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SJVN Limited
CIN: L40101 HP1988G01008409
Reqd. Office: SJVN, Corporate Office Complex,
Shanan, Shimla 171006, Himachal Pradesh
—

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D SJVN

Policy Statement on Nomination,

Remuneration, Succession and
Diversity of Board

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Ii
 CONTENTS

Sr. No. Topic Page No.

1. Introduction 3

2. Statutory requirements 3

3. SJVN’s Policy Statement on Nomination, Remuneration, Succession 6

and Diversity of Board

4. Nomination & Remuneration Policy 7

5. Board Diversity Policy 11

6. Board Succession Policy 12

Page 2
 Introduction

SJVN Limited, a Mini Ratna: Category-I and Schedule ‘A’ CPSE under administrative
—

control of Ministry of Power, Govt. of India, was incorporated on May 24, 1988 as a joint
venture of the Government of India (GOT) and the Government of [-limachal Pradesh (GOFIP)
(equity participation in the ratio of 75:25).

SJVN being a Central Public Sector Undertaking, the appointment, tenure, remuneration and
other terms and conditions of Directors are decided by the President of India.

However, the Companies Act, 2013 and SEBI (Listing Obligation and Disclosure
Requirements) Regulations, 2015 provides for a various Corporate Governance norms for
all companies and in absence of any special exemptions to Government Companies, we are
required to comply with the applicable Corporate Governance norms.

This policy was adopted by the Board of Directors of the Company at its 245ih meeting held
on 18” April, 2016. The Code is further amended and amended Code shall be effective from 12”
September, 2022.

1.0 Statutory Requirements

Both Companies Act, 2013 as well as the SEBI (LODR) Regulations, 2015 prescribe
requirement for constitution of Nomination and Remuneration Committee and formulation of
a Nomination & Remuneration Policy. The relevant statutory provisions are elaborated
hereunder: -

A. Companies Act, 2013: -

Section 178 of Companies Act, 2013 prescribes the following requirements: -

(1) The Board of Directors of every listed company and such other class or classes of
companies, as may be prescribed shall constitute the Nomination and Remuneration
Committee consisting of three or more non-executive directors out of which not less than
one-half shall be independent directors:
Provided that the chairperson of the company (whether executive or non-executive) may be
C appointed as a member of the Nomination and Remuneration Committee but shall not chair
such Committee.
(2) The Nomination and Remuneration Committee shall identify persons who are qualified to
become directors and who may be appointed in senior management in accordance with the
criteria laid down, recommend to the Board their appointment and removal and shall specify
the manner for effective evaluation of performance of Board, its committees and individual
Directors to be carried out either by the Board, by the Nomination and Remuneration
Committee or by an independent external agency and review its implementation and
compliance.
(3) The Nomination and Remuneration Committee shall formulate the criteria for
determining qualifications, positive attributes and independence of a director and recommend
to the Board a policy, relating to the remuneration for the directors, key managerial personnel
and other employees.
(4) The Nomination and Remuneration Committee shall, while formulating the policy under
sub-section (3) ensure that—

Page I 3
 (a) the level and composition of remuneration is reasonable and sufficient to attract, retain
and motivate directors of the quality required to run the company successftully;
(b) relationship of remuneration to performance is clear and meets appropriate
performance benchmarks; and
(c) remuneration to directors, key managerial personnel and senior management involves a
balance between fixed and incentive pay reflecting short and long-term performance
objectives appropriate to the working of the company and its goals:
Provided that such policy shall be placed on the website of the company, if any, and the
salient features of the policy and changes therein, if any, along with the web address of the
policy, if any, shall be disclosed in the Board’s report.
(8) In case of any contravention of the provisions of section 177 and this section, the
company shall be liable to a penalty of five lakh rupees and every officer of the company
who is in default shall be liable to a penalty of one lakh rupees.
Explanation: -The expression “senior management” means personnel of the company who
are members of its core management team excluding Board of Directors comprising all
members of management one level below the executive directors, including the functional
heads.
Subsequently, vide a notification dated 5th June 2015, the Central Government has partially
exempted the Government Companies from sub-sections (2), (3) and (4) of Section 178 of
Companies Act, 2013 as under: -

“Shall not apply to Government Company except with regard to appointment of “senior
management” and “other employees.”

B. SEBI ([AODR) Regulations, 2015: -

The provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations,

2015 with regards to Nomination, Remuneration, Succession & Diversity of Board are as
under: -

Regulation 4 (2) (f) (ii) Key functions of the board of directors-

-

(3) Selecting, compensating, monitoring and, when necessary, replacing key managerial
personnel and overseeing succession planning.
(4) Aligning key managerial personnel and remuneration of board of directors with the
longer-term interests of the listed entity and its shareholders,
(5) Ensuring a transparent nomination process to the board of directors with the diversity
of thought, experience, knowledge, perspective and gender in the board of directors.

Regulation 17(4) The Board of directors of the listed entity shall satisfy itself that plans are
-

in Place for orderly succession for appointment to the board of directors and senior
Management.

Regulation 19 Nomination and Remuneration Committee.

-

(1) The board of directors shall constitute the nomination and remuneration committee as
follows:
(a) the committee shall comprise of at least three directors;
(b) all directors of the committee shall be non-executive directors; and
(c) at least two-thirds of the directors shall be independent directors.
Page I 4
 (2) The Chairperson of the nomination and remuneration committee shall be an independent
director:
Provided that the chairperson of the listed entity, whether executive or non-executive,
may be appointed as a member of the Nomination and Remuneration Committee and
shall not chair such Committee.

(2A) The quorum for a meeting of the nomination and remuneration committee shall be
either two members or one third of the members of the committee, whichever is greater,
including at least one independent director in attendance.

(3) The Chairperson of the nomination and remuneration committee may be present at the
annual general meeting, to answer the shareholders’ queries; however, it shall be up to
the chairperson to decide who shall answer the queries.

(3A) The nomination and remuneration committee shall meet at least once in a year.

(4) The role of the nomination and remuneration committee shall be as specified as in Part
D of the Schedule II.
C C. Schedule II, PART D: -

A. Role of Nomination and Remuneration Committee:

Role of committee shall, inter-alia, include the following:

-

(I) formulation of the criteria for determining qualifications, positive attributes and
independence of a director and recommend to the board of directors a policy relating to,
the remuneration of the directors, key managerial personnel and other employees;
(lA) For every appointment of an independent director, the Nomination and Remuneration
Committee shall evaluate the balance of skills, knowledge and experience on the Board
and on the basis of such evaluation, prepare a description of the role and capabilities
required of an independent director. The person recommended to the Board for
appointment as an independent director shall have the capabilities identified in such
description. For the purpose of identifying suitable candidates, the Committee may:
a. use the services of an extemal agencies, if required;
b. consider candidates from a wide range of backgrounds, having due regard to
diversity; and
c. consider the time commitments of the candidates.
(2) formulation of criteria for evaluation of performance of independent
directors and the board of directors;
(3) devising a policy on diversity of board of directors;
(4) identifying persons who are qualified to become directors and who may be
appointed in senior management in accordance with the criteria laid down,
and recommend to the board of directors their appointment and removal.
(5) whether to extend or continue the term of appointment of the independent
director, on the basis of the report of performance evaluation of
independent directors;
(6) recommend to the board, all remuneration, in whatever form, payable to senior
management.

Page I 5
2.0 SJVN’s Policy Statement on Nomination, Remuneration, Succession and Diversity of
Board.

SPiN being a Government Company (Central Public Sector Undertaking), in terms of

Articles 31 to 35A of Articles of Association of the Company, the Powers of Nomination,
appointment, remuneration and deciding terms and conditions of appointment of Directors
vests with President of India, acting through Ministry of Power and other Government
Directives.

Thus, the policy for Nomination and Remuneration of Directors, KMPs and Senior Managers
is determined by President of India, through various directives, stipulations, guidelines,
notifications, circulars issued from time to time by the Department of Public Enterprises
(DPE), Public Enterprises Selection Board (PESB) or any other Department of the
Government of India. Similarly, the composition and succession of Board Members is also
decided by Government of India.

The Board or the Company has not been vested with any powers in these matters. Hence, this
Nomination and Remuneration Policy contains merely a description of polices & procedures
enforced in the company by Government of India and is divided into following chapters!
parts: -

Part — I: Nomination & Remuneration Policy.

