COMPENSATION MANAGEMENT

COMPENSATION AND BENEFIT PRACTICES

Reliance Industries
Limited

Faculty: [Link]
 GROUP-3

ASTHA GUPTA 19PGDMHR09

KIRTI SIROHI 19PGDMHR23

MOHNISH KATWARE 19PGDMHR28

SAMBHAV JAIN 19PGDMHR45

SATYAKI CHAKRABARTI 19PGDMHR46

VINI NIGAM 19PGDMHR63

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 Table of contents

[Link] TOPIC PAGE

1 COMPANY OVERVIEW 4

2 6
BUSINESS DISCIPLINE

3 COMPENSATION STRUCTURE 7

4 COMPENSATION THEORIES AND THE 10

PRACTICES

5 COMPARATOR BASKET 12

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COMPANY OVERVIEW

Reliance Industries Limited

Reliance Industries Limited (RIL) is a global Indian conglomerate with headquarters in

Mumbai, Maharashtra. Reliance owns oil, petrochemical, textile, natural resources,
retail, and telecommunications enterprises throughout India. Reliance is one of India's
most profitable companies, India's biggest publicly traded company by market
capitalization, And India's largest company as calculated by sales, having recently
surpassed the government-controlled Indian Oil Corporation. On 18 October 2007,
Reliance Industries became the first Indian corporation with market capitalization
exceeding $100 billion.
As of 2019, the company is ranked 106th on the Fortune Global 500 list of the world's
largest companies. As of 2016 it has been ranked 8th among the Top 250 Platts Global
Energy Firms. Reliance remains India's largest exporter, accounting for 8 per cent of
India's overall exports of merchandise with a value of Rs 147,755 crore and market
access in 108 countries. Reliance is responsible for about 5 percent of India's
government's gross customs and excise duty revenues. This is also the largest private
sector income tax payer in India. In 2019, Reliance Industries became the first Indian
company to reach the market valuation mark of Rs 9 lakh Crore. It has been the first
Indian company ever to achieve market capitalization of Rs 10 lakh crore.

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Some facts about RIL-

⮚ Reliance Industries was the first Indian company to reach market

capitalization of $100 billion. As of 2019, the company is ranked 106th on
the Fortune Global 500 list of the world's largest companies.
⮚ As on 31 March 2019, the company had 194,056 employees, the company
had 29,533 permanent employees of which 1,521 were women and 70
were employees with disabilities and the rest were temporary employees.
⮚ Reliance is one of the most profitable companies in India.
⮚ Reliance has seven major plants in India, including the Jamnagar plant,
the world's largest single refinery with daily capacity of 1.25 million b/day
⮚ The largest publicly traded company in India by market capitalization.
⮚ The largest company in India as measured by revenue.
⮚ Reliance continues to be India's largest exporter, accounting for 8% of
India's total merchandise exports
⮚ In a short period of 170 days Jio crossed a milestone of 100 million
customers on its all IP wireless broadband network.
⮚ Subsidiaries- Reliance Jio, Reliance Retail, Jiosaavn, Reliance petroleum.

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RELIANCE BUSINESS DISCIPLINE

Reliance follows the business discipline that is a mix of Customer Intimacy and
Product Leadership.

With the introduction of Reliance Jio, it was a clear example of the company trying
to build, grow and sustain its business by providing its customers with the “Best
Total Solution” to its customers, hence following the discipline of Customer
Intimacy. Not just the Customers, the organization implements its business in such
a manner that it values its shareholders, the employees and the society as a whole,
as per the text written on the company website.

The company has several businesses in the textile domain and has also acquired
several “top of the line” businesses that indicate the company’s strategic
functioning to be “Product Leadership”. As is reflected by the awards list, Reliance
has achieved several awards for its “Quality” of products and is moving towards
innovation as is evident by the various patents registered by the company.

