INTRODUCTION

One of the most important factors in human resource management is compensation

management. The soundness of compensation management depends upon the amount of
wage or salary paid to an employee for a fair days work. Despite the conclusions of
morale studies, wage or salary is significant to the most of the employees, as it
constitutes a major share of their income. “Pay in one form or another is certainly one of
the main springs of motivation in our society”. Salary provides more than a means of
satisfying the physical needs. It provides recognition, a sense of accomplishment and
determines social status. Hence formulation and administration of sound remuneration
policy to attract and retain right personnel in right position is the prime responsibility
any organization.

Development and administration of sound wages and salary policies are not only
important but also complex managerial functions. The complexities stem from the feet
that on the one hand a majority of union management problems and disputes relate to the
question of wage payment and on the other, remuneration is often one of the largest
components of cost of production. Thus it influences the survival and growth of an
organization to the greatest extent.

The influence of the remuneration over distribution of income, consumption, savings,

employment and prices is also significant. This aspect assumes all the greater importance
in an underdeveloped economy like India where it becomes necessary to take measures
for a progressive reduction of the concentration of income and/or to combat inflationary
trends. Thus the wage policy of an organization should not become an evil to the
economy.

Human Resource is the most vital resource for any organization. It is responsible for
each and every decision taken, each and every work done and each and every result.
Employees should be managed properly and motivated by providing best remuneration
and compensation as per the industry standards.

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Compensation is the remuneration received by an employee in return for his or her
contribution to the organization. Compensation is an integral part of human resource
management which helps in motivating the employees and improving organizational
effectiveness.

Wage and salary administration is a fundamental business requirement

demanding accurate financial control in a timely manner. A rules based wage and salary
administration system will assist in controlling the work force costs; ensure the entire
workforce is being paid on time and according to compensation

Wage & salary administration refers to the establishment and implementation of

sound policies and practices of employee compensation. It includes such areas as job
evaluation, surveys of wage & salaries, analysis or relevant organizational problems,
development and maintenance of wage structure, establishing rules for administering
wages, wage payments, incentives, profit sharing wage changes and adjustments,
supplementary payments control of compensation costs and other related items. Wage
and salary administration of a systematic approach to the problem of ensuring that
employees are paid in a logical, equitable and fair manner.

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 IMPORTANCE OF WAGE AND SALARY ADMINISTRATION IN HR
MANAGEMENT

The goals of compensation administration are to design a cost-effective

pay structure that will attract, motivate and retain competent employees. Thus, wage
and salary administration aims to establish and maintain an equitable wage and salary
structure and an equitable labour cost structure.

Wage and Salary Administration is important for the following

reasons:

 Attract and Retain the Employees:

If an organization possesses good wage and salary structure, it will

attract and retain suitable, qualified, and experienced personnel

 Builds High Morale:

The wage rates established for various categories of jobs should be

internally consistent; it will motivate the employees of the organization. It will build
the high morale of employees and act as an incentive to greater employee productivity
and efficiency.

 Satisfied Employees:

A good wage and salary structure will keep the employees satisfied. There
will be lesser labor turnover, industrial disputes and employee grievances and
exigencies.

 Labor Cost Equitable:

A good wage and salary structure will maintain two types of equitabilities viz.,
(a) labor cost equitable and, (b) equitable wage and salary structure. Pay according to
the work performed by an employee. If an employee is performing hazardous work
pay him more.

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 Clearly drawn the line of promotion:

If a company has a good wage and salary structure, it can have a definite
sequence of jobs and clearly drawn the line of promotion.

 Image of Progressive Employer:

A good and definite wage and salary structure would enable the company to
project in the public. All image of a progressive employer.

 Harmonious Industrial Relations:

A good wage and salary structure will serve as a sound basis for
collective bargaining and enable the maintenance of satisfactory union-
management and employee-management relations.
 Ensure Minimum Wages:

A good wage and salary structure should also conform to the minimum wage
laws.

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 SELECTION OF THE ORGANIZATION

Navayuga Engineering Company Limited (NECL), the flagship entity of the Navayuga
Group started its operations in the year 1986 as a private limited company.It was
founded by Mr.C.Visewesara Rao and was located in Hyderabad.

Navayuga Engineering Company Limited (NEC), the flagship company of the

Navayuga Group, is an engineering and core infrastructure company that has carved a
formidable position for itself in the industry. Established to fulfil the dream of a
visionary, nurtured on homespun values, empowered by state-of-art technology, the
company has redefined the parameters of growth and contributed to India’s
infrastructure landscape with unparalleled commitment and foresight. Spreading its
wings, NEC has transcended national boundaries to make an impact on the global
arena.

“NEC's core ability to deliver projects on time, and within budget, has
received widespread recognition and accolades. Having successfully undertaken
several port development projects, we are poised to achieve the distinction of being the
largest developer and operator of ports in India. Further, company was embarking on
ambitious plans to undertake and execute some of the most challenging projects in the
most unforgiving terrains, not just in India but also globally. This, indeed, is a
testimony to NEC’s emergence as one of the world’s leading infrastructure companies.

Company drive to the top is powered by a perfect blend of youth and

experience across the management and workforce. This apart, cutting-edge technology
and equipment, underlying strength of the value-system and well-defined corporate
vision, all contribute to strong foundation of excellence.

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 NEED FOR THE STUDY

One of the essential requirements for successful operation of business is to attain and
retain talented, committed, ethical and loyal manpower. In paper industry, many
companies are sick because of absolute technology, equipment and untrained employees.
Even though to meet the challenges of the modern technology. Hence effective Human
Resource Programmers should be designed to develop employee’s competencies and
increase their contribution at all levels. In the light of the above circumstances it is felt
necessary to study how different organizations are dealing with the Human Resource
Management.

The study has been conducted to the wage and salary administration structure and its
determination process of the organization. The study mainly focuses onrewards,
incentives, fringe benefits, additional benefits and employee services provided by the
organization

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 SCOPE OF THE STUDY

The scope of the study is limited to Navayuga Engineering Company Limited

(NECL),Polavaram. In understanding a research work, its scope is normally defined
with respect to a geographical and time dimension. The fixing of such boundaries is
usually resorted to due to the problems posed by the administration of a large data.
This study therefore, conforms to enhance the salaries and wages of the worker within
the organization to increase their performance.

The study covers with extent of help to check all the activities of salary
administration against the company polices. An attempt was made to know the
pleasure of employees regarding their wages and salary administration.

Hence this study specially is focused on wages and salary administration

which is a key factor for employee job satisfaction.

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 OBJECTIVES OF THE STUDY

 To study wage and salary administration system at Navayuga Engineering

Company Limited.
 To study the level of satisfaction of employees about the various compensations.
 To study how wage and salary system provided help in increasing employees job
satisfaction.
 To study the rewards, incentive, fringe benefits provided to the employees in the
Navayuga Engineering Company Limited
 To analyze the suggestions for improving the effectiveness of wage and salary
administration.

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 METHODOLOGY OF THE STUDY

Methodology describes the method of achieving objectives through collection of data.

The data collected can be either primary or secondary. Primary data are those which
are collected for the first time and thus original in character.

Generally for any research the researcher has to collect the data from both primary &
secondary sources the primary data means that collection of data is through the
discussions with officials and personal observations of the researcher. The secondary
data means the data collected from the broachers, journals & publications of the firms
and from libraries.

Primary data:

The primary data has been collected through Questionnaire. It is also collected
through personal interview and interaction with the officials and staff in the
organization.

Secondary data:

The secondary data are obtained from text books, magazines, annual reports,
journals, records of the company and from the websites.

Sample size:

The size of sample is 100(respondents).The respondents include employees and few

managers in the organization. The respondents have been selected by using simple
random sampling method.

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 LIMITATIONS OF THE STUDY

 The study is purely based on the data available in the form of questionnaire.
 The management allowed the researcher to collect the data from limited
respondents only .
 Some of the respondents have shown lack of interest in providing answers
 This study is based only on the information given by the employees.
 Due to the limitation of the time the study has been confined to some of the
functional areas in the organization.

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 INDUSTRY PROFILE

The Construction Industry of India is an important indicator of the

development as it creates investment opportunities across various related sectors. The
construction industry has contributed an estimated US$ 308 billion to the national
GDP in 2011-12 (a share of around 19%). The industry is fragmented, with a handful
of major companies involved in the construction activities across all segments;
medium-sized companies specializing in niche activities; and small and medium
contractors who work on the subcontractor basis and carry out the work in the field. In
2011, there were slightly over 500 construction equipment manufacturing companies
in all of India. The sector is labor-intensive and, including indirect jobs, provides
employment to more than 35 million people.

Historically construction industry is one of the oldest and largest industry

in unorganised sector providing ample employment to the people. Before the
independence, the construction activity in India was confined to building of
dwellings, religious places like mosques and temples etc. at individual and
community level, with the use of traditional techniques, which are still being used in
developing countries like India.

The Taj Mahal and Lal Quila are the legandry example of competence of
Indian talent in the field of construction .However very authentic record of the
construction operation of these buildings are not available today. The history of
systematised or organised construction practice in India can be traced back to around
1847 AD when Lord Dalhouise established the Public Works Department, called
PWD, today, to construct civil engineering structure which included road, small dams,
canals etc. The department worked successfully for 100 years.

In 1947, the independent India decided to launch a mammoth

multipurpose river valley project, called Bhakhra Nangal Project on the river Sutlej in
the North West India for irrigation and power generation at a cost of Rs.7750 lakhs in

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1952 which amounts today approximately more than Rs.100,000 crore in first five
year plan in which 50% of capital outlay was allotted to construction of civil works.

The construction of Bhakhra Dam was taken by irrigation wing of PWD of

Punjab with the help of technical knowhow from foreign help on cost plus basis. This
can be considered as a major breakthrough in the field of construction by India as
there were no big construction companies available at that time to take up such
stupendous job and more over network analysis like Construction Planning Method /
also known as Critical Path Method (CPM) and Programme Evaluation & Review
Technique (PERT) had not taken formal shape.

The evolution of Indian construction industry has followed the same

general pattern as happened in other countries, initially founded by the government
and slowly taken over by small and big enterprises. During execution of Bhakra
Nangal dam Indian government realised need of professional competence in the field
of construction and the first professional consultancy company National Industrial
Development Corporation (N I D C) was established in the public sector in 1954
.Subsequently a number of speciality companies in design and Construction came into
existence like Indian Railways Construction Limited (IRCON),National Building
Construction Corporation (N B C C),Rail India Transport and Engineering Services
(R I T E S),Engineers India Limited(E I L) and in private M N Dastur &
Co.Hindustan Construction Company are the name worth to be mentioned. In late
sixties government allowed foreign collaborations in these services .The guidelines
for such collaboration were prepared and issued in 1968 with binding that local
consultant would be the principal contractor in such collaborations .The objective
behind such binding was to develop indigenous design capabilities comparable to in
flown foreign technology and skills. The outcome of this strategy was establishment
of joint ventures in India.

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History:

The period from 1970 to mid 60’s witnessed the government playing an active role in
the development of these services and most of construction activities during this
period were carried out by state owned enterprises and supported by government
departments. In the first five-year plan, construction of civil works was allotted nearly
50 per cent of the total capital outlay.

The first professional consultancy company, National Industrial Development

Corporation (NIDC), was set up in the public sector in 1954. Subsequently, many
architectural, design engineering and construction companies were set up in the public
sector (Indian Railways Construction Limited (IRCON), National Buildings
Construction Corporation (NBCC), Rail India Transportation and Engineering
Services (RITES), Engineers India Limited (EIL), etc.) and private sector (M N
Dastur and Co., Hindustan Construction Company (HCC), Ansals, etc.).

In India Construction has accounted for around 40 per cent of the

development investment during the past 50 years. Around 16 per cent of the nation's
working population depends on construction for its livelihood. The Indian
construction industry employs over 30 million people and creates assets worth
over 200 billion.It contributes more than 5 per cent to the nation's GDP and 78 per
cent to the gross capital formation. Total capital expenditureof state and central govt.
will be touching 8,021 billion in 2011-12 from 1,436 billion (1999-2000).

The share of the Indian construction sector in total gross capital formation
(GCF) came down from 60 per cent in 1970-71 to 34 per cent in 1990-91. Thereafter,
it increased to 48 per cent in 1993-94 and stood at 44 per cent in 1999-2000. In the 21
st century, there has been an increase in the share of the construction sector in GDP
and capital formation.

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 GDP from Construction at factor cost (at current prices) increased
to 1.745 billion (12.02% of the total GDP ) in 2004-05 from 1,162.38 billion (10.39%
of the total GDP) in 2000-01.

The main reason for this is the increasing emphasis on involving the
private sector infrastructure development through public-private partnerships and
mechanisms like build-operate-transfer (BOT), private sector investment has not
reached the expected levels. The Indian construction industry comprises 200 firms in
the corporate sector. In addition to these firms, there are about 120,000 class A
contractors registered with various government construction bodies. There are
thousands of small contractors, which compete for small jobs or work as sub-
contractors of prime or other contractors. Total sales of construction industry have
reached 428854 million in 2004 05 from 214519 million in 2000-01, almost 20% of
which is a large contract for Benson & Hedges.

Construction and National Economy:

By just using common sense it can be inferred that economic plans of any
country is prepared to improve any particular sector of economy. Improvement or
emphasis on any particular sector may or may not need help of other sectors like
construction. A microscopic study of economy, irrespective of its state i.e. primary,
secondary or tertiary, reveals that development of most of the sectors need help of
construction. In nutshell, a gap between demand and supply is necessary for the
development of a particular sector.

Thus it can be said that any attention to optimise construction activity will
lead to reduction in waste of material, saving of energy and saving of time. This will
certainly lead to reduction in cost over runs of other projects. Thus, construction
sector is directly or indirectly influences the overall economy of the country.

The pattern of Indian economy of last fifty years shows that

construction work amounts to around 40% of development investment.Approximately

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16% of Indian working population depends on construction for its living .The
construction industry creates immobile assets worth over Rs.20000 crore by
employing more than 3 crore people .It enhances nation's GDP by 5% and gross
capital formation of 78%.It is expected that total capital expenditure of state and
centre will be approaching Rs.802087 crores during the period 2011-12. This amount
indicates an enhancement of Rs.658500 crore from the figure of Rs. 143587 in 1999-
2000.In the 21st century there has been an increase in the share of the construction
sector in GDP and capital formation .The GDP from construction at factore cost or at
current prices increased to Rs. 174571 crores (12.02 % of the total GDP)in 2004 -05
from Rs.16238 crores (10.39% of the total GDP in period 2000-01.The increasing
involvement of the private sector in infrastructure development through public private
partnership and the strategy like Build Own Transfer (BOT) can be cited as the main
factor for such increase in GDP. However there is always scope for more active
participation from private sector in this direction through investment. There are
around 200 firms from corporate sector, working in Indian construction industry .The
number of registered class.

