Report

Instrumentation Limited

A

SUMMER TRAINING PROJECT REPORTON

A Study on Employee Provident Fund and Pension SchemeWith reference

ToInstrumentation Limited, Kota.

Submitted in partial fulfillment of the requirement for the award of theOf

Master of Business AdministrationFrom

Rajasthan Technical University, Kota (Raj.)Academic Session-2007-2009

PROJECTGUIDE: SUBMITTEDBY:Miss Reena Gaur Anoop GautamAsst.Professor MBA-II(Sem-III)OKIM&R, Kota OKIM&R, Kota

A-1, Special I.P.I.A. Jhalawar Road, Kota-324005

(: 0744-2490878, 2490402, E-mail: [email protected]

OM KOTHARI INSTITUTE OF MANAGEMENT & RESEARCH

(Affiliated to Rajasthan Technical University, Kota, Approved by All India Council for Technical Education-Government of India and

Sponsored by Om Kothari Foundation, Kota)

CERTIFICATE

This is to certify that Mr.Anoop Gautam a student of MBA II Year (Sem-

III) at Om Kothari Institute of Management and Research has completed

Training Project Report entitled “A Study on Provident Fund & Pension

Scheme with reference to Instrumentation Ltd., Kota.” The project has

been completed after studying for one year in MBA course and for partially

fulfilling the requirements for award of degree of Master of Business

Administration of Rajasthan Technical University, Kota.

The Training Project Report has been completed under the guidance of

“Miss Reena Gaur” of OKIMR and is as per norms and guidelines

provided.

Dr.K.C.Shringi Miss Reena Gaur

Director Academic Guide

KotaDate:

OM KOTHARI INSTITUTE OF MANAGEMENT & RESEARCH

(Affiliated to Rajasthan Technical University, Kota, Approved by All India Council for Technical Education-Government of India and

Sponsored by Om Kothari Foundation, Kota)

CERTIFICATE

This is to certify that Mr.Anoop Gautam a student of MBA II Year (Sem-

III) at Om Kothari Institute of Management and Research has Submitted

Training Project Report entitled “A Study on Provident Fund & Pension

Scheme with reference to Instrumentation Ltd., Kota.” The project has

been completed after studying for one year in MBA course and for partially

fulfilling the requirements for award of degree of Master of Business

Administration of Rajasthan Technical University, Kota.

The training Project Report has been evaluated and viva-voce conducted by

the undersigned panel of examiners. The project has been found satisfactory

and is recommended for acceptance.

Prof. Prof.

Internal Examiner External Examiner

Kota

Date:

DECLARATION

I hereby declare the present report entitled “A Study on Provident Fund and Pension Scheme with reference to Instrumentation Limited, Kota” is based on my original work and indebtedness to other work/publication has been duly acknowledged at relevant places.

Submitted By: Anoop Gautam MBA-II (Sem-III) (2007-2009) OKIM&R, Kota

PREFACE

Management is a tool, which shapes our efforts in a systematic way to facilitate the achievement of certain pre-determined goals.

In respect to this upcoming Management Concern, Master of Business Administration (MBA) may be considered as stepping-stone and summer training is an integral part of MBA Curriculum.

Realizing that practical experience is an important part of the course curriculum for Master Degree in Business Administration, the student has to undergo practical training for 8 weeks.

The major objective of training is to make students familiar with the organization culture and practical work environment. Moreover it also provides in- depth knowledge of the topic assigned.

Project Report enable the student to undertake a theoretical project in order to study, interpret and report on one or more management problems and situation.

As being management student I also had to undergo training project. MySummer training at Instrumentation Limited, Kota was a memorable experience as it allowed me to learn a lot of things in a programmatic manner.

I have much pleasure in submitting the project report on “A Study on Employees Provident Fund and Pension Scheme with reference to Instrumentation Limited, Kota”

ACKNOWLEDGEMENT

It gives me a great pleasure in submitting this Training Project Report titled “ A Study on Employees Provident Fund and Pension Scheme with reference to Instrumentation Limited, Kota”

It has been made possible through the direct and indirect co-operation of various persons to whom I wish to express my appreciation.

I express my deep gratitude to Mr.S.N.Khatri (DGM, HRD) who provided me an insight into the working that enhanced my knowledge and with their support and co-operation this report has taken a presentable form. I am gratified to Mr. N.N. Pareek (DGM, F&A) who guided me and provided the opportunity to get acquainted with the organization culture and also supported to know the various operations of the organization.

I am indebted to my project supervisor Mr. Nitin Godha (Senior Accounts Officer, Books and Records, F&A, Kota Unit) & Mr. L.N.Verma for undertaking & co-ordinating this project through all its phases.

It is indeed the great pleasure to acknowledge my gratitude to My guide Miss Reena Gaur (Faculty) for guide and support helped me through the project preparation. This dissertation will not be complete and I to will be failing in my work if I do not work place in the record my gratitude to our madam who in their respective capacities as lecturer guide in my work. She gave me invaluable suggestion and timely advice.

Sincerest thanks to our Director Sir Mr. K.C. Shringi (Director,

OKIM&R) who has provided us with invaluable direction and

encouragement.

EXECUTIVE SUMMARY

The Researcher has conducted his research entitled,” Study of Provident Fund and Pension Scheme with reference to I.L., Kota.”I.L.was established in 1964 and the commercial production started in the year 1964.The researcher has selected this topic because He was keenly interested in knowing and understanding the Social Security Schemes especially Provident Fund and Pension Scheme.

I.L.is a Government of India enterprise with an annual turnover for the year 2006-2007 is Rs.21998.32 lakhs and today it is offering cutting-edge technologies based on turnkey solutions.

It is set-up with the prime objective of attaining self-reliance in the field of control and automation for process industry. Today IL is offering turnkey solutions based on cutting- edge technologies and unparalleled domain expertise for control & automation of various sectors of the industry viz. Power, Cement, Steel, Nuclear, Fertilizer, Chemical, Petrochemical, Refineries, Textile, Space, Oil and Gas.

I.L.has its registered and corporate office at Kota. Manufacturing Facilities accredited with ISO 9002 series quality system certification are located at Kota and Palakkad (Kerala). Rajasthan Electronic and Instruments Limited (REIL) Jaipur, is a subsidiary of IL and is supplying allied dairy equipment, non-conventional energy devices and electronic energy meters. REIL’s operations and practices confirm to ISO 9002.