A perfect example to justify Reliance’s business strategy as a mix of Customer

Intimacy and Product Leadership would be Reliance Digital getting appreciated by
receiving “Most Admired Consumer Electronics Retailer of the Year” at IMAGES
retail Awards, 2018. This goes on to show that Reliance Digital, the Product
leadership brand of Reliance which comes under retail electronic stores, has also
shown great levels of Customer Intimacy to be the most admired retail store. This
is just one of the many examples which are in store for Reliance.

Therefore, with a mix of Product Leadership and Customer intimacy, a similar

Strategy is reflected in compensation for Reliance’s employees. The Employees
are expected to be paid above the market rate to encourage the best talent, which
can be used for innovation and experimentation, along with providing employees
a share of wallet and revenue growth to increase customer intimacy and to put
more skin in the game.

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COMPENSATION STRUCTURE
The average Reliance Industries Ltd monthly salary ranges from approximately ₹ 10,000 per month
for Field Executive to ₹ 60,000 per month for Engineering Manager. The average Reliance Industries
Ltd salary ranges from approximately ₹ 1,47,087 per year for Payroll Coordinator to ₹ 13,19,071 per
year for Senior Engineer. (source:[Link]

Ltd/salaries)

PAY STRUCTURE

Amount(PA) in
Total Pay Components INR

[Link] Pay

[Link] Pay

1) Direct Payments

Conveyance Allowance

House Rent Allowance

Child Education Allowance/Child Hostel Allowance

Fuel & Maintenance

Leave Travel Assistance

Office Wear Allowance

Medical Reimbursement

Bonus

Personal Special Allowance

Residual Choice Pay

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 Total Direct Payments----

2) Indirect Payments

Food Coupons

Gift Voucher

NPS Contribution

Superannuation

Total Indirect Payments---

Total Choice Pay--Total (1)+(2)

[Link] on account of

Medical Insurance Premium

GPA Insurance Premium

Group Term Life Insurance Premium

Housing COA/CLA

Lease Car Rental/Vehicle EMI

Car Insurance

White Goods/Other Assets Debit

Total Other Costs---

[Link] Costs

Provident Fund

Gratuity

Total Costs of Retirals---

[Link] Pay (A+B+C+D)

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[Link] Payments

Annual Cash Bonus OR Performance Linked

Incentive

Deffered Cash Bonus (Annualised)

Long Term Incentive Plan (Annualised)

Retention(Annualised)

City Compensatory Allowance

Special Awards

Total Other Payments---

TOTAL PAY(E+F)

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COMPENSATION THEORIES AND THE PRACTICES

Benefits offered by Reliance Industries Limited

Telephone Policy

Employees are given phone sets of range 10,000 to 30,000 according to their ranks and this
can be renewed every 3 years.

Corporate Connection Plan

Employees are given unlimited calls and data plan for enabling employees to work better.

Car Leased Vehicle

With the help of a third party the company helps the employees who want to buy a car by
deducting the emi beforehand so that they do not need to pay tax on it.

Leave Policy

RIL gives its employees best in class holidays and all the leaves can be carry forwarded.

Employee get 28 days apart from 10-15 public holidays.

1. Paid Leaves = 15 (can be saved and carry forward)

2. Contingency Leaves = 5 (Lapsed at end of the year)
3. Sick Leaves = 5 (can be saved and carry forward)
4. Optional Paid Holidays = 3 (Lapsed at end of the year)
5. CompOffs = will be generated if you work overtime or on weekends & public holidays
(lapsed one year after generated date)
6. Pay for performance , LTI, STI, field force incentives etc (where applicable)

Long Service Awards

This retention measure, christened Long-Term Incentive Plan (LTIP), will be for the high
potentials in the group who earn Rs 2 crore on an average.

Also, these employees are awarded with silver medal which is very prestigious.