Part — II: Board Diversity Policy.
Part — III: Board Succession Policy.

Page I 6
 3.0 Part — I: Nomination & Remuneration Policy

A. Nomination Policy

Article 32 of Company’s Articles of Association stipulates that: -

a) The Chairman, the Vice-Chairman and all other members of the Board of Directors
(except part-time Directors) shall be appointed by the President.
Till the time Directors are appointed, the Subscribers shall be deemed to be Directors of
the Company.
b) The part-time Directors shall be appointed by the President from time to time, as
provided for in Article 3 1 supra.
c) The President may from time to time, appoint the Chairman or any of the Directors to the
office of the Managing Director(s) of the Company for such term and remuneration
(whether by way of salary or other- wise) as he may think fit. Any such Chairman!
Director appointed to any such office shall, if he ceases to hold the office of
Chairman/Director from any cause, Ipsofacto, immediately cease to be Managing
Director(s).

C Accordingly, except for one Got. of H.P. Nominee Director, all Whole-Time and Part-Time
Official! Non-Official Directors are nominated by President of India acting through MoP.

The Policy & procedure for nomination and appointment of various types of Directors on the
Board is summarized as under: -

A. Board of Directors

a. CMD & Functional Directors — The Chairman and Managing Director and other
Functional Directors are selected by Public Enterprises Selection Board and appointed
by Government of India through the order of the administrative Ministry i.e. Ministry
of Power.

PESB has framed elaborate guidelines! procedures for selection ! appointment to top
management posts in CPSUs. A summary of Govt’s Selection Policy for Board Level
Appointments in PSUs is placed atAnnexure—A.

b. Part-time Official Directors (Nominee Directors) One Part-Time Official Director

—

each is nominated by Government of India and Government of Himachal Pradesh and

appointed by Government of India through the order of the administrative Ministry i.e.
Ministry of Power.

c. Part-time Non-Official Directors (Independent Directors) The proposals for

—

appointment of non-official Directors on the Boards of CPSEs are initiated by the

concerned Administrative Ministries i.e. Ministry of Power. The selection of non-
official Directors is made by the Search Committee of Department of Public
Enterprises (DPE). The concerned Administrative Ministry!Department appoints the
non-official Directors on the basis of recommendations of Search Committee after
obtaining the approval of competent authority. The detailed eligibility criteria and
process of appointment notified by DPE is placed at Annexure B & C.
—

For the purpose of compliance with Section 149 read with Clause IV (2) of Schedule IV
Companies Act, 2013 the appointment as Independent Directors is also approved by the
Page I 7
 Shareholders in the immediately next Annual General Meeting and with effect from 01-
01-2022, the approval of shareholders for appointment of a person on the Board of
Directors or as a manager is taken at the next general meeting or within a time period of
three months from the date of appointment, whichever is earlier.

B. Key Managerial Personnel — The Company has designated the following as Key
Managerial Personnel: -

i. Managing Director CMD or in his absence any Whole Time Director who
—

has been given the additional charge of CMD of the Company.

ii. Chief Financial Officer — Director (Finance) or in his absence Head of
Finance. -

iii. Company Secretary — Company Secretary of the Company.

The CMD or Director (Finance) are appointed in accordance with procedure prescribed
in sub-clause A. a) above. Company Secretary is recruited’ elevated as such in
accordance with Company’s HR policy and appointed through a Board Resolution.
Head of Finance is recruited! elevated in accordance with Company’s HR policy and
designated as Head of Finance through an administrative order. The individuals so
appointed are designated as Key Managerial Personnel through a Board Resolution.
C. Senior Management Senior Management means personnel of the company who are
—

members of its core management team excluding Board of Directors comprising all
members of management one level below the Board i.e., Executive Directors (ED) and
Chief General Managers (CGM). Nomination & appointment of Senior Management
personnel is done as per the following procedure:-

a. EDs & CGM are recruited! elevated in accordance with Company’s HR

policy.
b. The appointment! elevation to ED & GM level posts is recommended by
company’s Nomination & Remuneration Committee.
c. Appointments are made by the Board on recommendations of Nomination &
Remuneration Committee, through a suitable Resolution.

Page I 8
 B. Remuneration Policy
As per Article 32 of Company’s Articles of Association, the President may from time to time,
appoint the Chairman or any of the Directors to the office of the Managing Director(s) of the
Company for such term and remuneration (whether by way of salary or other- wise) as he
may think fit.
Further, Article 33 stipulates that the Directors shall be paid such salary and/or allowance as
the President may, from time to time, determine. Subject to the provisions of Section 314 of
the Act, such reasonable additional remuneration, as may be fixed by the President, may be
paid to any one or more of the Directors for extra or special services rendered by him or them
or otherwise;
Thus, the President of India regulates the remuneration of the Directors, Managerial
Personnel and other Employees of the Company through directives stipulations, guidelines,
notifications, and circulars issued from time to time by the Department of Public enterprises
or other Ministries & Departments of the Government of India.
As per Article 35A of the Articles of Association of the Company, the Company is bound to
adhere to any such directives stipulations, guidelines, notifications, circulars issued by DPE
or any other Department of Government.
C. A. Board of Directors

a. CMD & Functional Directors The structure of pay & remuneration policy in respect
—

of CMD & Whole time Directors in CPSU’s is notified & regulated by Department of
Public Enterprises (DPE), Ministry of Heavy Industries, Government of India. DPE
issues Guidelines/ Notifications from time to time which need to be mandatorily
complied by the company in terms of Article 35A of Articles of Association. Detailed
KR! Remuneration policies of the company are framed in accordance with DPE
Guidelines and approved by the Board of Directors of the Company.

Copies of DPE OMs dated 3 August, 2017, 4th August, 2017 and 7”’ September, 2017
regulating the current structure of pay & perks of Board level and below Board level
executives and Non-Unionised Supervisors is placed at Annexure E. —

Full copy of Company’s HR Manual is available on company’s website

www.sjvn.nic.in.

b. Part-time Official Directors (Nominee Directors) No remuneration is payable to

—

Nominee Directors of Government of India or Government of Himachal Pradesh.

However, travelling facilities and Hotel / accommodation facilities are provided at par
with entitlements of Whole Time Directors of the Company for tours in connection
with company’s official business.

c. Part-time Non-Official Directors (Independent Directors) Department of Public

—

Enterprises (DPE) has vide its Circular No. DPE O.M. No. 2(31)/87-DPE(WC) dated
20th
August, 1997 specified that the quantum of the sitting fee may be decided by the
profit making Public Enterprises within the ceiling prescribed by the Ministry of
Corporate Affairs.

As per Rule 4 of the Companies (Appointment and Remuneration of Managerial

Personnel) Rules, 2014 notified by MCA a company may pay a sitting fee to a Director
for attending Meetings of the Board or Committees thereof, such sum as may be
decided by the Board of Directors thereof which shall not exceed 1 Lakh Rupees per
Page I 9
 Meeting of the Board or Committee thereof or such amount as may be prescribed by the
central Govt. from time to time. However, an Independent Director shall not be entitled
to any stock options of the Company.

The Board of Directors of the Company had vide its 223 Meeting held on 12th
September 2013, approved a sitting fee @ Rs.20,000/- per Meeting for Independent
Directors which is within the above limits. The sitting fee was further increased by
Board of Directors in its 296th Meeting held on 10th February 2022 to Rs. 30,000/- and
Rs. 40,000/- per Committee Meeting and Board Meeting respectively.

In addition to sitting fee, travelling facilities and Hotel / accommodation facilities are
also provided to Independent Directors at par with entitLements of Whole Time
Directors of the Company for tours in connection with company’s official business.

A copy of Company’s Sitting Fees rules/ procedures as amended upto date is placed at
Annexure U.—

d. Key Managerial Personnel & Senior Management — The structure of pay &
remuneration policy in respect of all Directors/ Officers of the Company is notified &
regulated by Department of Public Enterprises (DPE). Ministry of Heavy Industries,
Government of India. DPE issues Guidelines/ Notifications from time to time which
need to be mandatorily complied by the company in terms of Article 35A of Articles of
Association. The detailed HR/ Remuneration policies of the company are framed in
accordance with DPE Guidelines and approved by the Board of Directors of the
Company.

