Increment Strategy for FY 2014-15

1. 2015

2. FY 2014-15 trends, Outlook for
Economic Growth,
Hiring trends & Salary Hike
Projections FY 2015-16 &
Increment Strategy FY 2014-15

4. GLOBAL GDP GROWTH (SECTORAL)
Global GDP Growth Forecast by Sector for 2014-15 & 2015-16(By Kenanga Research)
Kenanga Forecast
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 1H14 2H14 2014-15 2015-16
By Sector
Agriculture 4.3 0.1 2.4 5.8 1.0 2.1 4.6 5.6 5.2 3.2
Mining -2.4 -6.5 -0.3 -5.5 1.4 0.5 0.6 2.2 1.4 2
Manufacturing 1.2 -9.0 11.9 4.7 4.8 3.4 7.1 5.9 6.5 5
Construction 4.2 6.2 11.4 4.7 18.1 10.9 14.3 8.2 11.1 8.5
Services 7.6 2.9 7.4 7.0 6.4 5.9 6.3 5.6 5.9 5.5
Real GDP 4.8 -1.5 7.4 5.1 5.6 4.7 6.3 5.7 6.0 5.1
Note: *The government recently updated the overall GDP forecast but break-down still based on data published in
2013/14 Economic Report.
Source: Kenanga Research, Finance Ministry's Economic Report 2013/2014

5. Growth of the global gross domestic product (GDP) from 2010 to 2020
(compared to the previous year)
The statistic shows the growth in global gross domestic product (GDP)
from 2010 to 2014, with projections until 2020.
2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21

6. A Glance on Growth in 2015-16
Global GDP growth prospects
GLOBAL GDP at a Glance
a2 a4 a5 a6 a7
a8
a9
a10a11
a12
a13

8. Source – Aon Hewitt Salary Increase Survey 2014-15
Broad Outlook—Indian Economy FY 2014-15

9. India’s business outlook
7 out of 10 organizations foresee an improved business outlook in
 The Indian economyis showing signs of a growth turnaround
 Positive sentiment in the market driven by anticipation around a stable government pushing a pro-reform
agenda
 Marginal recovery in globalgrowth (especially the US economymoving from strength to strength), low oil
prices in the Euro area impacting sentiment too
Source – Aon Hewitt Salary Increase Survey 2014-15
27.2% 26.6%
7.7%
4.0%
Declining
2015 (P) 2014 2013
69.4%
30.6%
65.1%
59.0%
10.4%
Improving Stabilizing
2015-16

10.  India continues to lead the pack forAsia in salary increases
 The projection does not include Variable Pay.
 Almost all leadingAPAC nations projecting a marginal to significant improvement in salary increases
over the previous year
Source – Aon Hewitt Salary Increase Survey 2014-15
2010 2011 2012 2013 2014 2015 (P)
Figuresin %
Australia China Hong Kong India Japan Malaysia Phillipines Singapore
2010 3.8 7.9 3.1 11.7 2.4 5.2 6.4 3.6
2011 4.4 9 4.7 12.6 2.7 6 6.7 4.5
2012 4 9.4 4.8 10.7 2.3 6.2 7.1 4.6
2013 3.8 8.5 4.6 10.2 2.3 5.5 6.9 4.5
2014 3.4 7.9 4.5 10.4 2.2 5.4 6.4 4.4
2015 (P) 3.6 8.2 4.8 10.6 2.4 5.6 7.1 4.6
Salary increase trends across APAC have seen an upward move

11.  Expectations of positive performance & market competitiveness have becomekey reasons for firms
revising their compensation budgets this year
Source – Aon Hewitt Salary Increase Survey 2014-15
83% of the organizations have revised their salary budgets FY 2014-15
Expectations of stronger performance cited as a key reason
Reasons for Higher Budgets (% of Org)
Multiple Responses
Strong expected company performance
Response to higher budgets among comparator group
Current pay levels are below market
68%
32%
31%
Budgets were reduced due to economic conditions
There was a freeze in place in 2014, removing the same
Shift in spending from variable pay to fixed pay
20%
4%
4%

