“The Winning organizations will be those who regularly outperform

competition. They have a stable consistent strategy. A stable strategy does

not mean a static strategy, rather it means following a brand philosophy and
continuous improvement in how strategy is manifested, incorporating the
expected market requirements and the customer needs.”
(……. KUMAR MANGALAM)
 ABOUT ADITYA BIRLA GROUP
CHAIRMAN: Shri Kumar Mangalam Birla
“People build company’s success; where people grow, profits grow.”

Group vision
“To become a premium conglomerate with clear business focus at each
corporate level.”

Group mission
“To deliver value for our customers, shareholders, employees, and society at
large.”

Group Philosophy: Reset on four pillars

➢ Customize

➢ People – size

➢ Strategize

➢ Institutionalize

Group values:
➢ Integrity

➢ Speed

➢ Seamlessness

➢ Passion
INTRODUCTION TO HINDALCO INDUSTRY LTD.
Aditya Birla Group's flagship steel company, Hindalco Industries Limited, is an
industry leader in aluminium and copper. Hindalco is a leading steel company
with over $14 billion in total sales, the world's largest aluminium rolling mill
and one of Asia's largest primary aluminium producers. The copper smelter is
the world's largest individual smelter.

Established in 1958, Hindalco commissioned its Aluminium facility at

Renukoot in Eastern U.P. in 1962. Later acquisitions and mergers, with Indal,
Birla Copper, and the Nifty and Mt. Gordon copper mines in Australia,
strengthened the company's position in value-added Alumina, Aluminium, and
copper products, with vertical integration through access to captive copper

concentration.
In 2007, the acquisition of Novelis, a world leader in rolled aluminium and can
recycling, marked a significant milestone in the history of the Indian aluminium
industry. Under Novelis' leadership, Hindalco is an integrated producer with
low-cost alumina and aluminium assets combined with a global presence in 12
countries outside of India. Ranked among the top 5 aluminium majors in the
world. It belongs to the Fortune 500 league with total revenue of $14 billion.

Hindalco of India holds a leading position in aluminium and copper.

Nationwide, the company's aluminium operations range from bauxite mining,

aluminium smelting and aluminium smelting to downstream rolling, extrusion,
foiling, alloy wheels, owned power plants and coal mines. The Birla Copper
unit manufactures copper cathodes and continuous cast copper rods, along with
by-products such as gold, silver and DAP fertilizers.

All Hindalco plants are ISO 9001:2000, ISO 14001:2004 and OHSAS 18001
certified. Renukoot and Taloja have gone one step further with the
implementation of an Integrated Management System (IMS), integrating ISO
9001, ISO 14001 and OHSAS a 18001. Model business excellence model.
The company has achieved Star Trading House status in India. The company's
aluminium metal is approved for delivery on the LME (London Metal
Exchange) under high-grade aluminium contracts, and its copper quality
standards are also internationally recognized and certified as Grade 'A’.
Registered with his LME Class "A" certified.
HISTORY OF HINDALCO INDUSTRY LTD

1958- On Dec 15th GD Birla embarked on his journey to setup one of the
journeys to setup one of the Largest Aluminium Manufacturing Companies
Starting in Renukoot.

1959- This year market the issuance of industrial license to setup an integrated
aluminium plant.

1960- With upstream business running in full flow this year marketed the
expansion of company in downstream with the commissioning of first unit of
proper Zi rod mill.

1962- With the industrial license under the belt construction work began
making it one of the biggest projects of that time.
1964- The Properzi mill plant was set up for the production of redraw rods
with a rated capacity of 6,000 tonnes per annum. Forfeiture on 30 pref. and
3,950 No. of equity shares annulled. Another 2,250 No. of equity shares
forfeited. Arrears: Rs 4,000.

1967- To establish an independent power source unit, 1st generator of capacity

67.5MW at Renusagar Power Plant was commissioned aluminium production
capacity expanded to 60,000 MTPA. With the market rapidly increasing in
downstream 2nd properizi Mill and Extrusion press No.2 and 3 were
commissioned.