Copies of DPE OMs dated 3rd August, 2017, 4ch August, 2017 and 7” September, 2017
regulating the current structure of pay & perks of Board level and below Board level
executives and Non-Unionised Supervisors is placed at Annexure E. —

Full copy of Company’s HR Manual is available on company’s website

www.sivn.nic.in.

Page I 10
 4.0 Part — II: Board Diversity Policy

Articles 31 of Articles of Association of the Company stipulates that the President shall, from
time to time, determine the number of Directors of the Company which shall not be less than
six (6) and not more than fifteen (15). Some of the Directors may be whole-time functional
Directors and others may be part-time Directors depending upon the requirement from time
to time. One of the part-time Directors shall be nominated by the Governor.

Provided the number of Independent Directors in any case shall not be Less than 50% of the
actual strength of the Board.

Hence the power to decide size and composition of Board vests with the President of India,
The present structure of the Board of the Company is as under: -

p DIRECTÔIiS H Nos
*$.rrr.- -
-

EXECUTIVE DIRECTORS
Functional! Whole Time Directors
C .

Chairman & Managing Director

.
1 (One)

.
I (One)
Director (Civil))
.

Director (Finance)
. 1 (One)

l(One)
Director (Personnel)
.

I (One)
Director (Electrical)

NON-EXECUTIVE DIRECTORS
Part -Time Official Directors
(Nominee Directors)
NomLnee
.

Director —
.
Govt. of India I (One)

I (One)
Nominee Director—Govt. of H.P.
.

Part Time Non- Official Directors

(Independent Directors)
Independent Directors 7 (Seven)
TOTAL 14 (Fourteen)

The existing structure/ composition of the Board has an optimum combination of executive
and non-executive directors with at least one-woman director, at least one independent
woman director and not less than fifty percent of the Board of Directors comprising non-
executive directors and is thus compliant with provisions of SEBI (LODR) Regulations, 2015
as well as DPE Guidelines on Corporate Governance.

Page j 11
 5.0 Part — III: Board Succession Policy

In terms of Articles of Association of the Company, all Powers regarding Nomination and
Appointment of Directors vests with President of India, acting through Ministry of Power.
The Board or the Company has not been vested with any powers in these matters.

However, Article 31 of Articles of Association of Company provides that one of the part-time
Directors shall be nominated by the Governor. Similarly, Article 33(e) provides that the
President shall consult the Governor for removal of part-time Director appointed from the
nominations received from the Governor.

Accordingly, except for one Govt. of H.P. Nominee Director, succession Policy in respect of
all Whole-Time and Part-Time Official! Non-Official Directors is determined by President of
India acting through Ministry of Power, Government of India.

Page 12
 Annexure A -

Public Enterprises Selection Board and Govt’s Selection Policy for Board Level
Appointments in PSU5**

Goverment has set-up a specialized agency called the Public Enterprises Selection Board
[PFSBJ with the objective of evolving a sound managerial policy for the Central Public
Sector Enterprises and, in particular, to advise Government on appointments to their top
management posts.

PESB is a high-powered body constituted by Government of India Resolution dated 3

March1987 which was subsequently amended from time-to-time, the latest being on
November 2008. The P.ES.B shall not be a mere Interview Board and it shall, also,
constitute itself into a Search Committee to look out for and identify suitable persons who
can be appointed to Level-I and Level-Il posts in PSEs.

The policy of Government is to appoint through a fair and objective selection procedure
outstanding professional managers to Level-I and Level-Il posts and posts at any other level,
as may be decided by the Govemment from time to time. Government have also recognized
the need to dev&op a cadre of professional managers within the public sector. Hence unless
markedly better candidates are available from outside, internal candidates, employed in the
PSE, will be preferred for appointment to Board level posts. However, if internal candidates
are not available, preference will be given to candidates working in other PSEs, either in the
same area of business or in other areas. Mobility of managerial personnel among PSEs within
the same sector or group, failing which mobility within the public sector as a whole will be
encouraged, subject to certain limitations. However, in special cases, recruitment may be
made from the organised services under the Central Government. Such cases would be
where, because of special circumstances, it is necessary to place a member of an organised
service in a PSE or where, because of the nature of the enterprise or its poor health, it would
be difficult to attract good professional managers on a tenure basis. Under special
circumstances, the appointment to a particular post or posts in a PSE may be made other than
through P.E.S.B with the prior and specific approval of the Govt.

For sick and potentially sick PSEs, the Administrative Ministry/Department concerned, in
consultation with P,E.S.B could take a decision at any stage in the process of recruitment to
the post of Chairnmn, Managing Director or Chairman-cum-Managing Director of the PSE,
to take a person on deputation from any of the All India or Group “A” Central Services
without insisting on the rule of immediate absorption.

**Source: PESB Website

Page I 13
 Annexure — B

Criteria laid down by the Government for consideration as non-official Directo?

A. (a) Criteria of Experience
i. Retired Government officials with a minimum of 10 years’ experience at Joint
Secretary level or above.
ii. Persons who have retired as CMD/CEOs of CPSEs and Functional Directors of the
Schedule A CPSEs. The ex-Chief Executives and ex-Functional Directors of the
CPSEs will not be considered for appointment as non-official Director on the Board
of the CPSE from which they retire. Serving Chief Executives/Directors of CPSEs
will not be eligible to be considered for appointment as non-official Directors on the
Boards of any CPSEs.
iii. Academicians/Directors of Institutes/Heads of Department and Professors having
more than 10 years teaching or research experience in the relevant domain e.g.
management, finance, marketing. tecimology, human resources, or law.
iv. Professionals of repute having more than 15 years of relevant domain experience in
fields relevant to the company’s area of operation.
v. Former CEOs of private companies if the company is (a) listed on the Stock
Exchanges or (b) unlisted but profit making and having an atmual turnover of at least
Rs.250 crore.
vi. Persons of eminence with proven track record from Industry. Business or Agriculture
or Management.
vii. Serving CEOs and Directors of private companies listed on the Stock Exchanges may
also be considered for appointment as part-time non-official Directors on the Boards
of CPSEs in exceptional circumstances.
B. Criteria of Educational qualification
Minimum graduate degree from a recognized university.
C. Criteria of Age
The age band should be between 45-65 years (minimum/maximum limit). This could,
however, be relaxed for eminent professionals, for reasons to be recorded, being limited to 70
years.
D. Reappointment
The non-official Directors, will not be re-appointed in the same CPSE after completing a
maximum of two tenures, each tenure being for a period of three years.
E. Appointment in number of CPSEs at the same time
One person will not be appointed as non-official Director on the Boards of more than three
CPSEs at the same time.
F. Directorship in private companies
A person being considered for appointment as non-official Director on the Board of CPSEs
should not hold directorship in more than 10 private companies.
Note The persons desirous of including their names in the Category (iv) i.e. Professionals of
repute having more than 15 years of relevant domain experience in fields relevant to the
company’s area of operation should furnish additional details (2-3 pages) of their
expertise/achievements in the relevant fields. For example ñ Chartered /Cost Accountants,
Company Secretaries, Consultants should provide list of companies (Public/Private) to which
they have rendered services, affiliations with Professional and Government
Institutions/Committees/Task Forces etc. and important assignments completed, etc. as these
details would facilitate determining their eligibility.

#Source: DPE Website

Page 14
 - Annexure — C

Process of appointment of non-official Directors on the Boards of CPSEs’

The proposals for appointment of non-official Directors on the Boards of CPSEs are initiated
by the concerned Administrative Ministries/Departments. The selection of non-official
Directors is made by the Search Committee. The present composition of the Search
Committee is as under.
1. Secretary (DoPT) Chairman
-

2. Secretary, DPE
3. Secretary of the concerned Administrative Ministry/Department
4. 2 non-officiaL Members,
The concerned Administrative Ministry/Department appoints the non-official Directors on
the basis of recommendations of Search Committee after obtaining the approval of competent
authority. The recommendation of the Department related Standing Committee of Industry to
the effect that if persons from the categories of Scheduled Castes, Schedules Tribes. OBC and
women categories come forward with the laid down criteria, they should be given preference,
has also been communicated to all Ministries as the proposals for appointment of non-official
Directors on the Boards of CPSEs are initiated by them.