IL Limited believes and practice commitment towards achieving excellence in Quality, Export and Consumer Satisfaction. With vast and rich experience in Project Management and expertise in installation & commissioning IL also entered in the area of EPC contracts for Offshore/Marine Instrumentation jobs. IL also entered in the area of Networking, ERP, IT Software Solutions and E-Governance related jobs.

IL has successfully executed offshore instrumentation jobs received from ONGC and is currently executing a number of such ONGC jobs. IL, after establishing itself as an undisputed leader has crossed the Indian borders to supply equipment on turnkey basis in international markets.Provident Fund and Pension Schemes are Social Security Schemes. Social Security means anything done for the comfort and improvement, intellectual and social well being of the employees over and above the wages paid.

Provident Fund involves contribution of both employer and employee and in I.L. Employees who are the members of the Provident Fund are also members of pension scheme. These measures enable employees and his family to lead a comfortable life and face financial hardships.

Provident Fund and Pension Schemes are Social Security Measures undertaken keeping in view the footer of industrial workers after their retirement or for their dependants in case of death in early age.

Provident Fund is a Social Security Scheme in which compulsory contribution of both the employer and employee is necessary. The objective behind this scheme was to provide some relief and benefits either to the employee after their retirement or to his dependants in case of his death.

In IL 12% contribution of employer is necessary and employee can contribute upto 80%

I.L has its own trust named “Instrumentation Limited Provident Trust”. It is recognized by Provident Fund commissioner of Rajasthan and also by commissioner of Income Tax.

The Regional Commissioner centrally controls this trust.

Government of India gave authority to IL to make its own fund, make investments to that fund, action loan to their employees etc but according to the rules and regulations laid down by central government.

A part of salary is paid to the employees and remaining is paid in installments as per convenience of the company.

The Trust also sanction loan to the employees of IL out of he amount of Provident Fund contribution collected from the employees and that amount is totally non-refundable i.e. loan taken from the employees is not taken back and that is deducted from the amount of Provident Fund received from employees and the interest is payable on the balance amount remaining in the provident fund account.Although Provident Fund is an effective Old Age and Survivorship Benefit, but in a case where death of employee is at early age, say after putting in a couple of years of decade service, the accumulation in the provident fund at the credit of such employee would be too meager and the family would be deriving little benefit from the fund.

The Government gave the matter a serious thinking to find out the ways and means by which the future interests of a family in distress can be safeguarded after the earning member makes an exit before he reaches the age of retirement.

An Employee’s Pension Fund has been created for this purpose by diverting a portion of the employer’s contributions to the Provident Fund.

CONTENTS

CERTIFICATE I

DECLARATION II

PREFACE III

ACKNOWLEDGEMENT IV

EXECUTIVE SUMMARY V

CHAPTERS: - PAGE NO.

1. COMPANY PROFILE 1-16

2. CONCEPTUAL FRAMEWORK 17-27

3. OBJECTIVES OF THE STUDY 28-29

4. RESEARCH METHODOLOGY 30-33

5. DATA ANALYSIS 34-41

6. FINDINGS &CONCLUSION 42-43

7. RECOMMENDATIONS 43-44

BIBLIOGRAPHY

CHAPTER: -1

COMPANY PROFILE

ADMINISTRATIVE OFFICE OF I.L.

INTRODUCTION OF I.L

Instrumentation Limited (I.L.) is a Government of India Enterprise established in the year 1964,for the purpose of entering to the requirement of process control Instrumentation in Thermal Power Station, Steel Plants, Nuclear, Fertilizer, Chemical, Textile, Paper, Space, Cement, Refineries,Oil & Gas etc.

I.L.has its Registered and Corporate Office at Kota (Rajasthan). Manufacturing facilities accredited with ISO 9000 series quality system certification are located at Kota & Palakkad (Kerala). Two units, namely, Marketing and Projects look after sales and projects through a network of branch and regional offices spread all over the country. Rajasthan Electronics & Instruments Ltd. (REIL), Jaipur is a subsidiary of IL & its manufacturing & suppling allied Dairy Equipments,Non-Conventional Energy Devices and Electronic Energy Meters.Reil’s operations and practices confirm to ISO 9002 standards.

Kota plant was set up in technical and financial collaboration with the USSR and it commenced commercial production in the year 1968.As a part of its continued efforts for modernization & standards, the company has internationally renewed manufacturers process control instruments.

The second unit of the company was established in Palghat for the manufacture of control valves & allied items for which technology are provided by a leading Japanese Firm viz. Yamatake Honeywell Co. Ltd.the unit commenced production in December 1975 & has significantly contributed to overall growth of the company’s financial results, its well-established mechanical shops & other manufactures.

With nearly 4 decades of experience & a dedicated workforce, I.L has mastered all complexities of control system requirements and can lead you

right through your project, from system design, detailed engineering, manufacturing, testing, system, integration, installation, final commissioning to after sales services and customer training.

I.L. has supplied instruments on turnkey basis for 2 Thermal Power Stations in Malaysia, established a service center at Kufa complex in Iraq, supplied instruments to Ethiopia Petroleum Company of Euthopia… Like this the list goes on.I.L.quality policy is to ensure satisfaction to customers by providing quality products and services of national/international quality standards.

In order to keep pace with advancements in modern technology particularly in the field of instrumentation where the obsolescence rate is high & quick & to indigence’s the manufacture of spares, components & total system, the company has from its inception been giving due importance to Research & Development activities.

Today, the corporate R&D center of the company is an independent wing like other units of the company with its own proto-type development shops, various labs. & Other amenities, manned by well-qualified technical personnel & headed by Addl. General Manager.

BOARD OF DIRECTORS OF I.L.

Sh.Ramanand Chairman Cum Managing DirectorSh.Gopal Singh DirectorSh. Amitabh Mandloi Director Dr. Vinay Mohan Director (Finance)Sh. V.S. Ranka Director (Production)Sh. A.K. Shringi Company Secretary & Addl. General

Manager (F&A)

Auditors: M/s C M Birla & Company (Statutory Auditors) M/s Mahadevan & Sivaranjan, CAS, Palakkad (Branch Auditors)

Bankers: State Bank of Bikaner & Jaipur

State Bank of IndiaState Bank of TravancoreThe Bank of Rajasthan Ltd.