12. Source – Aon Hewitt Salary Increase Survey 2014-15
Figures in %
Below India average proj.
Salary increase projections acrosssectors Above or at India average proj.
9.9 9.9
 Low dispersion in 2015 -16between the highest and lowest paying industries (2.8%), down from 5-7% earlier .
The projection does not include Variable Pay
RE-Infra
LifeSciences
Media
Engg.Services
Chemicals
ITeS
Hi-Tech
ConsumerProducts
Engg.Manufacturing
IndiaAverage
Automotive
Energy
Transport
Telecom
Hospitality
Retail
FinancialInstitutions
12.2 12.0 11.8 11.7
9.8 9.5 9.4
10.8 10.7 10.7 10.6 10.6 10.6 10.4 10.2
TOP 3 BOTTOM 3
2015-16
India takes an upward yet cautious leap at 10.6%

13. Comparing 2014-15 and 2015-16
All manufacturing industries projected a salary increase higher than actuals of 2014-15
 In 2015-16,all manufacturing industries projected asalary increase higher than payouts of 2014-15.RE – Infra,
Engineering Services and Automotive projectedthe highest movement
 Consumer Products, Retail and Media projections are lower than 2014-15 payout
 Hospitality and Transport projectionnumbers remained same as 2014-15
*In relative change terms, salary increase moved by 1.92(i.e. in comparison to 2014-15, the 2015-16 projected increase is 1.92% higher)
Source – Aon Hewitt Salary Increase Survey 2014-15
5.4
5.1
3.3 3.0
-7.1
RE-Infra
Engg.Services
Automotive
Engg.Manufacturing
ITeS
Hi-Tech
FinancialInstitutions
Energy
Telecom
India
Chemicals
LifeSciences
ConsumerProducts
Retail
Media
3.9 3.9 3.9
2.1 1.9
0.9 0.8
-0.9
-3.1
6.1

14.  RE-Infra, after a gap of three years is again reporting the highest increase. Life Sciences continues to project
increases on the higher side
 Consumer Products and Engineering Manufacturing have gone down in their ranking with regard to increases
 Industries like Telecom, Retail and Financial Institutions that have traditionally given high increases, no longer
feature in the top 10
Source – Aon Hewitt Salary Increase Survey 2014-15
The top 10 industries with highest projected increases for 2015-
16 & their ranks across the years

15. Source – Aon Hewitt Salary Increase Survey 2014-15
1. Productivity Improvement
2. Capital Dilemmas- allocation &
access
3. Social License to operate(SLOT)
4. Resource nationalism
5. Capital projects
6. Price & currency volatility
7. Infrastructure access
8. Sharing the benefits
9. Balancing talent needs
10. Access to water & energy
Top 10 business risks for Mining and Metal Industries

17. Source – Aon Hewitt Salary Increase Survey 2014-15
Highlights Of Increment FY 2014-15, Hiring & Salary
trends FY 2015-16
Actuals of FY 2014-15
 The average salary across industry in FY 2014-15 was 10.4% apart from variable salary(incentive) paid out in most
industries.
 The actual paid out variable pay stood at 12.7 per cent across sectors and levels. Oil and gas sector remained at the top
at 15.4 per cent for 2014, followed by FMCG at 14.5 per cent and chemicals at 14.4 per cent, the report said.
 "Another interesting trend that we've noticed is how companies are now choosing to unfollow the 'one size fits all'
approach
 "pay for performance" trend continues for India Inc, with payouts widely influenced by both individual and company
performance.
Trends of FY 2015-16
 Maximum movement of Employees will be in Manufacturing, Pharma, IT and Retail sector
 60 per cent companies operate a different remuneration policy for graduates as opposed to the company's standard
pay policy.(GET,DET & Mgmt.Trainee & General Bachelor Degree Trainee)
 Typical hiring salary for a graduate with a Bachelor Degree on an average is 350,000 in local currency. The figure for a
graduate with a Master's degree is 470,000.
 The year 2015 is likely to see an average pay increase of 11.3 per cent across job roles, with FMCG and chemical industry
expected to lead the market.