#Source: DPE Website

Page 15
 Annexure-il
Procedure of Sitting Fee of Non-official part time Directors
(As amended upto 10-02-2022)

A Sitting Fee of Rs. 30,000/- and Rs. 40,000/- per Committee Meeting and Board
Meeting respectively shall payable to Part- Time Non-Official Directors (Independent
Directors) attending the Meeting.

2. Sitting Fee is payable per Meeting basis. If there are two or more meetings in a day, (e.g.,
Board Meeting, Audit Committee Meeting) the meetings are considered as independent.

3. In case of sub-Committee of Directors for negotiations with Contractors, the sitting fee
shall be paid per day basis i.e., in a day if there are two meetings namely with contractor
X in the Forenoon and with contractor Y in the Afternoon, these meetings are considered
as one only.

4. Where a meeting is held and adjourned. and when adjourned meeting is reconvened, the
reconvened meeting is to be treated as separate and sitting fees is to be paid.

5. Where interviews of the candidates are done, honorarium as applicable shall only be paid.

6. Where a meeting is convened on a particular date and had to be continued on the next day
also, it is treated as a separate and sitting fees per day basis will apply.

7. In case of official visits to offices/project, no sitting fee shall be paid.

8. Where an independent Director (Non-official part time Director) participate in Quarterly

Review Meetings/Project Review Meetings, payment of sitting fees is applicable as per
the extant rules.

9. Where a meeting is convened but not held, no sitting fee is paid.

10. CMD is authorised to consider payment of sitting fees in respect of other meetings where
participation by an Independent Director is in the interest of the Company.

II. The travel expenses/daily allowance as applicable to the functional Directors shall be paid
as per the TA/DA rules of the Corporation.

12. A Daily allowance of Rs. 2000/- per day shall be payable to Directors attending Board/
Committee Meetings held at a place other than their place of stay/ headquarters and
making their own private accommodation for their stay.

13. In cases where the Director uses his own transport / arrangements, Conveyance charges
Rs.2000/- per day shall be payable.

14. Company Secretary is authorized to approve the claims of part time Directors on account
of sitting fees, travelling expenses etc.

-o-o-o-o-o-o-o

Page I 16
 Annexuie — F

No. W-02/0028/20 1 7-DPE (WC)-GL-XIII/ 17

Government of India
Ministry of Heavy Industries and Public Enterprises
Department of Public Enterprises
Public Enterprises Bhawan
Block No. ‘4, C. 0. 0. Complex,
Lodhi Road, New Delhi-i 10003
Dated: 3rd August, 2017

OFFICE MEMORANDUM
Subject:-Pay Revision of Board level and below Board level Executives
and Non-Unionised Supervisors of Central Public Sector
Enterprises (CPSEs) w.e.f. 01.01.2017.

The last revision of the scale of pay of Board level and below Board
level Executives and Non-Unionized Supervisors of Central Public Sector
Enterprises (CPSEs) was made effective from 01.01.2007 for a period of 10
years. As the next Pay Revision became due from 01.01.2017, the Government
had set up the wd Pay Revision Committee (PRC) under the chairmanship of
Justice Satish Chandra (Retd.) to recommend revision of pay and allowances for
above categories of employees following IDA pattern of pay scales with effect
from 01.01.2017. The Government, after due consideration of the
recommendations of the 3rd PRC have decided as follows:

Revised Pay Scales: - The revised Pay scales for Board and below
Board level executives would be as indicated in Annexure-l. There will be no
change in the number and structure of pay scales and every executive has to be
fitted into the corresponding new pay scale. In case of CPSEs which are yet to
be categorized, the revised pay’ scales as applicable to the Schedule D’ CPSES
would be applicable.

3. Affordability: The revised pay scales would be implemented subject to

the condition that the additional financial impact in the year of implementing
the revised pay-package for Board level executives, Below Board level
executives and Non-Unionized Supervisors should not be more than 20% of the
average Profit Before Tax (PBT) of the last three financial years preceding the
year of implementation.

1
 Fitment Benefit:

(i) In case additional financial impact in the year of implementing the

revised pay-package of a CPSE is within 20% of average PBT of last 3 years, a
uniform full fitment benefit of 15% would be provided.

(ii) If the additional financial impact in the year of implementing the

revised pay-package is more than 20% of the average PBT of last S Financial
Years (F’Ys), then the revised pay-package with recommended fitment benefit
of 15% of BP+DA should not be implemented in full but only partly, as per the
part-stages recommended below;

Part Additional financial impact of the full revised Fitment

stages pay package as a % of average PBT of last S benefit
C n’s (% of BP+DA)
I More than 20% but upto so% of average PBT of io%
lasts FYs
II More than so% but upto 40% of average PBT of 5%
last S FYs
Nofitment or any other benefit ofpay revision will be implemented in the CPSEs where
the additional financial impact of the revised pay package is more than 40% of the
average PET oflast sfinancial years.

(iii) At the time of implementation of pay revision, if the additional financial

impact after allowing full / part fitment exceeds 20% of the average PBT of last
3 years, then PRP payout / allowances should be reduced so as to restrict
impact of pay revision within 20%.

(iv) Subsequent to implementation of pay revision, the profitability of a CPSE

would be reviewed after every 5 years and

a) if there is improvement in the average PBT of the last 3 years, then full
pay package! higher stage of pay package would be implemented while
ensuring that total additional impact (sum total of previously
implemented part pay package and proposed additional package) stays
within 20% of the average of PBT of lasts years

b) if the profitability of a CPSE falls in such a way that the earlier pay
revision now entails impact of more than 20% of average PBT of last S

2
 ____ _______

/ year, then PRP/ allowances will have to be reduced to bring down

impact

3. Methodology for pay fixation: ‘lb ai’:ivc at the revised Basic Pay as on
1.12017 fitruent methodology shall be as tunler:

A S C D
[Revised BP as
*
on 1.1.2017j
Basic Pay + + Industrial Dearness ÷ 15% = Aggregate
Stagnation Allowance (IDA) @119.5% as /1096/5% amount rounded
increment(s) as applicable on 1.12017 of (A+B) off to the next
on 31.12.2016 (under the IDA pattern Rs1O/-.
(Personal Pay / computation methodology
Special Pay not linked to All India Consumer
tobeinchided) Price Index (AICPI) 2001=100
series]

* In case revised B!’ as on 1.1.2017 arrived so is less than the minimum

of the revised pa!’ scale, pay nil! be fixed at the minimum of the
revised pay scale.

4. Pay revision in respect of Non-unionized Supervisors of CPSEs: The

revision of scales of pay fèr Non—unionized Supervisory stat! would be decided by
the respective Board of Directors.

5. ‘ri applicability of affordability clause in respect of certain types of CL’SEs

is given at Annexure II

6. Increment:— A uniform rate of 3% ol Ill’ will be applicable for both annual

inclement as well as promotion ncrenient. ‘[he details regarding Stagnation
Increment and Bunching of pay are given at Annexure—Ill (A)

7, Dearness Allowance: 100% DA neiitralieation would be continued toi’ all the

executives and non-unionised supervisors, nho are on IDA pattern of scales of pay

weE 01.01.2017. Thus, DA as on 01.01.2017 will becOme hero with link point of AU

India Consumer Price Index (AIUPI) ‘2001 ICR;, which is 27733 (Average of AICPI
for the months of Septen]bel; October & November, 2016) as on 01.01.2017. The
periodicity of acljListlnent will be once in three months as per the existing practice.

3
The quarterly DA payable from 01.01.2017 will be as per new DA given at
Annexure-IH(B).

8. House Rent Allowance (IJRA)/ Lease Aècommodation and House Rent

Recovery (HRR): Separate guidelines would be issued later on these allowances.
Till then, the existing allowance at the existing rate may be continued to be paid at
pre—revised pay scales.

9 Perks & Allowances: The Board of Directors of CPSEs are empowered to

decide on the perks and allowance admissible to the different categories of the
executives, under the concept of ‘Cafeteria Approach’, subject to a ceiling of 35% of
BP. Under the concept of Cafeteria Approach’ the executives are allowed to choose
from a set of perks and allowances. The recurring cost incurred on running and
maintaining of infrastructure facilities like hospitals, colleges, schools etc. would be
outside the ceiling of 35% of BP. As regards company owned accommodation
provided to executives, CPSEs would be allowed to bear the Income Tax liability on
the ‘non-monetary perquisite’ of which 50% shall be loaded within the ceiling of 35%
of BP on perks and allowances.

to. Certain other perks & Allowances: Separate guidelines would be issued on
location based Compensatory Allowance, Work based Hardship Duty Allowances
and Non-Practicing Allowance. Till then the existing allowances at the existing rate
would continue to be paid at the pre-revised pay scales.