Registered Office: Jhalawar Road, Kota324005(Rajasthan)

ORGANIZATION STRUCTURE OF I.L.

BOARD OF DIRECTORS

CHAIRMAN-CUM-MANAGING DIRECTOR

COMPANYSECRETARY

BUSINESS ACQUISITION GROUP

PROCUREMENT MANUFACTURING FACILITIES

KOTA UNIT

PALAKKAD UNIT

SUBSIDIARY UNIT

REIL

PROJECTSDDC UNIT

CUSTOMER SERVICES

CP & IT

MARKETING UNIT

BRANCHOFFICES

EXPORTDIVISON

REGIONAL &SITE OFFICES

CORPORATE F & A

PERFORMANCE HIGHLIGHTS

During the year 2006-2007,the company made all efforts for improvement of performance. With continued support of the government and all other stakeholders, the company has achieved highest ever turnover of Rs.21998 lakhs, as compared to turnover of Rs.17585 lakhs in 2005-2006.

The company has been successful in achieving multifold increase in operating profit. in the year 2006-2007 the company has an operating profit of Rs.1305 lakhs as compared to operating profit of Rs.1092 lakhs only in the previous year.

Net loss for the year 2006-2007 was Rs.2451 lakhs as compared to loss of Rs.1698 lakhs in the last financial year.

EXPORTS

During the year under review the company achieved an export tunover of Rs. 312.77 lakhs including deemed exports. The company’s physical exports during the year 2006-07 have been worth Rs.21.92 lakhs to countries like Uganda, Sri-Lanka, Taiwan, Indonesia, and Malaysia etc.

MAJOR ORDERS EXECUTED DURING THE YEAR

CORPORATE P & A

CORPORATE R & CHAIRMAN-

a) Supply of 3573 telecom systems to various circles of BSNL amounting to over Rs.34 crores.

b) Supplies to Chandrapur Tps(R&M of unit no.2) have been completed.c) Supplies to Ropar-I Tps of Pseb completed.d) Supplies to Coal Injection Project Of Durgapur Steel Plant completede) Supplies to coal dust injection project of Bhilai Steel Plant.f) First solid interlocking system commissioned at Samalaya Rly

Station, Vadodara Divn.g) Executed higher size Butterfly Valves worth Rs.2 crores for Giral

project of Rvunl.

VOLUNTARY RETIREMENT SCHEME (VRS)

Based on the department of public enterprise’s guidelines, Voluntary Retirement Scheme was reintroduced in the company during 2006-2007. A total of 9 employees have taken VRS during 2006-07 and total number of employees who have sought VRS upto 31st March 2007 stood at 2276.

CORPORATE GOVERNANCE

I.L. believes that good Corporate Governance is essential to achieve long-term corporate goals and to enhance stakeholder’s value. Models of Corporate Governance code are many and different environments will need specific solutions to meet the demands of legal compliances and regulations. However, there is a universal principle, which percolates through the elements of governance, this calls for the affairs of the company to be regulated in the manner that is transparent, ethical and accountable.

In this pursuit, your company is committed to transparency in all it’s dealing with its shareholders and others and others and to provide high quality

products and services to its customers and places uncompromising emphasis on integrity and regulatory compliances. The basic philosophy of your company has been to achieve business excellence, to enhance shareholders value, keeping in view the needs and interest of shareholders.

OPERATING RESULT

S.No. Particulars 2006-2007 2005-2006 1.) A) Turnover

B) Other Revenue

21998.32 1655.90

17585.20 1694.26

2.) Expenditure on material

13533.37

9985.52

6.) Depriciation,interest& social obligations etc

3333.60 2457.45

7.) Profit/(loss) before tax (2028.68) (1365.71) 8.) Provision for taxation - - 9.) Prove. For fringe

benefit tax 55.0 -

10.) Profit/(loss) after tax (2083.68) (1365.71) 11.) Prior period, deferred

revenue & other adjustment net credit/(debit)

(367.17) (332.10)

12.) Net profit/(loss) (2450.84) (1697.81)Note: - The entire amount in the above table is in lakhs.

SALES AND SERVICES

The company has achieved a turnover of Rs. 21998 lakhs during the previous year 2004-2005. The unit-wise contribution towards the company’s turnover is indicated below: -

S.No. Unit 2006-07 2005-06

1.) Kota unit 4539.54 4494.90 2.) P-DDC unit 9093.01 5956.04 3.) Palakkad unit 5974.50 4962.78 4.) Marketing unit 2391.27 2171.48Note: - The entire amount in the above table is in lakhs.

PRODUCT OF I.L

The company has developed very good product mix. Details of main products being manufactured in different units are given below: -

PRODUCT FROM KOTA UNIT

This is the oldest unit. Main products from this main unit are; -

1. Annunciators2. Gas Analysis and Pollution Monitoring Instruments3. Microprocessor Based Controller and Recorder4. Electronic Transmittor5. Telecom Circuits6. Pneumatic Instruments and Transmittor Panel7. Railway Signaling System8. Modern Distributed Digital Control System9. Power and Process Simulator

PRODUCT FROM JAIPUR UNIT

1. Electronic Milk Tester2. Uninterruptible Power Supply System3. Digital Electronic Switching System

PRODUCT FROM PHALGHAT UNIT

1. Tank Level Gauging System2. Control Valves3. Valve Stand for Steel Melting Shop4. Low Noise Valves5. Pneumatic Control Drives6. Control Valves for High Pressure Drop7. Special Below Sealed valves for Nuclear Service8. Safety Relief Valves9. Electrical Actuator10.Large Size Soft Seated Butterfly Valves

SERVICES OF INSTRUMENTATION LIMITED

The I.L. has its own servicing department where faults of instruments manufactured by the company are removed. For this purpose customer training courses are designed to meet the needs of instruments.

A company’s future depends upon the customers; in today’s world customer is the king. Its very important for the companies too not only provides them with what they want but also to assist them time-to-time.

Each and every branch of I.L. has its own service departments, heads by service engineers and also supported by central service department at the head quarters.

When I.L. takes up a project, it is not just the schemes and systems of the instrumentation but rendering of all updated technology, innovative thinking and professional experience.