18. Hiring Trends & increased salary cost for Key Talents with
Projections FY 2015-2016
 Investment in key talent continues in 2015 with paying above the market continues to be a key strategy for
retention of key talent
 Gap between salary increase awarded to key talent vs. others is widening y-o-y
Source – Aon Hewitt Salary Increase Survey 2014-15
Key Talent vs Overall - Average Salary Increase Key Talent differentiation by levels of management
Top & Senior Middle Junior Clerical Staff2012 2013 2014 2015 (P)
Overall Salary Key Talent
16.6
14.7
11.5 11.611.110.5 10.69.6
14.714 13.512.8
10.7 10.2 10.4 10.6
2015-16(P)

19.  Performance rating linked payout is becoming anorm; organizations have become increasingly stringent in
doling out top ratings to its employees
 Employee distribution has become significantly sharper since 2007. Almost 68% of the population falls
under ‘Meets expectation and below’ category. This proportion has increased by approximately ~20% since
2012
Source – Aon Hewitt Salary Increase Survey 2014-15
Performance Rating Distribution expressed as %
Far Exceeding Expectations Exceeded Expectations Met Expectations Did not meet expectations
2014
2013
8.5 24 56.2 11.3
8.7 23.8 54.6 12.9
2010-12
2007-09
8.9 33.5 50.4 7.2
12.8 31.2 49.7 6.3
Employee distribution across performance rating scales
Recognizing ‘True’ performance only

20. Bell Curve Distribution
Rating A B C D E
Bell curve distribution @ Across Industry level
8.50% 24% 56.20% 11.30% NA
Bell Curve distribution @ ASHAPURA
10.00% 30.00% 50.00% 8.00% 2.00%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Bell curve distribution @ Across Industry level
Bell Curve distribution @ ASHAPURA
A B C D E

21. Overall industry analysis - Voluntary attrition analysis
Voluntary attrition rate across sectors (in %)
25
FY 2014 FY 2015
0
5
10
15
20
Overall
Industry
Auto BFSI Chem CB Eng Energy Hi-Tech ITeS Infra Log Media Pharma Retail
© 2015 Deloitte Touche Tohmatsu India Private Limited
FY 2014-15
16.2 11.4 18.7 10.6 18.4 10.9 10.4 19.4 21.5 17.5 16.6 17.2 18.2 18.9
FY 2015-16
16.5 11.6 18.9 10.7 18.7 11.1 10.5 19.9 21.9 17.8 16.8 17.5 18.6 19.4

22. Conclusion
 Salary increase trends show far greater optimism in the country as compared to the same
time last year – however it does not yet show a complete resurgence
 While India tops Asian markets on salary increases yet again, all Asian markets
have shown an increase in projections
 The composition of industries giving high salary increases has changed compared to earlier
years - this is on the back of resurgence in a few industries as well as the lack of increases
provided by companies in these sectors
 The trend of more distinct differentiation based on performance and potential continues this
year
 The incentive payout projected for FY 2015-16 has been distinctly higher than the previous
two years
 Attrition levels have slight changes in 2015-16 as compared to 2014-15 period and remain at a
moderately similar level as last year.

24.  Increment cost of a Bell curve should be within 15% (Excluding PBI)
 Promotion increment – PMS rating A & B eligible for Promotion &
also its component as additional increment (1-4%).
 Salary Correction – Will be applicable only in exceptional cases if justified.(1-5%)
 Retention Bonus – will be applicable as under;
MGR & Above
 Service length 2-3 years: PMS rating A & B only (0-2%)
 Service length 3.1 years to 8 years: PMS rating A, B & C (0-4%)
 Service length 8.1 years & above years: PMS rating A, B & C (0-5%)
Below Manager
 Service length Upto 03 years: PMS rating A & B only (0-4%)
 Service length 3.1 years to 8 years: PMS rating A, B & C (0-6%)
 Service length 8.1 years & above years: PMS rating A, B & C (0-7%)
 Increment will be distributed as per CTC breakup.
 Issue of basic salary pertaining to old employees to be resolved rationally.
 PBI will be paid as per management decision over & above increment but will not be
broken up as per CTC structure & Retention bonus & PBI will not be eligible for an
increment in ensuing financial year.
 Employee being Promoted will not be eligible for Salary Correction.
Increment Strategy

25. SALARY INCREMENT STRATEGY
Cap for Increment for the Organisation : 15 % of Salary
Cost /CTC for Increment (Bell Curve wise)
Grade
Inflation & Performance
Promotion(%)
SalaryCorrection(%)
Retention Bonus
Level MGR & above
(Based on length of Service)
Below MGR
(Based on length of Service)
MGR &
above (%)
Below MGR (%) 2-3 Yr 3.1-8 Yr
8.1 & above
Yr
2-3 Yr 3.1-8 Yr
8.1 &
above Yr
A
B
C
D
E

26. TRENDS OF INCREMENT
DURING PAST IN OUR GROUP
Year % Increment
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015 % (PROPOSED)