11. Performance Related Pay (PRP):- The admissibility, quantum and

procedure for determination of PRP has been given in Annexure- IV. The PRP
model will be effective from FY ‘2017-18 and onwards. For the FY 2017-18, the
incremental profit will be based on previous F’Y 2016-17. The PRP model will be
applicable only to those CPSEs which sign Memorandum of Understanding (MOU),
and have a Remuneration Committee (headed by an Independent Director) in place
to decide on the payment of PRP within the prescribed limits and guidelines.

12. Superannuation Benefits: The existing provisions regarding superannuation

benefits have been retained as per which CPSEs can contribute upto 30% of 81’ plus

4
DA towards Provident Fund (PF), Gratuity, Post-Superannuation Medical Benefits
(P11MB) and Pension of their employees.
12,1 The ceiling of gratuity of the executives and non—unionised supervisors of the
CPSEs would be raised from Rs 10 Iakhs to Rs 20 lakhs with effect from 01.01.2017

and the funding for the entire amount of Gratuity would be met from within the
ceiling of 30% of BP plus DA. Besides, the ceiling of gratuity shall increase by 25%

whenever IDA rises by 50%.

12.2 The existing requirement of superannuation and of minimum of 15 years of
service in the CPSE has been dispensed with for the pension.
12.5 The existing Post-Retirement Medica’ Benefits will continue to be linked to
requirement of superannuation and minimum of 15 years of continuous service for
other than Board level Executives. The Post-Retirement medical benefits shall be
allowed to Board level executives (without any linkage to provision of 15 years of
service) upon completion of their tenure or upon attaining the age of retirement,
whichever is earlier
IS Corpus for medical benefits for retirees of CPSEs: The corpus for post —

retirement medical benefits and other emergency needs for the employees of CPSEs
who have retired prior to 01.01.2007 would be created by contributing the existing
ceiling of 1.5% of PBT. The formulation of suitable scheme in this regard by CPSES
has to be ensured by the administrative Ministries/Departments.

14. Club Membership: The CPSEs will be allowed to provide Board level
executives with the Corporate Club membership (upto maximum of two clubs),
co—terminus with their tenure.

15. Leave regulations/management: CPSEs would be allowed to frame their

own leave management policies and the same can be decided based on CPSEs
operational and administrative requirements subject to the principles that:

a. Maximum accumulation of Earned Leave available are not permitted

beyond 300 days for an employee of CPSE. The same shall not be permitted
for encashment beyond 300 days at the time of retirement.

b. CPSEs should adopt so day’s month for the purpose of calculating leave
encashment.

5
 c. Casual and Restricted Leave will continue to be lapsed at the end of the
calendar year.

16. Periodicity: The next pay revision would take place in line with the
periodicity as decided for Central Government employees but not later than 10
years.

17. Financial Implications: Expenditure on account of pay revision is to be

entirely borne by the CPSEs out of their earnings and no budgetary support will be
provided by the Government.

18. Issue of Presidential directive, effective Date of implementation and

payment of allowances. The revised pay scales will be effective from
O1.O1.2017(except the allowances mentioned in the paras 8 and 10 above). The
Board of Directors of each CPSE would be required to consider the proposal of pay
revision based on their affordability to pay, and submit the same to the
administrative Ministry for approval. ‘l’he administrative Ministry concerned will
issue the Presidential Directive with the concurrence of its Financial Adviser in
respect of each CPSE separately. Similarly presidential directives would be issued by
the administrative Ministry concerned based on the result of review which is to be
done after every 3 years subsequent to implementation. A copy of the Presidential
Directives, issued by the administrative Ministry/Department concerned may be
endorsed to the Department of Public Enterprises.

19. Issue of instructions/clarification and provision of Anomalies

Committee; The Department of Public Enterprises (DPE) will issue necessary
instructions/clarifications wherever required, for implementation of the above
decisions. An Anomalies Committee consisting of Secretaries of Department of
Public Enterprises (DPE), Department of Expenditure and Department of Personnel
& Training is being constituted for a period of two years to look into further specific
issues/problems that may arise in implementation of the Government’s Decision on
3rd pay revision. Any anomaly should be forwarded with the approval of Board of
Directors to the administrative Ministry/Department who will examine the same
and dispose of the same. However, if it is not possible for the administrative

5
Ministry/Department to sort out the issue, they ‘nay refer the matter to DPE, with
their views for consideration of the Anomalies Committee.

LL
(Raieslj Kumar Chaudhry)
Joint Secretary to the Government of India

Administrative Ministry / Department (Secretary by Name) of the

Government of India

Copy to Chief Executives of CPSEs.

Copy also to:

Financial Advisors in the Administrative Ministry/Department
ii) Comptroller & Auditor General of India, 9 Deen Dayal Upadhyay Marg,
New Delhi,
iii) Department of Expenditure, EV Branch, North Block, New Delhi
iv) Department of Personnel & Training (CPC Pay I), North Block, New Delhi.
v) Chairman, PESB/Secretary, PESB, COO Complex New Delhi

Copy also to
i) Prime Minister’s Office (Shri Tarun Bajaj, Addl. Secretary)
ii) Cabinet Secretariat (Shri SAM. Rizvi, Joint Secretary)

Copy for information to

i) PS to Minister (I-1l&PE)
ii) PS to MoS (HI&PE)
iii) PS to Secretary, PE
iv) AS & FA (PE)
v) All Officers of DPE
vi) NIC Cell, DPE with the request to upload the OM on the DPE website.

(Samsul Haque)
Under Secretary to the Government of India

7
 Annexure-I

(Para £ )

Grade Existing(Rs) Revised(Rs)

Eo 12600-32500 30000-120000

El - 6400-40500 40000-140000

E2 20600-46500 50000-160000

Es 94900-50500 60000-180000

E4 29100—54500 70000-200000

ES 32900-58000 80000-220000

6 36600-62000 9000o-24o000
E7 43200-66000 100000-260000

E 51300-73000 120000-280000

E9 62000-80000 150000-500000

Grade Existing(Rs) — Revised(Rs)

Director(Sch-D) 43200-66000 100000-260000

CMD(D) 51300-73000 120000-280000

Director(Sch-C) 51300-7.3000 120000-280000

CMD(C) 65000-75000 160000-290000

Director(Sch-B) 65000-75000 160000-290000

CMD(B) 75000-90000 180000-320000

Director(Sch—A) 75000-100000 180000-340000

CMD(A) 80000-125000 900000-570000

*E7 only in CPSEs of Schedule A, B & C

*E8 only in CPSEs of Schedule A & B
*E9 only in CPSEs of Schedule A

8
 Annexure IJ (Para 5)
Affordability to certain types of CPSES;
a) In respect of Sick CPSEs referred to erstwhile Board for Industrial and Financial
Reconstruction (BIER) / Appellate Authority for Industrial and Financial
Reconstruction (AAIF’R), the revision of pay scales should be in accordance with
rehabilitation packages approved by the Government after providing for the
additional expenditure on account of pay revision in these packages.
1,) The affordability condition shall also be applicable to the CPSES registered under
Section 25 of the Companies Act, 1956, or under Section 8 of the Companies Act,
‘2013 (which by the very nature of their business are not-for profit companies) for
implementation of the revised compensation structure (including Performance
Related Pay) as being recommended for other CPSEs.
c) There are also certain CPSEs which have been fbrmed as independent
Government companies under a statute to perform a specific agenda / regulatory
functions. The revenue stream of such CPSEs are not linked to profits from the
open market in a competitive scenario but are governed through the fees &
charges, as prescribed and amended from time to time by the Government. There
is no budgetary support provided by the Government to such CPSEs. In
consideration that the impact of the revised compensation structure (including
Performance Related Pay) would supposedly form the part of revenue stream for
such CPSEs, the affordability condition shall not be applicable to these CPSEs;
however the implementation of same shall be subject to the approval of

( Administrative Ministry upon agreeing and ensuring to incorporate the impact of

the revised compensation structure into the revenue stream.
d) As regards the CPSEs under construction which are yet to start their commercial
operations, the implementation of pay-revision would be decided by the
Government based on the proposal of concerned Administrative Ministry and
after consideration of their financial viability.
e) In case of Coal India Limited (CIL), the holding company and its subsidiaries
would be considered as a single unit for the affordability clause as per past
precedent.

