is a system based on production, as follows:MONTHLY PRODUCTION IN CASES(C/S) GENERAL/STAFF Up to 64999 65000 65001-70000 70001-75000 75001-80000 80001-87000 87001-100000 Above 100000 Nil 40.00% 1.4% 0.8% 0.8% 1.0% 0.92% 0.78% INCENTIVE

BOTTLERY Nil 47.25% For every 1000 c/s “ “ “ “ “ 1.85% 1.85% 1.85% 1.85% 1.50% 1.20%

7.2.15 For example: Incentive calculation for a production of 1lakh is as shown below:Consider ‘A’ – workmen in BOTTLERY ‘B’ – employee in GENERAL category ‘C’ – STAFF

50

INCENTIVE PERCENTAGE MONTHLY PRODUCTION(c/s) Up to 65000 65001-70000 70001-75000 75001-80000 80001-87000 87001-100000 Total A 47.25 5*1.85 = 9.25 5*1.85 = 9.25 5*1.85 = 9.25 7*1.85 = 12.95 13*1.50 = 19.50 107.45 B 40 5*1.4 = 7 5*0.8 = 4 5*0.8 = 4 7*1.0 = 7 13*0.92 = 11.96 73.96 C 40 7 4 4 7 11.96 73.96

Incentive amount is: - 107.45% of 4210 for A : - 73.96% of 4210 for B : - 73.96% of 5083 for Staff

CALCULATION OF TOTAL INCENTIVE AMOUNT 7.2.16 For the calculation of percentage incentive the FDA amount is fixed as Rs 1000 for all permanent workmen and Rs 873 for all permanent staff members. Basic pay is assumed to be Rs 2000 for staff and Rs 1000 each for Bottlery and General category Basic FDA VDA Total Incentive amount A 1000 1000 2210 4210 4524 B 1000 1000 2210 4210 3114 C 2000 873 2210 5083 3759

a) Bonus 7.2.17 The annual bonus is paid in accordance with the provisions of The Payment of Bonus Act 1956. It is further agreed that in token of the good will pursuant to this settlement the workmen/staff members who cease to be covered under The payment of Bonus Act 1956 because of their wages/salary exceeding coverage limit (under the Act) will receive an ex-gratia payment equivalent to 95% of the Bonus payable to the workmen/staff members drawing the highest amount of bonus under the Act. 7.2.18 With the objective of improving attendance habits of the employees the management agrees to pay attendance bonus to the permanent workmen at the following rates.
51

Actual attendance-

280 days and above per year- Rs 950/270days but less than 280- Rs 750/-

260 days but less than 270- Rs 425/7.2.19 In order to discourage absenteeism it is agreed that those workmen who have not worked for a minimum of 240 days in a calendar year will not be eligible for his/her annual increment. For computing these 240 days the days for which a worker was incapacitated due to accident while on duty will be counted. The days of actual hospitalization during a calendar year will also be counted for computing 240 days provided he/she has not availed similar concession in the just previous year. For availing the above benefit only the medical certificates from the company approved hospitals X-Ray, KVM, Green Gardens and Government hospitals will be considered. Medical certificates in support of hospitalization should be submitted within three days of rejoining duty.

c) Fringe benefits a)Working dress 7.2.20 Two pairs of working dress (2T/cotton sari and 2T/cotton shirts) are issued to the permanent workmen every year. 7.2.21 It is agreed that all permanent female workers will be given two sets of working dress (2T/cotton sari and 2 Blouse piece. 7.2.22 The workmen are to wear their uniform provided to them before punching in for duty. Without working dress entry will not be permitted to any section/department. b) Stitching charges 7.2.23 The stitching charges will be determined with the prevailing rate for each item at Cherthala at the time of disbursement of working dress or management will arrange the stitching of the uniform. c )Washing allowances 7.2.24 An amount of Rs 40/- per month is given to those who are provided with working dress. d)Toilet soap and towel 7.2.25 One ‘Life buoy gold’ soap and one towel (Karalla towel or ‘thorth’ which will cost not more than Rs 12/-) will be provided to all permanent workmen per month for washing purpose.