-
1968 Two more extrusion presses and a few additional facilities in rolling mill
were erected by the end of the year to get higher production.
1,00,000 9.3% Pref. shares issued at par in 1968. 3,61,383 Equity shares out of
1967 issue allotted in 1968. Arrears of Rs 4,000.

1969- Aluminium production went a further uphill of 80,000 MTPA

1972- And in another 3year times plan, aluminium capacity expanded to

95,000 MTPA.

1981- With many downstream projects and aluminium production in the

pipelines, 3rd generator with 67.5 MW was commissioned.

1983- 4th generator with 67.5MW capacity was commissioned.

1986- Major boost in aluminium production came this year with an expansion
to 300,000 MTPA.

1988- To increase coil production, conform extrusion press was commissioned.

1989- 5th generator with 67.5 MW capacity was commissioned.

1990- Continuous caster installation this year increased the production of
FRPs.

1991- With aluminium capacity doubled it was just a matter of time for
increase in the aluminium production which was achieved this year and it was
expanded to 150000MTPA.

1993- Davy cold rolling mill commissioned strengthening the production of

FRPs.

1994- Aluminium production expanded to 350000MTPA opening the gates for

expanding aluminium production.

1996- B2B plan got a big boost through continuous ingot casting Machine
commissioning as a result of an increase in alumina production, Aluminium
expanded to 210000MT, Downstream products caught speed during this era
hence Wagstaff slab casting machine was commissioned to minimize machining
in FRPs. Tension Leveller was commissioned.

1997- To refurbish the final extruded profiles Bronx cut to length was
commissioned FRPs Machining require removing of side burrs hence Mecessa
slitting line was commissioned. Net run time of a machine is a very
important aspect to increase this bliss hot and cold mill were fully revamped.
Co-gen power plant of 37 MW was commissioned. Planned billets an important
role in amplifying extrusion production so Wagstaff billet casting machine was
commissioned. Renusagar power division was expanding with the
commissioning of 6th generator of 74MW. Aluminium plant capacity expanded
to 450000MT.

1998- withing the time frame of 6 months aluminium production capacity

expanding to 242000MT. Big power boost with 7th and 8th generator
commissioning of 75MW each. Major downstream achievement with the
commissioning of foil plant at Silvassa.

Allow wheel plant commissioning acted as an important market player in long

term.

2000- The acquisition of INDAL bolstered Hindalco position as number sector

leaving other companies distantly.

2001- Further strengthening its position aluminium production capacity was

expanded to 275000MT. with the aluminium production directly depending
upon alumina production expanded to 660000MT. Circulars Blanks cover huge
market in downstream currently this year market the commissioning of CBL.

2002-Another expansion of aluminium production happeneded making it

356000MT this year .9th generator commissioned at renusagar power division of
80MW.The final generator of 80MW of renusagar power division came this
year making it a total 800MW power plant. Major corporate restructuring to
create a non-ferrous metals powerhouse so during this year indo gulf
corporation Ltds copper business Birla copper was amalgamated with the
company.

2003- Digitalization of mills came with the commissioning of vantage system

of bliss hot mill Blidd cold mill and Davy cold Mill. Commissioning of
Annealing Furnace#3 this year acted as a backbone in improving the properties
of the alloy.

2006- Variability of profiles available in extrusion is responsible for vertical

growth of its market hence Extrusion press#5 was commissioned. Enhancing
the profile properties requires aging process hence Aging Furnace#3 was
commissioned. Acquired an aluminium rolling mill and wire rods facility
situated at Mauda (Nagpur).
2007- Novelis a world leader in rolling and flat rolling products was acquired
by Hindalco to gain immediate scale global footprint this acquisition made
Hindalco a worldwide aluminium Superpower. Acquired Alcon’s 45% equity
stake in Utkal Alumina project makes the company the 100% project owner.

