A STUDY ON COMPENSATION MANAGEMENT

PROCEDURES AND PRACTICES

with reference to
HINDUSTAN SHIPYARD LIMITED
VISAKHAPATNAM

A Project Report submitted in partial fulfilment for the award of the Degree of

MASTER OF BUSINESS ADMINISTRATION (MBA)

By

VARSHINI GARIKINA
(Regd. NO: 122200202092)

Under the Esteemed Guidance of

Prof M . MADHUSUDHANA RAO Ph.D
Hon. Professor
Department of Commerce and Management Studies
Andhra University, Visakhapatnam

DEPARTMENT OF COMMERCE AND MANAGEMENT STUDIES

ANDHRA UNIVERSITY
VISAKHAPATNAM - 530003
2022 - 24
 CERTIFICATE

This is to certify that VARSHINI GARIKINA student of MBA in the

Department of Commerce and Management Studies of ANDHRA

UNIVERSITY during the academic year 2022-2024 has undergone the

project work on COMPENSATION MANAGEMENT PROCEDURES

AND PRACTICES with reference to HINDUSTAN SHIPYARD

LIMITED, VISAKHAPATNAM and had fulfilled the requirements

concerning the project work.

Prof. JALADI RAVI

Place: Visakhapatnam M.Com, MBA, Ph.D
Date: Head of The Department
Dept. of Commerce and Management Studies
ANDHRA UNIVERSITY
 DECLARATION

I VARSHINI GARIKINA (Reg No 122200202092) hereby declare

that the dissertation entitled “COMPENSATION MANAGEMENT
PROCEDURES AND PRACTICES” WITH REFERENCE TO
HINDUSTAN SHIPYARD LIMITED, VISAKHAPATNAM, is an original
work done by me and submitted to the Department of Commerce and
Management Studies of ANDHRA UNIVERSITY in partial fulfilment of the
requirements for the Award of Degree of MASTER OF BUSINESS
ADMINISTRATION (MBA). I further declare that the dissertation or any
part of it has not been submitted anywhere for any degree or diploma.

I also declare that the project is entirely based on my own study and
findings. All care has been taken to keep this report error free and I sincerely
regret for any unintended discrepancies that might have crept into this report.

Place: Visakhapatnam VARSHINI GARIKINA

Date: (Reg.No:122200202092)
 CERTIFICATE

This is to certify that VARSHINI GARIKINA, student of MBA in the

Department of Commerce and Management Studies of ANDHRA

UNIVERSITY during the academic year 2022-2024 has undergone the

project work on COMPENSATION MANAGEMENT PROCEDURES

AND PRACTICES with reference to HINDUSTAN SHIPYARD

LIMITED, VISAKHAPATNAM, and had fulfilled the requirements

concerning the project work.

PROJECT GUIDE
Place: Visakhapatnam Prof M. MADUSUDHANA RAO, Ph.D
Hon. Professor
Date: Dept. of Commerce and Management studies
ANDHRA UNIVERSITY
 ACKNOWLEDGEMENT

I take this opportunity to thank my Project Guide Prof. M.

MADHUSUDHANA RAO, who has helped me to carve this project in a better way, your
profound knowledge, unwavering patience and insightful feedback have significantly
contributed to the success of the project work.

I immensely thank, Prof. JALADI RAVI, (Head of the Department, DCMS)

ANDHRA UNIVERSITY, Visakhapatnam, for giving us this opportunity to gain practical
experience of working and inspiring us to give our best to it.

I express my sincere thanks to Dr. A. NARASIMHA RAO, Principal of ANDHRA

UNIVERSITY, Visakhapatnam, for giving encouragement to carry out this project work.

A project consists of inputs and suggestions from various people directly or

indirectly related to the writer of the project, which cannot be ignored. Thus, I owe my
sincere gratitude to “HINDUSTAN SHIPYARD LIMITED VISAKHAPATNAM” for
allowing me to be a part of them. I would like to thank Dr. S. SOMASUNDHARAM,
Senior Manager (T&D) and the M. MERCY BHAGYA SREE, Deputy Project Officer
and staff who has been provided, perspective and stimulating discussion, throughout the
completion of this project.

Finally, my heartfelt gratitude to my family and co-interns and other faculty

members for their co-operation to complete my project work successfully in time.

VARSHINI GARIKINA

(Reg.No:122200202092)
 CONTENTS

Page No:

CHAPTER-I

➢ INTRODUCTION

CHAPTER-II

➢ INDUSTRY PROFILE

CHAPTER-III

➢ COMPANY PROFILE

CHAPTER-IV

➢ PERFORMANCE APPRAISAL
PRACTICES IN HSL
CHAPTER-V

➢ DATA ANALYSIS AND

INTERPRETATION
CHAPTER-VI

➢ FINDINGS AND SUGGESTIONS

• APPENDIX

• BIBLIOGRAPHY
 CHAPTER - 1
INTRODUCTION

 COMPENSATION MANAGEMENT
THEORITICAL FRAMEWORK

 OBJECTIVES OF THE STUDY

 NEED FOR THE STUDY

 METHODOLOGY OF THE STUDY

 LIMITATIONS OF THE STUDY

PRESENTATION FOR THE STUDY
HUMAN RESOURCE MANAGEMENT:

(HRM) is the strategic and coherent approach to the management of an organizations most valued

assets - the people working there who individually and collective contribute to the achievement

of the objective of the business. The terms "human resource management" and "human resources"

(HR) have largely replaced the term "personnel management" as a description of the processes

involved in managing people in organizations. Human Resource management is evolving rapidly.

Human resource management is both an academic theory and a business practice that addresses

the theoretical and practical techniques of managing a workforce.

• Personnel administration

• Personnel management

• Manpower Management

• Industrial management

But these traditional expressions are becoming less common for the theoretical discipline.

Sometimes even industrial relations and employee relations are confusingly listed as synonyms,

although these normally refer to the relationship between management and workers and the

behaviour of workers in companies.

Human resource management, or HRM, involves coordinating, managing, and allocating human

capital, or employees, in ways that move an organization’s goals forward. HRM focuses on investing

in employees, ensuring their safety, and managing all aspects of staffing from hiring to compensation

and development.
HRM careers may specialize in compensation, training, or managing employees. Most HRM

professionals hold a bachelor’s degree and some go on to pursue a master's degree. HRM professionals

at all levels can also earn professional certifications to help build knowledge and increase earning

potential. HRM’s goal is to build a company culture and carry out its mission and overall goals through

the management of employees.

Basic elements of Human Resource Management

The human resource management field includes recruiting new hires, evaluating employee

performance, ensuring fair compensation and benefits, training employees and supporting education

and development, and protecting the health and safety of all employees. These are critical cornerstones

of the work of HRM professionals. From crafting a job posting to providing continuing education

options, HRM functions at all stages of an employee's journey with an organization. To be an effective

HRM professional, you will need a mix of personal and technical skills like recruitment strategies,

creating compensation plans, and communication and team building.

Recruitment and Selection

An effective recruitment process is at the foundation of HRM. If you can recruit good talent, you can

build on their skills and invest in employees for years to come as they add value to the organization.

Equally important is company culture. You want employees that add to the culture of the organization.

Some common recruiting tools HRM may use include job aggregators like Indeed or Simply Hired,

video interviewing, or even social media sites like LinkedIn.

Training and development

Engaged employees are effective employees. HRM understands the importance of a workforce that is

challenged but also supported. Most employees want opportunities for advancement and to feel

competent and valued in what they bring to an organization. Part of HRM is providing these learning

opportunities to employees. This might include tuition reimbursement programs, on-the-job training
options, conferences, conventions, or certification programs. Aside from individual learning, HRM can

also use employee development and learning to help employees adapt to organizational changes, such

as system upgrades, technology shifts, and new policies.

Employee health and safety

The safety and well-being of an organization’s employees are critically important aspects of HRM.

Employee health and safety covers a lot, such as safety against harassment, discrimination, or

bullying in the workplace. It can mean physical safety that would involve building fire code

compliance. It can also mean adherence to labor laws that protect an employee's rights in the

workplace. Safety in the workplace means cybersecurity or safeguarding an employee’s personal

information. A lot goes into protecting all aspects of employees’ health and safety, and it is the job

of HRM professionals to ensure that protection. A few ways HRM professionals may go about this

is by installing security cameras, enforcing internet usage rules, implementing a zero-tolerance

policy, or creating restricted access areas

Compensation
Compensation can mean salary, commission, benefits, time off, and other non-monetary benefits. HRM

looks to the industry standard to set salary rates, commission rates, and benefits. This ensures fairness

and allows for a consistent company standard. Some organizations may use performance reviews to

adjust an employee’s salary, among other measures.

Compensation Management

Compensation is the total rewards, including monetary and non-monetary, that employees receive in

exchange for their work and contributions to an organization. It aims to attract, retain, and motivate

talented individuals by aligning their efforts with the organization’s objectives. This payment boosts

a sense of value and engagement and contributes to a positive workplace culture. A well-designed

compensation plan aids in ensuring a fair and competitive reward system. It comprises several

elements like base salary, bonuses, benefits, and other perks. This payment also includes aspects like

recognition, appreciation, job satisfaction, and opportunities for career advancement.

Compensation is a tool used by management for a variety of purposes to further the existence Of the

company. Compensation may be adjusted according to the business needs, goals, and available

resources. Compensation is systematic approach to providing monitory value to employees in

exchange for work per formed.

Compensation may achieve several purposes assisting in recruitment, job performance, and job

satisfaction. Compensation management is the process of managing, analyzing, and determining

the salary, incentives, and benefits each employee receives. Compensation management is a

crucial part of any talent management and retention strategy. Creative compensation includes

monetary and non-monetary benefits companies can employ to boost engagement and

productivity, reduce attrition, and attract top talent.

Compensation managers aim to attract, retain, and engage employees by offering broad and

competitive compensation plans within the company budget

Compensation management ensures that people get paid a fair salary
based on:

 Work performance

 Position

 Responsibilities

 Experience

 Job market

 Company budget

Effective compensation management benefits both the employer and the employee.

Professionals who receive a fair base salary, generous benefits, and incentives in return for

their work are much more likely to stay at their job and maintain a high performance level

and morale.

Effective compensation management fuels employee engagement and thereby leads to

company success

1. Recruit and retain qualified employees.

2. Increase or maintain morale/ satisfaction.

3. Achieve internal and external equity.

4. Reduce turnover and encourage company loyalty.

5. Modify practices through negotiations of unions.

 Main Types of Compensation

Compensation includes far more than just a base salary. The full compensation package includes a

variety of compensation types, both direct and indirect.

The four types of direct compensation are:

 Hourly pay

 Salary

 Commission

 Bonuses

There is also indirect compensation, which includes anything that provides people value such as:

 Retirement benefits

 Insurance (medical, dental, life, etc.)

 Paid time-off

 Profit-sharing distributions and stock options

 Tuition assistance and learning and development offerings

 Childcare assistance

 Gym memberships

 Relocation expenses

 Perks such as free food, an office gym, events, and so on

 How is compensation determined?

Many factors go into determining the specific compensation package offered to any given person,

including external factors relating to the company’s location and market as well as factors relating

specifically to the role and the candidate in question. Some considerations that go into calculating

compensation include:

 What the company can afford to pay

 Typical salary range for similar roles in the region

 How much competitors are paying

 The local cost of living

 The role—if it is a highly-skilled job, it may require higher compensation

 The candidate, their qualifications, and their compensation expectations

 Whether or not it is appropriate to use incentive compensation management, which is a type

of compensation usually used for sales roles in which the person’s compensation is tied to

their performance outcomes

HR leaders can guide compensation management towards building and implementing successful

compensation plans with these methods:

 Develop and apply a compensation philosophy.

A compensation philosophy formally documents the company policies regarding salaries, bonuses,

and benefits. It also demonstrates a company’s commitment to transparency. Consistently adhering

to a compensation philosophy demonstrates company integrity to employees and job candidat

SIGNIFICANCE OF COMPENSATION MANAGEMENT

 Attracting new talent to the company by offering the right salary & benefits to the right

candidate who can be beneficial for the company.