9
 Annexure-HI (A)
(Para 6)
Stagnation Increment: In case of reaching the end point of pay scale, an
executive would be allowed to draw stagnation increment, one after every two
years upto a maximum of three such increments provided the executives gets a
performance rating of Good or above.

Bunching of Pay: - In CPSEs where a lower fitment benefit (I.e. 10% or 5%) is
granted due to affordability, there is a possibility of bunching at different
grades due to revised Basic Pay falling short of reaching starting point of
revised pay-scale. The revised BP due to bunching of pay in these cases would
be the higher of the followings -

• Adding the difference between the pre-revised Basic Pay’ and 4the
minimum of the pre-revised pay scale to the starting point of revised
pay scale.
• The revised BP as arrived after applying the fitment benefit (ie io% or
5% of BP plus DA).
[Example for Basic Pay revision in cases of bunching in a Grade/level]

SI. Parameters Pre-revised pay-scale of E-6 level (In Rs.)

No. Minimum Minimum + Minimum + Minimum-f
/Starting 1 increment 2 3
of pay- @3% increments increments
scale @3% @3%
(A) (B) (C) (D)
1. E-6 level;Pre-revised BP (31.12.1 36600 37700 38840 40010

2HDA(1.1.2017) Say: 43920 45240 46608 48012

120%:
3 Total (1) + (2) 80520 82940 85448 88022
4. Fitmentbenelit %of 5% 5’ 5%
BP+DA H
5. Fitment benefit (4) x (3) 4026.0 4147.0 4272.4 4401.1
amount
6. Net amount to arrive (3) + (5) 84546.0 87087.0 89720.4 92423.1
atrevisedaP
7. Rounded off Next 84550 87090 89730 92430
Rs.10/-
8. Minimum of E-S’s Starting 90000 90000 I 90000 90000
revised pay-scale point

10
 Dlfferencebetween Linkedi(A)-jJ-(A (C)-(A) (O)-(A)!
the ‘pre-revised Basic to
Pay’ and the ‘minimum figure i.e.36600 i.e.37700 i,e.38840 i.e.40010
of the pre-revised pay at 36600- 36600
- - 36600 - 36600
scale’ Column

mentio
nedat
SL
No.1,
a’ 3410
11. Net of difference (8) + 90000 91100 92240 93410
added to starting point (10)
of revised pay-scale
12 Revised Pay-scale Higher 90000 91100 92240 93410
of (7) or
@41

11
 Annexure-m (B)
(Para 7)

Rates of Dearness Allowances for the employees of CPSEs following IDA

pattern

Effective Date Rate of Dearness Aflowance(in

percentage)
01.01.2017 0

01.04.2017 -1.1

01.07.2017 -0.2

12
 Annexure-IV
(para ii)
Performance Related Py

(I) Allocable profits:

a. The overall profits for distribution of PRP shall be limited to 5% of the year’s
profit accruing only from core business activities (without consideration of
interest on idle cash / bank balances), which will be exclusively for executives
and for non-unionized supervisors of the CPSE. The ratio of break-up of profit
accruing from core business activities for payment of PR? between relevant
year’s profit to Incremental profit shall be 65:35 to arrive at the Allocable
profits and the Kitty factor.

(1) PRP diflerentiator components:

(A) PRP payout is to be distributed based on the addition of following

parts I coniponents

Part-i CPSE’s performance component:-

(a) Weightage = 50% of PRP payout

(b) Based on CPSE’s MOU rating:

MOU rating %age eligibility of PRP
Excellent ioo%
Very Good 75%
Good 50%
Fair 25%

Poor Nil

Part-2 : Team’s performance component:

(a) Weightage = 30% of P1W payout

(b) Based on Team rating (i.e. linked to Plant I LTnit’s productivity

measures and operational / physical performance):

13
 Team rating %agc eligibility of FlIP
Excellent 100%

Very Good —— 80%

Good / Average
Fair
Poor Nil
*
In case of a CPSE not having Plants/Units and if there is a no
Team Performance areas/rating, then the PRP for such CPSE will
be determined based specifically on MoU rating after merging the
weightage of Team performance component to the Company’s
performance component.

(c) The Team rating shall be linked to individual Plant / Unit’s productivity
measures and operational / physical performance, as primarily derived from
CPSEs’ MOU parameters and as identified by CI’SE depending on the nature of
industry / business under the following suggested performance areas:

• ‘Achievement Areas’, in which performance has to be maximized (e.g.

market shares, sales volume growth, product output / generation,
innovations in design or operation, awards and other competitive
recognition, etc.); and

• ‘Control Areas’ in which control has to be maximized (e.g. stock / fuel

loss, operating cost control, litigation cost, safety, etc.).

(d) For office locations of CPSEs, the Team rating should be linked to the
Plant / Unit as attached to the said office; and if there is more than one Plant /
Unit attached to an office or in case of Head Office / Corporate Office of the
CPSE, the Team rating shall be the weighted average of all such Plants / Units,
The weighted average shall be based on the employee manpower strength of the
respective Plants / Units.

[Plants/Units shall primarily mean the work place where industry’s

manufacturing process is carried out and in case of a CPSE not having any
manufacturing process, it shall mean the work place where the main business is
carried out. The individual department/section within a work place shall not be
recognized as a Plant/Unit:.

14
 Part-S Individual’s performance component:

(a) Weightage = o% of PUP payout

(b) Based on Individual performance rating (i.e. as per the CPSEs

Performance Management System):

Individual performance %age eligibility of

rating PUP
Excellent ioo%
Very Good 80%

Good / Average 60%

Fair 4.0%

Poor Nil

(c) The forced rating of 10% as below par / Poor performer shall not be
made mandatory. Consequently, there shall be discontinuation of Bell-curve.
The CPSES are empowered to decide on the ratings to be given to the
executives; however, capping of giving Excellent rating to not more than 15% of
the total executive’s in the grade (at below Board level) should be adhered to.

(II) Percentage ceiling of PUP (%age of BP):

(a) The grade-wise percentage ceiling for drawal of PRP within the
allocable profits has been rationalized as under:

Grade Ceiling
(% of BP)
Eo 40%
El 40%

EQ 40%
Es 40%
E4. 50%

ES 50%

E6 60%
E7 70%
Es 80%

15
 EQ 90%
Director (C&D) 100%
Director (A&B) 125%

CMD/MD(C&D) 125%
CMD / MD (A&B) 150%

Note:
1.For Non- Unionized supervisors, the PRP as percentage of BP
will be decided by the respective Board of Directors of the CPSE.

(III) Kitty factor: After considering the relevant year’s profit, incremental
profit and the full PRP payout requirement (computed for all executives
based on Grade-wise ceilings, CPSE’s MOU rating, Team rating &
Individual performance rating), there will be two cut-off factors worked
out based on the PR? distribution of 65:35. The first cut-off shall be in
respect of PRP amount required out of year’s profit, and the second cut
off shall be in respect of PRP amount required out of incremental profit,
which shall be computable based on the break-up of allocable profit (i.e.
year’s 5% of profit bifurcated into the ratio of 6535 towards year’s profit
and incremental profit).

The sum of first cut-off factor applied on 65% of Grade PRP ceiling and
the second cut-ofifactor applied on 35% of Grade PRP ceiling will result
in Kitty factor. The Kitty factor shall not exceed ioo%.

(IV) Based on the PRP components specified above, the PRP pay-out
to the executives should be computed upon addition of the
following three elements:

(a) Factor-X (% of BP):

Weightage of 50% Multiplied with Part-i (CPSE’s MOU rating)

Multiplied with Kitty factor

(b) Factor-Y (% of BP):

Weightage of so% Multiplied with Part-2 (Team’s performance)

M’ultiplied with Kitty factor.