A contractors is around 120000 working for local development authority,

state departments and central government bodies like CPWD.
The number of small contractors and petty contractors working as sub contractors for
principal contractors are enormous. So there is ample scope for expansion of
construction industry at micro as well as at macro level in form of infrastructure
development.

NATIONAL ECONOMY

Construction industry has some peculiar characteristics like any other industry.

Firstly, it is a capital-intensive industry involving current and future outlays of

funds with the expectation of a stream of benefits extending far into the future.

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 Secondly, construction project takes a long duration to complete e.g. the
Bhakra Dam took fifteen years for its completion (1950-1965) and they also have a
long gestation period.

Thirdly, the useful life of construction project of national importance is very

long usually more than 60 years for most of the major constructions.

Fourthly, in construction project, products and services are combined together. In

construction, product is fixed and machine and men move, contrary to assembly line
production in which product moves.

Fifthly, a large construction needs a large land area. Acquisition of such

land leads to payment of compensation to the owners of the land, which has legal
and political over tones. In some cases like construction of dam, it needs rehabilitation
of nearby villages. Such problems usually do not occur with the other industries.

Sixthly, cost benefit analysis of public infrastructure created by construction

activity such as roads, bridges and dams cannot be done with traditional concept of
profit maximisation alone. Special economic tools like Social Cost Benefit Analysis
(SCBA) and principles of welfare economics are essential for the valuation of such
assets.

Seventhly, two construction projects are not identical in every respect.

Thus, construction project can be considered as a job work of a large magnitude
contrary to any other manufacturing unit producing products at mass scale by a single
machine.

Eighthly, the human resource working in construction forms a temporary

organisation for the project at the site and disperses in different directions as soon as
the project is over.

Ninthly, experience of generations plays a vital role as most of the

construction material directly used after quarrying are the natural material and
performance or relative merit of such material takes a long time for its
pronouncement, the time may be in decades.

Tenthly, death of workers during the execution phase of project is very

common, so safety and precaution are primary concerns.

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 Such peculiar characteristics of construction project opened the portals for
the development of special managerial tools, like materials management, CPM and
PERT to handle the project in a professional manner. In India, construction industry is
fragmented and a sizeable construction work is performed by the unorganised sector.
Such peculiar characteristic creates favourable conditions for the establishment of a
new company. If Construction Company is weighed on the basis of men; material and
money following facts come up.As most of the construction is done either on site or
precast members, are fabricated and assembled on the site and most of the
construction equipment are available on rental basis, thus a little capital is invested in
fixed assets and machinery.Construction companies require relatively low working
capital as after award of contract, company realises mobilisation advance from owner
before starting the work.

In India, companies, usually employ labour contractor for the supply of labour
force. So very few employees are on the permanent pay roll of the company.These
factors are responsible for the birth of small to very big construction companies. This
introduces competition in the market. There are pitfalls but a professionally managed
construction company is able to pay rich dividend to its owners/shareholders.

Constructions and National Development:

For any developing country like India, development of infrastructure is the

prerequisite for the economic progress of the country. To achieve this objective
optimised construction is the need of the hour as capital is a scarce resource

Types of Construction:

Total construction work can be divided into two broad categories viz. public and
private.

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 The public projects i.e. whose direct beneficiary will be the public, is
usually handled by the government, of course govt. get it done by any contractor or by
construction company by awarding the work through bids and tenders. It is public
money or any financial aid or loan from agencies like World Bank, that is spent.
Dams, Bridges, Canals, Metro Rail, Power Projects, DUDA,SUDA are typical
examples of public projects.

Private projects like house of an individual or construction of a factory, a

nursing home, hotel or project in which taxpayer's money is not involved can be
categorised as a private project. Frankly speaking profit motive is always there in
most of the private projects.

In private projects, capital outlays are less as compared to public projects.

Secondly in Indian working environment one cannot afford delay in private projects
but cost over runs and delays in public projects are an everyday phenomenon in India.

Consumers of Construction Industry:

Following are the consumers of construction industry:

 An Individual
 Group Housing Societies
 Centre, State, Local Government and Development Authorities.
 Corporate Sector
 Other countries at International level.

Individuals:

An individual needs the services of a construction company for the

construction of individual house, which is ordinarily his dream house. In such
construction, company cannot ignore individual taste and preferences. Persons who
are executing the project have to help and arrive at a decision in advance on the item
of choice and colour e.g. colour and size of tile of bathroom, colour, size and quarry
of marble stone etc. if construction has to proceed smoothly.

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Group Housing Societies:

The housing demand will be around 31 million by 2015(MPRA 2008)In

planning and designing of an apartment or building blocks for group housing society,
the requirement can be classified into two broad categories.

First requirement is of an individual in his house. In a group housing most

of the finishing items are left for the individual occupant so he could finish the house
as per his choice, taste and preferences.

Second requirement is the preferences of a group of people as a whole or

community. requirement. To fulfil this requirement planner needs knowledge of
architectural sociology, human behaviour, security aspect, and maintenance
engineering practices, generosity of the people and cooperation among the people.

Corporate Sector:

Corporate sector hires the services of Construction Company for

commercial building, for factory or for office building etc.

In such buildings, building economics,cost optimization ,requirement of future

expansion and flexibility of the plan are the key issues.There is ample scope for
creativity and innovation in corporate sector projects.

Government Construction:

Local Development Authorities, CPWD, PWD of various states etc are the
department which look after the construction of government sponsored, civil
engineering works. Here Construction Company is guided by strict rules and
regulations of the state, for such departments, time factor is least important.

International Contract:

After the Second World War under developed, oil-rich countries were busy
in creating infrastructure of the country to boost economic growth. Sometimes even
developed countries need huge construction for the events like Olympic and Asian
games.

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 These projects are mostly financed by the user country or by some
international financing agency like World Bank. In such cases international bids are
invited. Construction companies from US, Great Britain, West Germany and France
usually take the best part of these contracts.

Now competition is increasing. Companies from Japan, South Korea and

India are also getting business share in these countries in construction and in setting
up of power stations and infrastructure. Those companies who offer turnkey services
have bright chances of success in the competition when the nature of job is purely
works contract. Here sub contractor is capable of mobilising construction equipments
and manpower and gets subcontracts from principal contractor. Joint venture is a very
common phenomenon in international contracts.

Main Organs of Construction Industry:

There are three main organs of construction industry other than the consumer.

 The Owner
 The Consultant
 The Contractor
The Owner:

Civil Engineering Projects are usually cost intensive. Usually the investor
does feasibility study in advance. Any investor or promoter is worried about two
things. Firstly investor is worried about the rate of return. Secondly the patterns of
cash flow. The ideal situation will be high and early return. i.e. on what date what
amount is required and from where the same will be arranged. The owner or promoter
may be an individual, a government authority, a government department, a corporate
house etc.

The Consultant:

In Civil Engineering Projects, Architect, Engineer, Project Manager and

Chartered Accountant usually form the panel of consultants. These persons advise the
owner on the basis of their knowledge, experience, and know how. It is generally
believed that any person who has experience and knowledge can give advice on a
particular problem of his field.

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 The basic function of an engineer is to design and do necessary
permutation and combination to optimise the solution. Although consultant should
have experience, knowledge and wisdom that all certainly come with age but people
who are well versed with new material, new technology, new equipment and of
course having a lot of energy and enthusiasm to do something new are also desirable
on the project.

The Contractor:

In Civil Engineering Project, contractor translates the blue print into reality
with the help of work force and material. The practice of contractor ship in civil
engineering is perhaps as old as civil engineering itself. A poorly written contract
agreement is always a good cause of bone of contention. In contracts, one should
always seek the help of a legal expert. This is imperative that owner himself should
enhance his knowledge on the subjects like laws of contract, negotiable instrument act
and consumer protection act etc.

Regulatory Bodies Related with Construction:

Regulatory bodies related with any business can be classified into two broad
categories viz. general and specific.

Income Tax, Labour Court, Labour Union, Electricity Board are the
departments with which every business organization has to deal, fall in general
category. So every business organization should be well versed with the rules,
regulation ,written and unwritten laws of these departments.

The regulatory bodies specific to construction at local level are following:

(1) Local Development Authority, (2) Pollution Control Board, (3) Water Works and
Conservancy, (4) Local Police.

1. Local Development Authority:

It is the first regulatory body, which is encountered in any
construction. Most of the rules, regulations and byelaws of development authorities of
province of Uttar Pradesh are given in the book "Regulation of Building Operation in
Uttar Pradesh. This very book every construction manager should have and should
always keep himself in touch with the office of the development authority for the

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awareness of day-to-day changes in the working and rules and regulation of the
authority.

In fact, rules, regulation and bye laws are framed to provide healthy living
but sometimes these laws are one sided i.e. in favour of government only. Thus, it is
advisable that rules should not be violated in ordinary circumstances.

However, there is always a provision for the compounding. This is to be

weighed by the owners i.e. gain or loss on an unauthorised construction.

2. Pollution Control Board (PCB):

Now a day’sregulation regarding environmental pollution has become
very stringent in India to, like in advanced countries. Sometimes large projects like
construction of power plant, multipurpose river valley project are stopped or even
abandoned due to environmental considerations. Most common projects that have
been in trouble in the recent past include Tehri Dam in Uttranchal and Narmada in
Madhya Pradesh.

Clearance from PCB is also necessary for construction of a factory or

fabrication of a processing plant. The days are over when effluents were directly
discharged into the river. There is no harm in conforming to PCB norms but
sometimes these regulations are difficult to obey and PCB acts as a hassle. Planners
are advised to incorporate PCB recommendation right from site selection to project
formulation.

3. Water Works and Conservancy:

If construction is to be done in urban area then very first question comes to
mind is what will be the source of water during construction. If municipal water
supply is used , municipality charges additional tariff on it. So it is advisable that first
and foremost job of construction manager is to get a water pump installed and inform
the municipality that public water is not being used for construction.

The second thing in case of projects like hotel and apartment is the
disposal of wastewater and night soil. It is obligatory upon liaison officer of the

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construction company or construction manager to initiate the issue for the permission
of connection of sewer of the building to the municipal sewer.

4. Local Police:
Local police plays an important role in any construction project in India
because development authorities always take the help of police to meet their
objectives or in case of mishappening on the site local police has to be taken into
confidence. It is obligatory on the part of construction manager to maintain good
relations with local police station and police officers of that area. Of course
maintenance of such relations, always lead to additional expenditure on the
construction company.

Business Opportunity in Construction Industry:

Construction of infrastructure like road network, canals, urban development,

extension and renovation of existing facility are few activities through which capital
formation takes place in most of the countries of the world. So there is always ample
opportunity for construction from village level to international level for the
construction companies, depending upon size and ability and experience of the
company.

Management in Construction:

Based on work experience, it has been observed that most of the

construction contractors manage their business in a very unorganised manner. This
ultimately leads to failure of business. The numbers of small and medium size
companies' failures are much more.

Construction industry has been characterized as weak inefficient, nebulous,

backward and slow to incorporate changing conditions. In a nutshell majority of
construction companies are poor absorber of management knowledge. The
explanation given for it may be as under.

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 Every construction project is unique in itself and does not need very strict
technical standardization. An operation in construction work involves many skills and
talent, mostly of non-repetitive nature. Remote location of the project, poor means of
transportation and varying productivity of labour are some factors, which are beyond
the contractor's control. Thus construction business is volatile in nature with many ups
and downs.

Any construction activity is basically a manufacturing process. So the

decision-making people are very few. Any delay in on the spot decisions, increases
the cost and hampers the progress of construction. Such complexities lead to a
managerial challenge. It does not mean management problems of construction are
entirely different from other management problems.

Like any other industry, construction industry is also experiencing

cutthroat competition. Products and services of construction industry also face
temporal variation in demand and supply.

Such conditions necessitate the learning of managerial practice specific to

construction. Today skilled management is necessary for the survival of construction
industry. This maxim has not received adequate attention in construction firms in
India. The result is high incidence of failure.

Failures of Construction Company:

Any construction activity starts from scratch and passes through various
intricate processes and finally project ends in a built up facility or reaches to start up
phase of the project and finally project becomes operational. Like other business in

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construction business also ,there are many slips between cup and lip. The failure of
construction business is a subject of analytical inquiry and a matter of concern. So
many investigators have examined the issue. A few are being reported here.

Dun & Bradstreet (1985-1994) have studied the failure of Construction

Company for many years (10 years). They list the following reasons for the failures.

 Incompetence
 Unbalanced experience
 Lack of managerial experience
 Lack of experience in particular line
 Neglect
 Fraud
 Disaster
The first four items listed in above list account for over 90 percent of the
failures. This fact exhibits that financial success of Construction Company depends
almost entirely upon the quality of its management. Sometimes prolonged work, poor
profit margin, lack of proper accounting procedure can be cited as reason for the
failure. If we club all these reasons, it points towards poor management.

The Construction Managers:

The construction manager is the most critical resource in implementation

phase of the project. He is supposed to discharge basic functions like organizing,
staffing, directing, planning and controlling. A good performance of construction
manager is necessary for the growth, development and success of Construction
Company.

Although the managers do not normally, carry out the construction work with
their own hand, Yet they are responsible for keeping the project on schedule within
the cost limits. They should have telescopic as well as microscopic vision on each and
every step of construction operation, right from preliminary estimates and various
types of costs to the final inspection and payment.

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 In managing any construction project, personality of construction manager
plays a vital role. This very trait can never be ignored. Mustapha and Naoum (1998)
have investigated factors, which influence effectiveness of site managers. They are of
strong opinion that personal variables as a whole have an impact on effectiveness of
site managers.

The construction manager should also be capable of handling crisis and

contingencies at site. Crisis and contingency do arise at construction site. Managers
should be well equipped to deal with such emergencies. To deal with such
contingencies collective effort is needed. Loosemore (1998) has identified effective
responsibility and teamwork is the basic managerial tool to handle the crisis.

Construction Sector: Current Scenario and Emerging Trends

After recording a spectacular growth of over 12%, more than the country’s
GDP in the past half decade, the Indian construction sector all of a sudden lost stream
in last fiscal largely due to global financial turmoil. Not just this, the turmoil tremors
created multiplier impact across sectors including steel, cement, power, petroleum,
aluminum, IT and ports, besides badly Bruising the Indian economy.

But few sectors such as telecom, urban infrastructure, railways, oil and gas,
which are also generating large share of construction activities have not been affected
badly. These segments have registered a noticeable growth in project orders from
centre, states, and local firms. However, orders from overseas firms have drastically
dwindled.

Current Global Scenario

Currently, the global economy is in severe slowdown mode amidst

deepening credit crunch and upsetting developmental targets of economies across the
world. In the prevailing scenario, infrastructure remains a top priority for addressing
developmental gaps as it is considered omnipotent with potentials of lifting
economies out of the financial turmoil. The governments around the world are

26
pumping money to generate demands for goods and services by creating jobs through
higher spending into physical and social infrastructure. Likewise, the Indian
government on its part is not lagging behind on this score and has taken concrete steps
to revive the sector to regain its past glory.