 Employee retention

 Rewarding employees

 Ensuring equity

 Cost control

Advantages Disadvantages

Boosts employee motivation Can lead to inequality

Attracts skilled workforce May encourage unethical

behaviour

Reduces employee turnover Can cause financial strain

Enhances job satisfaction May demotivate underpaid

employees

Encourages employee Can create unhealthy competition

productivity
 Advantages of Compensation

1. Boosts employee motivation – Compensation can lift the spirits of workers by making

them feel valued, leading to more enthusiasm and drive in their roles.

2. Attracts skilled workforce – It acts like a magnet, drawing in talented people who

have the skills that the company needs.

3. Reduces employee turnover – By offering fair pay, businesses can keep their staff

from leaving, creating a more stable workforce.

4. Enhances job satisfaction – Paying employees well can make them happier in their

roles, leading to a positive work environment.

5. Encourages employee productivity – Lastly, a good compensation package can

motivate workers to perform better, increasing their output and benefiting the company

overall.

Disadvantages of Compensation
1. Can lead to inequality – Compensation can sometimes result in inequality among

employees, as some may receive higher pay than others for the same work.

2. May encourage unethical behaviour – Pay structures might prompt unethical actions,

with employees bending rules to achieve targets and secure rewards.

3. Can cause financial strain – It can put a financial burden on a company, especially if

it’s a small business or a startup, as high compensation packages can be costly.

4. May demotivate underpaid employees – Employees who feel they are not adequately

compensated may become demotivated, negatively affecting their productivity and work

quality.
5. Can create unhealthy competition – Lastly, it can foster unhealthy competition among

employees, as they may focus more on outperforming each other than on teamwork and

collaboration.
 OBJECTIVES OF THE STUDY:

The study of compensation management system in HSL has been carried out with the following

objectives:

 To have an understanding about compensation procedure of the HSL.

 To observe whether the compensation practices were followed the statutory provisions.

 To study the existing Compensation management methods in Hindustan Shipyard limited.

 To evaluate the pro’s and con’s of various Compensation management methods.
 To determine whether the Compensation management practices are being used to motivate
employees for the better productivity of the organization.

Finally, to offer suggestions for improvement of Compensation Management methods and

practices in HSL.

.
 NEED FOR THE STUDY:

Hindustan Shipyard Ltd., strategically located on the East Coast of the Indian

peninsula, at Visakhapatnam, Andhra Pradesh, is the nation’s premier shipbuilding

organization catering to the needs of shipbuilding, ship repairs, submarine

construction and refits as well as design and construction of sophisticated state-of-

the-art offshore and onshore structures. Direct sea access, excellent infrastructure,

skilled work force, rich expertise garnered over the years in building 189 vessels

(including 11 wellhead platforms), repairing 1975 vessels of various types and

refitting 3 classes of submarines enable HSL to offer competent services for the

defence and maritime sectors

it appeared very vital to study the activities of this organization. HSL is the only

organization, which has contributed to the natural harbour facilities and partly to the

efficient management zeal to know the factor, which contributed to the success of the

HSL and to know the performance of HSL, inspired, me to take up the study of

Compensation Management Procedures and Practices inorganization.

It involves the development, implementation, and administration of policies and

strategies related to employee remuneration, benefits, and rewards Some of the key

objectives of compensation management are

 SCOPE OF THE STUDY:

Sound research design is the preliminary stage for the success of any research design.

A research design is purely and simply the frame work, plan for the study the guides

the collection analysis of data. The qualitative and effective research has the

characteristics, for instances: identification of problem requires specific methods of

data collection and analysis time required. To ensure that the required data is collected

and they are collected accurately and economically.

METHODOLOGY:

Research Design
A research design is a type of blueprint prepared on various types of blueprints available

for the collection, measurement and analysis of data. A research design calls for

developing the most efficient plan of gathering the needed information. The design of a

research study is based on the purpose of the study. A research design is the specification

of methods and procedures for acquiring the information needed. It is the overall pattern

or framework of the project that stipulates what information is to be collected from

which source and by what procedure Sampling

An integral component of a research design is the sampling plan. Specifically, it

addresses three questions

Whom to survey (The Sample Unit)

How many to Survey (The Sample Size) &

How to select them (The Sampling Procedure)

Making a census study of the whole universe will be impossible on the account of

limitations of time. Hence sampling becomes inevitable. A sample is only a portion of

the total employee strength. According to Yule, a famous statistician, the object of
 sampling is to get maximum information about the parent population with minimum

effort.

DATA COLLECTION:

The data collection is an interesting aspect of the study. For the purpose of achieving data effectively,

the information consists of two types of data. The diagram is as follows:

1. PRIMARY DATA:
The primary data are those which are collected freshly and for the first time from the employees

directly. during the course of the study or research can be through observations or through direct

communication with respondents on one form or another or through personal interviews. I have

collected primary data by the means of a Questionnaire. The Questionnaire was formulated

keeping in mind the objectives of the research study.

It is collected through the following methods:

a) Questionnaire: A structure of questionnaire was prepared and distributed among the employees.

b) Interview: Personal interviews and interactions with the employee's and labor.

c) Observation: By observing the working environment.

2. SECONDARY DATA:

Secondary data someone or else which have been passed through statistical process, Sources of

secondary data can be categorized into two broad categories named published and unpublished

and statistics. Various sources are available namely, central and state government publications,

technical trade, journals, books, magazines etc. and also collected from various files, records and

HSL journals.

 News papers
 Magazines
 Journals
 Internet sites
 Books

The method used for study is observational and questionnaire for the study.
 LIMITATIONS OF THE STUDY:

As the study revolves around the Compensation management of human resources aspects,

the overall an organization cannot be ascertained. In spite of giving honest and sincere efforts

there are several limitations, which are as follows:

i. The period of study is only for 8 weeks, which is major constraint. The

perception bias or attitude of the respondent may also as a hurdle to the study.

ii. The study cannot be oriented with all HRM practices followed by

Visakhapatnam Port Trust because of the paucity of time requirements.

iii. The simple size taken for the research is small due to the constraint of time.

iv. Some of the employee's had hesitated to filling up the questionnaire.

 PRESENTATION OF THE STUDY

CHAPTER 1 - INTRODUCTION

CHAPTER 2 - INDUSTRY PROFILE

CHAPTER 3 - HSL PROFILE

CHAPTER 4 - COMPENSATION MANAGEMENT

IN SHIPYARD

CHAPTER-5 ANALYSIS AND INTERPRETATION

CHAPTER 6 - FINDINGS AND SUGGESTIONS

 APPENDIX
 BIBLIOGRAPHY
 CHAPTER 2
INDUSTRY PROFILE
 PROFILE OF SHIP BUILDING INDUSTRY

1. Shipbuilding is technology driven, skill and material intensive assembly operation.

Being a labor intensive industry, the cost of labor plays an important determinant

in a country’s competitive position vis-à-vis others. Over the years, the industry

has shifted from Europe to Japan and then to Republic of Korea and has now taken

firm roots in China. The factors governing this shift have been relatively high wage

in Europe coupled with strong competitive strength of manufacturing and steel

making sectors and active state support in the leading shipbuilding nations of East

& Far East Asia. This decisive shift in shipbuilding activities from Europe to Asia

has opened up window of opportunities for Indian ship yards in both public and

private sectors. Over 90% of shipbuilding in 2018 occurred in China, the Republic

of Korea and Japan.

2. India has a coastline of 7,517 Kms. with 12 Major ports and 205 notified Non-

major Ports facilitating sea-borne trade. Coastal and overseas cargo movement is

effected through ocean-going vessels. In addition, small ships/crafts also ply on

inland waterways and canals. Indian owned ships/vessels carried 7.7% of India’s

overseas trade during 2018-19. India’s emergence as a major economic power

would mean greater integration in terms of trade withthe rest of the world requiring

huge shipping tonnage. As on 31st March 2019, Indian shipping tonnage was 12.78

million Gross Registered Tonnage (GRT) with 1404 ships.

3. With the opening of Indian economy, there has been a steady increase in handling

of cargo traffic at Indian Ports. India’s share in global exports has increased from

0.8% in 2003 to 1.7% in 2018 (Source: World Trade Statistical Review, 2019). To
 sustain the momentum of foreign trade and improve competitiveness, the country

would need adequate and efficient infrastructure in terms of ports, ships and

maritime services.

4. At the time of independence, there were about a dozen shipyards around Kolkata

and Mumbai, which rose to around 45 shipyards in the late seventies. At present,

there are 30 shipyards, out of which 8 shipyards are in the public sector and the

rest are in the private sector. The demand for ships, semi-submersibles and port

auxiliary vessels, new ship building as well as ship-repair activities are projected to

grow in view of rising cargo traffic from/to India in coming years.

The “Manufacturing Plan – Strategies for Accelerating Growth of Manufacturing in India

in the 12th Five Year Plan and Beyond” released by the erstwhile Planning Commission

lists “Ship building and Ship Repair” as one of the key sectors of strategic importance.

5. ‘Make in India’ has been initiated to promote growth of manufacturing sector in the

country as it has higher employment multiplier effects compared to service and agriculture

sectors. An impetus on shipbuilding and ship repair industry in India is needed for the

following reasons:-

(a) The shipbuilding industry has the same impact as infrastructure sectors due to

higher multiplier effects on investment and turnover and high employment

potential.
 (b) The shipbuilding industry is a strategically important industry. To ensure safety of

our vast coastline, naval requirement of sophisticated and modern vessels is

growing rapidly.

6. The Indian Ship-Building Industry can broadly be categorized into following

categories:-

(i) Large ocean-going vessels catering to overseas as well as coastal trade;

(ii) Medium size specialized vessels like Port Crafts, Fishing

Trawlers, Offshore vessels, Inland and other smaller

crafts and;

(iii) Defence /Naval crafts and Coast Guard Vessels.

7. There are 33 dry-docks for repairing ships in India both in public and private sector as

per data reported. These dry docks include the 9 dry docks operated by 5 major ports.

The major ports which have no dry-dock facilities are Mormugao Port, JNPT, New

Mangalore, Chennai, Kamrajar, V.O. Chidambarnar and Haldia Dock Complex of

Kolkata Port. Cochin Port Trust has handed over its Dry Dock to M/s Cochin

Shipyard Ltd.
8. MAJOR SHIPYARDS AND R&D FACILITIES IN THE PUBLIC

SECTOR

UNDER THE MINISTRY OF SHIPPING:

• Cochin Shipyard Limited, Kochi

• Hooghly Dock and Port Engineers Limited, Kolkata

UNDER MINISTRY OF DEFENCE:

• Hindustan Shipyard Limited, Visakhapatnam

• Mazagon Dock Limited, Mumbai

• Garden Reach Ship-builders and Engineers Limited, Kolkata*.

(*Rajabagan Dockyard Limited, under Central Inland Water Transport

Corporation, Kolkata merged with Garden Reach Shipbuilders and Engineers

Ltd. Kolkata w.e.f. 1st July 2006.)

• Goa Shipyard Limited, Goa

UNDER THE CONTROL OF STATE GOVERNMENTS:

• Alcock Ashdown Co. Limited, Gujarat

• Shalimar Works Limited, Kolkata, West Bengal.

 THE HISTORY OF SHIPBUILDING IN INDIA

In the present era, the shipbuilding industry is being dominated by players from the US, European,

and Eastern Asia. But there was a time in the ancient past, when shipbuilding in India was a major

and thriving industry. Some of the most important aspects of the Indian maritime history can be

recounted as follow

ANCIENT INDIA

The shipbuilding industry in India was mainly carried on in the coastal territories

like Bombay, Cochin, Tuticorin, Mandvi and Cuddalore. The ships and the shipyards that existed

in Ancient India were used to carry out and further the existing international trade with the then

existing European empires. In addition to the European empires, trading through the oceanic

routes also existed between India and some of the other South Asian territories

COLONIZATION

With the advent of the European voyagers like Vasco da Gama in the 13th century, shipbuilding

in India suffered as these voyagers laid the foundation stone of colonisation in the country.

However due to the political alliance formed between the Indian rulers in the Western part of the

country to counter the shipbuilding and naval efforts of the Westerners, shipbuilding in India saw

a resurgence of sorts towards the 17th century.

But during the British colonisation of the country in the 17th and 18th century, because of lack of

competent rulers to hold the Indian maritime Industry fort, Indian shipbuilding suffered. This lack

of competence from the Indian perspective also ensured a further oppression for the Indians from

the British rulers.