I.L. provides the following services to his customers: -

Documentation Research and Development Customer Training Installation and Commissioning Routine Checks and Repairs After Sale Services

MAJOR SUPPLIERS

Exide India (Calcutta) Fuji (Japan) R.S. Components (Mumbai) Taylor India Andhra Paper Mills ABB (Bangalore) Jema (Spain) Gamatronic (Israel) Vinit Implex (Mumbai) Automatic Electric (Mumbai) Havells India (Noida) Finolex Cables (Mumbai)

IMPORTANT MILESTONES ACHIEVED

1964-Established With Registered Office At Kota 1968-C & I Production Commenced 1975-Control Valves Production Commenced at Palghat 1982-Special Temperature Sensor For Nuclear Plant 1985-Railway Signaling 1987-Digital Electronics Production Commenced 1988-Major Diversification In Tele-Communication 1991-Diversification In Ups Power Electronics 1995-Diversificaton In Water Treatment Automation 1998-Diversification In Defence Products

1999-Productin Of Nose Fuse (Defence Order) 2000-Production Of Firing Device (Defence Order) 2002-Production Of Large Size Telephone Exchanges 2003-Production Of Special Solenoid Valves For NuclearApplication

(Defence Order) SOME OTHER ACHIEVEMENTS AND AWARDS

I.L. is An ISO-9002 Company Certified Development Of Sophisticated Noise Fuse For Defense Project Which

Required Very High Mechanical Engineering Skill Secured Telecom Orders In The Year 2004 Worth Rs.56 Cores In

Comparison To Rs. 30 Crores During Previous Year. International Export Award Top Export Award National Safety Award Pollution Control Award

LICENSERS AND BUSINESS ASSOCIATES OF I.L

Segault, France Fuji electric co., Japan Yamatake corporation, Japan ABB utilities, gmbh, Germany Hf controls corpn, USA Gamatronics ind.ltd,. Israel C-Dot, India Matzo Automation, USA Jema, Spain Nuovo Pignone, Italy L.Bernard.,France Ifs, Sweden Kiekens Bv., Holland Rockwell Automation India Ltd. Kyosan Electric Co., Japan

CUSTOMERS OF INSTRUMENTATION LIMITED

a) POWER

1. National Electricity Board (Neb), Malaysia2. Bharat Heavy Electrical Limited (BHEL)3. Damodar Valley Corporations (DVC)4. Delhi Electricity Supply Undertaking (DESU)

b) STEEL

1. Esfahan Steel Plant, Iran2. Steel Authority Of India Limited, Alloy Steel Plant, Durgapur3. Steel Authority Of India Limited, Bokaro Steel Plant4. Steel Authority Of India Limited, Durgapur Steel Plant

c) REFINERIES

1. Madras Refineries Limited2. Cochin Refineries Limited3. Bharat Petroleum Corporation Limited, Mumbai4. Hindustan Petroleum Corporation Limited, Vishakhapatnam

d) OIL AND NATURAL GAS

1. Oil And Natural Gas Commission2. Gas Authority Of India Limited

e) PETRO CHEMICALS

1. Indian Petro Chemicals Corporation Limited2. Bath Heavy Electricals Limited, Trichy

f) CHEMICALS

1. Gujarat Alkalis And Chemicals Limited, Baroda2. King Chemicals 3. Tata Chemicals4. DCM Chemicals Works

g)FERTILIZERS

1. SPIC, Tuticorn2. Shriram Fertilizer, Kota

h) CEMENT

1.Chetinad Cements 2.Rasi Cements

i) ATOMIC ENERGY

1.Khammam Chemicals Refinery 2.Deptt. Of Atomic Energy (Dae)

j) MINERALS AND METALS

1.Graphite India Ltd. 2.Hindustan Zinc Limited

k) PAPER

1.Andhra Paper Mills (A.P.) 2.Mysore Paper Mills

l) PHARMACEUTICALS

1.Hindustan Antibiotics Ltd 2.Indian Drugs And Pharmaceuticals Ltd.Rishikesh

m) TEXTILES

1.Modipon 2.Grasim Industries

n) SUGAR

1.Gangavati Sugar Ltd. 2.Daurala Sugar Works (U.P)

o) SPACE

1.Indian Space Research Organization, SHAR Center, Sriharikota (A.P)

2.Vikram Sarabhai Space Center, Trivandrum

p) RAILWAY SIGNALING

1.Western Railway 2.RITES

q) DEFENCE PRODUCTS

1.ARDE, Pune 2.DRDL, Hyderabad

r) TELECOM EXCHANGES AND ACCESSORIES

1.Haryana Telecom Circle 2.Orissa Telecom Circle

s) OTHERS

1.BSNL 2.Citi Bank

3.Bank Of Baroda

PRESENT STATUS OF I.L

Due to delay in implementation of section Revival Scheme, I.L. has incurred additional cash losses and suffered badly interims of business due to acute shortage of working capital.

The company has therefore, submitted a proposal for consideration to the administrative ministry. The administrative ministry, that is, department of heavy industry, has been kind enough to consider the proposal for: -

1. Reservation of order by UPRVUNL (Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd.)

2. Government guarantees for raising funds from banks/financial institution for reimbursement of additional cash losses.

3. For VRS.

The committee of ministers has recommended for consideration by cabinet. The cabinet approval for the proposal will enable the company to utilize its manufacturing capacity, infractrutre, manpower, and over-come the working shortage.

Funds for V.R.S. will ensure realization of manpower. Reimbursement of additional cash losses will enable the company in meeting out the working capital deficit.

FUTURE OF I.L.

The future vision of the company has better in years to come.

1. The sanction of Revival Scheme is in its third year of implementation. Joint venture formation of Palghat unit is at advance stage. Qualified interested parties have completed due diligence activity. Integration of Jaipur unit at Kota unit has taken place successfully.

2. The sanctioning of Revival Schemes envisages liquidation of substantial portion of liabilities out of the proceeds as loan from sale of surplus land has taken place successfully.

3. The company has also undertaken various measures for further improvement in its working such as reduction in cost, reduction in salary and wages through right sizing of manpower, closure of unviable sites, sale of land & building etc. At Sitapura & Malviya Nagar at Jaipur.

4. Improvement in working capital management.

5. The company is also pursuing actively the plans for introduction of new products to ensure optimum utilization of existing facilities.

6. With the implementation of Revival Package & Restructuring Business of the company with assured from BSNL,NTPC,BHELetc. In next few years we can hope that the company can come back to high profitability.