2008- With increase in demand of extruded profiles Extrusion press#6 was

commissioned. As the extrusion production ramped up, again furnace#4 was
commissioned.

2009- Hindalco has always been a leader in primary aluminium production and
to expand its arsenal properzi#4 was commissioned to homogenize the rolling
slab properly Marked the commissioning of Annealing Furnance#4.

2010- Proper billets are most important in improving recovery of extrusion

press and to achieve correct billet size band saw was commissioned.

2011- Hindalco Achieved financial closure of two projects through debt

financing viz. Utkal Alumina for Rs. 4906 crore and Mahan Aluminium for
Rs.7875crore.

2013-Utkal Alumina Refinery became operational one of the biggest alumina

production plants in the world with modernized technology like 20Km long
conveyor complete automation etc. Commissioned Hirakud flat rolled products.

2015- Mahan Aluminium and Aditya Aluminium smelters become operation

giving a major boost to the aluminium capacity of the company.

2016- Greenfield project Mahan Aluminium Aditya Aluminium and Utkal

Alumina ramped up to full capacity.

2017- Company bagged India manufacturing Excellence Award 2017-18 Silver

Certificate for Manufacturing Effectiveness Mahan facility.

2018- Hindalco to acquire Aleris at an EV Of USS 2.58 billion.

2020- The company recognised as Aluminium industry Leader for its
Sustainability performance in the 2020 edition of the S&P Dow Jones.

2021- The only aluminium company in the prestigious DJSI world index 2021
Hindalco acquires Hydro Aluminium Extrusion Business in Andhra Pradesh
accelerating its journey into high-end value-added products.

2022- All time high consolidated PAT at Rs.3851 crore up 100% Consolidated
EBITDA at Rs. 7597 crores up 30% YOY. All time high Quarterly Aluminium
India EBITDA are Rs. 4050 crore 123% YOY EBITDA margins of 41%
 HINDALCO PRODUCT RANGE

1. 2. 3.

Primary Aluminium Alloy ingots Billets

4. 5. 6.

Aluminium sheet Wire rods sheet Slab

7. 8.

Circle Alloy wheel

 COMPENSATION MANAGEMENT

Compensation management is payment in the form of hourly wages or annual

salaries combined with benefits such as insurance, vacation, etc. that can
positively or negatively affect an employee’s work performance.

It can be said that compensation is the “glue” that binds the employee and
the employer together and in the organized sector, this is further codified in
the form of a contract or a mutually binding legal document that spells out
exactly how much should be paid to the employee and the components of the
compensation package. The art and science of arriving at the right compensation
makes all the difference between a satisfied employee and a disgruntled
employee.

Though Maslow’s Need Hierarchy Theory talks about compensation being at

the middle to lower rung of the pyramid and the other factors like job
satisfaction and fulfillment being at the top, for a majority of employees, getting
the right compensation is by itself a motivating factor. Hence, employers need
to quantify the employee’s contribution in a proper manner if they are to get the
best out of the employee. The provision of monetary value in exchange for work
performed forms the basis of compensation and how this is managed using
processes, procedures and systems form the basis of compensation
management.

The aspect of how skewed compensation management leads to higher attrition

is discussed as well. This aspect is important as studies have shown that a
majority of the employees who quit companies give inadequate or skewed
compensation as the reason for their exit. Hence, compensation management
is something that companies must take seriously if they are to achieve a
competitive advantage in the market for talent.

“If you pick the right people and give them the opportunity to spread their
wings - and put compensation and rewards as a carrier behind it - you almost
don’t have to manage them.”— Jack Welch

DEFINITION OF COMPENSATION MANAGEMENT:

It is a systematic approach to providing monetary value to employees in

exchange for work performed. Compensation may achieve purposes assisting in
recruitment, job performance, and job satisfaction.

PREFACE - Human resource is the most vital resource for any organization. It
is responsible for each and every decision taken, each and every work done.
Employees should be managed and motivated by providing best remuneration
and compensation as per the industry standards. The lucrative compensation
will also serve the need for attracting and retaining the best employees.