52

e) Umbrella 7.2.26 One folding umbrella each are given to all permanent workmen and staff members per year. f)Foot wear 7.2.27 All permanent workmen and staff are given one pair of shoes every year. It is also agreed that ladies can have the option for getting either shoes or three pairs of Hawai chapels every year. Those who are given shoes are to wear them while on duty failing which disciplinary action shall be taken.

53

7.3EMPLOYEE COST BUDGET
7.3.1 The following tables show the procedure for calculation of employee cost budget.

BUDGETED SALARY EXPENSES FOR THE YEAR 2007-2008 **For illustration purpose the basic pay of all workmen including staff is assumed as Rs 1000 per head. All figures shown below are assumptions in order to illustrate procedure for calculation of employee cost budget and NOT the original budget of USL. 1 STAFF April basic of 10 staff FDA(1094*10) VDA April DA 1423-400=1023*4.90=5012.70*10 HRA Conveyance Allowance RME (Basic+ FDA+VDA*8.33%) TOTAL PER MONTH 12 MONTHS TOTAL DA DEFFERENCE 66*4.90*10*11 Jan, Feb, March ’08 increment TOTAL 1.1 WORKERS April basic of 269 workers FDA (1234*269) VDA April DA 1423400=1023*4.90=5012.70*269 HRA (149*269) Conveyance Allowance Washing Allowance RME (basic+ FDA+VDA*5%) Salary of trainees TOTAL PER MONTH 12 MONTHS TOTAL DA DEFFERENCE 66*4.90*269*11 TOTAL Extra wages giving for loading/unloading (Average*12) GRAND TOTAL
54

10000 10940 50127 3130 3780 5920 83897 1006764 35574 2000 1212132 12.12

269000 331946 1348416 40081 29052 10760 97468 3000 2129723 25556676 956940 26513616 400004 26913620 269.13

2 CASUAL & TEMPORARY (OUTSOURCING) IMFL stacking, monocarton assembly, ETP misc work, cleaning. Waste carton removal TOTAL 3 CANTEEN/CLUB SALARY 26 worker’s basic salary VDA April DA 1423-300=1123*3.5=3986.65*26 Washing allowance(32*26) Night shift (average) Overtime average TOTAL PER MONTH TOTAL FOR 12 MONTHS DA DEFFERENCE 66*3.55*26*11 TOTAL Less UB debit BALANCE 4 ROAD AND COMPOUND CLEANERS Wages of 8 employees=1000*8*12 Shelter room cleaning PF.ESI, Bonus, Service charge Contract maintenance workers wages(1000*3*12) INCREASE ANTICIPATING 20% PER HEAD TOTAL 96000 10000 150745 336000 150000 742745 15000 103658 832 700 42678 162868 1954416 67010 2021426 2021426 20.21 800000

800000

8.0

7.42

55

5 STIPEND TO APPRENTICE TRAINEES Electrical-employees-4 Plumper Welder Fitter Boiler Turner Instrumentation-3 Diploma-2 TOTAL PER MONTH TOTAL FOR 12 MONTHS 6 BONUS/EXGRATIA / Exgratia for 10 staff Workers-269*7500 Trainees bonus Canteen/club-26*3000 Miscellaneous TOTAL 7 LTA Staff (10*1291) Workers Club/canteen(8*1250) TOTAL 8 SPECIAL ALLOWANCE Night shift allowance(47*4*52*7) Staff PL encashment Workers PL encashment Attendance bonus TOTAL 68432 50768 521345 200000 840545 12910 0 10000 22910 75000 2017500 18000 128000 15000 2253500 4000 1000 1000 1000 1000 1000 3000 2000 14000 168000

1.68

22.53

0.22

8.40

56

9 PF/PENSION Staff salary Workers salary Canteen TOTAL 10 ESI Outsourcing Canteen/club Trainees 06-07 expecting demand after inspection TOTAL 11 PF ADMN/EDLI/WELFARE FUND Welfare Administration charges TOTAL 12 WELFARE OHC medicines Uniform Shoe/ chappal Canteen, club, cleaners(total 34 employees)- uniform Shoe/chappal for the above34 Soap & towel Canteen subsidy(269*25*8*12) Staff subsidy(10*25*9.25*12) Umbrella Recreation club contribution Staff club contribution Temple pooja Stitching charges TOTAL
57

