CHAPTER-V HUMAN ASSET VALUATION METHODS OF SELECTED COMPANIES

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1 CHAPTER-V HUMAN ASSET VALUATION METHODS OF SELECTED COMPANIES 5.1 INTRODUCATION This chapter presents a detailed benchmarking of the valuation model used to measure Human Assets by the selected companies and the quantitative data concerning Human Assets as disclosed in the financial reports in the annual reports of each organization. The quantified Human Resource Value data that is required for this study and the other variables included in this study were disclosed in the annual reports of the selected companies. 5.2 WHAT VALUATION METHOD IS BEING USED TO MEASURE HUMAN ASSETS? Infosys Ltd. (IL) Infosys is an international consulting and technology organization. The company was established in 1981 and successfully completed an Initial Public Offering (IPO) in An IPO is the activity of selling the organization s shares of stock to the public investors. In 1999, Infosys became the first Indian Organization to be listed on the National Association of Security Dealers and Automated Quotation (NASDAQ). Infosys justifies the human resource valuation as: the dichotomy in accounting between human and non- human capital is fundamental. The latter is recognized as an asset and is therefore recorded in the books and reported in the financial statements, whereas, the former is totally ignored by accountants. The definition of wealth as a source of income inevitably leads to the 901

2 recognition of human capital as one of several forms of wealth such as money, securities and physical capital. Infosys provide additional information of the firm from intangible assets score sheet, Value-Added statement and Human Resource Accounting statement. Infosys provide the information regarding particular of employees under the provision of Section 21 7 (2A) of the Companies Rules, The Lev and Schwartz model has been used by Infosys to compute the value of the human resources (Sveiby, 1997). The Lev and Schwartz formula used by the company measures the present value of the employees future earnings. The calculation is as follows: Vr = l (t) / (l + r) t-r Where, Vr = the value of an individual r years old 1(t) = the individuals annual earnings up to retirement t = the retirement age r = the discount rate specific to the cost of capital to the firm It considers all direct and indirect benefits earned both in India and abroad for the valuation purpose. The incremental earnings based on age and groups are taken into consideration. Balance sheet with intangibles is also disclosed by the company in its reports. The future earnings have been discounted at the cost of capital for Infosys. Infosys calculates cost of capital by using Beta. Beta has been assumed at 1.54 based on average beta for software stocks in the US. From the year onwards [ ], and Beta is calculated based on Indian stock market prices. Infosys reports Number of employees, value of human resources, total revenue, software revenue, Employee cost, value added excluding extraordinary 990

3 income, Net profits excluding extraordinary income, total revenue/human resources value (ratio), total revenue/ human resources value (ratio), Value-added/human resources value (ratio), value of human resources per employee (Rs. In Crores), Employee cost/ human resources value in per cent and Return on human resources value in per cent. Behavioral analysis: Two important variables from the study point of view are: Human Resource Value The index based time series behavioral analysis has been carried out to observe the movement of each of these variables. This section studies the movement of these two variables which are considered for the study. The values of these variables have changed during the last seven years of the study. The researcher has also constructed the index of these variables with as the base year for comparative growth analysis. Human Resource Value Table 5.1 Indices for Human Resource Value of Infosys Ltd. Year ended on 31 st March Total HRV (Rs.) Total HRV-Index Source: Annual reports of Infosys, for the years to The total Human Resource Value at Infosys was Rs Crores at the yearend , which has increased remarkably during the last seven years to reach to 999

4 Rs Crores at the year- end This increase is 2.69 times over the base year i.e Table 5.2 Indices for of Infosys Ltd. Year ended on 31 st March (Rs.) Index Source: Annual reports of Infosys, for the years to is the market value of the organization s stock at the end of each of the respective sample years to The above table makes it clear that fluctuated in last seven years. The of the Infosys increase from Rs crores in 2006 to Rs crores for the year This increase in indicates that increased by approximately 1.03 times over the period of seven years. Figure 5.1 shows the and HRV indexes fluctuation during years of the study. 991