But while on one hand the Indian shipbuilding industry suffered a backlash, construction of

several British ships were awarded to the Indian ship yards which kept alive the hopes and

promises of the Indian ship construction industry in the chaotic times.

PRESENT SCENARIO

The Indian shipbuilding industry does not feature among the top Asian nations in the shipping

sector. This deficit in its international contribution has been taken as a majorly problematic area

by the Indian government and all efforts are being made to change this debilitative statistics.

A very important aspect of the Indian shipbuilding sector however, is about its ship breaking yard

located in the Western state of Gujarat. Alang has around 170 yards of which 50 are currently

functional as ship breaking yards. Yet, because of lack of proper infrastructural support from the

government authorities, the condition of the workers in the ship breaking yard is really poor and

remains an arena needing to be addressed as a priority.

The Indian peninsula enables a strong viability for the marine industry. Owing to certain factors,

while the full potential of the same has been failed to be capitalised contemporarily, it can be

hoped that in the days to come, the situation will be substantially reversed.
MODERN SHIPBUILDING MANUFACTURING TECHNIQUES

Modern shipbuilding makes considerable use of prefabricated sections. Entire multi-deck

segments of the hull or superstructure will be built elsewhere in the yard, transported to the

building dock or slipway, then lifted into place. This is known as "block construction". The most

modern shipyards pre-install equipment, pipes, electrical cables, and any other components within

the blocks, to minimize the effort needed to assemble or install components deep within the hull

once it is welded together.

Ship design work, also called naval architecture, may be conducted using a ship model basin.

Previously, loftsmen at the mould lofts of shipyards were responsible for taking the dimensions,

and details from drawings and plans and translating this information into templates, battens,

ordinates, cutting sketches, profiles, margins and other data. However, since the early 1970's

computer-aided design (CAD) became normal for the shipbuilding design and lofting process

need to be countered by determined and coordinated international man time action.

should be obvious that the protection and preservation of our interests. requires various types of

warships, merchant vessels and marine platforms and that too, in significant numbers. Naval

Headquarters have recently forwarded a comprehensive report to the Government, calling for a

multi-pronged strategy to revitalize the Indian shipbuilding industry. This would encompass

modernization of shipyards, induction of contemporary technologies and construction processes,

enhancements in ship-design knowledge, fiscal incentives and public-private partnership.

Firstly, our shipbuilding industry is very small by present global standards. Indian-built ships

constitute less than 0.5% of the global fleet, and accounts for only 10% of the Indian-owned ships.

Our economic growth is also symbiotically related to overseas trade and nearly 80% of the

international trade is moved by sea, being the most economical of all methods.

According to the government's Hydrocarbon Vision-2025, the likelihood of an extensive shortfall

in the national availability of natural gas and oil may require us to import 62 million tonnes of

natural gas by 2012 and 84 million tonnes by 2025. Simply put, we do not have enough Indian-

owned ships to carry our energy requirements in vessels, and thus require additional LNG, crude

and product carriers. Carriage of this critical cargo on Indian-owned vessels is of great

significance, especially during times of national crisis, so as to reduce our present dependency on

foreign- owned ships. Secondly, the overall share of Indian merchant shipping in the country's

foreign sea-borne trade has declined from about 36% in the late 1980s to about 14% in 2005-06.

40% of Indian hulls are old and due for scrapping in the next five years.

From the present 4 million gross tonnage, we need to add another 16 million gross tons by 2010

at a cost of nearly 20 billion US dollars, to maintain the present level of international trade on

Indian ships. Our overall international trade is likely to grow to 500 billion US dollars by that

time. Conscious of this demand, and faced with an unproductive domestic shipbuilding

infrastructure, Indian shippi when it placed its biggest ever import order of 400 million US dollars

for six tankers on Korea's Hyundai Shipyard. If uncorrected, this demand surge would continue

to be met by imports, facilitating the growth of overseas shipyards and stunting our own. The

nation can ill afford this loss of opportunity to our domestic shipbuilding industry.
Low productivity and long build periods have rendered Indian shipyards uncompetitive, in

comparison to yards in China, Japan and Korea, which build around 77% of global shipping. Our

shipbuilding practices are fairly outdated, whereas global industry standards have already

graduated to a womb-to-tomb concept called Concept, Assessment, Demonstration, Manufacture,

In-Service, Disposal or CADMID in short.

Needless to say, measures would need to be taken that will enable shipyards to increase capacity

and enhance competitiveness. Productivity would need to increase and production costs reduced

by a combination of improvements in infrastructure, technology and practices. Without this, it is

clear that we will have to incur significant import expenditure in sourcing ships from overseas,

much against our cherished national objectives of indigenization and self-reliance.ng companies

have placed huge orders on overseas yards as SCI did in August this year,
SHIPBUILDING INDUSTRIES IN INDIA

Public sector

 Alcock ashdown Gujarat limited

 Cochin Shipyard Limited

 Hindustan Shipyard Limited- Visakhapatnam

 Garden Reach Shipbuilders and Engineers- Kolkata

 Goa Shipyard Limited

 Mazagon Dock Limited-Mumba

 Naval Dockyard (Bombay)

 Naval Dockyard (Visakhapatnam)

 Jawaharlal Nehru Port Trust

 Shalimar Works (1980) Ltd

 Hooghly Dock & Port Engineers Limited

 Central India Water Transport Company

 keppel ship yard

Private sector

 Trinitech infrastructure pvt ltd

 ABG Shipyard Limited Aiswarya Marine Pvt Ltd

 Bharati Shipyard Limited

 Calex Marine and Industrial Services Pvt Ltd.

 Century Shipyard Pvt. Ltd

 Deena Engineering Works, Mumbai Dempo Engineering Works, Goa

 L&T Shipbuilding Limited, Hazira

 L&T Shipbuilding Limited, Kattupalli, Chennai

 Mandovi Drydocks, Goa

 Master Shipyard Pvt. Ltd.

 Modest Infrastructure Ltd

 Navgathi Shipbuilding & Heavy Industries

 Nigel Shipyard Private Limited

 NorthStar Shipbuilding Pvt Limited

 Pande Shipyard Pvt Ltd

 Pipavav Shipyard (currently Pipavav Defence and Engineering company

Limited)

 Sea Blue Shipyard Ltd.

 Sembmarine Kakinada Limited

 Shoft Shipyard Pvt. Ltd.

 Siddarth Engineering & Shipbuilding Co. Pvt. Ltd. Cumbharjua,

 SSR marine services pvt.ltd.

 Sulkha Shipyard

 Tebma shipyard Limited

FOUR MAJOR SHIP BUILDING CENTRES IN INDIA

nine large ships (five Bulk Carriers and four Crude Oil Tankers). Recently the yard has delivered

the Cargo Launch Vessel, the first export order to its owner National Petroleum Construction

Company, Abu Dhabi. It has also constructed 36 vessels.

At present, the yard has orders for more Tug Boats from M/s A.A. Tarki Corporation for Trading

and Contracting, Saudi Arabia.

Ships for Indian Navy are also bult here. The yard has so far repaired 1,000 ships of various types.

The Ship-repair turnover per the yard 2003-04 was Rs. 180 crores. India ranks second among the

Asian countries next only to Japan in terms of shipping tonnage. However, the shipping fleet is

too small for dimensions. Ship building is a large and complicated industry which requires huge

capital investment. Harbours with large space are ideally suited for this industry. At present, there

are four main centres of ship building industry at Vishakhapatnam, Kolkata, Kochi and Mumbai,

all in public sector.

1. Hindustan Shipyard Ltd., Vishakhapatnam:

It was set up by M/s Scindia Steam Navigation Company in 1941 and the first ship was launched

on 14th March, 1948. It was taken over by Government on 21st Jan., 1952 and was renamed as

Hindustan Shipyard Ltd. In 1962, the shipyard became a central public sector enterprise.

The shipbuilding capacity of the yard is 3.5 pioneer class vessels of 21,500 DWT each. The

maximum size of the vessel that could be built is 50,000 DWT. The yard has slipways, covered

building dock, wet basin and outfit jetty.

This is the first shipbuilding yard in the country which was awarded ISO: 9001 certification by

Lloyds Register of Quality Assurance, London for international standard of quality assurance. So

far as repair of ships is concerned, the yard has facilities of modern dry dock, wet basin repair

shops, etc. and it can repair tankers, ships and submarines up to 70,000 DWT. It has so far

constructed and delivered 123 vessels of various types.

2. Cochin Shipyard Limited, Kochi:

This shipyard was incorporated on 29 March, 1972 as a company fully owned by the Government.

It started commercial production in 1976. The yard is designed to construct ships of size up to 1,

10,000 DWT and repair of ships up to 1, 25,000 DWT.

Till now the yard has constructed and delivered

3. Garden Reach Shipbuilders& Engineers:

It became Central Public Sector Undertaking in 1984. The company has two working units in

Haora district of West Bengal, one at Salkia and another at Nazirgunge. It has installed capacity

of 1,100 tonnes shipbuilding and 125 ship repairs per annum.

Apart from dry dock and jetty, it has six slipways. The yard is capable of constructing various

types of ships (including passenger ships) and other vessels such as dredgers, tugs, floating dry

docks, fishing trawlers, supply- cum-support vessels, barges mooring launches etc. and

undertaking repairs of different types of vessels.

4. The Mazgaon Dock at Mumbai:

The Mazgaon Dock at Mumbai builds dredgers, dock cranes, cruisers, frigates, etc. for the Indian

Navy. It can also build ocean-going vessels up to 27,000 DWT. It is capable of building cargo

ships, passenger ships and dredgers. It has sub-units at Nhava and Mangalore. Recently it has
started constructing submarines, missile boats, destroyers of the Navy and off- shore supply

vessels etc for ONGC.

In addition to the above mentioned main centres, there are 33 smaller shipyards manufacturing

vessels of small sizes meant for domestic purposes. Goa Shipyard Limited (GSL) at Vaso-da-

Gama undertakes the manufacture of fibre glass boats, trawlers, dredgers and barges. It has

undertaken construction/refit of variety of vessels for Indian Navy and Coast Guard as well for

non-defence sector. Presently it is building advanced offshore petrol vessels of in-house desig
PRIVATE SHIPYARD IN INDIA

While the big sector shipyards in the country are smarting under a trail under book position, their
smaller count experts in the private sector that are engaged in building smaller vessels are being
bolstered by a surge in demand interestingly, the private shipyards are getting an increasing flow
of order from foreign companies for smaller vessels, as worldwide the big shipyards engaged in
building large vessels are noncompetitive in the global marketing due to their cost over-runs and
government restrictions, it makes sense for foreign ship owners to place orders for smaller Vessels
in Indian yards due to the cheap labour costs and efficient working in industry analysis pointed
out. There are about 30 to 35 shipyards in the private sector in the country. Of which Bharathi
shipyard, ABG Heavy industry, Western India is the lending players.

Most of them especially Bharathi shipyard and ABG Industries are sitting on rich order Books.
While the ABG Shipyard has an order hook of Rs.1300 crores involving some 25 ships, Bharathi
shipyard double its sales of ships from Rs.610 crores in 2003-2004 to Rs. 1213 crores last Fiscal.

Along with the Shipbuilding industries, the ship repairs industry is also riding in an upbeat Market.
This is so especially in the wake of the growing fear of pollution and stricter norms and
Regulations on ocean going vessels. The labour cost per worker in Indian is at present at $1192
per Year, while it is $1073 and $21317 per day in Korea and Singapore (both leading shipbuilding
Nations) respectively.

The private shipyards are getting an increasing flow of orders from foreign companies for Smaller
vessels, as worldwide the big shipyards engaged in building large vessels are Noncompetitive in
the global market due to their cost over-runs and government restrictions, a Makes sense for
foreign ship owners to place orders for smaller vessels in Indian yards due to the Cheap labour
costs and efficient working in industry analysis printed out. There are about 30 to 35 Shipyards in
the private sector in the company
 CHAPTER 3

HSL PROFILE

HINDUSTHAN SHIPYARD LIMITED

Hindustan Shipyard Limited was established in 1941 by the visionary Seth Walchand Hirarchand,
it is strategically located on the east of India at Visakhapatnam in Andhra Pradesh. Hindustan
Shipyard Limited foundation stone was laid in 1941 by late Dr. Rajendra Prasad the president of
India and later the first president of republic India Hindustan Shipyard Limited is the nation's
premier ship building, ship repairs industry with sophisticated state of the art of shore and on
shore structure.