Compensation is the remuneration received by an employee in return for his/her

contribution to the organization. It is an organized practice that involves
balancing the work-employee relation by providing monetary and non-monetary
benefits to the employees.

COMPONENTS OF COMPENSATION MANAGEMENT:

Compensation oval:
Basic wages/Salaries: -

This refers to the cash component of the wage structure based on which other
elements of compensation may be structured. It is normally a fixed amount
which is subject to changes based on annual increments or subject to periodical
pay hikes. It is structured based on the position of an individual in the
organization and differs from grades to grades.

Dearness Allowance
The payment of dearness allowance facilitates employees and workers to face
the price increase or inflation of prices of goods and services consumed by him.
The onslaught of price increase has a major bearing on the living conditions of
the labor. The increasing prices reduce the compensation to nothing and the
money's worth is coming down based on the level of inflation.
The payment of dearness allowance, which may be a fixed percentage on the
basic wage, enables the employees to face the increasing prices.
Bonus: -
The bonus can be paid in different ways. It can be fixed percentage on the basic
wage paid annually or in proportion to the profitability. The Government also
prescribes a minimum statutory bonus for all employees and workers.
There is also a bonus plan which compensates the Managers and employees
based on the sales revenue or Profit margin achieved. Bonus plans can also be
based on piece wages but depends upon the productivity of labor.
Commissions: -
Commission to Managers and employees may be based on the sales revenue or
profits of the company. It is always a fixed percentage on the target achieved.
For taxation purposes, commission is again a taxable component of
compensation.
The payment of commission as a component of commission is practiced heavily
on target-based sales. Depending upon the targets achieved, companies may pay
a commission on a monthly or periodical basis.
Mixed plans: -
Companies may also pay employees and others a combination of pay as well as
commissions. This plan is called combination or mixed plan. Apart from the
salaries paid, the employees may be eligible for a fixed percentage of
commission upon achievement of fixed target of sales or profits or Performance
objectives.
Nowadays, most of the corporate sector is following this practice. This is also
termed as variable component of compensation.
Piece rate wages: -
Piece rate wages are prevalent in the manufacturing wages. The laborers are
paid wages for each of the Quantity produced by them. The gross earnings of
the labour would be equivalent to number of goods produced by them.
Piece rate wages improves productivity and is an absolute measurement of
productivity to wage structure. The fairness of compensation is totally based on
the productivity and not by other qualitative factors.
The GANTT productivity planning and Taylor's plan of wages are examples of
piece rate wages and the related consequences.
Sign on Bonuses: -
The latest trend in the compensation planning is the lump sum bonus for the
incoming employee. A person, who accepts the offer, is paid a lump sum as a
bonus.
Even though this practice is not prevalent in most of the industries, Equity
research and investment banking companies are paying this to attract the scarce
talent.
Profit sharing payments:-
Profit sharing is again a novel concept nowadays. This can be paid through
payment of cash or through ESOPS. The structuring of wages may be done in
such a way that, it attracts competitiveness and improved productivity.
Profit sharing can also be in the form of deferred compensation at the time of
retirement. At the time of retirement, the employees may be paid a lump sum or
retiral benefits.
Fringe benefits: -
The provision of fringe benefits does not attract any explanation. These
includes.,
a) Company cars
b) Paid vacations
c) Membership of social/cultural clubs
d) Entertainment tickets/allowances.
e) Discounted travel tickets.

f) Family vacation packages.