5 Figure 5.1 and HRV indexes fluctuation of Infosys Ltd TOTAL HRV INDEX TOTAL FIRM VALUE INDEX Source: Compiled from tables 5.1 & 5.2 of the enterprise under consideration Rolta India Ltd. (ROLTA) ROLTA established in 1989,and employs around 5000 professionals and has a countrywide infrastructure and international subsidiaries across the globe. Rolta India Limited is ranked No. 12 in IT companies and overall ranked No. 365 in India in Fortune India 500 list in Forbes Global has ranked Rolta amongst the "Best 200 under a Billion" four times in six years while the company was included by Standard and poor on their 2008 Global Challengers List, which identifies 300 midsize companies worldwide with a total market capitalization between US$1 5 Billion. ROLTA is leader in Geo special Market in India. ROLTA follows the model proposed by Lev and Schwartz for the valuation of human resources. The calculation is as follows: 991

6 Vr = l (t)/ (l + r) t-r Where, Vr = the value of an individual r years old 1(t) = the individuals annual earnings up to retirement t = the retirement age r = the discount rate specific to the cost of capital to the firm The company considers all direct and indirect benefits earned by employees as a basis for calculation both in India and abroad. Average increment is based on the increment paid during last three years. Retirement age is taken as per company s policy. Based on these assumptions Human Resource Value was calculated considering different discount rates for different years to arrive at the present value of future earnings. Company reports total value of HR, total revenue of the company, total employee cost, net profit after tax, revenue per employee, HRV per employee, net profit per employee and total revenue/ total HRV, company does not report Discount rate. Behavioral analysis: Two important variables from the study point of view: Human Resource Value The index based time series behavioral analysis has been carried out to observe the movement of each of these variables. This section studies the movement of these two important variables which are considered for the study. The values of these variables have changed during the last seven years of the study. The researcher has also constructed the index of these variables with as the base year for comparative growth analysis. 991

7 Human Resource Value Table 5.3 Indices for Human Resource Value of Rolta India Ltd. Year ended on 31 st March Total HRV (Rs.) Total HRV-Index Source: Annual reports of ROLTA, for the years to The total Human Resource Value at Rolta was Rs Crores at the year-end , which has increased remarkably during the last seven years to reach to Rs Crores at the year- end This increase is 3.96 times over the base year i.e Table 5.4 Indices for of Rolta India Ltd. Year ended on 31 st March (Rs.) Index Source: Annual reports of Rolta, for the years to is the market value of the organization s stock at the end of each of the respective sample years to The above table makes it clear that fluctuated in last seven years. The of the Rolta Ltd. decrease from Rs crores in 2006 to Rs crores for the year This decrease in indicates that decreased by approximately 0.48 times over the period of seven years. Figure 5.2 shows the and HRV indexes fluctuation during years of the study. 991

8 Figure 5.2 and HRV indexes fluctuation of Rolta India Ltd TOTAL HRV INDEX TOTAL FIRM VALUE INDEX Source: Compiled from tables 5.3 & 5.4 of the enterprise under consideration Hindustan Copper Ltd. (HCL) Hindustan Copper Limited (HCL), a public sector enterprise of the Government of India was incorporated on 9th November It has the distinction of being India's only vertically integrated copper producing company encompassing mining, beneficiation, smelting, refining and casting of refined copper metal. HCL shares are listed at Mumbai, Delhi, Calcutta, Chennai, Ahmadabad exchanges. The method used by Hindustan Copper Ltd. to value the Human Assets is based on the Lev and Schwartz model. The Lev and Schwartz formula used by the organization measures the present value of the employees future earnings. HCL was reporting Total Number of Employees-group wise distribution and in gender wise 991