Chapter: -2

Conceptual Framework

PROVIDENT FUND

It is a non-security fund and it is the form of saving. There are mainly four types of provident fund- statutory provident fund, recognized provident fund, unrecognized provident fund and public provident fund.

1. STATUTORY PROVIDENT FUND: - Statutory provident fund

was set up in 1925. Government, semi-Government organizations, Local authorities, railways, Universities and Educational Institutions, maintain this fund. In statutory provident fund, contribution from the employer is exempt from tax. Deduction under section 80C of employee’s contribution is available to the interest credited to the provident fund which is exempt from tax and the lump sum amount which is paid at the time of retirement is also exempt from tax.

2. RECOGNISED PROVIDENT FUND: - Recognized provident fund

is referred in this manner because it is recognized by the Commissioner of Income Tax according to the rules of the Income Tax Act. When the commissioner of Income Tax recognizes this fund, it becomes recognized also by the provident fund commissioner. Recognized provident fund is also contributed to in the same way as statutory provident fund, i.e. both by the employer and the employee. Contribution of employer & employee & interest are also exempt but upto a certain limit.

3. UNRECOGNISED PROVIDENT FUND: -

Unrecognized provident fund is Taxable when the employer contributes to it but relief under section 80 is not available to the investor. The interest which is credited to this account is, however, Taxable and the payment which is received in respect of the employee’s own contribution at the time of retirement is also taxable.

4. PUBLIC PROVIDENT FUND:- In public provident fund ,the employer does not contributes amount. It is a fund provided for non-salaried people to mobilize personal savings. Any person from the public, whether salaried or self-employed, can open a public provident fund Account at any branch of the state bank of India. In this fund the employer does not contribute, but relief under section 80 is available and the interest credited to this fund is exempt from tax. The amount received at the timed termination of this contract is also exempt from tax.

CONTRIBUTION OF EMPLOYER’S AND EMPLOYEE’S TOWARDS PROVIDENT FUND

According to Provident Fund Act, 1952, presently, Contribution of Employer is 12% of Basic Pay + Dearness Allowance

Contribution of Employee is also 12% of Basic Pay + Dearness Allowance

IN INSTRUMENTATION LIMITED:

Contribution of Employer is 12% of Basic pay + Dearness Allowance

Contribution of employee (voluntary)Upto 80% of Basic Pay + Dearness Allowance Minimum: -12% of Basic Pay + Dearness Allowance

But in I.L. all the members to the Provident Fund (whether on contact/regular/casual, even peon) contributes to the Provident Fund.

The reason behind this type of contribution by employees in I.L.is they are not paid full monthly salary because it is a sick unit

FOR EXAMPLE: -Suppose salary of an employee is Rs.20000 per month. But he will be paid Rs.5000 in that month to the maximum extent and the balance will be paid to him in installments according to the convenience of the company without any interest.

Therefore, the employees of I.L.prefer to contribute upto 80% of their Basic Pay + Dearness Allowance towards Provident Fund at an interest rate or 8.5% per month keeping in mind the concept of present value, according to which the present value of a rupee to be received in future is less than one or the worth of a rupee tomorrow will be more than what it is today. This is because the money has alternative uses. The rupee available at present can be invested either in other projects or it can be deposited in a bank at certain rate of interest.

EMPLOYEES PROVIDENT FUND OF INSTRUMENTATION LIMITED

I.L has its own trust named “Instrumentation Limited Employees Provident Fund Trust”. It is recognized by Provident Fund Commissioner of Rajasthan and also by Commissioner of Income Tax.

The Regional Commissioner centrally controls this trust. TYPES OF TRUST:

Uncovered Exempted Unexpected

TRUST OF I.L. IS EXEMPTED:

Government of India gave authority to IL to make its own fund, make investments to that fund, action loan to their employees etc but according to the rules and regulations laid down by Central Government.

BOARD OF TRUSTEES OF I.L.

Board of Trustees, having a term, of five years, manages this trust

Board of Trustees of I.L includes 12 members in all.

6 members are from Management Side, which includes: -

1. Chairman Mr.V.S. Ranka Director2. Secretary Mr.L.N. Verma Sr.PersonnelOfficer(ss cell) 3. Member Mr. Rajeev Bhel D.G.M (F&A)4. Member Mr. Rajeev Kumar D.G.M. (P-DDC) 5. Member Mr.S.N. Gupta DGM (Tech)6. Member Mr.Ashutosh Saxena Senior Personnel Officer

6 members are from Labour Union Side, which includes: -

4 members of Worker’s Union 2 members of Supervisor Association

1. Member Mr. Sharma Foreman (e)2. Member Mr.Harish Sharma Senior foreman

(e)

3. Member Mr.Jagdish Suman IH (fitting) 4. Member Mr.Rasool Ahmed IH (carp.)5. Member Mr.Banku Mandal IH (welding) 6. Member Mr.Rafique Mohd. Peon

These Board of Trustees are concerned with all the task Related to Employee’s Provident Fund and Pension Scheme of I.L.

According to section 7(q) of the Provident Fund Act 1952,the trust is entitled to charge interest @ of 12% per day from the company in case of delay in payment of Provident Fund made by the company.

HISTORY AND OBJECTS OF PROVIDENT FUND AND PENSION SCHEME

The Employee’s Provident Fund & Miscellaneous Provisions Act, 1952 instituted a Compulsory Contributory Fund for the future of the employee after his retirement or for his dependents in case of his early death.

In Welfare State like India the responsibility lies upon the state to provide for some legislation whereby the workers working in factories or other establishments may get some financial assistance in old age. Such measures are common features in industrially advanced countries. But due to various difficulties particularly financial and administrative, the state could not enact a law, which could provide some measure of financial security to workers in his old age, or their families or dependents after death. A way out was found and a Contributory Provident Fund Scheme was conceived in which both employer and employee would contribute and the funds so raised could be depended upon to held the worker in old age.

The first legislative measure in India to cover industrial workers was the Coal Mines Provident Fund & Bonus Act, 1984.the legislation was designed to make adequate provisions for the future of labor in coal mines, to inculcate in them a habit of thrift and to stabilize the labor force in the coal mining industry.

As a result of the experience gained out of working of the coal mines Provident Fund Schemes and because of the persistent demand made of the central government for extending similar

benefits to workers employed in other industries the employees Provident Fund Act was passed in 1952.