Speeding Infra Spending

The government has initiated innumerable initiatives to lift the sector from its current
dormant conditions. The measures include authorizing the Indian Infrastructure
Finance Company Limited (IIFCL) to raise Rs.100 billion by issuing of tax free bonds
to make highways and port projects funding worth Rs. 250 billion available to the
sector. In order to finance projects worth Rs. 750 billion over the next 18 months, the
IIFCL has been given permission to raise additional funds worth Rs. 300 billion.

Other measures include liberalization of the external commercial borrowing (ECBs)

policy, revision in the cap for home loans to Rs. 2 million from Rs. 0.5 million
through inclusion in the priority sector, increase in foreign institutional investors limit
in rupee denominated corporate bonds from $6 billion to $15 billion exemption of
countervailing duty on cement and TMT bars and structural, close monitoring of the
government spending to expedite expenditure for all schemes and programmes.

The Planning Commission has estimated that an investment of about $492 billion will
be required for the infrastructure sector during the Eleventh Five Year Plan. Whereas
private investment seems difficult to come by in the current scenario, public
investment can be expected to materialize or even increase. While it is essential that
the government plays a vital role in improving the pace of implementation of key
projects, construction companies need to upgrade their project management expertise
and ensure that there is adequate capacity to undertake and execute projects on time.

27
Construction Equipment Industry

The ancillary industries including $3.1 billion construction equipment

industry has also witnessed a slowdown. Prior to the crisis, the Indian equipment
market was growing at a rate of about 35% for almost seven years. However, during
October-December 2008 quarter, the growth rate declined by 30%.

The new equipment purchases have slumped due to a lack of funds since
buying involves large upfront payments. According to available reports, equipment
sales have taken a hit of about 18 to 25%. While equipment already leased out is
unaffected, the decline in the number of new projects has led to a significant fall in
new leasing contracts. This situation is expected to continue for the next couple of
months. Many construction equipment companies have cut down production and are
approaching their respective governments for financial support.

To complete critical projects, developers are resorting to selective leasing

and renting of equipment. Rental rates have consequently firmed up, benefiting
companies involved in the rental business. Further, the price of major input material
such as cement and steel has declined significantly, thus somewhat mitigating project
costs.

In fact, the fundamentals of the Indian growth story are sound, and the
demand for infrastructure and industrial activity continues to be strong. With the
government stepping up its support to the infrastructure sectors along with adequate
monetary measures aimed at increasing credit flow, the situation is likely to stabilize
in the equipment sector, though expectedly with some lag.

Roads & Highways

Given the importance of road connectivity to the economic and social

development, the road network in India is not up to the mark. The network spans
about 3.3 million km but has road densities of 2.75 km per 1,000 people and 770 km
per 1,000 sq km as compared to world averages of 6.7km and 840 km respectively.

28
Further, about 15% of the network carries 80% of the traffic.

But with the setting up of an effective public-private partnership (PPP)

model by the government to expand the road network, this sector witnessed rapid
growth in the past few years and it has become the top contributors to the construction
industry. Moreover, the National Highways Development Programme (NHDP) has
created the biggest construction opportunity in the road and highways sector.

The programme aims at developing 50,000 km of national highways in seven

phases by 2015 with an investment of over Rs. 3,000 billion at 2007 prices.

Till January 2009, projects covering 33,000 km under phases I, II, III A and V have
been under development out of which about 10,000 km has been four-lane. The
Golden Quadrilateral, providing four-lane connectivity to four metros is near
completion and the North-South-East West (NSEW) corridor is around 45%
complete, whereas Phases III, V and VI are under– implementation. Phases IV and
VII are at initial stages of implementation. Strikingly, the policy and regulatory
framework has gone a sea change in the past 10 years wherein funding share of
private investment has registered a marked increase and share of traditional sources
declined drastically. In the prevailing circumstances public spending in the road sector
through budgetary sources or the CRP will not be impacted by the crisis. The
projected commitment of Rs. 131.73 billion for financial year 2008–09 under the CRF
is expected to be met. But the PPP investments under the NHDP have been impacted
by the crisis. Nearly 60% of the future funding requirements of the NHDP Rs.
3,014.88 billion till 2015 are expected to come from the private sector.

The PPP projects for which funds have already been tied up might also face
difficulty in drawing down as the risk perception of the sector has risen. Available
reports suggest that about 60% of the awarded national highway projects yet to
achieve financial closure. In the current scenario, the new highways projects in the
private sector may find it tough to achieve financial closure.

Moreover, future prospects for private sector investments in roads would

hinge on the effectiveness of the stimulus package in terms of persuading tenders to
reassess the risks associated with the sector. National and state level investments in

29
the sector are unlikely to be impacted though the economic slowdown may impact toll
collections.But the road sector, which has already seen a massive shift in the process
and mindset, is expected to undergo a further change in the next couple of years. New
domestic companies are expected to foray into road development, international
players are also expected to enter the Indian road sector and existing players are
churning out new strategies to retain their stronghold. With increasing competition,
only players with strong organizational structures and project management
capabilities are expected to gain ground in the long-term.

Urban Infrastructure

To boost urban infrastructure across the country, the government has

initiated multiple measures to lift the infrastructure and construction sectors from the
ongoing slowdown and has allocated Rs. 11,842 crore under the Jawaharlal Nehru
National Urban Renewal Mission (JNNURM), which is much higher than Rs. 6870
crore sanctioned in the previous budget. The funds aimed at integrated development
of urban infrastructure and services in rural areas and urban cities to boost allied
sectors including construction material, steel and cement. In addition, the government
has also set aside Rs. 40,900 crore for 2009–10 for its Bharat Nirman initiative. This
is a time bound plan for the development of housing, rural roads, power, irrigation,
telephony, and drinking water supply. This would in turn boost business opportunities
to small and large players alike in the construction and infrastructure as they would
offer sizeable scope for contractual work for the local populace.

That apart, the decision of the government to continue with a corpus of Rs.
4,000 crore for rural roads in the Interim Budget has brought cheer to the companies
engaged in construction, infrastructure, logistics and transport segments. The move is
expected to bring a shift in the supply-chain pattern and improve the delivery of
construction materials as due to lack of such facilities in the countryside, the delivery
is inadequate both in term of quantity and quality. Today, most of the tier II and III
towns are emerging as rural market hubs of production, consumption and distribution.

The government has also launched the Urban Infrastructure Development

Scheme for Small and Medium Towns (UIDSSMT) with an outlay of Rs. 64 billion to
address infrastructure needs of 5,098 small towns and cities with an outlay of about

30
Rs. 1,064. The JNNURM outlay of over Rs.1 trillion is targeted at augmenting urban
infrastructure needs of over 65 mission cities under which the government provides
grants ranging from 35% to 90% of the project cost, depending upon the size of the
city with state governments and private players contributing the rest. Moreover, the
emphasis on creating infrastructure in villages through Rural Infrastructure
Development Fund (RIDF) has raised hopes for construction and consumer
companies hopping that the growing demands from the rural heartland will boost the
sagging sectors.

Most construction and infrastructure companies from power to roads,

airports, ports and urban transport are asking for more in the final budget. Likewise
oil & gas, civil aviation, ports, bridges, and semi-urban areas are set to offer lot of
opportunities to the construction industryalso to its important constituents like
construction equipment, real estate and allied building activities. The measures are
bound to lift the commodity linked industries including cement, steel, aluminum,
glass, paint, stones, and titles.The government recent measures focused on
encouraging banks to fund PPP projects. This is a positive and progressive move at a
time when the financing options of infrastructure players have shrunk in the backdrop
of global credit crisis, delaying financial closures. Initially, the banks were demanding
a higher equity proportion compared to earlier norms. The refinancing measures will
provide better comfort to banks in lending to the infrastructure sector.

Similarly, the fiscal sops and stimulus and classified loans under Rs. 20
lakh as priority sector lending are all set to brighten the prospects of housing sector.
The new classification of loans is aimed at encouraging banks to lend. The Rs. 4000
crore refinance facility for NHB will ensure availability of loans for the sector. The
reduction in home loans rates by PSU banks to Rs. 5 lakh and 9.5% for loans in the
range of Rs. 5 to 20 lakh has prompted large private players such as HDFC and ICICI
bank to cut rates, the development will again encourage housing activities which will
again boost the business of steel and cement and construction companies.

Recently, the centre has given a major incentive to the states to engage
private developers by agreeing in doling out 25% of the total cost of external services
such as drainage, roads, sewage and a water supply as grant to state governments.

31
Consequently, the meltdown may soon make housing for the masses a reality. The
Centre has been awaiting a reply from state governments on its Rs. 5,000 crore
package to create on million affordable houses across the country. In the recent past,
developers have also announced plans to foray into the affordable housing segment.
The leading players in the real estate business have also unveiled plans to build
houses in the 20 lakh category. In fact, the meltdown may soon make housing for the
masses a reality.

Conclusion

Now the construction activities have started picking up. Recently, the
Government has issued contracts worth Rs 1,861 crore relating to projects in mining,
railway, infrastructure, commercial buildings, and some of the construction
companies are also coasting along with a steady flow of contracts. About 90% of
these contracts are from the Government agencies and this is going to be the mainstay
of business in construction sector for some time to come till such orders start flowing
from the private sector. It is indeed to the credit of some of the construction
companies that despite odds, these companies have shown exemplary perseverance in
tackling recession to carry out construction work, others would also ride well through
the present dull phaseas the situation improves.

It is expected that sooner rather than later, the sleepy construction project
sites would pulsate with construction work once again and one would see trucks loads
of men, materials and machinery moving to and fro with men and women working on
a war footing to translate country’s development vision into a concrete reality.
Shedding its initial pessimism, the construction equipment sector is also getting into
optimistic mode and is busy in giving final touches to their expansion plans to add
new manufacturing facilities sensing a demand pull in the next 6-8 months. All in all,
the construction industry was no doubt down but not out.
The next 2-3 years are going to be the moment of reckoning for the
construction industry to demonstrate its managerial, financial and technical prowess
to establish new benchmarks in construction management, construction quality,

32
imparting value addition to its products and services in critical construction
equipment product line. To resist such like present global meltdown, the industry has
to look within to develop its competitiveness across segments through enhancing their
capabilities in R&D to leverage innovation through indigenous capability and
expertise. They need to exploit and build on their own inherent labor and material cost
advantage and resource savings to manage crisis. The present time is the best time to
revisit some of these and other strategies and explore new growth avenues not only to
mere recover from such situations, but also to prepare itself for new global shocks.
With or without stimulus packages, the best means for the well being and growth
come from within. What matters most is to put one’s best foot forward in recession,
recover fast and emerge stronger than ever.

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 COMPANY PROFILE

Navayuga Engineering Company Limited (NECL), the flagship entity of the

Navayuga Group started its operations in the year 1986 as a private limited company.It
was founded by Mr.C.Visewesara Rao and was located in Hyderabad.

Navayuga Engineering Company Limited (NEC), the flagship company of the

Navayuga Group, is an engineering and core infrastructure company that has carved a
formidable position for itself in the industry. Established to fulfil the dream of a
visionary, nurtured on homespun values, empowered by state-of-art technology, the
company has redefined the parameters of growth and contributed to India’s
infrastructure landscape with unparalleled commitment and foresight. Spreading its
wings, NEC has transcended national boundaries to make an impact on the global
arena.

VISION

"To build an infrastructure conglomerate of global scale and create benchmarks of

excellence in both quality and customer service."

THE VISIONARY

“NEC's core ability to deliver projects on time, and within budget, has received
widespread recognition and accolades. Our unmatched domain knowledge and
expertise have earned us the reputation of a ‘pioneer’. Having successfully undertaken
several port development projects, we are poised to achieve the distinction of being the
largest developer and operator of ports in India. Further, we are embarking on
ambitious plans to undertake and execute some of the most challenging projects in the
most unforgiving terrains, not just in India but also globally. This, indeed, is a
testimony to NEC’s emergence as one of the world’s leading infrastructure companies.

Our drive to the top is powered by a perfect blend of youth and experience across the
management and workforce. This apart, cutting-edge technology and equipment,
underlying strength of the value-system and well-defined corporate vision, all
contribute to our strong foundation of excellence.

34
NEC's activities, operations and performance are the outcome of strict adherence to our
motto - Seize the right opportunities in a world of limitless possibilities and lay
milestones along the path to success."

THE DRIVING FORCE

NEC is well-served by a leadership team that brings the highest level of

professional excellence and collective vision to inspire and motivate the workforce to
exceed the expectations of the clients.

CORPORATE POLICY

"Commitment to excel in the chosen field of construction and to provide engineering

solutions in harmony with the environment and with quality of workmanship to
international standards."

BOARD OF DIRECTORS

NAME OF THE PERSON DESIGNATION

Mr. Chinta Visweswara Rao Chairman & Director

Mr. Chinta Sridhar Managing Director

Mr. Chinta Sasidhar Whole Time Director

Mr. S. Muralikrishna Independent Director

Mr. Gummadi Raghavendra Rao Independent Director

Mrs. Sailaja Moturu Director

Mr. Sirajuddin Mohammad Whole Time Director

Mr. Ramesh Yedduri Whole Time Director

35
 ICONIC PROJECTS

POLAVARAM DAM PROJECT

NEC is on a mission to fulfil the half-century-old dream of the people of Andhra

Pradesh with the Polavaram Dam Project, the most prestigious and challenging
project in India with 7.2 lakh acres of new ayacut created for irrigation during phase I
and 12 lakh acres in phase II, and another 23.5 lakh acres of stabilized ayacut.

NEC was entrusted with the responsibility of constructing the Polavaram Project by
the Govt. of Andhra Pradesh, once it became clear that the previous contractor could
not meet the herculean challenges associated with completion of this mammoth
Project.

The construction of this mega structure, with a pier height of 54 m and a total of 48
gates spanning 1070 m, requires pouring of 31 lakh cubic meters of concrete, 50,000
tonnes of steel and 9,30,000 tonnes of cement, all in record time.

The project has set a world record by pouring 32,315.5 cubic metres of concrete into
the spillway channel of the project. With this the project has clinched two Guinness
World Records® achievements — one for the ‘most concrete continuously poured in
24 hours’ and second for the ‘largest continuous concrete pour’.

36
The Polavaram Project would irrigate a total of 42 lakh acre ayacut in two phases and
influence the supply of water to all 13 districts of Andhra Pradesh.

Designed to withstand massive floods that could occur once in a 1000 years, the
Polavaram Spillway is set to have the highest discharge capacity in the world. At 50
lakh cusecs, it is set to surpass even the 3 Gorges Dam of China, one of the largest
dams in the world, which has a discharge capacity of 47 lakh cusecs. Polavaram dam
has a total capacity of 194 tmc of water and the design allows for 99.23% utilization
of water with a dead storage capacity of a mere 1.5 tmc. This landmark project would
ensure sufficient supply of water for the entire state of Andhra Pradesh.