(c) Factor-Z (% of BP):

Weightage of 20% bfultipiied with Part-S (Individual’s performance)
Multiplied with Kitty factor,
(d) Net PRP Factor X + Factor Y + Factor Z =Net %age of
Annual 1W

16
 EXAMPLES

Performance Related Pay (PRP)i Examples for calculating Kitty

fator/Allocable profit

PRP Kitty Distribution: within 5% of profit accruing from core business

activities (hereinafter, for brevity, referred to as Profit).
Ratio of relevant year’s profit : incremental profit 65 35
Example 1: —

Si. Parameters Amount (Rs.)/ %age

1 FY 2o1t-17 Profit = 5000 crore
‘2 FY 2017-18 [for which PRP is to be Profit = 6000 crore
distributed:
3 incremental profit 1000 crore
4. 5%oftheyear’s profit 300 crore
5 Allocable profit out of current year’s 5% ofprofit based on distribution in the ratio of
65:35 towards (lie year’s profit and incremental profit
a. PRP payout from year’s profit 195 crore [i.e. 65% out of 300
crore

b. PRP payout from incremental profit 105 crore [i.e. 35% out of 300
crorefl:
[105 crore can be fully utilized as
incremental profit is 1000 crore.

6 Full PRP Payout req uirement (computed 500 crore

for all executives based on Grade—wise
ceilings, CPSE’s MOU rating, Team rating
& individual performance rating) — but
without applying kitty factor related to year’s
profit or Incremental profit
7 PRP payout break—up based on 65:35 distribution out ofyear’s profit and incremental
profit
a PRP amount required out of year’s profit 65% of 500 crore = 325 erore
(i.e. 65% ofSl. No. 6)

al Cut-off factor(1) (in %age) for year’s PRP 195 crore / 325 crore = 60.00%
payout with reference to SI. No. 5(a) & 7(a)
b PRP amount required out of incremental 35% of 500 crore = 175 crore
profit (i.e. 35% of SI. No. 6)
bi Cut-off factor(2) (in %age) for incremental 105 crore / 175 crore 60.00%

17
 _______ ________ _________

PRP payout with reference to SI. No. 5(b) &

7(b)
S Thus, total Profit amount allocated for 195 crore + 105 crore 300 crore
PRP distribution [i.e. 5% of Core business /
operating profit]
9 Kitty factor for respective Grade (in %age) [65% x Grade PRP ceiling (%) x
Cut-off factor( 1)J Pius (i-) [35%
x Grade PRP ceiling x Cut-off
factor(2)] = Kitty factor

18
 PRY Payout to Individual Executives
Example — 1 For Grade E-i

SI Parameter Amount (Rsj/ %age payout

A CPSE’s MOU rating 75%

[Weightage = 50%] (Very Good)
B Team’s rating ioo%
[Weightage = 30%] (Excellent)

C Individual’s performance rating 60%

[Weightage = 20% (Good/Average)
D Grade ceiling (El) 40% of BP
(Max. of 40% of BP)

E Cut-off factor (1) 60,0%

F’ Cut-off factor (2) 60.0%

• G Kitty Factor for Grade El [65% x 40% x 60.00%] + [35% x 40% x

i.e. [65% x D (Grade PRP ceiling) 60.00%]
x E (Cut-off factor(1D] Plus ft) = 15.60% + 8.10%
[35% x D (Grade PR? ceiling) x F = 24.00%
(Cut-off factorQ2D]
E Net PRP
I F’actor-X Wtg.(50%) xA x C
[ Company’s performance
component]

i.e. 50% x 75% x 24.0% = 9.00%

ii Factor-Y — Wtg.(3o%) x B x G
[T earn’s performance component]

i.e. 30% x 100% c 9400% = 7.2001o

iii Factor-Z Wtg.(20%) x C x G

[Individual’s performance
component]

i.e. 20% x 60% x 24.00% = 2.88%

H PR? payout distribution Factor X + Factor Y + Factor Z =

19.08% of Basic Pay

19
 Performance Related Pay (PRP): Examples for calculating Kitty
factor/Allocable profit

PRP Kitty Distribution : within 5% of profit accruing from core business

activities (hereinafter, for brevity, referred to as Profit).
• Ratio of relevant year’s profit incremental profit = 65 35
Examnie 2: —

SL Parameters - Amount (Rs.)/ %age

I FY 2016-17 PBT 7000 crore
-

FY 2017-Is Cfor which P1W is to be PBT-s000crore

distributed]
3 Incremental profit Nil
4 5% of the year’s profit 300 crore
5 Allocable profit out of current year’s 5% of profit based on distribution in the ratio of 65:35
towards the year’s profit and incremental profiL
a. PRP payout from year’s profit 195 crore [i.e. 65% out of 300 crore]

b. PRP payout from incremental profit 105 crore [i.e. 55% out of 300 crore]:
[Nil amount to be allocated as profit
is Nil.:
6 Full PR? Payout requirement (computed for all 500 crore
executives based on Grade-wise ceilings,
CPSE’s MOU rating, Team rating & Individual
performance rating) but without applying kitty’
—

factor related to year’s profit or Incrementalprofit

7 PuP payout break-up based on 65:35 distribution out ofyear’s profit and incremental profit:
a PRP amount required out of year’s profit (i.e. 65% of 500 crore 525 crore
65% of SI. No. 6)

al Cut-off factor(1) (in %age) for year’s P1W 195 crore / 325 crore = 60.00%
payout with reference to Si. No. 5(a) & 7(a)
b PRP amount required out of incremental profit ss% of 500 crore = 175 crore
(i.e. 55% ofSl. No. 6)
bi Cut-off factor(2) (in %age) for incremental PRP Nil / 175 crore v.00%
payout with reference to Si. No. 6(b)& 7(b)
8 Thus, total Profit amount allocated for PR? 195 crore + 0 crore r 195 crore
distribution [i.e. 3,25% of Core
business/operating profit]
9 Kitty factor for respective Grade (in %age) [65% x Grade PRP ceiling (%) x Cut
off factor(1)] Plus (+) [55% x Grade
PR? ceiling x Cut-off factor(2)] =
Kitty factor

20
 PRP Payout to Individual Executives
ExamDle — For Grade E-i

Si Parameter Amount (Rs.)/ %age payout

A CPSE’s MOU rating 75%
[Weightage = 50% (Very Good)
B Team’s rating ioo%
[Weightage = so%] (Excellent)
C Individual’s performance rating eo%
[Weightage = 20% (Good/Average)
D Grade ceiling (El) 40% of BP
(Max. of 40% of BP)
E Cut-off factor (1) 60.0%

F Cut-off factor (2) 00.0%

G Kitty Factor for Grade El [65% x 40% x 60.00%] + [35% x 40% x

i.e. [65% x D (Grade PRP ceiling) x E 0.00%]
(Cut-off factor(t))] Plus (÷) [35% x I) = is.uo% + 0.00%
(Grade PRP ceiling) x F (Cut-off = 15.60%
factor(2))]
E Net PRP
i Factor-X Wtg.(60%) x A x G
[Company’s performance component]
i.e. 60% x 75% x 15.60% = 5.85%

ii Factor-Y Wtg(3o%) x B x G
[Tearn’s performance_component]
i.e. 30% it 100% x ts.€o% = 4.68%

iii Factor-Z Wtg.(2o%) it Cx G

[Individual’s performance component]
i.e. 20% it 60% x 15.60% 1.87%

H PRY payout distribution ( Factor X + Factor Y + Factor Z = 12.40%

J of Basic Pay

21
 No. W-02/0028/!201 7-DPE (WC)-GL-XIV/ 17
Government of India
Ministry of Heavy Industries and Public Enterprises
Department of Public Enterprises
Public Enterprises Bhawan
Block No. 14, C. G. 0. Complex,
Lodhi Road, New Delhi-i woos
Dated: 4th August, 2017
OFFICE MEMORANDUM
Subject:-Pay Revision of Board level and below Board level Executives and Non
Unionised Supervisors of Central Public Sector Enterprises (CPSEs)
w.e.f. 01.01.2017-decision on allowances other than the allowances
under ‘Cafeteria approach’
The undersigned is directed to refer to para 8 and 10 of this department’s O.M.
No.W-02/0028/2017-DPE (WC) dated s August, 2017 regarding the issue of
separate guidelines in respect of allowances mentioned therein. After due
consideration, the Government has decided as follows:
(1) House Rent Allowance:
(i) The house rent allowance to the employees of CPSEs will be at the
following rates.
Classification of cities Rate of HRA
X-Class (Population of 50 Lakh and above) ‘24% of Basic Pay
Y-Class (Population of 5 Lakh to 50 Lakh) 16% of Basic Pay
Z-Class (Population below 5 Lakh) 8% of Basic Pay

(ii) The rates of HRA will be revised to 27% 18% & 9% for X, Y and
Z class cities respectively when IDA crosses 25% and further revised to
so% 20% and 10% when IDA crosses 50%.