The object of the act is to provide for the institution of Provident Fund & Family Pension And Deposit Linked Insurance Scheme for employees in factories and other establishments. The provisions have been made for the better future of the industrial workers on his retirement and for dependents in case of his death while in establishment

EXTENT AND APPLICATION OF PROVIDENT FUND AND PENSION SCHEME

The act extends to the whole of India except the State of Jammu and Kashmir.

Subject to the provisions of sec 16,the act applies to: -

Every Establishment which is a factory engaged in any industry manufacturing: -cement, cigarattes, electricals or general engineering products iron and steel, paper, textile, mathes, edible oils, fats, sugar, rubber, electricity, tea, painting, glass, stonewares, pipes, sanitary wares, electrical porcelain, insulators, tiles, heavy and fine chemicals, indigo, lac, non-edible vegetables and animal oils and fats, mica, plywood, fruits, & vegetable preservation, confectionary etc.

1. Every Establishment, which has 20 or more persons employed in it.

2. Any other Establishments employing 20 or more persons, which the Central Government may by notification in the Official Gazette, specify in this behalf.

However, the Central Government may after giving not less than two months notice of his intention so to do, by notification in the Official Gazette, apply the provisions of this act to any establishment employing less than 20 persons.

CONTRIBUTIONS

The act lays down that both the employer and employees shall contribute towards the fund.

EMPLOYER’S CONTRIBUTION

The employer is required to contribute tee following amounts: -

1) Towards Employee’s Provident Fund and Pension Fund

In case of establishments employing less than 20 persons or a sick unit or any establishment in the Jute, Beedi, Coir or Gum Industry

10% of the basic pay, Dearness Allowance in case of all other establishments employing 20 or more persons

12% of wages and Dearness Allowance

A part of contribution is remitted to the Pension Fund and the remaining balance continues to remain in Provident Fund Account.

Where, the pay of an employee exceeds Rs 6500 p.m.the contribution payable to pension fund shall be limited to the amount payable on his pay of Rs 6500 only. However, the employees may voluntarily opt for the employer’s share of contributions on wages beyond the limit Rs.6500 to be credited to the Pension Fund.

Where the amount of any contribution involves a fraction of a rupee, the scheme may provide for the rounding off of such fractions to the nearest rupee, half of a rupee, quarter of a rupee.

For the purposes of the contribution to Provident Fund u/s 6, Dearness Allowance shall include cash value of any Food Concession allowed to the employer of any factory of other establishment during any period,in which the establishment is not working,for retaining his service.

The contribution in respect of employer and employees is to be paid in first instance by the employer. The employer is under a duty to pay both his & the employees share of the contribution irrespective of whether a demand has been made on him or not. The employer shall, in turn deduct the employee’s share from wages due to him. It is thus the employer who has to bear the ultimate liability of contributions.

EMPLOYEES PENSION SCHEME

Under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 an Employees Family Pension Scheme, 1971 has been drafted. This scheme applies to employees of all factories and other establishments to which the act applies and came into force on 1st

March 1971. This scheme applies to every employee who becomes a member of employees provident fund on or after 1st march 1979 and continues to be a member until he becomes entitled to withdraw the benefits to which he is entitled under the scheme or dies whichever is earlier.

The Central Government may, by notification in the official gazette, frame a scheme to be called employees pension scheme for the purpose of providing for: -

Superannuating Pension, Retiring Pension, Or Permanent Total Disablement Pension to the employees of any establishment or class of establishment to which this act applies; and

Widow or Widower’s Pension, Children Pension Or Orphan Pension payable to the beneficiaries of such employees

CONTRIBUTION TOWARDS PENSION

Such sum from employee’s contribution u/s 6,not exceeding 8.33% of basic pay, dearness allowance, retaining allowance if any, of concerned employee, as may be specified in pension scheme.

On establishment of Pension Fund, the Family Pension shall cease to operate & all assets of ceased scheme shall vest in and shall stand transferred to, and all liabilities under the ceased scheme, shall be enforceable against the pension fund. The beneficiaries under the ceased scheme shall be entitled to draw the benefits, not less than benefits they were entitled to under the ceased scheme, from Pension Fund.

The Pension Fund shall vest in and be administered by the Central Board in such manner as may be specified in Pension Scheme.

LOAN SANCTIONED TO THE EMPLOYEES

Another advantage made available to the employees of I.L. is that they can take loans from Provident Fund Trust of the company.

Types of loans

Refundable Non-Refundable

1. REFUNDABLE: -

The refundable loan involves re-payment of the whole amount of the loan sanctioned to the employees in installments with interest @ 1% higher then the interest rate paid to the employees on the amount of Provident Fund.

2. NON- REFUNDABLE: -

The amount withdrawn by the employees is deducted from the balance remaining to the Provident Fund account of the Employees.

Presently in I.L. Procedure of Non-Refundable Loan is followed and reduction in the balance of provident fund encouraged the employees to contribute 70%-80% towards provident fund.

In a financial year, trust is entitled to sanction loan for 3 times to the members.

1) 2 times for social obligation (marriage, engagement, birth, any other occasion)

Amount of loan sanctioned for social obligation =9 months basic salary + dearness allowance

Formalities: - Submission of loan application

In case of Marriage of a dependant child;18 months basic pay =dearness allowance

Formalities: -submission of loan application with marriage card attached to it.

Note: -Loan is sanctioned out of employee’s contribution only.

2) 1 time for purchase of house/plot/construction of house.

For purchase of house/construction of house36 months basic salary + dearness allowance

Formalities: - Title/ownership deed Blue Print Estimate Copy of salary slip

Loan For purchase of plot24 months basic salary + dearness allowance

Formalities: - Agreement copy of purchase of house/proof of advance submitted

to the seller Proof of ownership of seller.

Note: -Loan is granted out of employer and employee’s contribution.

Condition: -Time lag between 2 loans is 90 days and also employee should have completed a tenure of 5 years in service for the sanction of house loan.In other organization the legal formalities involved with the sectioning of the loan are much more than what is in I.L.In I.L. Negligible formalities are required to be fulfilled by the employees for sanctioning loan to them.

Chapter: -3

OBJECTIVES OF THE STUDY

OBJECTIVES OF I.L.

1) BUSINESS

To re-evaluate the corporate plan for higher growth & dividend objective

To further increase its contribution in the company’s value of production & profitability.

To maintain 10% annual growth in the turnover of the company excluding the bought out items.