156000 4487965 250000 4893965

48.93

42000 110000 4000 30000 186000

1.86

7800 290056 297856

2.97

45000 187200 82000 15000 10524 123400 645600 27750 28000 40000 94000 40000 150000 1488474

14.88

13 SECURITY Security officer Supervisor-3 Gaurds-23 Lady security-2 TOTAL Service tax@12.25% TOTAL PER MONTH TOTAL FOR 12 MONTHS 14 OTHER PERSONNEL COST School bus Annual gift to workers/staff Salary for OHC employees Annual get together Policy under workmen compensation TOTAL 15 OVERTIME PLANT/DISTILLATION Shift workers Boiler shut down maintenance TOTAL BOTTLERY Shift workers Bottlery Sunday cleaning Bottlery evening cleaning Warehouse OT loading (average of 2006-07) MECH: workshop (average of 2006-07) TOTAL GRAND TOTAL 25000 120000 91000 150000 450000 836000 3500 8200 74200 3256 89156 10922 100078 1200936

12.00

8.36

987320 8000 995320 427890 458902 789034 96785 67890 1840501 2835821

9.95

28.35

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7.3.2INCENTIVE CALCULATION FOR 2007-2008 Normal production per month- 140000 Over-time production per month-25000 Total production-165000 Incentive percentage (per month) Bottlery – 155.45 General – 105.16 Staff – 105.16 Incentive amount **Basic pay for all three categories is assumed to be Rs 1000 each. Bottlery (197 employees) Rs 197000 197000 435370 1026370 1398492 General (72employees) Rs 72000 72000 159120 375120 322476 Staff (10mployees) Rs 10000 8730 22100 50830 43452

Total Basic pay FDA VDA TOTAL Incentive amount

TOTAL PER MONTH = Rs 1764420 TOTAL FOR THE YEAR = Rs 21173040= Rs 211.73 lakhs

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TABLE SHOWING EMPLOYEE COST BUDGET (amount shown in lakhs) ACCOUNT HEADS Executives Salary & wages – permanent Salary & wages – casual & temporary Salary & wages – casual outsourcing Wages – canteen & club Wages – civil & colony cleaners Stipend – trainees Rent – HRA Rent – residential quarters Rent – Co. accommodation Lunch expenses PEP (executives) Bonus & Exgratia LTA Transport Medical expenses Special allowances Production incentive/commission PF/FPF/DLIF/SOCIAL SEC. ESI Gratuity Supper Annuation Fund Administration charges-PF/DLIF Pension- retired staff Provision of previous year SUB-TOTAL WELFARE/OTHER EXPENSES Club/uniform/canteen Staff training Security/watch and ward Hospitalization expenses Recruitment cost Other personnel cost SUB-TOTAL Overtime – regular Overtime – IMFL production Total overtime TOTAL 14.50 0.25 13.50 0.45 7.75 36.45 26.92 0 26.92 905.77 14.78 0.28 11.67 0.39 8.20 35.32 26.92 48.61 75.53 944.77 14.78 0.28 11.67 0.39 8.20 35.32 26.92 48.61 75.53 944.77 14.88 0.30 12.00 0.40 8.36 35.94 28.35 64.24 92.59 991.96 BGT 06-07 220.20 273.03 6.80 20.02 7.20 1.60 ACT 06-07 246.81 259.03 6.75 22.00 7.20 1.60 TOTAL 06-07 246.81 259.03 6.75 22.00 7.20 1.60 BGT 07-08 250.23 281.25 8.00 20.21 7.42 1.68

21.56 0.18

21.56 0.18

21.56 0.18

22.53 0.22

8.36 241.34 45.96 1.64

8.40 209.94 45.94 1.64

8.40 209.94 45.94 1.64

8.40 211.73 48.93 1.86

2.87

2.87

2.87

2.97

842.40

833.92

833.92

863.43

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7.4 FIXED COST AND VARIABLE COST

7.4.1. As per the analysis carried out with the data received from 2007-2008 employee cost budget, United Spirits Limited, Cherthala has a labour cost of which fixed cost comprises of three-fourth of the total and the rest arises from variable cost. The variable cost factors include VDA, bonus allowed, incentive, other personnel cost and the special allowances.