9 distribution, value added, value of production and also value of HR in total. It also disclosed value added. HCL didn t report discount rate. Behavioral Analysis: The data used in the study has been collected from the annual reports of HCL from the year to Two important variables from the study point of view: Human Resource Value The index based time series behavioral analysis has been carried out to observe the movement of each of these variables. This section studies the movement of these two important variables which are considered for the study. The values of these variables have changed during the last seven years of the study. The researcher has also constructed the index of these variables with as the base year for comparative growth analysis. Human Resource Value (HRV): Table 5.5 Indices for Human Resource Value of Hindustan Copper Ltd. For the year ended on 31 st March HRV (Rs. In crores) HRV-Index Source: Annual reports of HCL from the year 2006 to 2012 The total Human Resource Value at HCL was Rs crores at the year end , which increased remarkably during last seven years to reach to Rs. 991

10 crores at the year-end This increase is high around 3.4 times over the base year i.e Table 5.6 Indices for of Hindustan Copper Ltd. Year ended on 31 st March (Rs.) Index Source: Annual reports of HCL, for the years to is the market value of the organization s stock at the end of each of the respective sample years to The above table makes it clear that fluctuated in last seven years. The of the HCL increase from Rs crores in 2006 to Rs crores for the year This increase in indicates that Firm Value increased by approximately 1.90 times over the period of seven years. of the study. Figure 5.3 shows the and HRV indexes fluctuation during years 991

11 Figure 5.3 and HRV indexes fluctuation of Hindustan copper Ltd TOTAL HRV INDEX TOTAL FIRM VALUE INDEX Source: Compiled from tables 5.5 & 5.6of the enterprise under consideration Hindustan Petroleum Corporation Ltd. (HPCL) HPCL was incorporated in 1974 after the takeover and merger of Erstwhile Esso Standard and Lube India Limited. HPCL is a Government of India Enterprise with a Navratna Status, and a Fortune 500 and Forbes 2000 company, with an annual turnover of Rs. 1,90,048 Crores and sales/income from operations of Rs 2,15,675 Crores (US$ Billions) during FY , having about 20% Marketing share in India among PSUs and a strong market infrastructure. HPCL uses Lev & Schwartz model for the purpose of computation of value of human resources. The company considers all direct and indirect benefits given to employees as a basis for valuation of human resources. HPCL was reporting Total Number of Employees-group wise distribution, in age wise distribution and average age of 991

12 employees. HPCL also disclosed value of HR in total and per employee. It also disclosed value added in total and per employee. It also calculates employee cost and some ratios like profit/hr, Employee cost/hr, and HR/total resource. It uses the constant rate for discounting the future expected income of employees at 8.25 per cent. Behavioral Analysis: The data used in the study has been collected from the annual reports of HPCL from the year to Two important variables from the study point of view: Human Resource Value The index based time series behavioral analysis has been carried out to observe the movement of each of these variables. This section studies the movement of these two important variables which are considered for the study. The values of these variables have changed during the last seven years of the study. The researcher has also constructed the index of these variables with as the base year for comparative growth analysis. Human Resource Value (HRV): 910

13 Table 5.7 Indices for Human Resource Value of Hindustan Petroleum Corporation Ltd. For the year ended on 31 st March HRV (Rs. In crores) HRV-Index Source: Annual reports of HPCL from the year 2006 to 2012 The total Human Resource Value at HPCL was Rs 9969 crores at the year end , which increased remarkably during last seven years to reach to Rs crores at the year-end This increase is 2.14 times over the base year i.e Table 5.8 Indices for of Hindustan Petroleum Corporation Ltd. Year ended on 31 st March (Rs.) Index Source: Annual reports of HPCL, for the years to is the market value of the organization s stock at the end of each of the respective sample years to The above table makes it clear that fluctuated in last seven years. The of the HPCL increase from Rs crores in 2006 to Rs crores for the year This increase in indicates that increased by approximately 1.04 times over the period of seven years. of the study. Figure 5.4 shows the and HRV indexes fluctuation during years 919