(2) Leased accommodation:

(i) The Board of Directors may decide on the grade-wise lease rental
ceilings in a standardized manner for the different level ofexecutives. The
amount of lease rental ceilings should be decided on its merit keeping in
view / linkage to the HRA amount, classification of cities for HRA
purpose, pay-scales of the executives, House Rent Recovery (HRR) rate,
etc.
(ii) If an executive is staying in his/her own house then normally he
or she should be entitled to the HRA amount but if the said house is taken
as lease accommodation for self-occupation purpose, the lease rental
ceilings (after adjusting the HRR amount) should not exceed the net
applicable HRA amount.
(iii) The HRR in respect of leased accommodation should be at the
following rate, or the actual rent, whichever is lower:-
Classification of cities Elates of HER
X-class 7.5% of BP
Y-class 5% of BP
Z-class ‘ 2.5% ofBP
1
 (iv) For accommodation arranged by CPSE in its own township, the
HRR shall be 7.5% of BP (for X—class cities) / 5% of BP (for Y—class cities)
/ 2.5% of BP (for Z-class cities), or standard rent fixed by CPSE,
whichever is lower.
(s) Other Allowances/Perks: The following allowances will be outside the
purview of Ceiling of 35% of Basic Pay under ‘Cafeteria Approach’:

(a) Work based Hardship Duty Allowances : The payment of work

based hardship duty allowance upto 12% of Basic Pay shall be
admissible for the period the executives / non-unionized supervisors
has actually performed one of the following hardship duty:
i) For performing duty in Underground mines, and
ii) For performing duty at Offshore exploration site
(b) Separate guidelines regarding Location based Compensatory
Allowance and Non-Practicing Allowance would be issued later.
2. The additional financial impact in the year of implementing the revised pay-
package for Board level executives, Below Board level executives and Non-Unionized
Supervisors, as mentioned in para S of the DPE O.M. No.W-02/0028/2017-
DPE(WC) dated 3rd August, 2017, would be calculated taking into account the OM
No. W-02/0028/2017-DPE(WC) dated 3rd August, 2017 and OMs issued on payment
of allowances.
s. The allowances specified in this O.M. would be effective from the date of issue
presidential directive.

(Rajesh 4mar Chaudhry)

Joint Secretary to the Gov&nment of India

Administrative Ministry/Department (Secretary by Name) of the Government

of India

2
Copy to Chief Executives of CPSEs.

Copy also to:

I) Financial Advisors in the Administrative Ministry/Department
ii) Comptroller & Auditor General of India, 9 Deen Dayal Upadhyay Marg,
New Delhi.
iii) Department of Expenditure, K-V Branch, North Block, New Delhi
iv) Department of Personnel & Training(CPC Pay 1), North Block, New
Delhi.
v) Chairman, PESB/Secretary, PESB, COO Complex New Delhi

Copy also to
i) Prime Minister’s Office (Shri Tarun Bajaj, Addl. Secretary)
ii) Cabinet Secretariat (Shri SAM. Rizvi, Joint Secretary)

Copy for information to

i) PS to Minister (HI&PE)
ii) PS to MoS (HI&PE)
iii) PS to Secretary, PE
iv) AS & FA (FE)
v) All Officers of DPE
vi) NIC Cell, DPE with the request to upload the OM on the DPE website.

(Samsul Haque)
Under Secretary to the Government of India

3
 No. W-02/0028/2017-DPE (WC)-GL-XVI/ 17
Government of India
Ministry of Heavy Industries and Public Enterprises
Department of Public Enterprises
Public Enterprises Bhawan
Block No. 14, C. G. 0. Complex,
Lodhi Road, New Delhi-110003
Dated: 7th September, 2017
OFFICE MEMORANDUM

Subject:-Pay Revision of Board level and below Board level Executives and
Non-Unionised Supervisors of Central Public Sector Enterprises
(CPSEs) w.e,f. 01.01S017-decision on Location based compensatory
allowances and Non-Practicing Allowance (NPA)
The undersigned is directed to refer to para 10 of this department’s O.M. of
even No. dated 3 August, 2017 and sub-para 3(b) of para 1 of OM of even No. dated
4th August, 2017 regarding the issue of separate guidelines in respect of LocatioH

based Compensatory Allowance and Non-Practicing Allowance. After due

consideration, the Government has decided on Location based Compensatory
Allowance and Non-Practicing Allowance as follows:
Location based Compensatory Allowance:
(i) For serving in North-East States and Ladakh Region:
Assam, Meghalaya, Manipur, 10% of Basic Pay
Nagaland, Tripura, Arunachal
Pradesh,_Mizoram_and_Sikkim
Ladakh Region io% of Basic Pay

(ii) For serving in Island territories of Andaman and Nicobar (A&N)

Islands and Lakshadweep:

Areas around Capital Towns (Port Blair in 10% of Basic

A&N Islands, Kavaratti and Agatti in Pay
Lakshadweep)
Difficult Areas (North and Middle 16% of Basic
Andaman, South Andaman excluding Port Pay
Blair, entire Lakshadweep except
Kavaratti, Agatti and Minicoy)

More Difficult Areas (Little Andaman, 20% of Basic

Nicobar group of Islands, Narcondam Pay
Islands, East Islands and Minicoy)

1
 (iii) Special allowance: For serving in the difficult and fhr flung
areas:

Areas Covered - Percentage of Basic

Pay
Part ‘A’ (Areas covered under 8% of Basic Pay
Annexure-I of D/o Expenditure O.M.
No._3/1/2017-EII(B)_dated_19.7.2017)
Part ‘B’ (Areas covered under 6% of Basic Pay
Annexure—li of D/o Expenditure O.M.
No. 3/1/2017-ElI(S) dated 19.7.2017)
Part ‘C’ (Areas covered under 4% of Basic Pay
Annexure—I1I of D/o Expenditure O.M.
No. 3/1/20 17—EiI(B) dated 19.7.2017)
Part ‘D’ (Areas covered tinder 3% of Basic Pay
Annexrire—IV of D/o Expenditure O.M.
No. 3/1/2017-Eli(s) dated 19.7.2017)

(iv) In the event of a place falling in more than one category, i.e.
(i)/(ii) and (iii) mentioned above, in that case only the higher rate of
allowance will be admissible.

Non-practicing Allowance (NPA):

NPA upto 20% of Basic Pay would be paid to Medical Officers. NPA
wifl not be considered as pay for the purpose of calculating other benctits.

‘2. The allowances specified in this O.M. will he outside the purview of Ceiling of
35% of Basic Pay under ‘Cafeteria Approach’ and would he effective from the date of
issue of presidential directive.

(Rajesh\l{umar Chaudhry)
Joint Secretary to the Gdvernment of India

Administrative Ministry/Department (Secretary by Name) of the Government of

India

Copy to Chief Executives of CPSEs.

2
Copy also to:
i) Financial Advisors in the Administrative Ministry/Department
ii) Comptroller & Auditor General of India, 9, Deen Dayal Upadhyay Marg, New
Delhi
iii) Department of Expenditure, E-V /E-II Branch, North Block, New Delhi
iv) Department of Personnel & Training(CPC Pay 1), North Block, New Delhi.
v) Chairman, PESB/Secretary, PESB, COO Complex New Delhi

Copy also to
i) Prime Minister’s Office (Shri Tarun Bajaj, AddI. Secretary)
ii) Cabinet Secretariat (Shri SAM. Rizvi, Joint Secretary)

Copy for information to

i) PS to Minister (KI&PE)
ii) PS to MoS (HI&PE)
iii) PS to Secretary, PE
iv) AS & FA (PE)
v) All Officers of DPE
vi) NIC Cell, DPE with the request to upload the OM on the DPE website.

(Samsul Haque)
Under Secretary to the Government of India