KALESHWARAM PROJECT

After the bifurcation of the state of Andhra Pradesh, the Govt. of Telangana decided
to redesign the existing Pranahita Chevalla Lift Irrigation Scheme. Renamed the
‘Kaleshwaram Project’, it is being developed with an aim to supply water to the
drought prone upland regions of Telangana State, irrigating about 18.25 lakh acres of
new ayacut and further stabilizing 18.82 lakh acres, a total of 37.07 lakh acres.

37
The redesigned project now includes three barrages. To supply water to upland areas
of Telangana, within the previously intended timelines, the barrage was to be
completed in record time of just one year, instead of five years’, the time that is
normally required for a project of this magnitude.

The construction of this barrage involves the pouring of 10 lakh cubic meters of
concrete, 52,000 tonnes of steel, 3,80,000 tonnes of cement and a total of 5300 secant
piles of length 40,000 rm. Once completed, the barrage will have a total of 74 gates,
weighing 15593 mt. The barrage spanning a total length of 1.45 km, would require 30
lakh cubic meters of earth to be excavated and would require 40 lakh cubic meters of
earth to form guide bunds and flood banks. The barrage will have a total water storage
capacity of 8.83 tmc and a total discharge capacity of 57000 cumecs.

R&D INOne of NEC’s defining qualities is its ability to adapt new, innovative
technologies to respond to the challenges in a fast-changing world.

NARMADA-MALWA GAMBHIR LINK PROJECT

One of the finest examples of this characteristic is the Narmada-Malwa Gambhir Link
Project. NEC has undertaken the project to supply irrigation water to 50,000 hectares
of land, through a pressurised piped distribution network using wireless SCADA, an
automated system designed for controlling, metering and monitoring from a centrally
automated control room.

38
The highlight of this major project is the supply of water using an Outlet Management
System and through pressurised pipelines to micro levels of areas as little as 40 ha
level, making it convenient for the farmer to connect to drip or sprinkler irrigation
without the use of any other electrical source. Some of the main components of this
project include, 4 pump houses each housing 9 pumps of 3 mw capacity each, a 68 km
long gravity/ pressurised pipeline of 3 m dia, a 147 km long distribution mainline of
500 mm to 2.5 m dia and a 700 km long HDPE distribution pipeline.

DHOLA-SADIA BRIDGE

39
An engineering marvel, Dhola-Sadia Bridge is India’s longest river bridge constructed
over the Brahmaputra river, spanning a total of 9.15 km.

This historic bridge, linking Dhola to Sadia in Tinsukia District of Assam, is crucial
from a strategic perspective as it is close to the border state of Arunachal Pradesh.
Envisioned to seamlessly connect the north-east and the rest of India, the construction
is an infrastructural masterpiece.

Apart from providing an all-weather access to civilian transportation, the bridge will
enhance Indian Army’s mobilisation capabilities and movement of troops and heavy
equipment including heavy artillery and battle tanks weighing up to 100 tonnes.

DIBANG-LOHIT RIVER MANAGEMENT SYSTEM

NEC took up the task of building the highly complex Dibang-Lohit River
Management System. Spread across a total length of 17.4 kms, the project includes
building a river management system to manage 11 tributaries and their diverse paths.

What makes this project challenging is the river flow management, which had to be
done in sync with the construction, boat traffic and the diverse flow paths of the
rivers. This apart, intense floods in Arunachal used to disrupt the work for several
months every year. Despite the challenges, NEC has ensured smooth completion of
the project.

40
QUAZIGUND TO BANIHAL HIGHWAY PROJECT

Quazigund to Banihal Highway project is one of the most critical projects for
India as it ensures all-weather connectivity to north Kashmir through Pir Panjal Pass,
a road prone to closure due to severe weather conditions. The tunnel will also shorten
the distance between Srinagar and Jammu considerably.

NEC was entrusted with the challenge of building one of India’s longest road tunnel
that includes a 2-lane twin tunnel of 8.45 km each and 10 m in dia. This unique twin
tunnel construction is strategic in a way that when an emergency arises, the military
services can commandeer one tunnel, while civilians can use the other.

With an average low temperature of 100 celsius, the site is covered with snow for
most of the year. Surpassing all the challenges thrown by the nature, NEC is
progressing at a record pace by reaching an excavation advance rate of 10 m per day -
one of the highest excavation rates in the unforgiving Himalayan conditions.

41
THE BRIDGES OVER THE RIVER GANG

GANGA PATH
A true landmark in the city of Patna and the pride of Bihar, the Gangapath Project is a
high-speed corridor extending along the banks of River Ganga. This prestigious
project – from Digha to Didarganj – is spread over 21.5 kms of which, the road is 10.5
kms and the elevated structure is 11 km. This corridor has been designed to provide
connectivity between western and eastern Patna, while reducing the travel time from
60 minutes to just 15 minutes.This 4-lane elevated structure consists of 222 spans of
50 meters each and 221 circular piers of approx. 17 meters height. It passes right
under the Mahatma Setu Bridge leaving enough vehicular clearance between the two
bridges.

GANGA BRIDGE
The Project is designed to provide all weather high speed connectivity between the
towns of Bhaktiyarpur and Tajpur, connecting North and South Bihar. Of the total
50.943 km project length, the road length is 45.393 km and main bridge across the
river Ganga is 5.55 kms long.

The four lane bridge will have 45 spans each of length 125 m, one of the longest
spans for a bridge in India. The segmental erection is done using the balanced
cantilever erection method with a 200 mt capacity launching gantry of length 278 m.

42
KRISHNAPATNAM PORT

43
 Krishnapatnam Port is located in the Nellore District of Andhra Pradesh, on the
East Coast of India, as a prominent gateway to Southeast Asian countries. With the
largest waterfront of 12.5 km in the country, the deepest draft of 18 m and the
capability of handling capesize vessels up to 2,00,000 dwt, the all-weather port
operates 365 days a year.

Phase 1 of the construction of the Krishnapatnam Port was completed in a record time
of just 18 months. The port is scheduled to have 42 berths, out of which 10 are
commissioned, 4 berths in phase 1 and 6 berths in phase 2.\

 Krishnapatnam Port offers state-of-the-art mechanical cargo handling equipment,

capable of handling bulk cargo at the rate of over 100,000 mt per day.

 Capacity up to 200 mmtpa, making it the largest port in India

 Capacity to handle 6 million teu p.a., making it one of the largest container ports
in India

 One of the largest turning circles (500 m diameter)

 45 million tons of cargo handled in the year 2017-18

BY AIR: Chennai International Airport: 180 km, Tirupati Domestic Airport: 120 Km
and helipads within the port.

BY RAIL: A 26 km long double railway line connecting Venkatachalam Station to

the port and an additional 91 km of rail connectivity from Venkatachalam to
Obulavaripalle. Internal railway network of 50 km with capacity of 60 trains in/out
per day.

BY ROAD: Dedicated 4-lane road (25 km connecting National Highway 5). An

internal road network of 55 km. Dedicated road around the port for handling Over
Dimensional and project cargo.

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SECTORS

Navayuga Engineering (NECL) has established its reputation in the Construction

industry in the following specialized fields.

 MARINE INFRASTRUCTURE

NEC is a leader in marine infrastructure development. Supported by an accomplished

R&D team, the company has developed a consummate ability to build deep wells,
berths, jetties, wharves, mooring dolphins, breakwaters and coastal & shore protection
projects in the open seas. NEC has built over 12800 rm of berthing structures across
most of the major ports in the country. Importantly, more than 6000 rm of these
structures were built employing the company’s in-house innovative and cost-effective
designs.Navayuga has built over 12800 rm of berthing structures across most
major ports in the country

 DEVELOPMENT OF PORTS

Since more than 90% of international cargo moves by sea, ports - being the
gateways to the hinterland - are critical for the efficient supply chain of any nation.
New-age carriers call on ports with deep draft, adequate quay length and efficient
cranes. With decades of rich experience, NEC has developed the expertise to build
such world-class facilities with vital infrastructure. Innovations such as “KOLOS,” a
patented technology comprising concrete armour blocks with the highest KD value,
reaffirm the company’s authority in the sector. In fact, the company is regarded as the
‘pioneer’ in setting up ports on a turnkey basis, with Krishnapatnam Port being the
perfect example. With other mega port projects at Astaranga and Machilipatnam,
which are envisaged to be among the country’s largest privately owned and managed
ports, NEC is now at the cusp of maritime glory, charting its course to unprecedented
success and growth.

ASTARANGA PORT
The proposed port is located at Astaranga on the coast of Orissa. The lagoon type port
is poised to connect the mineral rich hinterland to the world. The wave climate on this
coast is extreme with frequent cyclones. Also, the coast is subjected to large amount
of littoral drift. NEC’s patented breakwater technology ‘KOLOS’, will be

45
implemented effectively to take care of these conditions while building the port.
Astaranga Port is all set to spur industrial growth in the region.

 IRRIGATION

NEC, through its expertise in irrigation, has stamped its authority as a leader in this
sector. The company has garnered high-performance credentials in building vital
turnkey projects in adherence to stringent schedules with complete quality assurance
by deploying advanced equipment and skilled manpower. Behind numerous high
value irrigation projects, NEC demonstrates specialized expertise in the construction
of canals, aqueducts, barrages, lift irrigation works and other irrigation structures.

 MACHILIPATNAM PORT
Machilipatnam is a small town located on the east coast of India. Subsoil at the site of
the port consists of very soft marine clay for nearly 18 metres. NEC developed the
design of a structural breakwater, which is a first in the world. Layout of the
breakwaters and berths have been made to obtain absolute tranquillity in the port
waters. This port will be the gateway for most of central India as it will be the
preferred gateway for containers. The port will have the advantage of extensive back
up area for container stacking. Machilipatnam will soon be one of the most preferred
container ports on the east coast.

 POWER

Responding to Government of India’s mission to provide “POWER FOR ALL”, the

Navayuga Group has ventured into power generation in a big way by building an
installed capacity of about 6,000 mw. The portfolio includes both thermal power as
well as hydroelectric power generation projects.

 DEFENCE

NEC takes pride in being one of the very few companies in India qualified to
undertake sensitive defence contracts to build infrastructure essential for national
security.

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 STRATEGIC PROJECTS

Through specialized expertise, category knowledge and customized engineering

solutions, NEC has won the trust and approval to deliver a range of capabilities
required by the Ministry of Defence. NEC has demonstrated multi-disciplinary
competencies in engineering and construction to accomplish these complex mission-
critical projects.

 SHIPYARD FACILITIES WITH SHIPLIFT & TRANSFER SYSTEM

NEC has been entrusted with the task of building an advanced shipyard equipped with
ship lift and transfer system. The ship lift platform is 165 m long and 22 m wide
designed for an MDL of 170 mt/m and a total lifting capacity of 28000 t consisting of
56 nos of 650 mt capacity hoists. The transfer system consists of 44 trestles with
carrying capacity of 500 t each with a total of 88 bogies of 250 t capacity each.

The project also includes design, fabrication and erection of a covered structural steel
shed 254 m long, 127 m wide and 53 m in height, the supply and commissioning of 2
nos of 200 t capacity single failure-proof EOT cranes for the handling of operations in
the project, the construction of 2400 nos M40 grade cast in-situ bored piles with
structural steel liners of dia. 1000 mm and 1200 mm in marine conditions, the
construction of repair bays on either side of the ship lift platform to carry out the
repairs and construction of vessels and the design and construction of 253 m long and
83 m wide shore protection jetty for berthing operations.

 PROJECT VARSHA - OUTER HARBOUR

The outer harbour, Project Varsha is a major strategic project undertaken by NEC on
the east coast of India. Some of the major components of the project include dredging
of 12.7 million cubic meters of the sea bed up to a depth of 21 m, reclamation of 6.83
million cubic meters including ground improvement and sand stacking for bench
nourishment.

The execution of the 2.9 km long breakwaters with a total height of 36 m involves the
laying of 1,93,000 sqm of proprietary non-woven geotextile to improve the ground
conditions beneath the breakwaters, 49.45 lakh cubic meters of rock ranging from 10

47
kg to 10 t situated at the core, roundheads, toes and the sides of the breakwaters and
more than 85,000 cubic meters of M35 grade high density unreinforced crown wall
7m high on the breakwaters, around 22500 nos of concrete armour blocks ranging
from 12.5 mt to 45 mt on the sides of the breakwaters.

The construction of the 2.29 km long jetties and berths include a total of 1901 cast in-
situ bored concrete piles with structural steel liners of diameter varying from 1000
mm to 1500 mm, more than 90,000 cubic meters of rock under the jetties for scour
protection, more than 2.1 lakh cubic meters of M50 grade concrete is involved in the
construction of these jetties and berths.

 ROADWAYS

One of the first companies to visualise the importance of taking up BOT projects,
NEC has scaled new heights with every kilometre of road it has laid. NEC’s expertise
coupled with advanced infrastructure has enabled the company to break new grounds
in the sector. The company has executed some of the most prestigious and complex
road projects, including highways and bridges, across the country in the recent past
Highways and bridges lane length of over 2400 kms completed, 500 kms under
progress

 SPECIAL FOUNDATIONS

Completed over 2,400,000 rm of bored cast in-situ RCC piles up to 3000 mm

diameter Over 520,000 sqm of Diaphragm Wall up to 1200 mm thick.

 THE TECH SUTRA

As a leader in special foundations, NEC continues to raise the bar. Several records
including executing of the largest quantum of piling in a single day, and
recommendations from reputed institutions such as NTPC etc., bear ample testimony
to the company’s expertise.Installation of RCC bored cast-in-situ piles – 425,000 rm
at NTPC, Barh – Largest single piling contract to any company in India .For the first
time in India – 2.5 m dia pile for bridge across River Ganga, Bihar

48
 THE GLOBAL FOOTPRINT

Engineers at NEC are constantly driven by new challenges and opportunities. The
overseas market – especially the Middle East – is an inspiring destination. Buzzing
with the most competitive and cuttingedge construction, it offers fertile ground for
inspiration and growth.

NEC began its overseas foray with Qatar, and in just two years, established a
significant presence in Abu Dhabi as well. Rapidly building a track record for
excellence, NEC is scaling up its activities in the Middle East to showcase the might of
India to the world.

Banking on its core strengths – a huge inventory of the most advanced equipment and
the ability to design & deliver the toughest foundations in the roughest terrains and
harshest climatic conditions – NEC is currently executing the largest underground
reservoir in Qatar. To support a project of this scale and importance, NEC has
designed a pile that can facilitate horizontal load movement, which was not possible
earlier. Yet another industry first, yet another remarkable achievement for NEC!

PLANT & MACHINERY

Plant and machinery are essential for effective operation of any civil works site.
Equipping the site with latest tools and equipment plays an essential role in achieving
timely and good quality results. NEC has acquired a vast line-up of latest equipment
and inventory to execute the most challenging projects.

 Fleet of Boom Placer including the world’s longest boom placer with a boom length
of 65 m.