Hindustan Shipyard Limited is a public sector undertaking under the administration and control
of the ministry of shipping and transport government of India. At present it is undertaken by
ministry of defence. The skimmer steam navigation company limited was registered in Bombay
in March 1919. Srinathoram Morarji was the chairman of the board of directors and sir Walchand
hirarchand was one of the directors. The first passengers cargo ship "S.S.Loualty" sailed from
Bombay to UK on 5th

Mr.Kundson was invited to visit India in 1920. He was to formulate the project plan but died
suddenly, this event resulted in project being shelved in 1951. In 1940 Scandia's commissioned
Alexander Gibb and partners, London to investigate and make recommendations on the shipyard
project.

VISION:
To make Hindustan Shipyard limited a "WORLD CLASS SHIPYARD" with modernization and
up gradation of infrastructural facilities.

MISSION:
* To operate a strong and efficient shipbuilding, ship repairs and retrofitting of submarine to meet
the growing requirements of mercantile marine, oil and defense sector with good management
and improve efficiency.

*To obtain core competence in 877 EKM submarine refit and modernization.

* To improve financial performance and profitability.

FORMULATION OF HINDUSTAN SHIPYARD LIMITED:

Even by 1948, Scindia's found it difficult to run shipyard without financial assistance from the
government. In 1949, the government sought assistance from French ship building export for the
development of the ship building industry in India. An expert stated that most suitable scheme for
ship building in India would be fully developing the shipyard at Visakhapatnam.

In 1949 there were 40 men employed and engineers including Mr.Campbell as the chief manager
of shipyard

In 1950 the government with the formation of eastern shipping coordination in March 1950
entered the field of shipping it was a joint venture with the government holding. 74% of the capital
and 26% Scindia's were appointed as managing agents of eastern Shipping Corporation. By 1950
the financial positions of the year was so critical that long-sale retirement and even closure of the
yard apprehended so government of India placed an order 43 ships in 1951.

Finally was decided that the government should go ahead, with the takeover proposal. A new
company under corporation designation for Hindustan shipyard limited was registered on 21st
January 1952 with the government holding 2/3 share of the capital and Scindia's holding 1/3 and
then after they also signed agreement to state on 23rd February 1952. Hindustan shipyard limited
took possession of the Visakhapatnam yard 1st March 1952.

HISTORY

The long journey towards making ships in India started during the pre-independent years with the
founding of the first green-field shipyard in the year 1941 in the name Scindia Steam Navigation
Co. Ltd by the great Industrialist and visionary Seth Walchand Hirachand which is today known
as the Hindustan Shipyard Ltd.

Walchand selected Vishakhaptnam as a strategic and ideal location and took possession of land in
November 1940 The World War II was going on and in April 1941, the Japanese bombed the town
However, Walchand was unfettered and decided to go ahead with his plan of building a
shipbuilding industry in India In the days when it was unthinkable of foundation ceremony to be
done by anyone other than British officials, the truly patriotic Walchand decided to break the
tradition and the foundation stone for the shipyard was laid by Dr Rajendra Prasad on 21 June
1941, who was acting Congress President at that time. The first ship to be constructed fully in
India after independence was built at the Scindia Shipyard and named JalUsha It was launched in
1948 by Jawaharlal Nehru by the first Prime Minister of India, at a ceremony where the families
of Seth Walchand Hirachand, late Narottam Morarjee and Tulsidas Kilachand, the partners of
Scindia Shipyard, were present along with other dignitaries and industrialists

Walchand died in 1953, and the Scindia Shipyard continued to flourish under next of kins of
founders. However, later on the government of India decided to nationalise the Scindia Shipyard,
as it was a sensitive and strategic related to defence sector of the country.

The shipyard was acquired by Gol and Incorporated as Hindustan Shipyard Ltd on 21 Jan 1952.
It became a fully owned Gol undertaking in 1961 under the administrative control of Ministry of
Shipping. Considering the strategic requirements of the nation, the yard was brought under the
administrative control of the Ministry of Defence on 22 Feb 2010. The Registered Office of the
company is located in Visakhapatnam and has a regional office at New Delhi.

GROWTH OF HINDUSTAN SHIPYARD LIMITED

The Hindustan Shipyard Limited emerged as an emblem of Swedish sprit India shipping since
independence has increased eighteen fold that the country is at the tip in shipping tonnage among
the developing countries India still carries only about 20% of its total trade in Indian ships. It has
to depend to a large extent on foreign of many types of vessels. Efforts to arguments the ship
building capacities with in the country are continuing The capacity of the yard has been increased
to achieve an output of 1,30,000 built in possible at present, within year of the government take
over the Hindustan Shipyard Limited. Realized that the ship construction should be supplemented
with year work. Ship repairing is the one of the few enviable industries, where the customer
brings, the foreign reserving to the door steps.

Ship repairing is the major income to the organization at present various are financing the
organization for out its purchases and import of raw material, Long term loans extending to a
period of 10-15 years by various government development banks and private banks are supporting
the operations of the organizations subsidies; customer's duty rebates on imports of raw materials
from foreign countries are available to the organization. Gists of subsidies etc in foreign countries
are given below.

JAPAN
1. Scrapping subsides of 2480 per GRT of ocean going vessel.

2. 50-65 of the cost on loan for 10 years at around 7% of interest by Japanese development bank.

3. Loan by private banks up to 25-30% of building cost for 8-15 years at about 5% rate of interest.

4. Foreign purchases got 70% of cost price as loan from banks for 8.5 years at 8% rate of interest
and another 10% from shipyards.

U.K
1. Subsidy of 17% on ship price by ship building intervention fund,

2. Up to 50% subsidy for the re-organization of shipyard.

3. Customs duty reimbursement of 2%.

4. Loans up to 80% at 75% for 8 years.

NETHER LANDS
1.1.5% of construction cost repaid to government over 5 years.

2.12% demolition subsidy to keep capacity at 50%.

3.80% loans at 8% for 8 years.

BELGIUM

1.70/80% loans at 5% for 15 years for domestic purchases.

2.80% loans at 8% for 8½ years foreign purchases.

NORWAY:
1. Direct subsidy of 2.4% of cost price.

2. Subsidy from 4.3 to 10.7%.

3.80% loans at 8% for 8½ years for customers rebate of 4%.

QUALITY ASSURANCE OF HSL:

ISO 9001 certificate direct subsidy of 2.4% of cost price is the first shipyard in the country to
achieve the ISO 9001 quality accreditation certificate awarded by Lloyd's register of quality
assurances London

[L.R.Q.A). The ships repairs division is also under ISO 9002.

QUALITY POLICY OF HSL:

To produce consistently quality products to national and international customers.
OBJECTIVES OF HINDUSTAN SHIPYARD LIMITED

➤ To incorporate BEST PRACTICES" in all key activities of the yard such as production,
efficiency, customer satisfaction, marketing, human resource, purchase and planning.

➤ To develop and improve technological capabilities in the area of ship designs and ship
construction and render "Ship Building" more viable.

➤To explore new ship building orders from indigenous and expert market and construct vessel to
national maritime sector.

➤To undertake retrofitting of normal refit, short refit and medium refit and modernization of
special class submarines.

➤To make collaboration/joint venture arrangement with reputed compares for securing new order
to achieve ship repair and retrofitting business of Rs. 13000 cr. In 2004-2005.

➤Rationalization of manpower by ultimate reduction of new employee and 400 employees during
2004-2005 through voluntary retirement scheme (VRS) and redeployment through training
subject to release of funds for VRS by Government of India.

➤To strive to secure offshore platform construction orders and maintain activities from ONGC.

➤To obtain order for construction of ship for Indian navy and coast guard.

➤To introduce enterprise resources planning for a greater transparency in all transaction fasts
decision-making and ensure proper accountability.

➤To make arrangements with financial institution, banks for securing project based funding to
ensure adequate working capital for the completion of ongoing and future projects.

➤To improve design facilities.

HUMAN RESOURCE:

Hindustan shipyard limited is a heavy engineering industry under public sector and it is under the
administrate control of ministry of surface transport. The employees are broadly categorized as
officers, staff and workmen 2216, making a total of 3694 as on 1 January 2006. Hindustan
shipyard limited company has given V.R.S to total numbers of 619 employees comprising of 15
officers. 146 staff and 458 workmen. The organization strength is 3583 employees as on 01-12-
2004; the organization strength is 3523 employees as on 31-03-2006

SHIP BUILDING DIVISION

Ever since the yard's first Ship "JALA USHA", a 8000 DWT steam ship launched on the 14 Mar
1948, by Pandit Jawaharlal Nehru, the first Prime Minister of India, HSL has gone a long way in
building a range of ships numbering one hundred and sixty seven of various types of sizes. The
range varies from conventional Bulk Carriers, General Cargo and Supply Vessels, Patrol Vessels
to highly sophisticated Drill Ships covering Defence and Oil Sectors apart from conventional
Merchant Shipping. Thanks to its valued and varied clientele, HSL has achieved a phenomenal
growth and success in achieving versatility in building ships of different product mix.

SAGAR BHUSHAN a highly sophisticated and complex Drill Ship built for the first time in India
for ONGC is just an example of HSL's capability in high-tech products.

For the first time, HSL constructed and delivered the largest 53000 DWT diamond series of GML.
The Infrastructure:

HSL's yard is spread over an area of about 300,000 Sq.Mtrs. Workshops and facilities are
systematically planned and functionally laid out to ensure unidirectional flow of material. The
steel processing facilities consist of a stock yard to hold 30,000 tons of steel, modern plate and
section treatment plant, NC gas cutting machines, heavy duty pressures, self elevating trucks
capable of handling blocks up to 250 tonnes and large prefabrication shops with overhead
travelling cranes of adequate capacity. The hull construction facilities include a modern Covered
building Dock and three Slip Ways. Cutting, Welding and Assembly of steel to any specification
is handled with care and accuracy by skilled operators who are continuously trained to upgrade
their skills. The long Outfitting Quay is equipped with adequate self contained services and
facilities.

SHIP REPAIR DIVISIONS

The Dry Dock is an important adjunct to the Shipyard for undertaking repairs of ships. The Wet
Basin with two arms serves additional afloat repairs. It is capable of handling vessels up to 70,000
DWT. The Dry Dock, the biggest and modern dock in the East Coast, has accomplished intricate
repair jobs on a variety of Naval Ships including Submarines, Merchant Ships and Oil Rigs.
Foreign and Indian Flag Ships total over 1900 Nos, have undergone hull and engine repairs.
Service with Confidence and Capability

HSL meets with promptness the varied requirements of customers, as under:

 Hull renewals
 Blasting and painting
 Overhauling
 Main engine
 Auxiliary machinery
 Propulsion systems
 Various Servicing Requirements
 Systems' piping
 Electrical systems and related equipment
 Other specialized repairs

SUBMARINE RETROFITTING
An exclusive / dedicated submarine complex was added in 1997 to undertake all types of medium
refit and modernisation of submarines of Indian Navy. All quality standards are being maintained
to the satisfaction of Indian Navy.

HSL entered into a new area of submarine repairs of conventional type in a big way bagging the
order for in-depth repair/retrofit of INS Vagli, an F- class submarine of Indian Navy. This refit
was successfully completed and submarine delivered to Indian Navy to participate in the
President's Fleet Review held at Visakhapatnam in 12 Feb 2006.

The yard was also nominated by the Ministry of Defence to undertake the Medium Repair-Cum-
Modernisation of 877 EKM Submarine "INS Sindhukirti of the Indian Navy. This is presently
being undertaken.

SHIP REPAIR ACTIVITY

The total tumover of ship repairs including submarine repair during the year 2006-2007 amounted
to Rs 167.68cr. During the year, the ship repairs division repaired 24 vessels of various types
belonging to Indian navy, dredging corporation of India Itd, shipping corporation of India Itd,
Visakhapatnam. Port trust and one foreign flag vessel and 3 private vessels besides some
miscellaneous repair works. Ship repair turnover increased by 5.62% in 2006-2007 aver from Rs
8700 Lakhs to Rs9302.10 Lakhs. This could be achieved by utilizing the repair dock to the
optimum level even though building dock was not available for the ship repair during the year. In
a nutshell following is the performance of ship repairs division during the year 2006-2007.