7.4LABOUR COST
7.4.1 United Spirits Limited, Cherthala calculates its labour cost as shown below:Labour cost Total employee cost (2007-2008) = Rs 991.96 lakhs Total production of the year (2007-2008) = 165000 cases i.e. Labour cost = 99196000/165000 = Rs 50.09

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7.5 PAYROLL PROCESSING
7.5.1. United Spirits Limited has a Centralized, Online payroll processing system. For the functioning of this system the company uses the application software provided by ‘RCS Technologies’, Bangalore. This application system known as ‘RCS payman’ is an automated browser based payroll management system for an organization. It reduces time and labour and with its multi-company and multi-location capacity it provides enhanced service. This system provides with the following features and services: • Configuration of organization hierarchy • Configuration of various salary components • Processing and reporting PF, ESI, Pay slip and other details • Changing Government/company statutory polices can be incorporated • Configurable loans and advances • Over time module • Swipe card interface • Salary details can be received on mobile SMS and e-mail • Incentives can be calculated on the variable performance of the employee region, sub-region and department wise.

7.5.2

The following details are to be entered in the payroll system for processing:-

a)Master details • • • • • • Company Employee Perk Gratuity Arrears Provident fund

b)Sub master details • • • • • • Earnings Deduction Leave Loan Bonus LTA

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7.5.3

7.5.4

All details including Basic salary, Service, eligibility, etc. of each employee is present in the server at the Head Office. The unit is required to enter details regarding, attendance, leave, over time details, Night shifts and VDA for the particular month. Further these data are put for processing, after which each unit can print its pay slips, and all other payment details regarding deduction and yearning. Salary is calculated from the previous month 26th-25th of the current month for the convenience of processing. Both overtime wages and salary are paid by the 5th day of next month by cash. For the staff salary is credited to their individual bank accounts.

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8. PART- IV- FINDINGS AND INFERENCES

64

The findings and inferences of this study conducted in USL, Cherthala is presented below in the form of a SWOT analysis.

1. STRENGHT
The company ranks second largest in the global market The company is the market leader in Indian market Company maintains a good employer-employee relationship Company promotes its employee participation in management Company has high goodwill to add to its asset Company has a sophisticated quality control system Company has high end production technologies Company has gains of 40% of biogas by treating effluents for burning boiler Company has well defined employee cost budgeting system Company has formulated a well defined production incentive scheme, which so far has turned out great results for the company as well as the employees. Company has a systematic, technologically enhanced and timely payroll processing system. The welfare measures taken by USL are highly appreciable The various training programs conducted since the past two years has improved over-all discipline within the company. Strict security system enables hassle free functioning Company is following its standing orders

2. WEAKNESS
Company does not have any defined appraisal system for its workmen and staff category. Company has formulated an employee remuneration system of which 74.41% arises out of fixed cost.

3. OPPORTUNITY
The Indian liquor market now being a duopoly with USL and Sab Miller in the play, and USL being the leader has immense opportunity for further growth. Abolition of arrack has increased demand for the labeled foreign liquor.

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4. THREATS
Chances of molasses shortage in near future. Company has no proper place to dump its waste.

5.

INFERENCE

Over the last two years USL has shown a significant increase in its profits as well as the global and Indian liquor market. The company has taken all round measures including new product initiatives, maintaining and improving its product quality, cost controlling measures and various other mergers and acquisitions. USL has all-through maintained an efficient team of motivated and delighted employees which adds to its major strength. However, the company has to look into the various issues like; alternatives in case of shortage of molasses- its major raw material; increase the percentage of variable cost that constitutes labour cost and new alternatives for waste disposal.

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9. RECOMMENDATIONS

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9.1 After studying about the organization and its payroll administration procedures the following suggestions are made that would help more efficient working of the company

The company should try and increase the percentage of variable labour cost over the fixed cost. The company should bring in efficient performance appraisal system for the workmen and staff. The company should find proper means for more efficient waste disposal.

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9 BIBILOGRAPHY

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The following books and magazines were referred for the study of this project:1. Human resource management and Personnel management – k.Ashwathappa 2. Hand book on labour law – H.V.D Prasad 3. In house magazines i. Drink blitz ii. Pegasus 4. Company’s Memorandum of Settlement

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