 Aggregate chilling plant with core chilling capacity of upto -5ºC.

 Fleet of Telebelts including 200 Telebelt, with a boom length of 62 m and a concrete
placing capacity of upto 180 cum/hr.

 Automated Concrete Batching Plants upto 240 cum per hour.

 Crushing Plants upto 650 tph Capacity.

49
 Hydraulic Rotary Piling Rigs, Hydraulic Trench Cutters/Grabs, Hammer Grabs for
piling.

 Drilling equipment / Rock Anchors for Tunnelling.

 Rocket Boomers for Tunnel excavation.

 Launching Girders / Trusses.

 Cranes-Crawler mounted 25 t to 250 t capacity.

 Tyre mounted all terrain Crane 10 t to 50 t Capacity.

 Floating Crafts- Heavy Duty Jackup Platform, Barges and Dredgers.

 Wet Mix Macadam Plants up to 200 tph Capacity.

 Hot Mix Plants up to 200 tph Capacity.

 Electronic Paver Finisher.

 Agitors, Atomizer for dust control.

 Launching Gantries including India’s longest launching gantry of length 280 m

NEW-GEN DREDGERS

 Navayuga 1 is a Trailer Suction Hopper Dredger with a hopper capacity of 7500 m3.
This is one of biggest hopper dredgers owned by an Indian company. It is deployed to
carry out dredging works in the Krishnapatnam port channel.

 Navayuga 2 is a Trailer Suction Hopper Dredger with a hopper capacity of 4500 m3.
Being small, it has better manoeuvrability and is deployed in works of the inner
channel and berths at Krishnapatnam Port.

50
  Navayuga 3 is a Cutter Suction Dredger CSD 500, built by DAMEN, which is
dismountable and a well-proven standard model well. Max dredging depth - 16 mtrs.

 Navayuga 4 is a Cutter Suction Dredger IHC Beaver 1600, built by IHC of Holland,
well-known for its robust construction and excellent performance. Max dredging
depth - 16 mtrs.

 Navayuga 5 is a Cutter Suction Dredger, built in the Ninbo Baliun Hangda Shipyard.
It has a maximum dredging depth of 25 mtrs, extendable up to 30 mtrs.

 Navayuga 6 is a Trailer Suction Hopper Dredger, built in 2008 in China. It has a

maximum dredging depth of 27 mtrs and a hopper capacity of 7000 m.\

R & D INTIATIVES

 Development of new Armour Block: Breakwaters are constructed in the sea to

absorb the energy of oncoming waves, so that the waters in the basin in the lee of
the structure are tranquil. The basin can be utilized for handling vessels to
load/unload cargo. Breakwaters should be able to withstand the onslaught of the
waves, without undergoing distress themselves.

 NEC has developed a new Armour Block named “Kolos”. According to tests, its
stability coefficient is the highest in the world, i.e. 32. The blocks have excellent
interlocking characteristic. It has the distinction of being the first Armour Block to
be awarded a patent in India. It facilitates NEC’s powerful thrust into the field of
harbour engineering.

 NEC has developed a Kelly Bar with Grab to maintain alignment during the
construction of diaphragm walls.

 NEC has developed in-house Reverse Mud Circulation (RMC) rig with 10 t
capacity free-fall double drum winch, to chisel through hard rock strata to execute
diaphragm wall trenches.

51
 NEC has developed, in house, a post tensioned concrete diaphragm wall for
berthing structure - the first of its kind in the world. With the arrangement of post
tensioning, substantial reduction in concrete and steel quantity is achieved.
Besides, the pre-compression results in corrosion protection in a marine
environment, due to absence of cracks in the structure.

 NEC has developed a tension pile with a mechanism to accommodate horizontal

movement without transferring any horizontal force or moment to the pile. The
tensile load is applied to the pile cap on top. The pile is connected to the pile cap
by means of a few high tensile strands, anchored at the anchor head at the top of
the pile cap. The strands pass through a corrugated duct; the duct is grouted with
cement grout to guard against corrosion. In the pile, the duct passes through a
larger diameter PVC sleeve to facilitate movement of the duct inside it. The sleeve
has seals against wet concrete at top and bottom, while compressible polythene
board is provided between the pile top and the pile cap bottom to prevent vertical
downward load from passing on to the pile.

52
 REVIEW OF LITERATURE

Review of literature is a key step in research process. Review of literature

refers to an exhaustive and systematic examination of publications relevant to the
research. The significance of the review of literature shows that it provides a basis for
future investigations, justifies the need for replication, throws light on the feasibility
of the study, indicates constraints of data collection and helps to relate the findings of
one study to another.
It has been emphasized by many researchers and scientists that review of
literature can play a vital role in a research project and it is a critical summary of
research on a topic of interest. It is generally prepared to put a research problem in
context or to identify gaps and weakness in prior studies so as to justify a new
investigation.
One of the simplest ways of economizing a research is to review and
build upon the work already done by other research scholars. There are number of
studies related to Human Resource Development, Personnel Management, Reward
Management, Compensation Management, etc, but most of them have concentrated
on broader areas of interest and as such, to narrow the study, compensation
management practices in public sector, especially in energy sector is essentially
needed to be studied. As such, the researcher was searched Management Reviews,
Management Abstracts, research journals, conference proceedings, books, etc., and
collected the relevant literature for the present study. All the studies are not significant
enough to be enumerate, however, an effort has been made to review and highlight
briefly the objectives and findings of the important studies relevant to the present
work in the following paragraphs.

Sivaprakasam P. (1986) has studied an appraisal of personnel management

policies and practices in central co-operatives bank in Tamilnadu, under the
supervision of Dr. V. Kulandaisamy, Department of Commerce, SRMV Arts college,
Coimbatore. He has made an appraisal of recruitment selection, promotion, wage and
other important aspects with special reference to central co-operative banks in
Tamilnadu.

53
 Tiwari Pratap Shankar (1986) has studied management of human resources
in Indian Army under the supervisionof Prof. A.K. Shah, Department of Management
Studies, Banaras Hindu University with special reference to participative
management.

Laxminarayan C. (1988) has studied personnel management in small scale

industries of Hydrabad city under the supervision of Dr. Ravi Prakash Kakatiya
University. He has made a brief comparative analysis of personnel management
practices in selected small scale unit of Hydrabad city.

Harinder Jeet singh(1989) has studied personnel management practices and

industrial relations in National Textile Corporation on Uttar Pradesh units under the
supervision of Dr. Mahendra Singh, Department of Commerce, Meerut college,
Merrut Through highlighting on recruitment, selection,promotion, working
conditions, wage, motivation, industrial relation and other important aspects.

Saikia Jitindra Nath (1989) has studied human resources management in

public sector enterprises in Assam under the supervision of Dr.H.K.Barnaj,
Department of Commerce, and Gauhati University. He has made a comparative study
of human resources management practices in selected state level undertaking in
assam.

Sudhir Kumar (1989) has studied personnel administration in Himachal

Pradesh State Electricity Board under supervision of Dr. Shiv Raj Singh, Department
of Public Administration, and Himachal Pradesh University. He has discussed
recruitment, selection, training and development, promotion, transfer wage, discipline,
motivation, employee benefits and services, participative management and other
related aspects with special reference to Himachal Pradesh State Electricity Board.

54
 Ramchandra Reddy L (1992) has studied personnel management in public
enterprises under the supervision of Dr. M.V.Subha Rao, with special reference to
Andhara Pradesh Dairy Development Co-operative Federation Ltd.

M.Gangadhar Rao and P.subba Rao (1993) have studied human resources
management in Indian Railways and tried to draw attention on important aspects of
human resources management. They have discussed employment, monetary
emoluments, employee benefits and services, employee’s organization, organizational
conflict, consultation and co-operation and operational efficiency with special
reference to Indian Railways, in the book “Human Resources Management in India
Railways”

Dr. M.K.Patel (1993) has studied Gujarat ni Jilla Madhyastha Sarkari Banko
nu Karmachari Sanchalan and has discussed recruitment , training, promotion
transfer, discipline, wage and salary, employee welfare activities , working condition
of employee and union activities of employees in his book.

. B.D. Kolekar (1994) has studied human resources development in selected

public sector undertakings in Maharashtra and Gao. He has highlighted recruitment,
selection, training, performance appraisal, reinforcement and promotion practices
with special reference to five central public sector undertakings namely Richardson
and Cruddas Ltd. Bombay, The Shipping Corporation of India Ltd. Bombay Indian
Oil Corporation (Marketing Division) ltd. Bombay, The Cotton Corporation of India
Ltd. Bombay and Hindustan Antibiotics Ltd., Primpri and five state public sector
undertaking namely Maharashtra Electronics Corporation Ltd, Bombay, Maharashtra
State Road Transport Corporation Ltd. Bombay, Maharashtra State Electricity Board
Bombay, Maharashtra Agricultural Development and fertilizer Promotion Co-
operation Ltd. Bombay and Gap Antibiotics and Pharmaceuticals Ltd. Panaji in his
book.

Dixon (1994) describes the essence of a learning organisation as the

organisation's ability to use the amazing mental capacity of all its members to create
the kind of processes that will improve its own (Dixon 1994 cited in Wilson 1999).

55
They are organisations where individuals constantly expand their capacity to create
the results they truly desire. They have systems, mechanisms and processes in place,
that are used to continuously enhance their capabilities to achieve sustainable
objectives. To achieve this strategy there is an open culture which promotes learning
in both formal and informal methods. Mistakes are discussed and reviewed,
theoretically without blame being apportioned (Wilson 1999).

The research can also be viewed with that of Goodall and Warner (1997),
who examined HRM in joint ventures in Shanghai compared with those in Beijing,
using a case-study approach. They focused primarily on issues relating to labour
contracts, rewards and benefits, social insurance, trade unions and personnel policies,
and described developments in China in each of these areas. The extent to which HR
practices in joint ventures are distinct from those in contemporary state owned
enterprises was also examined. The papers conclusions were that, although, as one
would expect, foreign ownership modified traditional practice, the degree and extent
to which this was true varied widely. Although neither of these pieces of research
directly related to mergers and acquisitions, they were both strongly focused on the
influence of the west in China, and thus provide good data and analyses which will be
prevalent in the study of the M&A field.

Gratton et al, (1999.) "Human Resource Management advocates the

devolution of people management from the Human Resource function to line
management. However, research shows that this is difficult to achieve in practice
Discuss why this is the case. Indicate what can be done to ensure that line managers
take responsibility for the implementation of HR policies and practices."

Galbraith (Heneman, etal, 2000) pointed out the importance of studying the
role of human resources in the development of entrepreneurial firms. Research on the
role of HRM in the entrepreneurial process, however, is only now beginning to
emerge. Current research literature on HRM in entrepreneurial firms, though,
“appears to be rich in prescriptions, limited in so und descriptive surveys, and sparse
in analytical research”

56
 Meyer (2001) takes another approach to the topic, using an understanding of
the allocation processes in mergers and acquisitions by applying an organizational
justice perspective. This is a perspective that had previously been neglected in past
research on mergers and acquisitions, but which is very important in understanding
the challenges managers face in allocating human resources and other resources of
symbolic importance. particular, the paper examines the trade-offs between multiple
goals in selecting distributive and procedural justice rules, and identifies factors that
constrain these choices. A similar perspective is offered by Lieberman and Moss
(2001), who analyse the reasons reorganizations and mergers often result in workforce
reductions, and the forms these changes often take. However, this paper concentrates
more on the legal challenges and risks for in-house counsel and the human resources
departments when dealing with local and regional employment laws, claiming that,
with proper planning and advice, the potential for incurring charges of discrimination
or other employment law issues can be anticipated and avoided. However, the paper is
very clear that human resource departments planning a reduction in force, whether
due to mergers or otherwise, are often running tribunal risks, and should consider
whether other options are feasible, including freezing wages or postponing wage
increases if cash needs are an immediate issue.

Chu and Siu (2001), A further study on the effects of the Asian Financial
Crisis on human resource practices in the area was conducted, whose paper examined
the processes of the ‘rightsizing’ strategies of Chinese-owned small and medium-
sized firms in Hong Kong. The research results suggest that SMEs in Hong Kong
follow different human resources practices at different stages, and also suggested a
tentative model for the ‘rightsizing’ strategies of human resource departments in
Chinese state owned small and medium-sized firms in Hong Kong.

Horowitz etal. (2002) provide one of the most definitive pieces of research on
the subject of human resource challenges in mergers and acquisitions. Their article
identifies the attributes of organizational culture and human resource practices
required for successful transitions in mergers and acquisitions, and analyses the
implications of culture types for inter-organizational combinations. They cite the
importance of information when dealing with employee turnover during a merger or

57
acquisition, and also the importance of giving special attention to management style
and organizational integration in successfully managing mergers and acquisitions.
Another recent academic piece to touch on the subject was that of Signorovitch
(2004). This article discussed how to successfully deal with a change in leadership in
a company, and in some cases, those leadership changes were accompanied by other
changes, such as reorganization, acquisitions or mergers. He claimed that it is also not
that difficult to get some early insights into the new leader from colleagues in the
organization, especially in the human resources department, due to that department’s
necessary close association with the change.

HRM practices and development were reviewed by Chiu and Levin (2003) in
Hong Kong which is a useful case study for predicting and analyzing the potential
future directions. Their work briefly reviewed the principal types of employment
systems that emerged within this environment following the reunion with the People’s
Republic, and analyzed how changes in the economy, the politics, and the labor
marker impacted on these systems from the late 1970s to the mid-1990s. In particular,
it examined how human resources management practices in both the private and
public sectors’ have changed since 1997 in response to two critical events occurring
that year: the onset of the Asian Financial Crisis and the change of sovereignty over
Hong Kong.

People Management (2003) focused on the study HR’s Contribution to

International Mergers and Acquisitions, released by the Chartered Institute of
Personnel and Development, stating the importance of accounting for differences in
human resources management policies and industrial relations between companies,
whilst also studying information on cultural due diligence.

M. Doyle (2003) examined that the labour force in competitor countries is

educated to higher levels than those in the UK, and that higher education
qualifications will ever more be in demand to address future skills needs, particularly
at the technical and associate professional level. Foundation degrees have been

58
introduced as a method for non-academic or professionally qualified employees to
obtain the correct skills to enhance their role and future career prospects. Although
these degrees are not the only method to bridge the skills gap, they should be
considered together with more traditional methods of learning. With employers
working closely to compile the courses they facilitate opportunities to create diversity
and differentiation within education establishments

Emmot (2003), In a survey by the CIPD of almost 1,200 senior HR

practitioners line managers’ views were the most frequently cited measure of HR
performance, with 70 per cent of respondents indicating that this form of assessment
was used in their organisation. ‘Business outcomes’ was ranked second, with
employee surveys the third most popular measurement tool – just over half of the
sample reported using these. Only a quarter spoke of relying on cost benefit analyses.
These figures present a contrasting view to that suggested by the dearth of published
or otherwise available material on the subject of ‘soft’ performance measures, and
suggest – perhaps not surprisingly – that HR related communications between the
department, managers and employees tend to be informal, or, at least, unpublished
outside the individual organisation concerned.