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Retirement Benefits
Retiring from RIL is always a prestige as employee gets many benefits.
Generally, gratuity accrues at a rate of 15 days last drawn salary per year of service for each
employee or as defined by the trust deeds. Gratuity is payable immediately on cessation of
employment, provided the employee has continuous service of at least five years.

Short Term Incentives

RIL provides short term incentives termed as monthly incentives or quarterly incentives
paid on monthly or quarterly basis on the following criteria:

● SALES

● EBITDA

● PROFITABILITY

● MARGINS

● BRAND/CATEGORY INCENTIVE

● PIECE BASED

● SHRINKAGE

Compensation theories

Expectancy theory

Since the employees are supposed to work harder and better, RIL pays higher salary higher
than the average market rate so that the employees feel that their work is being valued and they
are getting the reward for it.

Equity Theory

They use external equity theory to compare their compensation it's obviously higher, giving them
a sense of giving greater output.

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COMPARATOR BASKET
Comparator Basket is basically choosing peer companies or competitors in a specific area and
comparing their different parameters with own company to assess where it stands and also to
determine how to improve their performance in that area.

For Reliance Industries Limited, they mainly operate in 6 areas. And for each area we have
taken their competitor based on compensation pay in the comparator basket.

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Exploration and Production

In this area the main competitors of RIL are ONGC, Hindustan Oil and Oil India. In the
comparator basket we have taken their compensation pays and RIL’s compensation pay and
compared them where we have found that Hindustan Oil provides the highest amount of
compensation pay.

Reliance ONGC Hindustan Oil Oil India

Rs.20lakhs Rs.20.6lakhs Rs.21 Lakhs Rs. 9.1 Lakhs

Petroleum Refining and Marketing

In this are the main competitors are Indian Oil and Hindustan Petroleum and from the
comparator basket we have found that Hindustan Petroleum and RIL have same amount of
compensation pay and Indian Oil provides less amount.

Reliance Indian Oil Hindustan Petroleum

Rs. 20 Lakhs Rs.10 Lakhs Rs. 20 Lakhs

Textiles

In this area the main competitors of RIL are Bombay Dyeing and Raymond Ltd. and from the
comparator basket we have found RIL provides the highest amount of compensation pay.

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 Reliance Bombay Dyeing Raymond Ltd.

Rs. 20 Lakhs Rs. 10.4 Lakhs Rs. 18.1 Lakhs

Petrochemicals

In this area the main competitor of RIL is Haldia Petrochemicals and from the comparator
basket we have found that RIL provides more compensation pay than Haldia Petrochemicals.

Reliance Haldia Petrochemicals

Rs. 20 Lakhs Rs. 13.3Lakshs

Retail

Here the main competitors are Aditya Birla and Shoppers Stop and from the comparator basket
we have found that Aditya Birla provides the highest amount of compensation pay.

Reliance Aditya Birla Shoppers Stop

Rs. 20 Lakhs Rs. 21.2 Lakhs Rs. 3.92Lakhs

Jio

In this area the competitors are Airtel and Vodafone and from the comparator basket we have
found that RIL provides the highest amount of compensation pay.

Reliance Airtel Vodaphone

Rs. 20 Lakhs Rs. 7.43 Lakhs Rs. 7.34 Lakhs

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Therefore, a comparison for the above mentioned sectors would be:

Company Area Average Compensation

Pay(in Lakhs)
Exploration, Petroleum
RIL refining, Textile, Petrochem, 20
Retail, Telecom

ONGC Exploration & Production 20.6

HINDUSTAN OIL Exploration & Production 21

INDIAN OIL Petroleum Refining and 10

Marketing

HINDUSTAN PETROLEUM Petroleum Refining and 20

Marketing

RAYMOND Textile 18.1

HALDIA PETROCHEMICAL Petrochemicals 13.3

ADITYA BIRLA Retail 21.2

SHOPPERS STOP Retail 3.92

AIRTEL Telecom 7.43

VODAFONE Telecom 7.34

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