14 Figure 5.4 and HRV indexes fluctuation of Hindustan Petroleum Corporation Ltd TOTAL HRV INDEX TOTAL FIRM VALUE INDEX Source: Compiled from tables 5.7 & 5.8 of the enterprise under consideration Bharat Petroleum Corporation Ltd. (BPCL) Bharat Petroleum Corporation Limited (BPCL), is an Indian statecontrolled Oil and Gas company headquartered in Mumbai, Maharashtra. BPCL has been ranked 225th in the Fortune Global 500 rankings of the world's biggest corporations for the year BPCL organization implemented the Lev and Schwartz valuation model for Human Assets. BPCL was reporting Total Number of Employees-and group wise distribution. BPCL also disclosed value of HR and value added in total. It uses the 911

15 constant rate for discounting the future expected income of employees at 8.5 per cent. Behavioral Analysis: The data used in the study has been collected from the annual reports of BPCL from the year to Two important variables from the study point of view: Human Resource Value The index based time series behavioral analysis has been carried out to observe the movement of each of these variables. This section studies the movement of these two important variables which are considered for the study. The values of these variables have changed during the last seven years of the study. The researcher has also constructed the index of these variables with as the base year for comparative growth analysis. Human Resource Value (HRV): Table 5.9 Indices for Human Resource Value of Bharat Petroleum Corporation Ltd. For the year ended on 31 st March HRV (Rs. In crores) HRV-Index Source: Annual reports of BPCL from the year 2006 to 2012 The total Human Resource Value at BPCL was Rs 4781 crores at the year end , which increased remarkably during last seven years to reach to Rs crores at the year-end This increase is high around 3.10 times over the base year i.e

16 Table 5.10 Indices for of Bharat Petroleum Corporation Ltd. Year ended on 31 st March (Rs.) Index Source: Annual reports of BPCL, for the years to is the market value of the organization s stock at the end of each of the respective sample years to The above table makes it clear that fluctuated in last seven years. The of the BPCL increase from Rs crores in 2006 to Rs crores for the year This increase in indicates that increased by approximately 2.11 times over the period of seven years. Figure 5.5 shows the and HRV indexes fluctuation during years of the study. 911

17 Figure 5.5 and HRV indexes fluctuation of Bharat Petroleum Corporation Ltd TOTAL HRV INDEX TOTAL FIRM VALUE INDEX Source: Compiled from tables 5.9 & 5.10 of the enterprise under consideration Steel Authority of India Ltd. (SAIL) Steel Authority of India Limited is one of the largest state-owned steelmaking company based in New Delhi, India and one of the top steel makers in World. SAIL is India's largest steel producing company. With a turnover of Rs. 49,350 crore, the company is among the top five highest profits earning corporate of the country. It is a public sector undertaking which trades publicly in the market is largely owned by Government of India and acts like an operating company. SAIL had started providing information related to HRA in its annual report from the financial year

18 SAIL follows the human resource valuation model suggested by Lev and Schwartz by accommodating some adjustments suggested by Flamholtz and Jaggi and Lau. SAIL considers the possibility of leaving the job by employees. SAIL has categorized its Total Number of Employees in six groups; Managers, Executives, Supervisors, Clerical staff, Skilled workers, and Semi skilled workers. SAIL reports number of employees category-wise, age-wise and total. It reports the HRV of all employees in total as well as category wise. SAIL uses the constant rate of discounting the future expected return at 15 per cent. Company also provides the information about Turnover, Value Added, and Capital Employed, EPS, Net worth per Share, Employee Remuneration and Benefit. Behavioral Analysis: The data used in the study has been collected from the annual reports of SAIL from the year to Two important variables from the study point of view: Human Resource Value The index based time series behavioral analysis has been carried out to observe the movement of each of these variables. This section studies the movement of these two important variables which are considered for the study. The values of 911

19 these variables have changed during the last seven years of the study. The researcher has also constructed the index of these variables with as the base year for comparative growth analysis. Human Resource Value (HRV): Table 5.11 Indices for Human Resource Value of Steel Authority of India Ltd. For the year ended on 31 st March HRV (Rs. In crores) HRV-Index Source: Annual reports of SAIL from the year 2006 to 2012 The total Human Resource Value at SAIL was Rs crores at the year end , which increased remarkably during last seven years to reach to Rs crores at the year-end This increase is 1.14 times over the base year i.e Table 5.12 Indices for of Steel Authority of India Ltd. Year ended on 31 st March (Rs.) Index Source: Annual reports of SAIL, for the years to is the market value of the organization s stock at the end of each of the respective sample years to The above table makes it clear that fluctuated in last seven years. The of the SAIL increase from Rs crores in 2006 to Rs crores for the year This increase in indicates that increased by approximately 1.01 times over 911