INFRASTRUCTURE FOR SHIPBUILDING:

The Hindustan shipyard limited is spread over an area of about 3,00,000 square meters workshop
and facilities are systematically planned and functionally laid out to ensure unidirectional flow of
material. The steel processing material consists of a stockyard to hold 30,000 tons of steel. A
modern plate, self-evaluating trucks capable to handle flock up to 250 tones and large
prefabrication cranes of adequate capability are employed.

The hull construction facilities include a modern cover building dock with intermediate gate
facility and three shipways. Cutting, welding and assembly of steel to any specification are
handled with care and accuracy by continuously trained to upgrade their skills.

OFFSHORE PLATFORM DIVISION

Hindustan shipyard limited set up exclusive off shore platform yard (OPF) adjacent to main ship
building yard during the year 1985, as a captive yard to construct well head platforms for ONGC.
The OPE yard had facilities for fabrication of two platforms per year. The man power exclusively
trained for fabrication of platforms was diverted to many to carry out ship building ship repair
works.

ORGANIZATION FUNCTIONS OF M/S H.S.L:

The main activity of the yard is construction of all types of vessels ship repairs, manufacturing
and installation off-shore plat forms and jackets, structural fabrication and consultancy in the field
of marine construction.

The yard is divided into three parts.

1. Maintains priority to undertake construction of all types of vessels and structural repairs.

2. Dry dock and ship repairs, and.

3. Off-shore plat form yard.

The main yard is divided again into two units.

1. Hull construction department.

2. Fitting out departments.

It assists three departments besides other administration departments such as personal, purchases,
finance. The dry dock and ship repairs unit has also got its own departments such as hull
departments and fitting out departments. The off shore yard is a separate unit by itself having self
supporting departments however all the will be under the administration control of chairman and
managing director the organization structure of the yard is as follows.

DEPARTMENTS IN HSL
The department can be mainly categorized as follows.

I. PRODUCTION DEPARTMENTS:
The production department mainly consists of the following sections.

Hull shop
It deals with material preparation like plates used for the construction of ship.

Prefabrication ship:
It deals with ship parts like funnel, wheel house, and engine roots.
Fraction department:
Assembling the ship to bring complete shape.

Welding department
It deals with attaching the parts to make complete ship work.

Blacksmith department:
It deals with rallying work, leader work, and flooring work.

Sheet metal department:

It deals with air conditioning work.

Rigging department:
Holding the ship with repairs.

Painting department:
Painting the ship with required colors.

Electrical department:
To fix all the electrical equipment.

Plumbing department:
Plumbing works.

Engineering department:
Facilitating and assembling the main engine.

II. ADMINISTRATION DEPARTMENTS:

The administration department mainly consists of the following sections.

Accounts department:
a) Cost accounts, compilation of final accounts, budget cost repairs etc.
b) Bills and insurance.
c) Provident fund.
d) Record section.
e) Salaried section etc.

Personal department:

a) Staff cell.
b) Workmen cell.
c) Executive cell.
This pertains to maintenance of personal records of all the employees including workmen. These
are based on the principles of human resources development.

Internal audit department

This department checks the values of inventories and bills, different branches accounts are
evaluated annually

General department:

This is responsible for procurement of the stationary and functional goods and other incidental
items,

III. SERVICE DEPARTMENTS:

The service department mainly consists of the following sections.

a) Design office.
b) Production planning department.
c) Quality control department.
d) General stores.
e) Purchase department.
f) Bond stores clearance department.
g) Maintenance department.
h) Civil engineering department.
i) Medical and health department.
j) Transport department.
k) Security department.
Human Resources Department at HINDUSTHAN SHIPYARD LIMITED

This department looks after the needs and recruitment of the present employees. This
department includes number of function which is as follows:

 Training and development — it includes technical, soft skills and process

related totraining.
 Process and policies — it contains all the rule and regulations that need to be
allowed by the employees.
 Appraisal and increment — it is in formal assessment of the employees about
their performanceand the conduct of work.
 Induction — involves the information to the new employees about the
company, job, departments etc.
 Motivational activities and entertainment — involves motivating the
employees to improve their productivity.
 Roles and responsibilities — that every individual employee needs to fulfil.

 Key result area (KRA) — it is the measurement quantifiable of output for the
roleof responsibilities.
 Employee separation — includes resignation and dismissal.

 Joining formalities — take place when a new employee joins the company.

 Computerization

 Helpdesk

 Employee verification — take place at the time of joining of the new employee.

 Surveys

 Project trainees

 Counselling and grievance handling — both are different as counselling is

basically helping out in personal problems whereas, grievances handling
involves the handling of complains that the employees has towards the
management.
All the above head are included in the human resource development and the overall
development of individual's employees which in turn increases the overall profit of
thecompany
 CHAPTER – 4
COMPENSATION MANAGEMENT
PRACTICES AT HINDUSTAN
SHIPYARD LIMITED
COMPENSATION MEANING:

Compensation is the reward that the employees receive in return for the work performed
and services rendered by them to the organization. Compensation includes monetary
payments like bonuses, profit sharing, overtime pay, recognition rewards and sales
commission, etc., as well as nonmonetary perks like a company-paid car, company-paid
housing and stock opportunities and so on. Apart from the basic financial pay the
employees receive paid vacations, sick leave, holidays and medical insurance, maternity
leave, free travel facility, retirement benefits, etc., and these are called benefits.

Compensation refers to all forms of financial rewards received by employees. It arises

from their employment. It occupies an important place in the life of the employee. It is a
considerable cost to the employer. Compensation dissatisfaction can lead to absenteeism,
turnover, job dissatisfaction, low performance, strikes and grievances. Majority of labour
management disputes relate to compensation.

Compensation is a key factor in attracting and keeping the best employees and ensuring
that the organization has the competitive edge in an increasingly competitive world. The
Compensation Management component enables to differentiate between the
remuneration strategies and those of competitors while still allowing flexibility, control
and cost effectiveness. It provides a toolset for strategic remuneration planning that
reflects the organization culture and pay strategies, and it empowers line managers within
a framework of flexible budget control. Compensation management allow to control
bottom – line expenditures and competitive and motivating remuneration, be it fixed pay,
variable pay, stock options, merit increases, or promotion- in other words, total
compensation.
  Compensation as component of Human Recourses Management
Compensation management consists of designing the lowest cost pay structure that will
attract, retain, and motivate the competent employees and which is perceived as fair by
the employee satisfaction.

 Objectives of compensation management

The following are the objectives of compensation management:

1. An ideal compensation system will have positive impact on the efficiency and results
produced by employees. It will encourage the employees to perform better and achieve the
standards fixed.

2. It will raise the morale, efficiency and cooperation among the workers. It being just and fair
will provide satisfaction to the workers.

3. Sound compensation/ Rewards system bring peace in the relationship of employer and
employees, collective bargaining generally focus on compensation issues

4. The perfect compensation system provides platform for happy and satisfied workforce. This
minimizes the labour turnover. The organization enjoys the stability.

5. The business organization can think of compensation and growth if it has the support of
skillfull talented and happy workforce.

6. The sound compensation system is hallmarks of organization success and prosperity.

7. The success and stability of the organization is measured with pay-package it provides
to its employees

 Concept of Compensation:

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

exchange for work performed. It is a tool used by management for a variety of purposes
to further the existence of the company. It may be adjusted according to the business
needs, goals and available resources.

I. Individual worth

The value of a job is related to similar jobs of the company or the competitors but the
value of an individual to perform that job may vary according to his/her skill/knowledge,
expertise and more so his behaviour on the job and with associating persons. The
combinations of these attributes decide the worth of individual.
This definition is a perception of the employees.

ii. Cost to Company

Human resource is considered as an asset to the organisation. The investment on this

asset by the company with respect to skill, competence or expertise is a cost to the
company and the employer’s intention is to make aware the employees that he/she has to
ensure return on this investment through his/her consistent and continuous performance.

iii. Flexible Compensation Package

Employees are being offered compensation structure with numbers of benefits to choose
to plan tax plan and provide freedom to choose to get maximum benefit.
Compensation management is a critical function within organizations that involves
designing, implementing, and administering various strategies and practices to fairly and
effectively reward employees for their work. It encompasses a broad range of activities
aimed at attracting, retaining, and motivating employees through monetary and
nonmonetary rewards.
The introduction of compensation management typically
includes:

1. Understanding Compensation Philosophy:

Organizations start by defining their compensation philosophy, which outlines their
approach to rewarding employees. This philosophy aligns with the company's overall
goals, culture, and values

.2. Job Analysis and Evaluation:

This involves assessing and determining the relative worth of different jobs within
the organization. Job analysis helps in understanding the tasks, responsibilities, and
requirements of each position, while job evaluation assigns a value to each job based
on factors like skills, effort, responsibility, and working conditions.

3. Market Research:
Companies conduct market research to understand prevailing compensation trends and
practices in their industry and geographic location. This information helps in designing
competitive compensation packages that attract and retain top talent.

4. Designing Compensation Structure:

Compensation structures define how employees are rewarded based on factors such as
performance, seniority, skills, and market value.
This may include base pay, bonuses, incentives, benefits, and perks.

5. Performance Management:
Linking compensation to performance is a common practice to incentivize employees to
achieve organizational goals. Performance management systems set clear expectations,
provide regular feedback, and assess employee performance, which influences
compensation decisions such as pay raises, bonuses, and promotions
.
6. Legal and Regulatory Compliance:
Compliance with labour laws and regulations is essential to ensure fairness and prevent
discrimination in compensation practices. This includes adhering to minimum wage
laws, equal pay regulations, and other relevant legislation

Abstract:
Compensation is a systematic approach to providing monetary value to employees in
exchange for work performed. Compensation may achieve several purposes assisting in
recruitment, job performance, and job satisfaction. An ideal compensation management
system will help you significantly boost the performance of your employees and create
a more engaged workforce that’s willing to go to the extra mile for your organization.
Such a system should be well – defined and uniform and should apply to all levels of the
organization as a general system. Plus you enjoy clearer visibility into individual
employee performance when it comes time to make critical compensation planning
decisions.
With effective compensation management you‘ll also enjoy clearer visibility into
individual employee performance when it comes time to make critical compensation
planning decisions. With effective compensation management you’ll also enjoy clearer
visibility into individual employee performance when it comes time to make critical
compensation planning decisions. These performance appraisals assist in determining
compensation and benefits, but they are also instrumental in identifying ways to help
individuals improve their current positions and prepare for future opportunities. 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. The lucrative compensation will also serve
the need for attracting and retaining the best employees.
Process of compensation management:

1. Organisation’s Strategy:
Organisation’s overall strategy, though not a step of compensation management is the
starting point in the total human resource management process including compensation
management. Companies operating in different types of market/product having varying
level of maturity, adopt different strategies and matching compensation strategy and
blend of different compensation methods. Thus, it can be seen that organisations follow
different strategies in different market situations and align their compensation strategy
and contents with these strategies.

2. Compensation Policy:
Compensation policy is derived from organisational strategy and its policy on overall
human resource management. In order to make compensation management to work
effectively, the organisation should clearly specify its compensation policy, which must
include the basis for determining base compensation, incentives and benefits and various
types of perquisites to various levels of employees.

3. Analysis of Contingent Factors:

Compensation plan is always formulated in the light of various factors, both external and
internal, which affect the operation of human resource management system. Various
external factors are conditions of human resource market, cost of living, level of
economic development, social factors, pressure of trade unions and various labour laws
dealing with compensation management. Various internal factors are organisation’s
ability to pay and employees’ related factors such as work performance, seniority, skills,
etc. These factors may be analysed through wage/salary survey.
4. Design and Implementation of Compensation Plan:
After going through the above steps, the organisation may be able to design its
compensation plan incorporating base compensation with provision of wage/salary
increase over the period of time, various incentive plans, benefits and perquisites.
Sometimes, these are determined by external party, for example, pay commissions for
Government employees as well as for public sector enterprises. After designing the
compensation, it is implemented. Implementation of compensation plan requires its
communication to employees and putting this into practice.