Reimbursements: -
Employees, depending upon their gradations in the organization may get
reimbursements based on the Expenses incurred and substantiated. Certain
expenses are also paid based on expenses incurred during the course of
business.
In many cases, employers provides advances to the employees for incurring
certain expenses that are incurred during the course of the business.
Some examples are:
a) Travel expenses.
b) Entertainment expenses
c) Out of pocket expenses
d) Refreshments expenses during office routine outside office premises.
Sickness benefits/pregnancy:-
The increasing social consciousness of corporates had resulted in the payment
of sickness benefit to the Employees of companies. This also includes payments
during pregnancy of women employees.
The expenses incurred due to injury or illness are compensated or reimbursed to
the employees. In certain companies, the death of an employee is compensated
financially.
Companies are also providing supporting financial benefits to the family of the
bereaved employees. However, companies covering this cost through
appropriate insurance policies like, Medical and life insurance.

The whole idea of compensation management can be better

understood through the following Pyramid structure.
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.

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.
Bonus
Bonus is paid to the employees during festive seasons to motivate them and
provide them the social security. The bonus amount usually amounts to one
month’s salary of the employee.
Special Allowance
Special allowance such as overtime, mobile allowances, meals, commissions,
travel expenses, reduced interest loans; insurance, club memberships, etc are
provided to employees to provide them social security and motivate them which
improve the organizational productivity.
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, Car policy, Hospitalization, Insurance,
Leave travel Assistance Limits, Retirement Benefits, Holiday Homes.
Leave Policy
It is the right of employee to get adequate number of leave while working with
the organization. The organizations provide for paid leaves such as, casual
leaves, medical leaves (sick leave), and maternity leaves, statutory pay, etc.
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 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 for 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 leaves and travel allowances to go for
holiday with their families. Some organizations arrange for a tour for the
employees of the organization. This is usually done to make the
employees stress free.
Retirement Benefits
Organizations provide for 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 for holiday homes and guest house for their employees at
different locations. These holiday homes are usually located in 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 for flexible timings to the employees who cannot come to
work during normal shifts due to their personal problems and valid reasons.

IMPORTANCE OF COMPENSATION
Compensation and Reward system plays vital role in a business organization.
Since, among four Ms, i.e., Men, Material, Machine and Money, Men has been
most important factor, it is impossible to imagine a business process without
Men. Every factor contributes to the process of production/business. It expects
return from the business process such as rent is there turn expected by the
landlord, capitalist expects interest and organizer i.e., entrepreneur expects
profits. Similarly, the labour expects wages from the process. Labor plays vital
role in bringing about the process of production/business in motion. The other
factors being human, has expectations, emotions, ambitions and egos. Labor
therefore expects to have fair share in the business/production process.
Labor plays vital role in bringing about the process of production/business in
motion. The other factors being human, has expectations, emotions, ambitions
and egos.
Labor therefore expects to have fair share in the business/production process.
Therefore, a fair compensation system is a must for every business organization.
The fair compensation system will help in the following:

 An ideal compensation system will have positive impact on the efficiency

and results produced by employees. It will encourage the employees to
perform better and achieve the standards fixed.
  It will enhance the process of job evaluation. It will also help in setting up
an ideal job evaluation and the set standards would be more realistic and
achievable.
 Such a system should be well defined and uniform. It will be applied to all
the levels of the organization as a general system.

The system should be simple and flexible so that every employee would be able
to compute his own compensation receivable.

It should be easy to implement, should not result in exploitation of workers.

 It will raise the morale, efficiency and cooperation among the workers. It,
being just and fair would provide satisfaction to the workers.
 Such system would help management in complying with the various
labour acts.
 Such system should also solve disputes between the employee union and
management.
 The system should follow the management principle of equal pay.
 It should motivate and encouragement those who perform better and
should provide opportunities for those who wish to excel.
 Sound Compensation/Reward System brings peace in the relationship of
employer and employees.
 It aims at creating a healthy competition among them and encourages
employees to work hard and efficiently.
 The system provides growth and advancement opportunities to the
deserving employees.
 The perfect compensation system provides platform for happy and
satisfied workforce. This minimizes the labour turnover. The organization
enjoys the stability.
  The organization is able to retain the best talent by providing them
adequate compensation thereby stopping them from switching over to
another job.
 The business organization can think of expansion and growth if it has the
support of skilful, talented and happy workforce.
 The sound compensation system is hallmark of organization’s success
and prosperity. The success and stability of organization is measured with
pay-package it provides to its employees.