Another useful piece is that of Woodard and Wang (2004), who discuss the
implications of the acquisitions of Chinese companies being made by international
companies for total foreign direct investment. They also mention the formation of the
State Assets Supervision and Administration Commission in line with the
restructuring and privatization of state-owned enterprises, showing that not only must
HR departments in Chinese state owned enterprise beprepared to acquire other
companies, but they would do well to consider the possible implications of acquisition
themselves.

A deeper look at this field was undertaken by Movshuk (2004), who used a
stochastic frontier model with panel data, in order to evaluate the impact of major
reform initiatives, including merger policy, on enterprise performance in China’s iron

59
and steel industry. While the production possibility frontier of examined enterprises
was shifting upward, their technical efficiency did not improve significantly, and was
even deteriorating in the mid-1990s. Moreover, the largest steel enterprises did not
have a pronounced efficiency advantage over smaller ones, even though the former
are considered by the Chinese authorities as the core of their ongoing centralized
merger campaign to create internationally-competitive steel conglomerates. As such,
the paper examines various determinants of enterprise inefficiency, and discusses
policy implications of major findings, including some implications that could
potentially impact on HR departments.

Wen (2004), who used a Cournot competition model to show that the welfare
consequences of different reforms are determined by the industrial structure, the
distribution of production capacities, and the cost differentials among firms. As these
factors vary from industry to industry, decisions on reform of loss-making state
owned enterprises, including choices between mergers and sale, to which the
enterprises’ assets should be sold as well as the auction approach should be endogen
zed within the industrial structure. Near the end of 2003, the Far Eastern Economic
Review looked at the purchase of the two plants of U.S.-based Intergen Co. in
Australia by China state-owned Huaneng Power International Inc., and examined
some of the potential implications.

Law, Wong and Wang (2004), who claim that the localization of human
resources has been a major objective for many transnational corporations and state
owned enterprises in China. After a review of related literature and in-depth
interviews with six such corporations, Wong and Law (1999) developed a model
explaining the localization process in China, and based on this localization model,
Law, Wong and Wang (2004) conducted an empirical test involving the antecedents
of successful localization results of 139 transnational corporations in the country.
Results showed that whether or not localization had been identified as an important
goal, overalllocalization planning efforts and most importantly the actual human
resources management practices were important factors leading to successful
localization of expatriate positions.

60
 De Saa Perez and Garcia Falcon (2004) reviewed that Strategic HRM
provides firms with the internal capacity to adapt and adjust to their competitive
environments by aligning HRM policies and practices (Kidwelland Fish, 2007).
Examples of these policies and practices are recruitment and selection, training and
development, and reward systems with business strategies (Leingnick-Hall and
Leingnick-Hall, 1988; Delery and Doty, 1996; Svelik andStarrov-Costea, 2007;
Petrescu and Simmons, 2008; Verano-Tacoronte andMelia´n-Gonza´lez, 2008). The
firm’s ability to develop HRM practices aligned withbusiness strategy is a source of
sustainable competitive advantage (Dyer and Reeves, 1995; Huselid et al., 1997;
Barrett and Mayson, 2007; Andonova and Zuleta, 2007). Strategic HRM has been
studie from three perspectives (Delery and Doty, 1996; Twomey and Harris, 2000):
universalistic, contingency and configurational.

Hayton, (2005), Human capital is the knowledge, skills, and abilities of

employees, while human resource management (HRM) includes all activities related
to the management of employment relationships in the firm (Lin et al., 2008).

Kearney (2005), whilst discussing the consolidation of Oracle and PeopleSoft

workforces, looked at differences in the consolidation process in several countries,
including collective consultation on the merger and job losses. His conclusion was
that job losses are inevitable in a merger, and it is up to HR departments to complete
them as swiftly as possible because prolonging the pain for everyone in the name of
protecting the few really is cruel. (Kearney, 2005) Kearney’s conclusions back up
those of Faulkner, Pitkethly and Child (2002), who investigated HRM practices
adopted by companies from the USA, Japan, Germany and France in UK companies
that they acquired, with UK/UK acquisitions used as a control. The research, which
was based on a survey instrument applied to 201 companies and interviews with forty,
notes that there is some convergence of HRM practices, in that, for example, all
countries researched employ performance-related pay and increased the amount of
training in their new subsidiaries. It found, however, that there is a distinct difference
in the HRM practices employed by companies from each of the countries, influenced
by the characteristic HR practices commonto companies in the country of origin of

61
the parent. This work thus shows the importance of accounting for national
differences, whilst also ensuring that necessary changes are carried out swiftly and
efficiently in order to minimize prolonging the pain, as Kearney put it.

Pomeroy (2005), who focused mainly on the role played by Hewlett-Packard

human resources and workforce development executive vice president Susan Bowick
in the HP-Compaq merger in 2001, showing the pressures that mergers and
acquisitions can place on senior HR management. Further, the Human Resources
Department Management Report (2005), focused on the announcement of Affiliated
Computer Services Inc. that it will acquire Mellon Financial Corp.’s human resource
(HR) consulting and outsourcing division in the U.S. This report examined the
increasing tendency for companies to acquire well functioning human resource
operations, as well as develop and focus on their own, thus voicing the expectation
that the HR business process outsourcing market would grow, fuelling the so called
‘mergerama’.

Zhu, Cooper, De Cieri and Dowling (2005) have occurred in Chinese state
owned industry. Their research firstly notes that the Chinese government has launched
extensive reforms to encourage integration with the global economy and, secondly,
investigates the implications for human resource management practices of the
changing business environment in China, ownership of organizations, organizational
strategies and strategic integration of the HR function. The results from two surveys
in major Chinese cities, in 1994/5 and 2001/2, with managers of state-owned,
privately owned, collectively owned and foreign-invested enterprises, are analyzed,
and regression analyses are used to show that organizational strategy and
organizational ownership, in contrast with earlier research, were not found to be
strong predictors of HRM practices. The changing business environment in China and
participation by the HR function in strategic decision-making were the strongest
predictors of HRM practices, and overall, a strategic role for the HR function and
implementation of ‘Western’ HRM practices are becoming more prevalent in China,
although the legacy of traditional practices endures and new challenges are emerging.

62
 Keating and Olivares (2007), The study of entrepreneurship requires a
holistic approach , previous comprehensive reviews of research on HRM and
entrepreneurship are almost non-existent. One notable exception to this is Hayton’s
(2005) review of empirical studies on human resources as drivers of corporate
entrepreneurship; this study, however, does not include start-ups.

Matthew Freedman and Renata Kosova (2012) writes a paper entitled

“Agency and Compensation: Evidence from the Hotel Industry” in ‘The Journal of
Law, Economics, and Organization’ and examined how agency problems in the
workplace interact with compensation policies by taking advantage of the structure of
the hotel industry, in which many chains have both company-managed and franchised
properties. As residual claimants on their properties’ profits, franchisees have stronger
incentives to monitor employees than managers in company-managed hotels.
Exploiting this variation and using rich, longitudinal data on the hotel industry, the
effort has been made to estimate differences in wages and human resource practices
across company-managed and franchised hotels within chains as well as within
individual hotels as they change organizational form. The results suggest that the
timing of pay and the propensity to use performance-based incentives relate to the
extent of agency problems within establishments

Yao-Hung Yang (2013) conducted a study and published a research paper entitled
“An Investigation of the Business Performance and Manager Compensation of
Taiwanese Non-Family-Controlled and Family-Controlled International Businesses”
in’ International Journal of Economics and Finance’. This study explores the problem
of the communities of interest that form when management and ownership overlap.
Samples were obtained from the Taiwan Economic Journal (TEJ) data bank from
2005 to 2011.The result of non-family-controlled international businesses shows that
business accounting performance is improved when directors serve as managers;
however, if control rights exceed ownership rights to a great extent, business
accounting performance declines. The results of family-controlled international
businesses shows that directors who serve as managers can monitor compensation
effectively; however, if control rights exceeds the ownership rights toa great extent,

63
communities of interest can pursue selfish interests. In this study, suggested that
directors serve as managers to improve business performance and supervise
managers’ compensation. Moreover, controlling shareholders should serve as board
members with a certain proportion to prevent excessive interest assimilation.

Afroja Rehan Rima and Md. Rifayat Islam (2013) have written a paper “A Case
Study on Compensation System Practices in the Perspective of Telecom Industries of
Bangladesh” in ‘American International Journal of Research in Humanities, Arts and
Social Sciences’. Telecommunication sector in Bangladesh has always been leading
the way to initiate new products and services in the local marketplace. The total
strength of this sector depends on their employees stood at approximately 20,000 at
the end of the year. The telecom industry considers that a hefty, skillful and
enthusiastic employee is the key factor to success. The continual expansion of their
people is an essential factor in driving their growth ambitions. They place a strong
importance on how they are investing on their people and in people development,
building a strong performance culture and driving the right levels of motivation across
the organization. “People” are the central focus, which is why they maintain a very
strong Human Resource Managing Culture throughout their organizations. As they
give more focus on their employees and for that they want to do best for them
throughmotivation so that they will be able to perform in an efficient andeffective
way. Though there were some dark sided regarding the full utilization of the process
in the perspective of Bangladesh; still the telecom industry in Bangladesh getting
benefitted from it. A good compensation system is very much effective for an
organization; whatever the industry. It creates an opportunity for the telecom industry
in Bangladesh’s employees as well for high involvement with the organization.
Through a strong and standardized compensation system, employee can compare
themselves with others. No compensation system can succeed without a clear,
concise, and comprehensive communication plan. Every employee should make clear
themselves about the whole process to proceed for further and make them competent
in such a competitive market place. In this case study, a brief description of
compensate issues has been highlighted and finally build up a comparison between
two leading telecom companies in Bangladesh and make some effective
recommendations.

64
Maria Joutsenvirta (2013) published a paper “Executive Pay and Legitimacy:
Changing Discursive Battles over the Morality of Excessive Manager Compensation”
in ‘Journal of Business Ethics’. This study investigated discursive processes through
which heavily contested executive pay schemes of the Finnish Energy Giant Forum
were constructed as (i) legitimate in public during 2005–2009.The critical discursive
analysis of media texts identified five legitimation strategies through which
politicians, journalists, and other social actors contested these schemes and, at the
same time, constructed subject positions for managers, politicians, and citizens. The
comparison of two debate periods surrounding the 2007–2008financial crisis revealed
significant differences in the discursive strategies and the corresponding moral
struggles linked to legitimation of executive compensation. The analysis highlights a
change in moral reasoning by social actors as they adapt their justifications to a
changing social context. This study has important implications for our understanding
of the ethical aspects and socio-political embeddedness of manager compensation. In
particular, it adds to the knowledge of organizational legitimacy by showing how
discursive strategies and the corresponding morality constructions used to
(de)legitimate business activities can shift quickly as a result of a change in the social
and political climate surrounding the legitimating struggle.

Hang Le et al. (2013) conducted a study and published an article entitled

“Management Compensation Systems in MNCs and Domestic Firms: Cross-National
Empirical Evidence” in ‘Management International Review’ and it is a study of the
relationship between institutional settings and managerial compensation systems,
basedon extensive cross-national survey evidence. The authors compared the
differences in practices between Multinational Corporations (MNCs) and domestic
firms across a range of capitalist archetypes. It was found that MNCs are more likely
to promote compensation systems that incentivize managers in line with
organizational performance compared to domestic firms. The findings also reveal
persistent diversity reflecting firm type and institutional setting. The authors find that
the gap between MNCs and domestic firms in terms of the usage of incentive-related
compensation is less pronounced in Liberal Market Economies than in other settings.
This suggests that it is a combination of being an MNC and the specific home locale
that moulds approaches to managerial compensation. This reflects considerable
hybridization of practices within and between settings.

65
Bijan Abedini et al.(2013) published a paper entitled “Analysis of the Relationship
between Managers’ Compensation and Earnings in Companies Listed in the Tehran
Stock Exchange” in “Journal of Educational and Management Studies”. The objective
of the paper is to study the relationship between managers ‘compensation and
earnings in companies. It is a causal-analytic survey which is based on analysis of
panel data. In this study, the financial information on 112 companies listed in the
Tehran Stock Exchange from 2006 to 2010 is analyzed. It shall be mentioned that560
companies were listed in the Tehran Stock Exchange each year. The SPSS 20,
EVIEWS 7 and MINITAB 16 software were used for analysis of the research results.
The results of the study show that there is a significant direct relationship between
managers ‘compensation and earning.

Yusuf Mohammed Nulla7 (2013) published “The Examination of Top Manager

Compensation System of NYSE Energy Companies” in ‘Strategic Management
Quarterly’. This study investigated CEO compensation system of NYSE energy
companies. It tested the relationship between CEO compensation, firm size,
accounting firm performance, and corporate governance, from 2005 to 2010. The
totalled twenty five companies were selected through random sampling method from
NYSE index companies. The research question for this study was: is there a
relationship between CEO cash compensation, firm size, accounting performance, and
corporate governance? To answer this question, nine statistical models were created.
It was found that, there was a relationship between CEO salary, CEO bonus, total
compensation, firm size, accounting performance, and corporate governance. The
correlations between CEO salary, CEO bonus, CEO total compensation and firm size
were ranged from moderate to strong positive ratios. Thecorrelations between CEO
compensation and firm performance wereranged from low negative to strong positive
ratios. The correlations between CEO compensation and corporate governance were
ranged from low negative to moderate positive ratios

.Abbdul-Jaleel Saani(2013) writes on “Influence of Compensation and Supervision

on Private Basic School Teachers Work Performance in Ashaiman Municipality” in
‘International Journal of Business and Social Sciences’. This study investigated the
influence of compensation and teacher supervision on teacher work performance. A
total of 103 randomly selected private basic school heads and teachers in the
Ashaiman community of Tema, Ghana completed the questionnaire. Data for the

66
study were analyzed using multiple regression analysis. It was found out that
compensation and teacher supervision relate positively to teacher work performance;
however, the two variables do not directly predict work performance. They do so only
if teachers are satisfied with the forms of compensation available to them. It is
therefore recommended that management of private basic schools should design
attractive compensation packages for their teachers. They should also use appropriate
supervision strategies in their schools, as this increases teacher work performance.