5. Evaluation and Review:

A compensation plan is not a rigid and fixed one but is dynamic since it is affected by a
variety of factors which are dynamic. Therefore, compensation management should have
a provision for evaluating and reviewing the compensation plan. After implementation
of the plan, it will generate results either in terms of intervening variables like employee
satisfaction and morale or in terms of end-result variable like increase of productivity.
However, this latter variable is more important. The evaluation of compensation plan
must be done in this light. If it does not work as intended, there should be review of the
plan necessitating a fresh look.
Job Evaluation
Job evaluation is one of essence of compensation administration and the establishment
of pay structure. Job evaluation uses the information collected through ob analysis and
systematically determines the value of each job in relation to all jobs within the
organization. Job evaluation seeks to rank all the jobs in the organization and place them
in a hierarchy that will reflect the relative worth of each and determines the organization’s
pay structure.

Job Evaluation Method

Job Evaluation

Analytical Non Analytical

Classification
Factors
Comparison

Ranking

Point
Establishing pay structure
Once the job evaluation is completed, its data become the nucleus for the development of
the organization’s pay structure. This mean establishing pay rates or ranges that are
compatible with the ranks, classifications or points arrived at through job evaluation. The
pay structure can be determined through following process:

Wage survey
Wage survey is the systematic gathering of factual information on pay practices from
comparable firms within or outside the industry. The gathered information gives an idea
of the standard market practices which are used to set the actual wage level. The data can
be generated or the organization can collect the data through secondary source such as
publications, research firms or organization can generate the data through primary source
such as conduction their.

Incentive Compensation Plan

In addition to the basic wage structure, organizations that are sincerely committed to
developing a compensation system that is designed around performance will want to
consider the use of incentive pay. Incentive can be paid based on individual, group or
organization wide performance.

Individual Incentives
Individual incentives plan pay off for individual performance. Popular approaches
include piecework plans, time-saving bonuses and commission. Under straight piecework
plan, the employee is typically guaranteed a minimum hourly rate for meeting some pre
established standard output. For output over this standard, the employee earns so much
for each piece produced. Individual incentives can be based on time saved as well as
output generated. As with piecework, the employee can expect a minimal guaranteed
hourly rate, but in this case the bonus is achieved for doing a standard hour’s work in less
than sixty minutes. Employees who an hour’s work in fifty minutes can do obtain a bonus
that is some percentage of the labor saved. Sales personnel frequently work on
commission basis. In addition to low wage rate, they get an amount that represents a
percentage of the sales price.

Group Incentives
Each of individual incentive can also be used on a group basis. That is two or more
employees can be paid for their combined performance. One problem with group
incentives is that employees do not see them as being directly linked to their own
behavior. The pay of the employee under group incentives is influenced by the behavior
of others with whom that employee works.

Organization wide incentives

The goal of organization wide incentive is to direct the efforts of all employees toward
achieving overall organizational effectiveness. This type of incentive produces rewards
for all employees based on organizational wide cost reduction or profit sharing.

Executive compensation

Executive compensation is significantly higher than the benefits given to the middle level
managers and operational staff. This is how executive of business corporations are paid
which includes basic salary, bonuses, shares, options and other company benefits. There
are three components of executive compensation they are explained below:

Executive Salary
Top managers are expected to demonstrate good decision making abilities. Eventually
the supply of qualified senior executives is scare, and organizations have bid up the price
for this talent. They too must keep their salaries in line with the competition or potentially
lose an executive to another organization. High salary also acts to motivate both top
executives and lower level managers. High pay encourages top level managers to perform
well in order to keep their jobs. But high pay also acts to stimulate lower level managers
to work hard so that they can someday move up the ladder to the “big money”.
Supplement Financial
Compensation Financial incentives like bonuses or stock option plans are the exception
among rank and file workers, but it is the rare senile business executive whose
compensation does not include such incentives. The executive is bonus is computed on
the basis of some formula, usually taking into account increases in sales and profits. This
bonus although earned in the current period is distributed over several future periods. The
major purpose of such deferred compensation is to increase the cost to the executive of
leaving the organization. Similarly stock options have been a common incentive offered
to executives. They generally allow executives to purchase, at sometime in the future, a
specific amount of the company’s profitability and, therefore the price of the stock; Stock
options are viewed as performance based incentives.

Supplement Non – Financial Compensation

Executives are frequently offered benefits of perquisites not offered to other employees.
These benefits includes such as medical insurance, life insurance, interest free loan, club
membership, vehicles/fuels, quarters, supplemental retirement accounts etc.
TYPES OF COMPENSATION:

DIRECT COMPENSATION:
Direct compensation is the financial compensation, or cash, given from the employer to
the employee for their services. What makes it direct is that it is given to the employee
without an intermediary. Under direct compensation.

 Base pay
Base pay (also known as basic salary or base salary) refers to the fixed financial amount
that an organization pays its employees in exchange for the services they perform. This
amount is negotiated during the hiring process and agreed upon before the employment
contract begins. It is typically an annual or monthly salary or an hourly rate.

 Overtime pay
Overtime pay is the amount of extra pay an employee receives for working extra hours
on top of their scheduled contract hours.

Every company should establish a set of normal working hours to clarify overtime. For
example, if the normal working week hours are 30, then an employee who works 40
hours is eligible for overtime pay for those additional 10 hours.
All employees covered by The Fair Labor Standards Act (FLSA) – non-exempt
employees – who work over 40 hours per week are eligible for overtime pay. The Federal
Overtime law states that employers must compensate workers at least time and a half for
the overtime worked.

 Variable compensation:
Variable compensation (also known as variable pay) is compensation given to an
employee that is based on performance. The aim of variable compensation is to reward
and encourage a specific behaviour or result. These pay programs are typically
implemented with sales teams and are often given in the form of bonuses and
commissions. For example, if an individual employee achieves a professional milestone,
an entire team meets a goal, or the entire company meets a specific target, then those
people are rewarded accordingly.
These performance goals will be pre-determined and outlined with a target date. There
may also be a range of payouts, which is based on how close the results are to the original
target.

 Sales compensation
These performance goals will be pre-determined and outlined with a target date. There
may also be a range of payouts, which is based on how close the results are to the original
target.
sales compensation strategy is often used to motivate a sales team to achieve its goals.
It will typically comprise a base salary and be top up with commissions, bonuses, and
other performance-based incentives, all of which are tailored to the role and company in
question. In this form of direct compensation, the base salary will often be minimal, while
the commissions and bonuses are lucrative. That is to incentivize employees to achieve
certain performance goals and contribute to the success of the company.

 Incentives:
They are provided for the employee’s benefit, but is not given directly to the employee.
Under indirect compensation there are two performing work. It con be piece wage,
commission, bonus, profit sharing, stock option etc.

Indirect compensation:
Indirect compensation refers to monetary and non-monetary incentives given to an
employee to increase their overall engagement and motivation at work. This type of
compensation still has a financial value, but employees don’t receive it in cash form.
Here are some of the common forms of indirect compensation. Note that there’s an
overlap between what’s considered indirect compensation and what’s regarded as
benefits.
  Benefits are the payments addition to pay. They can be
1. Pay for time not worked: paid vacation, holidays, leaves

2. Protection Programs: Pension, Gratuity, Insurance etc

3. Executives Benefit: Free Newspapers, telephone etc

 Service and Perquisites:

They increase employees wellbeing at on cost or significantly reduced cost to
employees. They can be

1. Housing, transport, food

2. Loans Children’s, education expenses

3. Discount on purchases, credit cards

4. Social-culture recreational activities; club subscriptions.

 Equity:
The employee is offered equity in the company via shares of stock or the option to buy
shares. This is a common part of compensation packages within startups where cash is
low, and they desire to reward employees who are the first through the door.
When the company succeeds, the employee succeeds too, which incentivizes them to
work to achieve the company’s goals.
COMPENSATION STRUCTURE:

1. Basic:

This is the main part of the pay package, which refers to the component of compensation
that justifies the worth of a job, as compared to a similar job in another
industry/organization.

It matches job worth with the human skill, knowledge and experience to perform the job
and is a stable wage/salary part of the compensation paid over a period of time, which
could be weekly or monthly, and must be paid by the employer to meet the basic needs
of the employees.

As per the Fair Wage Committee, it is a fair wage or the minimum wage to be paid by
the employer to all categories of employees in a grade. It is a normal rate for a given
output by an average employee of the particular grade.

Fixation of Basic Pay:

It is fixed as per the job evaluation points for a particular group of jobs and by comparing
its worth with other job prices for similar jobs in other organizations to cover equity
concept. This basic component, once fixed, remains stable for a reasonable period of time
unless some substantial change intervenes.
It is built upon the statutory minimum wage criteria, the tribunal awards as well as the
directives of the Pay Commission at the national or state level and collective bargain.

2. Dearness Allowance (DA):

It is the second important part of the compensation structure, which compensates the
employee fully or partly for the loss of real earning. It takes care of the price inflation
that affects the purchasing power of the employees. It is a regular and continuing part of
the compensation package that gets changed according to the price increase, i.e., to
establish a real wage concept.

It is linked with the price index (an approved calculation of the Government formulated
from time to time depending upon the changes in the price index). However, the W/S
policy defines the system of the DA changes and the management is committed to use
this protection device.

Since the Wage/Salary grades once fixed cannot be changed quite frequently (till the next
Wage Board or Pay Commissions recommendations), DA increase is not termed as the
increase in wage or salary, but it is a relief to the employees to meet the additional burden
due to price escalation.

In India, the practice of paying this allowance to compensate for the price increase began
during the First World War when Mahatma Gandhi sat on a fast in 1918 in support of the
Ahmedabad Textile workers’ protest against the increased cost of living.

DA as a continuing component of wage or salary came into existence during the

conditions created by the Second World War as the cost of living shot up abnormally
towards the end of the Second World War. That time, the AICI (All India
Consumption Index) moved up from 269 in 1945 to 285 in 1946 and to 329 in 1947.
The practice of the payment of dearness allowance relates to all the sectors of
organizations, as has also been referred to in the Minimum Wage Act, 1948. However,
the multinational and private sectors do not separately define this component in their
compensation structure, especially those of executives, and put more emphasis on perks
and benefits to project more attractive packages.
The Wage and Salary policy defines the system of DA changes and the management is
committed to use this protection device. However, the multinationals and private sectors
do not separately define this component in their pay packages, especially those of
executives, and put more emphasis on perks and benefits to cover this aspect to link the
pay to performance and not to inflation.

Fixation of DA:

In the context of the changing pattern of prices of commodities and consumption rate,
the real wage or salary is likely to fluctuate greatly, which may upset the employees to
meet the basic needs and to support their families. DA is that component of the pay
structure which takes care of this fluctuation.

Therefore, an accurate and scientific approach is necessary to review and calculate this
component so as to avoid conflicts or dissatisfactions in the minds of employees. For the
employees of PSUs, Governments through the Wage Board and/or the Pay
Commissions fix this component periodically based on the CPI (Consumer Price Index)
to satisfy the real values of wage or salary.

General Principle of Fixing DA:

Whether it is pay fixation or DA fixation, some principles are to be followed to balance

the loss of real earning to the employees and the extra financial burden on the employers.
Compensation Management Practice at Hindustan Shipyard
Limited

Performance Based Evaluation Measure:

Shipyard always tries to give the better service to their customers. As for this they tries
to find out the best employees compare with their rival companies. The HSL of shipyard
not only provide training to the employees but also goes for measurement of the
performance before and after training. HSL goes for two types of methods:

a) Post-training performance method

b) Pre-post training performance method

According to the post-training performance method HSL evaluate the training programs
based on how well employees can perform their job in the position Shipyard provides to
after training. Under pre-post training performance method HSL of Shipyard evaluate the
training programs based on the difference in performance before and after training.

Critical Compensation decision:

While compensate the employees, HSL of Shipyard Bangladesh make some critical
decision. HSL tries to find out the four policies that match with the employee’s current
performance based on the decision they have made before.

Consistency:

HSL recommend or choose to compensate the employees performing according to the

company's standard of performance level. But Shipyard also ensures that the
performance of the employee should maintain the consistency of performing well and up
to the standard. It means, the person who will be compensated, have to maintain and each
time increase the standard of performance level Shipyard wants from its employees in
order to meet the company needs.

Contribution:

HSL recommend those employees who are fully contributed for the company. Anyone
who works only for to work is not countable at all for the compensation

Competitiveness:

Employees who have the mentality to reach the competitive advantage levels with the
company automatically are going to be selected by the HSL of Shipyard. It means
employee who has the ability to accept and adapt the change and also has the ability to
compete effectively and efficiently with competitors are always motivated by giving
proper compensation.