20 the period of seven years. Figure 5.6 shows the and HRV indexes fluctuation during years of the study. Figure 5.6 and HRV indexes fluctuation of Steel Authority of India Ltd TOTAL HRV INDEX TOTAL FIRM VALUE INDEX Source: Compiled from tables 5.11 & 5.12 of the enterprise under consideration National Thermal Power Corporation Ltd. (NTPC) India s largest power company, NTPC was set up in 1975 to accelerate power development in India. NTPC ranked 337th in the 2012, Forbes Global 2000 ranking of the World s biggest companies. NTPC's core business is engineering, construction and operation of power generating plants and providing consultancy to power utilities in India and abroad. In NTPC, People before Plant Load Factor is the mantra that guides all HR related policies. NTPC has been awarded No.1, Best Workplace in India among large organizations and the best PSU for the year 2010, 911

21 by the Great Places to Work Institute, India Chapter in collaboration with The Economic Times. NTPC uses the Lev and Schwartz economic value based model for the valuation and reporting of information regarding its human resources as supplementary information in its annual reports. For valuation of human resources, company divides total employees in three groups as under: Executives, Supervisors, and Workmen NTPC reports value of human resources group wise as well as in total. It also calculates some ratios like HR/TR, VAD/HR, Turnover/HR. it uses the constant rate for discounting the future expected income of employees at 12 per cent. The numbers of employees have increased in last seven years from 21,870 to Behavioral Analysis: The data used in the study has been collected from the annual reports of NTPC from the year to Two important variables from the study point of view: Human Resource Value The index based time series behavioral analysis has been carried out to observe the movement of each of these variables. This section studies the movement of these two important variables which are considered for the study. The values of these variables have changed during the 911

22 last seven years of the study. The researcher has also constructed the index of these variables with as the base year for comparative growth analysis. Human Resource Value (HRV): Table 5.13 Indices for Human Resource Value of National Thermal Power Corporation For the year ended on 31 st March HRV (Rs. In crores) HRV-Index Source: Annual reports of NTPC from the year 2006 to 2012 The total Human Resource Value at NTPC was Rs crores at the year end , which increased remarkably during last seven years to reach to Rs crores at the year-end This increase is 2.03 times over the base year i.e Table 5.14 Indices for of National Thermal Power Corporation Year ended on 31 st March (Rs.) Index Source: Annual reports of NTPC, for the years to is the market value of the organization s stock at the end of each of the respective sample years to The above table makes it clear that fluctuated in last seven years. The of the NTPC increase from Rs crores in 2006 to Rs crores for the year This increase in indicates that increased by approximately

23 times over the period of seven years. Figure 5.7 shows the and HRV indexes fluctuation during years of the study. Figure 5.7 and HRV indexes fluctuation of National Thermal Power Corporation TOTAL HRV INDEX TOTAL FIRM VALUE INDEX Source: Compiled from tables 5.13 & 5.14 of the enterprise under consideration Indian Oil Corporation Ltd. (IOC) Indian Oil began operations in 1959 as Indian Oil Company Ltd. The Indian Oil Corporation was formed in 1964, with the merger of Indian Refineries Ltd. Indian Oil Corporation Limited is an Indian state-owned Oil and Gas corporation with its headquarters in New Delhi, India. It is the world's 83 rd largest corporations, according to the Fortune Global 500 list, and the largest public corporation in India when ranked by revenue. 919