Amit Hole and Ashutosh Misal (2013) published a paper entitled “Impact of
Compensation Strategies on Performance of Insurance Agents in General Insurance
Companies” in ‘Tactful Management Research Journal’. Since 1956, with the
nationalization of insurance industry, the LIC held the monopoly in India’s life
insurance sector, GIC, with its four subsidiaries, enjoyed the monopoly for general
insurance business. From 1991 onwards, the Indian Government introduced various
reforms in the financial sector paving the way for the liberalization of the Indian
economy. It was a matter of time before this liberalization affected the insurance
sector. Insurance being one of the segments of financial sector, it has in the recent
past gone through a transformation and change including the passing of IRDA
(Insurance Regulatory and Development Authority) Act 1999. Due to the IRDA Act
1999 the insurance sector has been opened up, the monopoly of government
companies has broken and many new private players have entered into the insurance
sector and thus the sector has become highly competitive with full of challenges.
Several factors account for new private general insurance companies speedily
penetrated in the market. Private companies develop new distribution channels. They
were having particular success in forging bank assurance alliances, through direct
marketing. This research paper analyzes impact of compensation policies on
performance of insurance agents’ for general insurance sector. It helps to improve the
market share of public sector general insurance company by improving performance
of insurance agents by motivating them by technique of compensation management. It
provides a toolset for strategic remuneration planning that reflects organization
culture and paystrategies.

Rim Ben Hassen (2014) writes on “Executive Compensation and Earning

Management” in ‘International Journal of Accounting and Financial Reporting’.
Given the growing complexity of business, the need for financial reporting to include

67
more reliable information is increased. For this information to be relevant, they must
be conducted in an implementation of an efficient system of control to ensure a high
quality result. The directors of listed companies may be required to affect the quality
of accounting earnings as their compensation depends. Therefore, it would be wise to
examine the relationship between the elements of executive compensation and earning
management. The objective of this paper is to examine one of the motivations that
could encourage managers to manage the accounting results, namely the managerial
remuneration. The result of this study shows that executive compensation is
determined by the requirements of earning management. Specifically, our litters
indicate that total compensation is negatively related to the absolute value of accruals.
This result confirms the theoretical hypothesis alignment of interests of executives
with those of shareholders.

Roya Anvari et al. (2014) conducted a study and presented a paper entitled
“Mediating Effects of Affective Organizational Commitment and Psychological
Contract in the Relationship between Strategic Compensation Practices and
Knowledge Sharing” in ‘International Conference on Innovation, Management and
Technology Research’. This study contributes to the development of the knowledge
management and strategic compensation literature through developing the linkages
between them. The study sample comprised of 301 employees from universities of
medical sciences in Iran. Multiple and simple linear regression and path analysis were
used to test the direct and mediated relationships among the variables. Results
highlighted significant relationships between (a) strategic compensation practices and
affective organizational commitment (b) affective organizational commitment and
knowledge sharing (c) strategic compensation practices and psychological contract
and (d) psychological contract and knowledge sharing. The study revealed that
strategic compensation practices are positively related to affective organizational
commitment and psychological contract. In addition, the results provided evidence
that affective organizational commitment and psychological contract have a
significant mediating effect on the relationship between strategic compensation
practices and knowledge sharing. Managerial and practical implications of the
findings are highlighted.

68
Grace Mwamburi Odhiambo and Esther Waiganjo (2014) examines the role of
human capital management strategies on the mobility of employees, specifically, the
influence of communication of corporate strategy, organizational alignment strategy,
compensation strategy and transformational leadership strategy on employee mobility.
It adopted a case study research and used a semi-structured questionnaire to collect
data that was analyzed using Microsoft Excel and SPSS. The study’s findings
revealed that JKUAT had communicated its corporate strategy well as over 90% of
the respondents were aware of the vision and mission. Presence of transformational
leadership was also established. Organizational alignment was found to be non-
existent while compensation strategy emerged as the most prominent trigger for
employee mobility. The research recommends that the university considers utilizing
its ICT infrastructure and telephone as channels for disseminating strategy
information; incorporating the HR function in the university management board and
reviewing its compensation system for equity and alignment with responsibilities and
qualifications.

Uthra13 (2014) published an article entitled “A Study on Compensation Management

at Sri Steel Industries Limited, Coimbatore” in ‘The International Journal of Business
and Management’. In Today’s Dynamic Economy, with increased corporate
competition and the job uncertainty that follows hand in hand with mergers and
acquisitions, it is becoming ever more important to offer employees a benefits
package that they perceive to be of great value. Not only benefits packages help to
retain employees, they can help to attract qualified candidates to add to the 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. Compensation dissatisfaction can lead to absenteeism, turnover, job
dissatisfaction, low performance, strikes and grievances. Majority of labor-
management disputes relate to compensation. The objectives of the study are to study
the compensation management practices in the organization and also to identify the
type of compensation and analyze the satisfaction of workers with regard to
compensation. The study assumes the nature of descriptive research. The sample size
considered for the study is50. The respondents are the employees of Sri Steel
Industries Limited, Coimbatore. The sampling technique used is Strata sampling. The
data is collected from the sample through Questionnaire method. The statistical tools

69
used for analysis are chi-Square and mean score. The mathematical tool used is
percentage analysis. It is found that most of the employees are satisfied with the
compensation policy followed at their organization and they are also satisfied with the
non-monetary benefits provided, basic pay, house rent allowance, dearness allowance,
conveyance allowance, medical benefits provided, over time allowance, travelling
allowance. The employees are dissatisfied with the leave rules laid. From the chi-
square analysis it is observed that there is no relationship between the no. of year’s
service and giving equal part in decision making process and it is also observed that
there is a significant relationship between the work performance of the employee and
the kind of compensation. It is recommended that management can consider the pay
revision at least once in every three years and as respondents are dissatisfied with the
leave rules of the organization management can laid down the leave rules in
consultation with the employees, if possible.

Nate Holdren (2014) published on “Incentivizing Safety and Discrimination:

Employment Risks under Workmen’s Compensation in the Early Twentieth Century
United States” in ‘Enterprise and Society’. This article takes criticisms of employment
discrimination in the aftermath of the creation of workmen’s compensation
legislations a point of entry for arguing that compensation laws created new
incentives for employment discrimination. Compensation laws turned the costs of
employees’ workplace accidents into a risk that many employers sought to manage by
screening job applicants in a manner analogous to how insurance companies screened
policy applicants. While numerous critics blamed insurers for discrimination, the
author argue that the problem was lack of insurance. The less that companies pooled
their compensation risks via insurance, the greater the incentives for employers to
stop employing people they would have previously been willing to hire.

Abdul Hameed et al.(2014) published “Impact of Compensation on Employee

Performance (Empirical Evidence from Banking Sector of Pakistan)” in ‘International
Journal of Business and Social Science’. Compensation is very important for the
performance of the employees. Therefore, they are very important for the organization
too. The purpose of this research is to measure the impact of compensation on
employee performance. A questionnaire was designed to collect the data on the
factors related to compensation like salary, rewards, Indirect Compensation and
employee performance. The data was collected from different banks of Pakistan. The

70
data collected were analyzed in SPSS 17.0 Version. Different analytical and
descriptive techniques were used to analyze the data. It is found from different results
that Compensation has positive impact on employee performance. It is proved from
correlation analysis that all the independent variables have weak or moderate positive
relationship to each other. Regression analysis shows that all the independent
variables have insignificant and positive impact on employee performance.
Descriptive analysis also reveals that all the independent variables have positive
impact on employee performance. ANOVA results reveal that education have not
same impact on employee performance. The major limitation of this research is that
this study only covers the banking sector of Punjab. Another limitation is that it
excludes many variables of compensation due to shortage of time. Funds were also
another limitation. Apart from these limitations this research may provide insights to
the managers to enhance the employee performance of their subordinates.

Avinash Pawar and Charak (2014) writes and article entitled “A Study and Review
of Employee Value Proposition: A Tool of Human Resource Management” in
‘Review of Research’. The Employee Value Proposition (EVP) represents the
perceived overall deal between employer and employee. The employer makes an offer
to the employee (or the give) and expects contributions (or the get) from the employee
in return. The inducements and contributions consist of mutual obligations and
promises. Inducements typically concern things such as career progression,
organizational support, air and transparent performance management and more
tangible things such as pay and holiday entitlements. Contributions relate to things
such as working hours, being an advocate of the employer within and outside the
organization, bringing skills, enthusiasm and entrepreneurship to productive work.
Importantly, within the overall deal there are nested deals operating at different levels
of the organization, such as the tailored, workable arrangements forged between team
leader and team members, these reflect opportunities available for employees to shape
their work experience. Top-performing companies create a sustainable EVP and total
rewards strategy based on the needs, demographics and preferences of their
workforce. Employee Value Proposition refers to the rewards and benefits that an
employee receives in return of the performance that he gives at the workplace in the
organization. Manpower planning is putting the right number of people, right kind of
people at the right place, right time, doing the right things for which they are suited

71
for the achievement of organizational goals. EVP is at the core of all other
organizational processes. The characteristics of the EVP need to be reflected in the
corporate and employer brands. The EVP, if maintained well is the driver of
engagement, it informs recruitment messages and communications and it helps to
inform strategic HR priorities. It helps to support and drive business strategy forward.
People are the most important assets. Treat them like they make a difference and
they’ll make a difference. This paper takes the Review of Concept of Employee Value
Proposition and its relationship with Human Resource Management.

Adisa Delić and Amra Nuhanović(2014) published a paper entitled “Management

Compensation and the World Economic Crisis: Evidence from Bosnia and
Herzegovina” in ‘Asian Journal of Business Management’. In the published scientific
discussions the main factors – causes of crisis have been often analyzed. All those (up
to now) analyzed factors make the crisis long-lasting, harder, uncertain with hardly
predictable implications. On the other hand, understanding the cause and preventing
the consequences of crises are an important precondition of economic and social
development of any country. With regard to this, the main aim of research by the
authors is to explain the view according to which, the greed of Wall Street bankers
caused by excessive management compensation has also been, inter alia, one of the
relevant factors causing and deepening the 21st century world economic crisis.
Furthermore, the paperwork provides an overview of possible directions of regulation
in the field of management compensation, all with the aim to prevent large scale
crises in the future. Finally, to complete the research, theauthors have analyzed the
state in the field of management compensation in Bosnia and Herzegovina.

Ofoegbu Onyema (2014) writes an article entitled “Assessing the Relationship

between Human Resource Management and Employee Job Satisfaction: A Case Study
of a Food and Beverage Company” in ‘Journal of Business Administration Research’.
The relationship between human resources management practice and Employee job
satisfaction has always been contentious. The study therefore, set out to examine and
indeed ascertain the true state of such relationship using the Nigerian Breweries as a
case study. Survey design was adopted in the gathering of the primary data.
Questionnaire was designed and administered on some staff of the organization. The
data gathered was analyzed using regression method and Pearson's correlation. The
result of the study indicates that recruitment and selection, training and development,

72
performance appraisal and compensation (human resources management practice
variables) jointly and independently predict job satisfaction. It is recommended that to
improve competitive ability organizations need to recruit and retain competent staff.
This can only be done through good human resource management practices.

Tarus Kipkorir Erick et al.(2014) published a paper entitled “The Relationship

between Executive Compensation and Financial Performance of Insurance Companies
in Kenya” in ‘Research Journal of Finance and Accounting’. This paper sought to
assess the effect of executive compensation on the financial performance of insurance
companies in Kenya. The study considered functional form relationship between the
level of executive remuneration and key performance ratios by using a regression
model that establishes the relationship between pay and financial performance. The
results show that there is a non-significant relationship between executive
compensation and financial performance, P-Value>0.05. The negative correlation
suggests the capping of executive compensation to maximize shareholders returns.
This advocates that key performance ratios are not key considerations in determining
executive compensation among the insurance companies in Kenya. Hence, there is
need to sensitize executives to align their payment to accounting performance
measures because they are directly linked to shareholder’s wealth maximization. The
study’s findings are useful to managers in insurance companies for strategic planning.
The arguments of this study are based on the agency theory and review of relevant
literature.

Alice Chepkorir Milgo et al. (2014) conducted a study and published a paper entitled
“Reward and Compensation as a Determinant of Employee Commitment: A Survey
of KTDA Tea Factories in Kenya” in ‘European Journal of Business and
Management’. The purpose of this study was to investigate the determinants of
employee commitment in tea organizations in Kenya. Strong commitment is
correlated with high productivity, while low commitment lowers productivity. The
primary objective of this research was to determine the influence of reward and
compensation on employee commitment in tea factories in Kenya. To achieve this
objective a survey was conducted to canvas the opinions of respondents in public
KTDA tea factories in Kenya. Purposive sampling was employed to select six (6)
factories based on second payment known as bonus; with three (3) high paying and
three (3) low paying. Stratified sampling technique was used to categorize population

73
into managers and employees. Random sampling was used to give the sample size of
employees. A total of 273 respondents were randomly selected from a population
frame of 861 employees. Qualitative and quantitative data was collected by use of
self-administered structured questionnaires and interview schedule. Analysis of data
showed low paying factories had a lower average mean in all aspects of reward and
compensation 54.93 percent compared to high paying at average mean 71.60 percent.
Further analysis using Spearman’s rank correlation test revealed significant
relationship (P=0.00<0.01) between reward and compensation and commitment. The
study confirmed the significance of reward and compensation as a determinant of
employee commitment. This study has implications for management of KTDA tea
factories in Kenya since they can influence employees to achieve optimized
motivation and commitment, by designing a good reward and compensation that is
perceived as fair, equitable and consistent.

As stated by Emmanuel Erastus Yamoah (2014) in his paper entitled “Exploratory

Analysis of Compensation and Employee Job Satisfaction” published in ‘Developing
Country Studies’, organizations are made up of people and the success or failure of
these organizations are dependent on the people in the organization. It has been
proven time and again that one of the ways to get the best performance out of
employees is to make them comfortable and happy. Workers of all ages and income
brackets continue to grow increasingly unhappy at work a long-term trend that should
seriously concern employers. How then do managers create satisfied employees?
Since compensation has been a major factor of motivating employees in an
organization. This study examined the issue compensation and employee job
satisfaction. Data was collected and analyzed in terms of descriptive statistics and
Pearsonchi square was used to test the significance of relationship between
compensation and employee job satisfaction. The result indicated that there is no
significant relationship between compensation and employee job satisfaction among
the respondents. However, components of compensation such as career development
and job security were major contributing factors to employee job satisfaction. The
study recommended that better career development opportunities should be given to
the employees to increase job satisfaction.

74
Mohammad Rahim Uddin et al. (2014) published an article entitled “Compensation
Management from Islamic Perspective” in ‘European Journal of Business and
Management’. Around the world Muslims are rediscovering Islam; consequently there
is a growing demand of practicing Muslims for compensation from Islamic
perspective. But lack of adequate Islamic guidelines regarding compensation system
is one of the key constraints to the way of ensuring employee compensation from
Islamic point of view. So this study is an attempt to minimize the gap found therein.
In this study a framework for determining and ensuring employee wages and
compensation system has been developed in the light of Islamic principles. If the
compensation system is managed from Islamic perspective both employees and
employers will not only gain conducive, congenial and productive working
environment in this world but also can expect for getting salvation in the hereafter.