Administration:

Employees who follows the rules and regulations of Shipyard gets the additional support
BY the HSL of Shipyard, when compensate the employees.

Compensation Systems

It is a big issue to compensate the employees because each and every employee has some
extra capabilities which make him/her different from the other employees as well as
reducing the lacking that make him/her away from the race of reward system. For making
a fair compensation system, HSL of Shipyard follows some factors of the employees.

1) Mental efforts____ intelligence, memory, verbal expression, specialized

Knowledge communications.

2) Physical efforts___ height, weight, strength, working hours

3) Skills ___________ experience, training, education, ability to perform

 the given task

4) Responsibilities____ how much the employee responsible to perform the

job, how will full he/she is?

All this above factors are considered while the HSL are going to compensate any
employees. His past (if has) and present records of the works are evaluated for making a
fair compensation packages.

Types of Compensation provided by Hindustan shipyard Limited

HSL of Shipyard provides both direct and indirect compensation to their employees.
HSL tries to match with the environment of the current situation and the needs of the
employees. Cluster with all that HSL gets the decision whether they give direct or indirect
compensation benefit.

Direct compensation

Direct compensation that Shipyard usually provide to their employees consist of:

 Merit pay

 Spouses Income Continuation

Direct Compensation
 Gain sharing
Benefits

 Profit sharing

a) Merit pay: If some times any employee did any unexpected work which can not be
possible for other employees and to did that should have some additional knowledge on
that cases HSL of Shipyard give direct financial support to that employee to motivate
both that employees and all others of the company.
b) Spouse income continuation: If any uncertainties arise that a employee of Shipyard
can not able to work due to his disable situation most of the cases Shipyard tries to stand
beside the family of that employee.

c) Gain sharing: When a group of people did any thing extremely well and make a huge
financial profit some times Shipyard gives some percentage from that profit equally to
each and every members of the group. By doing this employees are being motivated to
work as a team to gain the competitive advantage.

d) Profit sharing: Basically it is not happen regularly and if it so than only the percentage
of the profit is distributed to the top level management Officers.

Indirect Compensation benefits:

Shipyard not only gives the direct compensation but also compensate their employees
indirectly. Company gives so many facilities for the employees to become a friendly
relation with the management and the employees.

Indirect compensation consists of:

 Protection programs

 Services and prerequisites

 Others (Vacation, Holiday, Sick leave)

Protection programs: HSL of Shipyard provides protection programs like Medical

Insurance, Life Insurance, Social Security etc.

Services and prerequisites: Services that Shipyard gives to the employees are
recreational facilities, car facilities according to the designation etc.

Others: Employees of Shipyard enjoy holiday facilities, sick leave, vacation etc

Rewards System
Shipyard is very much concern about the reward system of the employees. Because all
the time Shipyard believes that no more Shipyard in the world would exist if each and
every single employee are not satisfied while doing their job in the company. Shipyard
always try to give some rewards which will cheer up the employees and makes them
more attract on their own field. Basically shipyard gives two types of rewards towards
the employees.

1) Intrinsic reward

2) Extrinsic reward

Under intrinsic reward employees are not allowed to enjoy financial benefits from the
company. For top level or upper mid level employees can go for

a) decision making ( while unexpected situation arises)

b) personal development by getting training without any expense

c) job freedom. Under extrinsic reward employees get financial rewards. But some times they
have the chance to get some additional benefits by the company. In a diagram extrinsic
rewards are given below

Extrinsic Reward

Financial Support Non-Financial

Support

Preferred office furniture

Assigned space Business Cards
 CHAPATER- 5

DATA Analysis and

interpretation
EMPLOYEE PERCEPTIONS OF PERFORMANCE
APPRAISAL PRACTICES IN HSL

Survey of Employees’ views and opinions about

performance appraisal practices in Hindustan
Shipyard Limited has been conducted with the help
of a questionnaire. The results of the survey are
discussed and analyzed in the following pages.
INTRODUCTION

This chapter the analysis and interpretation has with a sample of 100 in which
maximum responders were male and minimum responders were female. The sample
groups taken are of the age (ranging between) 25-60 years.

The analysis of study consists of

• Data table

• Pie representing the data

• Interpretation of every chart

The survey is done keeping in mind the different procedures of compensation

practices in public as well as private sectors. Every question has been analysed and
appropriate solution has also given to it.
1.Gender

Option Number of Responses Percentage

Male 56 56

Female 44 44

Total 100 100%

number of respondent

44% Male
56% Female

Interpretation:

According to the above table,44% of the respondents are female and the remining
56% are male. We found that majority of the respondent (56%) i.e., employees are
male.
2.Work Experience (in years) of the employee

Work Experience Respondent Percentage

0-2 Years 17.2 17.2%

3-5 Years 47.5 47.5%

6-10 Years 30.3 30.3%

10-20 Years 5.1 5.1%

Number of respondent

5% 17%
0-2 years
30% 3-5 years
6-10 years
10-20 years
48%

Interpretation:

According to the above table 5% of the respondents are 0-2 years.17% of the
respondents are 3-5 years.30% of the respondents are 6-10 years.48% of the
respondents are 10-20 years.
7. Monthly Income of the employee.

Monthly income Respondent Percentage

10000-20000 22 22%

20000-30000 27 27%

30000-40000 18 18%

40000-50000 21 21%

50000-above 12 12%

Total 100% 100%

Number of respondent

12% 10000-20000
22%
20000-30000
21% 30000-40000

27% 40000-50000
18% 50000-above

Interpretation: According to the above table the monthly income 10000-20000 is

22%.20000-30000 is 27% , 30000-40000 is 18%,40000-50000 is 21% and
50000above is 12%.
8. Are you agree that your salary is suitable to the cost of living in your area.

Options Respondents Percentage

Agree 34 34%
Strongly agree 41 41%
Neutral Strongly 9 9%

Disagree 8 8%
Strongly disagree 8 8%
Total 100 100%

Number of respondnets

9% agreed
10%
37% strongly agreed
neutral
disagreed
44% strongly disagreed

Interpretation: From the table it can be known that 81%% of the respondents were
Agree with their salary to the cost of living, 16%% respondents were disagreed
16%.neutral 10%
9. How satisfied are you with your current salary

Option Respondent Percentage

Satisfied 50 50%
Highly satisfied 5 5%

Dissatisfied 25 25%
Highly dissatisfied 20 10%

Total 100 100%

Number of respondents

14%
satisified
34% 9%
highly dissatisified
disatisified
higly dissatisified
43%

Interpretation: According to the above tables it can be known that 55% of the
respondents satisfied with the, 45% of the respondents are dissatisfied with current
salary.
6. How satisfied are you with the benefits package (e.g., healthcare, health,
insurance, retirement plans

options Respondent percentage

Satisfied 22 22%

Highly satisfied 28 28%

Dissatisfied 20 20%

Highly dissatisfied 30 30%

Total 100 100%

Number of respondents

10%
satisified
35%
highly satisified
32%
dissatisified
highly dissatisified
23%

Interpretation: According to the above table 50% of the respondents are satisfied
and 50% are of them dissatisfied.
7. Does the fringe benefits helps a part from regular salary.

Options Respondent Percentage

Agreed 36 36%

Strongly agreed 16 16%

Neutral 15 15%

disagreed 20 20%

Strongly disagreed 13 13%

total 100 100%

Number of respondents

18% 11% agreed

strongly agreed
22%
neutral
28% disagreed

21% strongly disagreed

Interpretation:

According to the above table the fringe benefits helps a part from regular salary are
agreed 52% and disagreed 33%. Neutral 15%.
8. Can you agree the rate of the annual increment is appropriate fixed

Options Respondent Percentage

Agree 39 39%
Strongly agreed 21 21%
neutral 7 7%
Disagreed 18 18%
Strongly disagreed 15 15%
Total 100 100%

Number of respondents

8% AGREE
DISAGREE
25%
46% STRONGLY AGREE
STRONGLY DISAGREE
21% NEUTRAL

Interpretation:

According to the table 39% of the respondents are agree the rate of annual increment
is appropriate fixed. 18% of the respondent is disagree,21% is strongly agreed. 7%
is strongly disagree, 15% are neutral.
9. Education qualification

Options Respondents Percentage

10th class and below 13 13%

Inter/ITI 18 18%

Under Graduate 45 45%

Post Graduate 24 24%

Total 100 100%

Number of respondents

13%
24% 10th and below

18% inter/iti
undergraduate
postgraduate
45%

Interpretation:
According to the above table education qualification of the each respondent 10 th and
below are 13%. Inter/ITI respondents are 18%. undergraduate respondents are
45%.post graduate respondents are 24%
10. Are you comfortable discussing compensation related concern with your
superiors in organization.

options respondents Percentage

Agreed 30 30 %

Strongly agreed 20 20 %

Neutral 10 10%

Disagreed 25 25%

Strongly disagreed 15 15%

Total 100 100%

Number of respondents

14% agreed
33%
strongly agreed
24% neutral

19% dissagree
10%

Interpretation:
According to the above table compensation related concern with your superiors in
organization are agreed 50% disagreed are 40% & neutral 10%.
11.What factor influence compensation practices in your organization. industry
standards or government regulations organizational objectives.

Option Respondent Percentage

Agreed 21 21%
Strongly agreed 44 44%
Neutral 8 8%

Disagreed 9 9%
Strongly disagreed 18 18%
Total 100 100%

Number of respondents

11% agreed
25%
10% strongly agreed
neutral
disagreed
strongly disagreed
54%

Interpretation:
According to the above table factor influence the compensation practices in the
organization of each respondent are Agreed 65%. Disagreed 27% neutral 8%.
12. Which of the following methods is commonly used for determining employee
compensation within the organization. Seniority-based pay &Market-based
benchmarking &Performance-based incentives.

options Respondents Percentage

Agreed 35 35%
Strongly agreed 25 25%

Neutral 10 10%
Disagreed 12 12%

Strongly disagreed 18 18%

Total 100 100%

Number of respondents

agreed
15%
strongly agreed
12% 43%
neutral
disagreed
30%
strongly disagreed

Interpretation:
According to the above table the employee compensation methods commonly used
in the organization of each respondents agreed 60% disagreed 30% neutral 10%.
13.Is the compensation practices within the organization, which of the following is
the key objective of designing effective compensation package. Minimizing
operational cost, Ensuring fair and equitable pay, Minimizing share holder
dividends 52.

Options Respondents Percentage

Agreed 20 20%
Strongly agreed 38 38%

Neutral 6 6%
Disagreed 26 26%
Strongly disagreed 10 10%
Total 100 100%

Number of respondents

Agreed
22%
29% strongly agreed
neutral
7% disagreed
42% strongly disagreed

Interpretation:
According to the above table the key objective of designing effective compensation
package the each respondents are Agreed 58% Disagreed 36 Neutral 6%.
14. Is the compensation practices within the Visakhapatnam port trust contribute
to the employee retention and motivation.

options Respondents Percentage

Agreed 17 17%
Strongly agreed 50 50%
Neutral 5 5%
Disagreed 13 13%
Strongly disagreed 15 15%
total 100 100%

Number of respondents

15% Agreed
20%
6% strongly agreed
neutral
disagreed

59% stronly disagreed

Interpretation:

According to the above table the employee retention and motivation compensation
practices in the organization each respondent agreed 67%. Disagreed 18%. Neutral
5%
15. Does the organization can measures the implement to ensure transparency in
its compensation practices in HSL.

options Respondents percentage

Agreed 22 22%

Strongly agreed 25 25%

Neutral 15 15%

Disagreed 20 20%

Strongly disagreed 18 18%

total 100 100%

Number of respondents

Agreed
24% 27%
strongly agreed
neutral

18% disagreed
31% strongly disagreed

Interpretation:
According to the above table the organization implement to ensure transparency in
its compensation practices of each respondents are Agreed 47%. Disagreed 38%
neutral 15%.
16. Does the organization influence variations in compensation among different
job role in the organization.