24 IOC follows the human resource valuation model suggested by Lev and Schwartz. IOC reports number of employee group wise, gender wise and total. It discloses Human Resource Value, value added and discount rate for 7 consecutive years. Behavioral Analysis: The data used in the study has been collected from the annual reports of IOC from the year to Two important variables from the study point of view: Human Resource Value The index based time series behavioral analysis has been carried out to observe the movement of each of these variables. This section studies the movement of these two important variables which are considered for the study. The values of these variables have changed during the last seven years of the study. The researcher has also constructed the index of these variables with as the base year for comparative growth analysis. Human Resource Value (HRV): Table 5.15 Indices for Human Resource Value of Indian Oil Corporation For the year ended on 31st March HRV (Rs. In crores) HRV-Index Source: Annual reports of IOC from the year 2006 to 2012 The total Human Resource Value at IOC was Rs crores at the year end , which increased remarkably during last seven years to reach to 911

25 Rs crores at the year-end This increase is 2.28 times over the base year i.e Table5.16 Indices for of Indian Oil Corporation Year ended on 31 st March (Rs.) Index Source: Annual reports of IOC, for the years to is the market value of the organization s stock at the end of each of the respective sample years to The above table makes it clear that fluctuated in last seven years. The of the IOC increase from Rs crores in 2006 to Rs crores for the year This increase in indicates that increased by approximately 1.19 times over the period of seven years.. Figure 5.8 shows the and HRV indexes fluctuation during years of the study. 911

26 Figure 5.8 and HRV indexes fluctuation of Indian Oil Corporation TOTAL HRV INDEX TOTAL FIRM VALUE INDEX Source: Compiled from tables 5.15 & 5.16 of the enterprise under consideration Bharat Heavy Electricals Ltd. (BHEL) Bharat Heavy Electricals Ltd. (BHEL) is a public sector organization set up with the aim of manufacturing heavy electrical equipment, in the country. BHEL was set up in November 1956 to meet and develop the country s infrastructure. BHEL was established in Heavy Electrical (India) Ltd. was merged with BHEL in BHEL had initiated publishing information related to HRA in its annual report for the financial year , by using the Lev and Schwartz model, for the first time in India. BHEL also started considering efficiency factor for the purpose of human resource valuation from the year Moreover, this company has 911

27 consistently used a particular model for the valuation of its human resource from onwards. The model adopted by BHEL is given below: HRV = P 12 N E I/F Where, HRV Human Resources Value of the group of employees in the particular salary grade. P 12 =Annual compensation (including DA, CCA, HRA, PF contribution by employers etc). N = Total Number of Employees in the grade. E= Efficiency Factor (The factor varies with the amount of experience. It decreases at about5% for each accounting period of five or six years). I = Incremental Factor (It is 5% for five years period. The period of 5 years has been taken as the basic in the assumption that people with five experiences are normally promoted to the next higher grade). F = It has been taken at 12% per annum which is the weighted average cost of capital to the company. BHEL divides total employees of the organization according to age, grade and category for the purpose of valuation and reporting information related to human resource accounting. The company followed the discount rate at 12 per cent considering the weighted average cost of capital. BHEL became the first Indian company to provide the highest information under the head human resource accounting. It took a lead in calculating and communicating the ratios measuring the productivity and performance of human resources. 911

28 BHEL was reporting number of employees, Value added, Employee Remuneration and benefit, value added per employee, turnover per employee and also Human Resource Value-age wise, group wise and in total. It also communicated the ratios like Human Resources (HR)/Total Resources (TR), HR/fixed asset (FA), turnover/hr, PBT/HR, HR/VAD. The company has classified its employees into six categories based on skill, type of work, experience and qualifications. In each category ten to fifteen salary grades have been identified to facilitate the valuation of Human Assets. The number of employees have increased from 42,601in to 49,390 in Behavioral Analysis: The data used in the study has been collected from the annual reports of BHEL from the year to Two important variables from the study point of view: Human Resource Value The index based time series behavioral analysis has been carried out to observe the movement of each of these variables. This section studies the movement of these two important variables which are considered for the study. The values of these variables have changed during the last seven years of the study. The researcher has also constructed the index of these variables with as the base year for comparative growth analysis. Human Resource Value (HRV): 911