Yinghong Zhang (2014), In his paper entitled “The Impact of Auditor Changes on
CEO Compensation” written in ‘International Journal of Economics and Finance’,
investigated that whether auditors are a good external control mechanism to restrain
management from intentionally increasing CEO compensation through earnings
management. To examine this, the author regress variations of CEO cash and total
compensation on changes in auditors after controlling financial, stock market,
industry and year variables. There are two sample periods. In the period 1993–
2004,the paper examined the impacts of overall auditor changes and auditor changes
that are classified by the audit failure or auditor brand names. In the period 2000–
2004, the author checks the influences of auditor resignations and of auditor
dismissals due to accounting disagreements. The empirical results shows that changes
in cash compensation is positively related to the existence of auditor changes and this
relationship actually comes from auditor changes from big 5 auditors to non-big 5
auditors. Meanwhile, changes in total compensation is negatively associated with the
appearance of auditor switches from non-big 5 auditors to big 5 auditors. These
findings are consistent with the notion that big 5 auditors are moreactive at
discouraging earnings management. Overall speaking, the empirical evidences
support the belief that auditors do not function very well to monitor managers’
opportunistic behaviours.

75
 DATA ANALYSIS& INTERPRETATION

1. Are you satisfied with your remuneration which you are paid basing on your
experience?
TABLE -4.1
OPINION NO OF RESPONDENTS PERCENTAGE
Highly satisfied 43 43
Satisfied 27 27
Neutral 15 15
Dissatisfied 8 8
TOTAL 100 100

CHART-4.1

REMUNERATION BASED ON EXPERIENCE

43
45
40
35
27
30
25
20 15
15 8
10
5
0
Highly satisfied Satisfied Neutral Dissatisfied

INTERPRETATION:

From the above table it is very clear that 43% of employees feel highly
satisfied, 27% of employees feel satisfied, 15% of employees feel neutral, 8% of
employees feel dissatisfied about their remuneration based on their experience.

76
 2. How do you feel about job security in your company?

TABLE -4.2

OPINION NO OF RESPONDENTS PERCENTAGE

Highly Satisfied 30 30

Satisfied 20 20

Neutral 10 10

Dissatisfied 40 40

TOTAL 100 100

CHART-4.2

JOB SECURITY

40
40
35 30
30
25 20
20
15 10
10
5
0
Highly Satisfied Neutral Dissatisfied
Satisfied

INTERPRETATION:

From the above table it is very clear that 30% of employees feel highly
satisfied, 20% of employees feel satisfied, 10% of employees feel neutral,40% of
employees feel dissatisfied about their jobs security

77
 3. Are you satisfied with the monetary allowances providing by the organization?

TABLE 4.3

OPINION NO OF RESPONDENTS PERCENTAGE

Highly Satisfied 14 14
Satisfied 24 24

Neutral 40 40
Dissatisfied 22 22

TOTAL 100 100

.CHART-4.3

MONETARY ALLOWANCES
40
40
35
30 24
22
25
20 14
15
10
5
0
Highly Satisfied Neutral Dissatisfied
Satisfied

INTERPRETATION:

From the above table it is very clear that 14% of employees

feel highly satisfied, 24% of employees feel satisfied, 40% of employees feel
neutral, and 22% of employees feel dissatisfied about their monitory allowances.

78
 4. Have ever been involved in the decision making process by the management?

TABLE -4.4

OPINION NO OF RESPONDENTS PERCENTAGE

Never 8 8

Rarely 20 20

often 30 30

Always 42 42

TOTAL 100 100

CHART-4.4

DECISION MAKING PROCESS BY MANAGEMENT

42
45
40
35 30
30
25 20
20
15 8
10
5
0
Never Rarely often Always

INTERPRETATION:

From the above table it is very clear that 8% of employees feel Highly
satisfied, 20% of employees feel satisfied, 30% of employees feel neutral 42% of
employees feel dissatisfied involved in the decision making process.

79
 5. Are you satisfied with this privilege given to you during the decision
making process?

TABLE-4.5

OPINION NO OF RESPONDENTS PERCENTAGE

Highly satisfied 50 50
Satisfied 14 14
Neutral 30 30
Dissatisfied 6 6

TOTAL 100 100

CHART-4.5

PRIVILEGE GIVEN TO EMPLOYEES DURING THE DECISION

MAKING PROCESS

50
50

40
30
30

20 14
6
10

0
Highly satisfied Satisfied Neutral Dissatisfied

INTERPRETATION:

From the above table it is very clear that 6% of employees feel highly
satisfied, 14% of employees feel satisfied, and 30% of employees feel neutral 50% of
employees feel dissatisfied about privilege given to employee during decision
making process.

80
 6. Are you satisfied with the overtime pay?

TABLE -4.6

OPINION NO OF RESPONDENTS PERCENTAGE

Highly Satisfied 34 34
Satisfied 26 26
Neutral 24 24
Dissatisfied 16 16
TOTAL 100 100

CHART-4.6

OVERTIME PAY

34
35
30 26
24
25
20 16
15
10
5
0
Highly Satisfied Neutral Dissatisfied
Satisfied

INTERPRETATION:

From the above table it is very clear that 34% of employees feel
highly satisfied, 26% of employees feel satisfied, 24% of employees feel neutral, and
16% of employees feel dissatisfied about their Overtime pay.

81
 7. How do you rate safety measures in the organizations?

TABLE -4.7

OPINION NO OF RESPONDENTS PERCENTAGE

Highly Satisfied 24 24
Satisfied 30 30
Neutral 20 20
Dissatisfied 26 26

TOTAL 100 100

.
CHART-4.7

SAFETY MEASURES IN THE ORGANIZATION

30
30 26
24
25 20
20

15

10

0
Highly Satisfied Neutral Dissatisfied
Satisfied

INTERPRETATION:

From the above table it is very clear that 24% of employees feel highly satisfied, 30%
of employees feel satisfied, 20% of employees feel neutral, and 26% of employees
feel dissatisfied about safety measures in the organization.

82
 8. How effectively management deals with employees disputes?

TABLE -4.8

OPINION NO OF RESPONDENTS PERCENTAGE

Highly Satisfied 22 22
Satisfied 12 12
Neutral 38 38
Dissatisfied 28 28

TOTAL 100 100

CHART-4.8

MANAGEMENT DEALS WITH EMPLOYEE DISPUTES

38
40
35
28
30
22
25
20
12
15
10
5
0
Highly Satisfied Neutral Dissatisfied
Satisfied

INTERPRETATION:

From the above table it is very clear that 22% of employees feel highly
satisfied, 12% of employees feel satisfied, 38% of employees feel neutral, 28% of
employees feel dissatisfied about dealing with employee disputes by management

83
 9. What is your opinion about statutory welfare facilities provided by the
organization?

TABLE -4.9

OPINION NO OF RESPONDENTS PERCENTAGE

Highly Satisfied 48 48
Satisfied 24 24

Neutral 22 22

Dissatisfied 6 6

TOTAL 100 100

CHART-4.9

PERCENTAGE

48
50
45
40
35
30 24 22
25
20
15
6
10
5
0
Highly Satisfied Neutral Dissatisfied
Satisfied

INTERPRETATION:

From the above table it is very clear that 48% of employees feel highly satisfied, 24%
of employees feel satisfied, 22% of employees feel neutral, 6% of employees feel
dissatisfied about their statutory welfare facilities.

84
 10. What is your opinion about comparing jobs across similar companies in the
same Industry?

TABLE -4.10

OPINION NO OF RESPONDENTS PERCENTAGE

Highly Satisfied 6 6
Satisfied 26 26

Neutral 14 14
Dissatisfied 54 54

TOTAL 100 100

CHART-4.10

OPINION ABOUT COMPARING SIMILAR JOBS ACROSS

SIMILAR COMPANIES

54
60
50
40
26
30
14
20
6
10
0
Highly Satisfied Neutral Dissatisfied
Satisfied

INTERPRETATION:

From the above table it is very clear that 6% of employees feel highly
satisfied, 26% of employees feel satisfied, 14% of employees feel neutral, 54% of
employees feel dissatisfied about opinions comparing similar jobs across similar
companies.

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 11. Does your management respond to your suggestions about compensation
plan?

TABLE -4.11

OPINION NO OF RESPONDENTS PERCENTAGE

Yes 48% 48%

No 52% 52%

TOTAL 100 100

CHART-4.11

MANAGEMENT RESPONDS TO EMPLOYEES

SUGGESTIONS
52%

52%
51%
50% 48%
49%
48%
47%
46%
Yes No

INTERPRETATION:

From the above table it is very clear that 24% of the responders feel that the
management is responding to the employee suggestions about the compensation
planthe wage given by the management

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 12. Do you feel that wage is enough to meet your family’s usual monthly
expenses and bills?

TABLE -4.12

OPINION NO OF RESPONDENTS PERCENTAGE

Highly Satisfied 50 50
Satisfied 40 40

Neutral 6 6
Dissatisfied 4 4

TOTAL 100 100

CHART-4.12

WAGE IS ENOUGH TO MEET YOUR FAMILY EXPENSES

50
50
45 40
40
35
30
25
20
15
6
10 4
5
0
Highly Satisfied Satisfied Neutral Dissatisfied

INTERPRETATION:

From the above table it is very clear that 50% of employees feel Highly
satisfied,40% of employees feel satisfied, 6% of employees feel neutral, and 4% of
employees feel dissatisfied about fulfilling of their family requirements with the wage given
by the management

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 13. What is your opinion about non statutory welfare facilities provided by the
organization?
TABLE -4.13

OPINION NO OF RESPONDENTS PERCENTAGE

Highly Satisfied 28 28
Satisfied 18 18
Neutral 14 14
Dissatisfied 40 40

TOTAL 100 100

CHART-4.13

OPINIONS ABOUT NON STATUTORY WELFARE FACILITIES

40
40
35
28
30
25
18
20
14
15
10
5
0
Highly Satisfied Satisfied Neutral Dissatisfied

INTERPRETATION

From the above table it is very clear that 28% of employees feel Highly
Satisfied, 18% of employees feel satisfied, 14% of employees feel neutral, and 40%
of employees feel dissatisfied about their non statutory welfare measures.

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 RESULTS & DISCUSSIONS

 It is found that the remuneration given to the employees is satisfactory to the 66 per
cent of the employees.
 It is observed that the Job security measures provided by the firm disappoint 40 per
cent of the employee. Due to this the employees lose their interest and employee
turnover increases.
 It is noticed that the firm’s monetary benefits are not satisfying to more than 40 per
cent of employees. The provided benefits does not help them to meet their daily
needs.
 It is identified that the chance for participation in decision making process is not
given to all the employees .28 per cent of respondents feel they are not given
enough value by the management .
 It is noticed that the over duty payment method is not sufficiently provided. 40 per
cent of the respondents feel that they are exploited.
 It is observed that the Safety measures are very important .But 46 per cent of
respondents feel that these measures are not adequate especially at larger
machinery.
 It is noticed that solving the disputes among employees is the responsibility of the
management. 64 per cent of respondents are feeling that company fall to perform their
responsibility.
 It is observed that the implementation of statutory welfare facilities by the firm
give satisfaction to 72 per cent of the respondents ,at the same time 28 per c2nt of
respondents are completely disappointed due to bias shown in their provision.
 It is identified that in terms of flexibility and creation of friendly atmosphere the
competitors of the firm are ahead. This same response is given by 68 per cent of the
employees.
 It is found that the Grievance and redressed system is weak according to 52 per cent
of the respondents.
 It is noticed that the non-statutory measures such as maternity leave and flexible time
causes are not satisfied to 54 per cent of the respondents.
 It is observed that the company does not follow any employee retention methods.
 It is noticed that the wages and salaries to the employees are not provided on time.
Sometimes, there is a delay of more than a week.

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 SUGGESTIONS
 The Company should follow a fair method increasing the pay on the basis of
experience. Because, a dissatisfied employee will not be completely productive.
 The company should provide permanent job facilities after some years of work in the
firm. It will create loyalty and motivates the employees to continue their work in the
company.
 Firm should understand how monetary allowances play the role of motivating the
employees and increase efficiency. So, company should provide allowances on some
occasions.
 The lower level employees are not involved in decision making process. At least they
must be made known the company’s goals so that the work towards that goals and
also feel their contribution as recognized.
 Company should be fairly paying for overtime performed by the employee. Thus, no
employee must feel exploited.
 The firm must know that safety is their prime duty. Employee have rights to safety.
 Employee disputes cause damage to the firm and its fame, management must be strict
in avoiding such disputes and solving if any disputes arise.
 Besides statutory welfare measures the firm also must look into fulfilling the non-
statutory welfare measures. Because, these are help in motivation and increasing
brand value indirectly.
 There is an urgent need for altering the view of the employees. The firm can provide
safety and job security measures to develop loyalty towards the firm.
 Employee grievances must be solved. Otherwise, they feel de-motivated and
unrecognized.
 Adequate maternity paid leave should be provided and time schedule should allow
employees to work comfortably.
 The strength of the firm depends upon the retention of the employees. Hence, I
suggest the management of the company to implement the measures to retain their
employees.
 Employees satisfy their daily needs with the salary they receive. Hence, I suggest the
management to provide the wages and salaries on time.

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 CONCLUSION

An organization has to balance fairly financial and non

financial rewards extrinsic awards. Effective awards and intrinsic awards. Effective
reward system requires not only that the absolute level of compensation paid by an
organization compares favorably but also enquires that it satisfies the principles of
internal equity and equity with the job content. The employees gets pay satisfaction of
the perceived salary is equal to actual salary received and actual salary is less than
perceived salary the employee is dissatisfied with the salary. The remuneration paid
by the employer for the services of hourly, daily, weekly and fortnightly employees.

The remuneration paid to the clerical and managerial personnel employed

on monthly or annual basis. It is the amount of remuneration for unit of time
excluding incentives, overtime pay etc. Is the amount of wage fixed for the unit of
time fixed on the basis of job evaluation standards. Is an assembly of all properly
evaluated standard wage rate set from in the sequence according to the job and size of
the rate. Refer to compensation given to the employees over and above wage rates
which often is not directly related to output performance of time worked refer to
special rates to certain period such as over time, Sundays and holidays.

The objective of wage and salary administration is numerous and sometimes

conflict with each other. Candidates decide upon their career in a particular
organization mostly on the basis of the amount of remuneration the organization
mostly on the basis of the amount of remuneration the organization offers qualified
and competent people join the best paid organization. The organization should aim at
payment of salaries at that level where they can attract competent and qualified
people. If the salary does not present compare favorably with that of other similar
organization. Employees quit the present one and join the other organization.

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 BIBLIOGRAPHY

TEXT BOOKS:

 Dipak kumar Bhattacharya, Compensation Management, OXFORD

 Dr.kanchan Bhatia, Compensation Management, Himalaya Publishing house
 N.K.Singh Human Resource Management, Excel Publications.
 Jyothi - Human Resource Management, Pearson Education, New Delhi.
 P.S Rao , Essentials of Human Resource Management & IR,
Himaliya,Mumbai
 Dwivedi &Agarwal, Human Resource Management, Vikas, ND

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