Options Respondents percentage

Agreed 40 40%
Strongly agreed 30 30%
Neutral 6 6%
Disagreed 10 10%
Strongly disagreed 14 14%
Total 100 100%

Number of respondents

12% agreed
7% strongly agreed
46% neutral
disagreed
35%
strongly disagreed

Interpretation:
According to the above table the following factors might influence variations in
compensation among different job role in the organization of each respondent are
agreed 70%. Disagreed 24%. Neutral 6%
17.Does job evaluation play in determining compensation within the organization.

options Respondents Percentage

Agreed 25 25%

Strongly agreed 28 28%

Neutral 14 14%

disagreed 20 20%

Strongly disagree 13 13%

total 100 100%

Number of respondents

13% agreed
25%
strongly agreed
20% neutral
disagreed
14% 28% stronglydisagreed

Interpretation:
According to the above table the job evaluation play in determining compensation
within the organization of the each respondents are agreed 53% and disagreed 23%.
Neutral 14%.
18. Is the organization integrate non-monetary rewards to its compensation strategy.

options Respondents percentage

Agreed 28 28%
Strongly agreed 23 23%
Neutral 5 5%
Disagreed 24 24%
Strongly disagreed 20 20%
total 100 100%

Number of respondents

agreed
30% 35% strongly agreed
neutral

6% disagreed

29% strongly disagreed

Interpretation:
According to the above table the organization integrate non-monetary rewards to its
compensation strategy each respondent are agreed 51% disagreed 44% neutral
6%.
19. can considerations should the organization take into account when determining
performance-based compensation.

Options Respondents percentage

Agreed 29 29%

Strongly agreed 30 30%

Neutral 9 9%

Disagreed 22 22%
Strongly disagreed 10 10%
Total 100 100%

Number of respondents

25% agreed
32%
strongly agreed
10%
neutral

33% strongly disagreed

Interpretation:
According to the above table the organization take into account when determining
performance-based compensation of the each respondents are agreed 59% and
disagreed 32%.
20. Is this compensation benefits helpful to the employee.

Options Respondents Percentage

Agreed 45 45%
Strongly agreed 40 40%
Neutral 4 4%
Disagreed 6 6%
Strongly disagreed 5 5%
Total 100 100

Number of respondents

6% 5% agreed
4%
strongly agreed
45%
neutral
disagreed
40%
strongly disagreed

Interpretation:
According to the above table the compensation benefits helpful to the employee are
more number agreed 85% disagreed 11% neutral 4%.
 CHAPTER 6

FINDINGS
AND
SUGGESTIONS
SUMMARY:

Chapter -1: Covers the following topics: - introduction, need of the study, scope of
the study, objectives of the study, methodology of the study and limitations of the
study.

Chapter -2: industrial profile.

Visakhapatnam was an ancient port city, which had trade relations with Middle
East and Rome. Ships were anchored at open roads and loaded with cargo from
Visakhapatnam shore by means of small boats. Visakhapatnam Port is one of
the major ports on the eastern seaboard of Bay of Bengal at a latitude 17 0 41'N
& longitude 83018' E. It is situated in between Kolkata & Chennai Ports. It has
acted as a catalyst in the process of Industrialization of its hinterland along with
other ancillary industries. The Port plays a dynamic role in fostering accelerated
development in the region shall contributed significantly to the National
Development.

Chapter -3: Theoretical concept.

Compensation is the total rewards, including monetary and non-monetary,

that employees receive in exchange for their work and contributions to an
organization. It aims to attract, retain, and motivate talented individuals by
aligning their efforts with the organization’s objectives. This payment boosts
a sense of value and engagement and contributes to a positive workplace
culture

Chapter -4: Covers the data analysis and interpretation, which is represented
through bar graphs and shows percentage obtained for different parameters.
This chapter the analysis and interpretation has with a sample of 100 in which
maximum responders were male and minimum responders were female. The
sample groups taken are of the age (ranging between) 25-60 years.

: Consists of summary, conclusion, findings, suggestions, bibliography, and

annexure.
FINDINGS:

 it observed that most of the respondents are male 68% and female 32%.

 It observed that most of the work experiences of the employee 3-5 years are
48%.
 It observed that 30000-40000 of monthly income has higher percentage of
27%.
 It observed that 65% of the respondent are agreed for their salary which is
suitable in their cost of living area.
 It is observed that 55% of the respondent are agreed with their current salary.

 It observed that 60% of the respondents are satisfied with their benefits
package i.e., health, insurance, retirement plans & 28.3% are dissatisfied.
 It observed that 52% of the respondent are agreed for fringe benefits a part
from regular salary.
 It observed that 50% of the respondents are agreed for comfortable with the
discussing related concern with their superiors in the organization.
 It observed that 66% of the respondents are agreed for government
regulations and policies are influenced compensation practices in their
organization.
 It observed that 60% are agreed the methods of employee compensation

 It observed that 58% of the shareholder are agreed in minimizing the

dividends are the key objective of designing effective compensation
package.
 It observed that 67% of the respondent are agreed recognizing the rewarding
employee contribute to the employee retention and motivation.
 It observed that 47% of the respondents agreed are implement in
transparency of conducting regular audits of the compensation processes
 It observed that 70% of the respondents are agreed length of commute of
work influence the variations in compensation among different job roles.
 It observed that 53% of the respondents are agreed determine the bonus and
incentives in job evaluation.

 It observed that 51% agreed for the respondents are recognizing outstanding
performance are integrate non-monetary rewards to the compensation
strategy
 It observed that 59% agreed for the opportunities for ongoing feedback and
coaching based on performance compensation.
 It observed that 85% of the respondents are agreed in benefited to employee.
SUGGESTIONS:

 To satisfy the employee you need to provide extra health benefits like
healthcare, health insurance.
 Many of the employees are not discussing with the superiors in the
organization we have to suggest them to discuss with the employee.
 The payment method should be on performance based which helps to
increase the employee satisfaction and loyalty.
 The employee retention and motivation in compensation practices should
have to increase in HSL.
CONCLUSION:

The process of study is basically dealing with objectives and methodology adopted
and the conclusions arrived at the detailed study on laree Administration pattern in
Visakhapatnam Port Trust. The study was conducted to know the practices of
fixation of salaries and wages of the employees in Visakhapatnam Port Trust, which
influences the satisfaction of employees.

The wage and salary structure and employee benefits and services is one of the vital
area of personal administration for sound wage and salary policies and programs are
essential to maintain, develop, promote and transfer employees and to get effective
results from them. Wage and salary structure are perhaps the most important single
element in the condition of employees. Organizational morale cannot be maintained
at high level without a fair equitable and sound remuneration program.

The compensation management in HSL project is a big task and it is being managed
by inviting lot of human resources. The little attention has been devoted the study
the internal structure and Human Resource Management policies. Therefore it is felt
that the study relating to wage and salary administration in HSL project to help and
understand and analyse the practices followed by HSL project. It is also felt that
there is need to provide a theoretical background and improvement of wage and
salary administration in HSL under the public sector.

I have used a well-structured questionnaire comprising of thirteen questions. The

Sample size consists of 100 respondents. Secondary data, which is, gathered from
various sources like libraries, annual reports, wage agreement and other records of
Visakhapatnam Port Trust. As in any study there are certain limitations, my study
also includes some limitations. The being that the availability of information is not
adequate for studying the entire organization's attribute towards the wage & salary
Administrative pattern in HSL. The second being that some of the employees could
not Cooperative and interaction with them was not at this juncture it is very high to
say that I have studied this concept of Wages and Salaries Administrations with
reference to the Visakhapatnam Port Trust and its administration in the field of
wages & salaries of its employees and the system adopted by Visakhapatnam Fort I
rust is the best one. This package is very much influencing the financial status and
conditions of its employees and dedication of its employees, In this context I would
like to say that this industry influences the economy of the country that means the
wages & salaries of its employees are influence the economy of the country.

I would like to say about the prestigious organization, Visakhapatnam Port Trust
With reference to wages, allowances and deductions and the other welfare measures
are implemented as per the law in the interest of its employees and workmen to get
good yield and profits. The port trust Management adopted a good system of
participation of workmen in Management and the wage structure and the
management of the Visakhapatnam Port Trust also offered and accepting the
valuable suggestions from its employees, supervisors and other executives in order
to avoid unnecessary wastages in the Port Trust and the management also given
awarded to its employees by way of gifts. It means that directly and indirectly the
employees also participate in the management of Visakhapatnam Port Trust and
indirectly contributed and helped to the economy of the country for its development.
The management of Visakhapatnam was also adopted the Welfare measures to its
employees for betterment of their families.
APPENDIX

BIBLIOGRAPHY
 APPENDIX

QUESTIONNAIRE FOR A STUDY OM PERFPRMANCE APPRAISAL

TOPIC:"COMPENSATION MANAGEMENT PROCEDURES AND

PRACTICES”

“A STUDY WITH REFERENCE TO HINDUSTAN SHIPYARD LIMITED”

1.Gender?
(a) Male
(b)female

2. Work Experience (in years)?

(a) 0-2 years
(b) 3-5 years
(c) 6-10 years
(d) 10-20 years

3. Monthly Income of the employee?

(a) 10000-20000
(b) 20000-30000
(c) 30000-40000
(d) 40000-50000
(e) 50000-above

4. Are you agreed that your salary is suitable to the cost of living in your area?
(a) Agree
(b) strongly agree
(c) Neutral
(d) Disagreed
(e) strongly disagree

5.How satisfied are you with your current salary ?

(a) satisfied
(b) highly satisfied
(c) dissatisfied
(d) highly satisfied

6.How satisfied are you with the benefits package (e.g., healthcare, health,
insurance, retirement plans?

(a) satisfied
(b) highly satisfied
(c) dissatisfied
(d) highly satisfied

7. Does the fringe benefits helps a part from regular salary?

(a) Agreed
(b) strongly agree
(c) Neutral
(d) Disagreed
(e) strongly disagree

8. Can you agree the rate of the annual increment is appropriate fixed? (a)
Agreed
(b) strongly agree
(c) Neutral
(d) Disagreed
(e) strongly disagree
9. Educational qualification?

(a) 10th class & below

(b) Inter/ ITI

(c) Post graduation

(d) under graduation

10. Are you comfortable discussing compensation related concern with your
superiors in organization.

(a) Agree
(b) strongly agree
(c) Neutral
(d) Disagree
(e) strongly disagree

11. What factor influence compensation practices in your organization. industry

standards or government regulations organizational objectives?
(a) Agree
(b) strongly agree
(c) Neutral
(d) Disagree
(e) strongly disagree

12. Which of the following methods is commonly used for determining employee
compensation within the organization. Seniority-based pay &Market-based
benchmarking &Performance-based incentives? (a) Agreed
(b) strongly agree
(c) Neutral
(d) Disagree
(e) strongly disagree
13.Is the compensation practices within the organization, which of the following is
the key objective of designing effective compensation package. Minimizing
operational cost, Ensuring fair and equitable pay, Minimizing share holder
dividends?
(a) Agree
(b) strongly agree
(c) Neutral
(d) Disagree
(e) strongly disagree

14.Is the compensation practices within the Visakhapatnam port trust contribute to
the employee retention and motivation?
(a) Agree
(b) strongly agree
(c) Neutral
(d) Disagree
(e) strongly disagree

15. Does the organization can measures the implement to ensure transparency in its
compensation practices in HSL? (a) Agreed
(b) strongly agree
(c) Neutral
(d) Disagree
(e) strongly disagree

16. Does the organization influence variations in compensation among different job
role in the organization.
(a) Agree
(b) strongly agree
(c) Neutral
(d) Disagree
(e) strongly disagree
17.Does job evaluation play in determining compensation within the organization?
(a) Agree
(b) strongly agree
(c) Neutral
(d) Disagree
(e) strongly disagree

18. Is the organization integrate non-monetary rewards to its compensation strategy?

(a) Agreed
(b) strongly agree
(c) Neutral
(d) Disagree
(e) strongly disagree
19. can considerations should the organization take into account when determining
performance-based compensation? (a) Agreed
(b) strongly agree
(c) Neutral
(d) Disagree
(e) strongly disagree

20. Is this compensation benefits helpful to the employee?

(a) Agree
(b) strongly agree
(c) Neutral
(d) Disagree
(e) strongly disagree
BIBILOGRAPHY:

Books Management

1.Memoria. C.B (2002) "Personal Management" Bombay: Himalaya Publication

House.

2.Aswath Appa, K. "Human Resource and Personnel management": Tata McGraw

Hill, New Delhi (2001).

3.Robbins. "Human resource management" , John Wiley (1994).

4.K.K. Chawdhuri" Human resource and Personnel management" Himalaya

publishing house.

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