29 Table 5.17 Indices for Human Resource Value of Bharat Heavy Electricals Ltd. For the year ended on 31 st March HRV (Rs. In crores) HRV-Index Source: Annual reports of BHEL from the year 2006 to 2012 The total Human Resource Value at BHEL was Rs 5683 crores at the year end , which increased remarkably during last seven years to reach to Rs crores at the year-end This increase is high around 3.36 times over the base year i.e Table 5.18 Indices for of Bharat Heavy Electricals Ltd. Year ended on 31 st March (Rs.) Index Source: Annual reports of BHEL, for the years to is the market value of the organization s stock at the end of each of the respective sample years to The above table makes it clear that fluctuated in last seven years. The of the BHEL decrease from Rs crores in 2006 to Rs crores for the year This decrease in indicates that Firm Value decreased by approximately 0.9 times over the base year i.e Figure 5.9 shows the and HRV indexes fluctuation during years of the study. 911

30 Figure 5.9 and HRV indexes fluctuation of Bharat Heavy Electricals Ltd TOTAL HRV INDEX TOTAL FIRM VALUE INDEX Source: Compiled from tables 5.17 & 5.18 of the enterprise under consideration Oil and Natural Gas Corporation Ltd. (ONGC) The government of India established Oil and Natural Gas Commission (ONGC) in October It became a statutory corporation on 23 rd June ONGC is India s premier and one of the world s few leading companies engaged in surveys, research, drilling, exploration, production of crude oil and gas, etc. It is one of the largest Asia-based oil and gas exploration and production companies.it is one of the largest publicly traded companies by market capitalization in India. ONGC has been ranked 357th in the Fortune Global 500 list of the world's biggest corporations for the year It is also among the Top 250 Global Energy Company by Platts. ONGC is the only fully integrated petroleum company in India, operating along the entire hydrocarbon value chain. It holds largest share of 911

31 hydrocarbon aggregates in India and Contributes over 79 per cent of Indian s oil and gas production. ONGC follows the Lev and Schwartz model by accepting the modifications suggested by Flamholtz and Jaggi and Lau. ONGC divides total employees into four categories as under: Managerial and supervisory; Clerical; Skilled workers; and Unskilled workers. ONGC considers the rate of interest, at which the Government of India advances them loans, as the discount rate. ONGC reports the present value of future expected return of the employees by discounting it at 10.5 per cent constantly. ONGC reports HRV category wise as well as in total. Behavioral Analysis: The data used in the study has been collected from the annual reports of ONGC from the year to Two important variables from the study point of view: Human Resource Value The index based time series behavioral analysis has been carried out to observe the movement of each of these variables. This section studies the movement of these two important variables which are considered for the study. The values of these variables have changed during the last seven years of the study. The researcher 911

32 has also constructed the index of these variables with as the base year for comparative growth analysis. Human Resource Value (HRV): Table 5.19 Indices for Human Resource Value of Oil and Natural Gas Corporation Ltd. For the year ended on 31 st March HRV (Rs. In crores) HRV-Index Source: Annual reports of ONGC from the year 2006 to 2012 The total Human Resource Value at ONGC was Rs crores at the year end , which increased remarkably during last seven years to reach to Rs crores at the year-end This increase is 1.82 times over the base year i.e Table 5.20 Indices for of Oil and Natural Gas Corporation Ltd. Year ended on 31 st March (Rs.) Index Source: Annual reports of ONGC, for the years to is the market value of the organization s stock at the end of each of the respective sample years to The above table makes it clear that fluctuated in last seven years. The of the ONGC increase from Rs crores in 2006 to Rs crores for the year This increase in indicates that 910

33 increased by approximately 1.22 times over the period of seven years. Figure 5.10 shows the and HRV indexes fluctuation during years of the study. Figure 5.10 and HRV indexes fluctuation of Oil and Natural Gas Corporation Ltd TOTAL HRV INDEX TOTAL FIRM VALUE INDEX Source: Compiled from tables 5.19 & 5.20 of the enterprise under consideration 919