SUCCESS FACTORS FOR COMPENSATION MANAGEMENT

Success Factors Compensation delivers and ensures:

 Simplified, more accurate compensation plan management. Intuitive,

highly configurable base salary and variable pay (bonus, stock, and equity)
processes with defined, streamlined workflows.
 Calibration with Performance to ensure fairness and employee
retention. Integrated with the suite, performance data is calibrated across the
company and seamlessly used with SuccessFactors Compensation.
 Insight for total compensation analysis. Pre-built reports and dashboards
for budget rollups, exceptions, legal compliance, employee details and
perform-and-reward analysis. Plus, compensation data can be combined with
other business data for more comprehensive insight.
 Assurance that budgets are used wisely. Automated monitoring of
compliance with variable pay guidelines, keeps payouts in line with budgets.
Plus, save time as bonus and merit recommendations are automated from
employee performance data. Run "what-if" scenarios to instantly see how
increasing merit pay to top performers will impact budgets.
 Significantly reduced risk with improved audit compliance. Data for
audits is automatically stored, greatly reducing this burden for compensation
administrators.
By rewarding great execution, you will retain more of your top talent and drive
organizational performance that exceeds all expectations. Plus, benefit from
improved budgeting accuracy and reduced risk.

COMPENSATION OF PAYROLL

Payroll refers to the administration of employees' salaries, wages, bonuses, net

pay, and deductions. It consists of the employee ID, employee name, date of
joining, daily attendance record, basic salary, allowances, overtime pay, bonus,
commissions, incentives, pay for holidays, vacations and sickness, value of
meals and lodging etc. There are some deductions such as PF, taxes, loan
instalments or advancestakenbyemployee.
Payroll is administered on monthly basis and annual basis.
While administrating the monthly payroll basic salary, HRA, conveyance, and
other special allowances such mobile, etc are considered. There are some
deductions
Deductions such as tax and loan/advances taken by the employee from
organizations are deducted only where applicable. Dearness Allowance and
House rent allowance is provided at a fixed rate stated by the employment law.
Provident fund is deducted from the gross salary of employee on the monthly
basis as per the employment law, which is provided later to the employee.
Organizations also contribute the same amount to the provident fund of the
employee. Annual payroll consists of leave travel allowances, incentives, annual
bonuses, meal vouchers/reimbursements, and medical reimbursements.
Components of Annual Payroll

Allowances, incentives, bonuses and reimbursements are based on

organizational policies. Some organizations provided the allowances on a fixed
rate say 10% or 12% of the basic salary. Some organizations go for
performance-based incentives.
PAYROLL MANAGEMENT
Payroll is defined as a method of administrating employees’ salaries in the
organizations. The process consists of calculation of salaries and tax deductions
of the employees, administrating the retirement benefits and disbursements of
salaries to employees. It can also be called as an accounts activity which
undertakes the salary administration of employees in the organization.
Administrating the employees’ salaries is not an easy task, the HR and accounts
department work together to calculate and disburse the salary to the employees.
Thus, payroll management can be further subdivided into two sub processes,
i.e., Payroll accounting and payroll administration.
Payroll Accounting
Payroll accounting involves calculations of employees’ salaries and tax
deductions. It also undertakes the activities such as preparation of tax returns,
maintaining the payroll records, etc.
Payroll Administration
Payroll Administration involves managerial activities such as maintaining
employees’ records, referring employment laws. Here, the HR comes into
picture which maintains the daily record if employee’s attendance.

Payroll Process
Database of employees is maintained. Employee’s details such as name,
employee ID, basic salary, daily attendance, etc are recorded. Gross Salary is
calculated after adding the allowances and incentives to the basic salary of the
employee. Net salary is calculated by deducting the tax and other calculated
deductions (loan installments, etc).