To undertake financial restructuring of the company to be more competitive.

To endeavor to achieve reasonable return on investments.

2) PRODUCTIVITY

Higher capacity utilization & generation of internal recourses To realize greater operational efficiency improved productivity. To ensure optimum utilization of all the facilities in

manufacturing division. To ensure optimum utilization of all the facilities Created for manufacture of railway signaling

System

3) CUSTOMER

o To achieve & maintain high degree of customer satisfaction With timely delivery.

o To provide better after sale services.

4) EMPLOYEES

To achieve level of safety standards. To achieve continuous increase in value addition per

employee.

OBJECTIVES OF THE STUDY

1. To study the pattern of membership in Provident Fund and Pension Scheme in I.L.

2. To study the contribution made by employer as well as employee towards Provident Fund And Pension in I.L.

3. To find out the benefits of P.F. and Pension derived by employees in I.L.

4. To find out the weaknesses in implementation of Pension Scheme in I.L.

5. To study the requirement of other Social Security Schemes in I.L.

Chapter: -4

RESEARCH METHODOLOGY

DEFINITION OF RESEARCH

Research in common parlance refers to a search for knowledge. It is a scientific and systematic search for pertinent information on a specific topic.

“Research may be defined as a systematized effort to gain new knowledge.”

-Redman and Moray

PROCESS OF RESEARCH

Problem Identification and definition

Research Design(a) Type of Research(b) Unit Identification(c) Sampling

Data collection

Data Analysis and representation

Interpretation of the result

SuggestationTYPES OF RESEARCH

There are various types of research like: -1) Descriptive v/s analytical2) Applied v/s fundamental3) Quantitative v/s qualitative4) Conceptual v/s empirical

RESEARCH DESIGN

“A research design is simply the framework or plan for a study that is used as a guide in collecting and analyzing the data. It is blueprint that is followedin completing a study.”

TYPES OF RESEARCH:

Descriptive Research: Descriptive studies, as their name implies, are designed to describe something- for example, the characteristics of users of a given product; the degree to which product use varies with income, age or other characteristics.

DATA COLLECTION

The task of data collection beings after a research problem has been defined and research design/ plan chalked out. While deciding about the method of data collection to be used for study, the researcher should keep in mind two

types of data.

There are two types of data

Primary data Secondary data

COLLECTION OF PRIMARY DATA

It is collected afresh and for the first time, thus happen to be original in character. Primary data is collection of data through questionnaire, interview method, observation method, etc. In my research I opted for questionnaire method. Questionnaire was filled by Finance Department and Procurement Division. WAY OF PRIMARY DATA COLLECTION:

1. Observation Method2. Interview method3. Questionnaires4. Schedules etc.

COLLECTION OF SECONDARY DATA

These are those data which have been already collected by someone else and which have already been passed through the statistical process. When the researcher utilizes secondary data, than he has to look into various sources from where they can obtain them. Secondary data may either be published data or unpublished data.

Published data are available –

1. Newspapers and Journals2. Market Reports3. Government Publications4. Book Magazines5. International Publications etc.

Un Published data are available –

Dairies, letters, unpublished biographies and autobiographies and also may be available with scholars and research workers, trade associations, labour bureaus and other public/ private individuals and organizations.

Secondary data was collected through annual reports and the brochures of I.L.

LIMITATIONS OF THE STUDY:-

1. DIFFICULTY IN DATA COLLECTION: -

A great of problem is faced during data collection (secondary) due to the improper record keeping by the employees of I.L.

2.LACK OF CO-OPERATION OF EMPLOYEES: -

General co-operation of the employee is to be achieved in the organization is one of the major limitations of the project.

3.TIME CONSTRAINT: -

The most glaring of any constraints is the short time from within which a certain objective has to be achieved.

4.RESTRICTED STUDY: -

Research is based on the study of data restricted from year 2002 to 2006.

Chapter: -5

DATA ANALYSIS

INVESTMENTS OF THE AMOUNT OF PROVIDENT FUND

EMPLOYEE’S PENSION SCHEME IN I.L.

Although Provident Fund is an effective old age and survivorship benefit, but in a case where death of employee is at early age, say after putting in a

couple of years of decade service, the accumulation in the provident fund at the credit of such employee would be too meager and the family would be deriving little benefit from the fund.

The Government gave the matter a serious thinking to find out the ways and means by which the future interests of a family in distress can be safeguarded after the earning member makes an exit before he reaches the age of retirement.

Thus in order to make an adequate provision for the future of an industrial worker after he retires or for his dependants in case of his premature death, a scheme was under active consideration of the government for many years. During the course of study of the issue it was found that some industrially advanced countries already had similar schemes to look after the destitute families in absence of the earning memberA scheme to provide long-term financial security and protection to the dependants of the workers in the event of their untimely death was required in the country. By passing legislation in the shape of Employee’s Pension Scheme Government has taken a praise-worthy step, which will be a landmark in the history of industrial workers welfare.An Employee’s Pension Fund has been created for this purpose by diverting a portion of the employer’s contributions to the provident fund.For example: -

Suppose the salary of an employee is Rs.10000 per month.

Employer’s contribution @ 12% of Rs.10000 i.e. Rs.1200

Pension @ 8.33% is charged on maximum limit of rs.6500 i.e. Rs.541.Rs.541 are transferred to employee’s pension fund and remaining 659 (1200-541) remains in the employee’s provident fund account on which interest @ 8.5% per month is payable to employees.

RULES GOVERNING PENSION IN I.L.

In the other Central Government & State Government Organizations it is necessary for an employee to remain in service for 10-15 years

in order to become eligible to receive Pension but in I.L. no such condition applies. As soon as an employee (casual, contract or regular) becomes member of Employees Provident Fund he also becomes member of employees Pension Fund and is entitled to receive Pension even if die after rendering 1 month service.

An employee becomes entitld to receive pension only after rendering 10 years service or on attaining 58 years age, whichever is earlier.

If an employee dies even after rendering 1 month service is entitled to receive pension. Here no clause of rendering 10 years service and attaining 58 years age applies.

If an employee dies after rendering 10 years service without drawing any withdrawal benefit, he is entitled to receive pension with the consent of employer.

Note: -If an employee leave job without drawing any withdrawal benefit, he is not entitled to receive pension.

MAXIMUM PENSION: -

Pension limit is decided on the basis of 2 criteria’s:-

On attaining he age of 58 years -- Rs.1400In case of death of an employee – Rs.2021

APPOINTMENT OF NOMINEE IN CASE OF DEATH

In case of death, the Nominee Appointed by the deceased employee becomes entitled to receive pension.

If an employee is unmarried then parents are appointed as nominee.

If an employee is married then his wife and 2 children upto the age of 25 years become entitled to receive pension.

In case of death

½ of the pension to remaining 2 children (upto 25 years age) ½ of the pension

DATA ANALYSIS AND INTERPRETATION

(a) MEMBERSHIP OF EMPLOYEES PROVIDENT FUND IN I.L.

Year Members 2002-2003 5730 2003-2004 5534 2004-2005 2921 2005-2006 2911

Interpretation: -Pattern of decline in membership in comparison to previous year is as follows: -

2003-2004 --- 3.4%2004-2005 --- 47.22%2005-2006 --- .34%

There has been continuous decline in membership. But in the year2004-2005 there has been major decline due to increased frequency of VRS,Resignations,Retirement & Death

b) MEMBERSHIP OF EMPLOYEES PENSION SCHEME IN I.L.

Year Members 2002-2003 2821 2003-2004 2659 2004-2005 2756 2005-2006 2740

Interpretation: -Membership of employees as compared to previous year: declined in 2003-2004 by 8.02% Slightly increased in 2004-2005 by 3.65%

Negligibly declined in 2005-2006 by .58%.

c) CONTRIBUTION TO EMPLOYEES PROVIDENT FUND

Year Employee’s

Contribution Employer’s contribution

Total

2002-2003 369556952 174021568 543578520 2003-2004 353803846 156383944 510187790 2004-2005 395199747 162436185 557635932 2005-2006 439992792 176363909 616356701

Interpretation:-Although Membership in Provident Fund has declined during previous years yet contribution towards Provident Fund has increased from year 2004 onwards due to the increase in Provident Fund Contribution Rate.

d) PENSION SCHEME IN I.L.

Interpretation:-

In the year 2002-2003 amount of Pensions is more because no.of employees is more.

Year Amount in pension scheme

2002-2003 152440522003-2004 140667062004-2005 140628482005-2006 14138149

Then there has been continuous decline in pension amount as compared to previous year in the following way: -

In year 2003-2004 --- by 7.72% In year 2004-2005 --- by .027% In year 2005-2006 --- by .54% (increase)

Up to year 2004-2005 8.33% of 5000 was transferred to Pension Fund of the Employees. From year 2005-2006 onwards 8.33% of 6500 is transferred to Pension Fund of Employees. Therefore, there has been increase in Pension Contribution of Employees as compared to previous year due to the increase in amount from 5000 to 6500.

Chapter: -6

FINDINGS AND

CONCLUSION

FINIDINGS

As I.L. is having its own Fund and so they have their own procedure of making payment of Provident Fund and Pension Scheme. Based on this, the findings are as follows:-

1. The Membership of Employees in Provident Fund in I.L. has continuously declined due to the Voluntary Retirement Scheme (VRS.) adopted by employees of I.L

2. The Membership in Employees Pension Scheme has declined in the recent years in comparison to year 2002-2003 due to the V.R.S. adopted by employees of I.L

3. The contribution of members have reduced in the year 2003-2004 as compared to year 2002-2003 but increased in years viz. 2004-2005 and 2005-2006 inspite of the reduction in membership due to the increased % of contribution by members.

4. Amount in Pension Scheme has shown a decreasing trend due to the reduction in number of employees due to VRS

CONCLUSION

1) Employees Provident Fund and Pension Scheme are much more helpful for the industrial workers at the time when his source of income is stopped, simultaneously the scheme provides monetary benefits to the nominee/heirs of an employee in the event of his death while in service.

2) Legal Formalities are involved at the time of joining of membership in Provident Fund And Pension Scheme with regard to the appointment of nominee who would be entitled to receive the amount of pension at the time of the death of the earning member of the family.

3) After independence, the Government has introduced a number of schemes in this regard but proper implementation is not done due to lack of funds.

4) Apart from the Employees Provident Fund And Pension Scheme, other Welfare Measures have been introduced by the Government but they are not properly implemented due to lack of adequate funds with I.L.

Chapter-7

RECOMMENDATIONS

RECOMMENDATIONS

The Employees Provident Fund And Pension Scheme is the Schemes for the benefit of the industrial workers, under social Security Measures. It is expected that under these schemes the industrial workers and the dependant family members should sufficiently benefited at the time of financial hardship. But because of certain drawbacks in the implementation of the Act the following measures are suggested to the Government for the improvement in the working of the scheme: -

1. Looking at the inflationary pressure, the Employer’s Contribution to the Provident Fund should be increased.

2. The Employees/Workers should be made aware of the nomination forms to be filled at the time joining the organization.

3. Super-Annuation Scheme should also be made compulsory for all industrial workers to supplement the monetary benefits at the time of retirement of an employee.

4. Old Age Pension Scheme may be introduced so that the employees may not face any financial hardship, at the time when his source of income is stopped.

5. The difference in the opinion prevailing in the mind of Central Government regarding interest paid to the employees in Provident Fund should be resolved.

BIBLIOGRAPHY

BIBLIOGRAPHY

C.R. Kothari (Research Methodology, Methods And Techniques)

K.D.Shrivastava (Provident Fund And Miscellaneous Act, 1952)

I I M B Management Review (For Literature Review)

Secondary Data (Provided By Company)

ANNEXURES

QUESTIONARE

1. Name of the employee : …………………………2. Name of the organization : …………………………3. Address of the employee : …………………………4. Designation : …………………………

5. What about the price level of the material procured?

High better

Moderate Low

6. What is the source of material purchased for production?

Local Indigenous

Imported All

7. Which mode of payment is used for purchase/ sale?

Letter of credit Advance

Sight payment All

8. What are the major products made by I.L.?

Electronics Gas Analyser

Telecom exchange others

9. How much demand is there in the market for our product?

Excellent Moderate

Less Very Less

10.Who is the major Competitors in India for our product?

TATA Siemens

Others

11.What is our product’s market position?

Good Moderate

Poor Cannot say

12.What type of quality of material is used in production?

High Better

Moderate Low

13.Can you comment on the procurement policy adopted in I.L.?

Yes No