Company Car Policy

Transcript

Company Car Policy 1. Objective The new Company Car Policy has been formulated in order to introduce an employee friendly and easy to administer car scheme in the company with effect from April 1, 2006. With the introduction of this scheme all previous car schemes stand withdrawn. 2. Scope Employees in Grade M1 and above are entitled to participate in this scheme. These employees have been assigned Management Allowance / Car Kitty as part of their remuneration package. Their Management Allowance / Annual Car Kitty amount is given in the table included herein below. (A) Grade (B) Car Kitty (p.a.)* Rs. M5 M4 M3 M2 M1 240,000 195,000 150,000 105,000 75,000 Amt (C) Mgmt. (p.m.) Rs. 20,000 16,250 12,500 8,750 6,250 Allow. (D) Addnl. Car Kitty(p.a.)* Rs. 60,000 45,000 45,000 45,000 30,000 (E) Max. Car Kitty Amt (p.a.)* Rs. 300,000 240,000 195,000 150,000 105,000 In the case of employees joining the Company Car Scheme post July 1, 2006, actual Car Kitty amount shall be net of Fringe Benefit Tax (FBT) as applicable. 3. General 3.1. Under this scheme eligible employee can avail of a leased car for both official duties as well as personal use. For this purpose, the company has entered into an agreement with a lease finance company. The details of the same have been provided in the Annexure I. 3.2. Eligible employees would be entitled to a car with a per annum cap on lease rent equivalent to their annual car kitty entitlement included in their remuneration package. 3.3. Employees can select any car of their choice within their lease rent entitlement limit. 3.4. Full finance is available without any margin money requirement. The amount that can be rentalized includes the following: Page 1 of 17 3.4.1. 3.4.2. 3.4.3. 3.4.4. 3.4.5. Ex-Showroom Cost of the car Registration Fees Insurance Cost of Accessories Octroi and other taxes. However, the minimum amount that would need to be rentalized is the ExShowroom cost of the vehicle. 3.5. In case accessories are bought from some other dealer, the VAT Invoice from that dealer will be required. 3.6. At the end of the Lease Term, the car will be returned to the leasing company. 4. Standard Operating Procedure: 4.1. The process starts with the employee getting an “In principle” approval of his/her respective HOD vide e-mail on a model that falls within his/her car kitty entitlement limit. 4.2. Employee negotiates with the dealer to get the best deal possible and gets a formal quotation in the form of Proforma Invoice. 4.3. Employee then submits to the Admin Department. an application for joining the company car scheme in the prescribed format as per Annexure II enclosing the Proforma Invoice and the e-mail approval from HOD. 4.4. Employee also executes an Undertaking on Rs. 20 Stamp Paper (refer Annexure III) and submits the same to Admin Department. 4.5. Admin gets the approvals from Finance on the Application Letter and retains the original Application Letter and Proforma Invoice for their records. 4.6. Admin intimates the Lease Finance Company vide Authorization Letter as per Annexure IV enclosing a copy of Proforma Invoice. 4.7. The Lease Finance Company then sends the following to the Admin Department.: 4.7.1. Cheque in the name of the Dealer 4.7.2. Covering Letter to the Dealer 4.7.3. Letter for Endorsement to the RTO 4.7.4. Form 20 for signature of Authorized Signatory Page 2 of 17 4.8. Commencement date for the lease period under the scheme shall be the date on which cheque is drawn in favor of the dealer by the Lease Finance Company. 4.9. Admin gets the required signature on Form 20. Admin hand over the following to the employee to take the delivery of the car: 4.9.1. Cheque in the name of the Dealer 4.9.2. Covering Letter to the Dealer 4.9.3. Letter for Endorsement to the RTO 4.9.4. Form 20 with approval from Authorized Signatory (CFO) 4.9.5. Copy of ABC’s PAN Card 4.9.6. Company’s Address Proof 4.9.7. Letter of Authority to take the delivery of the car (Refer Annexure V). Admin retains a copy of all the above documents. 4.10.Based on these documents employee can take delivery of the car. 4.11.On receiving the delivery of the car, the employee needs to forward the following docs to the Admin Department. 4.11.1. 4.11.2. 4.11.3. 4.11.4. Original Invoice Copy of Insurance Cover Note Copy of R C Book Copy of Insurance Policy 4.12.Admin Department retains a copy of all the above documents and sends the Original Invoice and copy of the other three docs to the Lease Finance Company. 4.13.The Lease Finance Company then sends the following to the Admin Department: 4.13.1. Lease Agreement drawn in triplicate (One Original and two copies). 4.13.2. First Debit note 4.14.Admin takes required signatures on the Lease Agreements, sends original to Lease Finance Company, handover one copy to employee and retains the other copy for their records. Page 3 of 17 4.15.Admin then intimates the payment schedule included in the Agreement to the HR Department and forwards the First Debit Note to the Accounts Department. for making payment to the Lease Finance Company 4.16.On receiving the Payment Schedule, the HR Department provides the necessary inputs to the Payrolls Department vide the monthly salary input. 4.17.Second year onwards, the employee gets the insurance done himself, retains the original insurance policy and submits two copies of it to Admin Department. Admin Department retains a copy and sends a copy to Lease Finance Company 4.18.The Lease Finance Company will raise a single rental bill by 20 th of every month reflecting all the on-going agreements and sends it to the Admin Department who will forward the same to Accounts Department for payments. 5. Maintenance / Repairs / Normal Running / Insurance The employee will be required to maintain the Car in good condition & incur all running costs including costs of fuel, spares, tubes, tyres, repairs, maintenance, servicing etc., as required from time to time. As stated above, the employee will also bear the insurance cost 2 nd year onwards. All these expenditures can be claimed against reimbursement entitlement included as part of the compensation package. 6. Foreclosure: 6.1. Premature exiting from the car scheme by returning the car at any point of time has been provided for under the scheme. However, where premature exit from the scheme is not at the behest of the company, the foreclosure charges / expenses shall be borne by the employee in totality. Instances of premature exit not at the behest of the company are foreseen as, but not limited to the following: 6.1.1. Resignations 6.1.2. Retirements (including Voluntary Early Retirement) 6.1.3. Personal Reasons 6.1.4. Dismissals from service will be treated on the same footing as cases, which are not at the behest of the Company. 6.2. The working of the foreclosure charges would be as agreed with the Lease Finance Company. The details of the same are in Annexure I. 6.3. In case the employee is joining a new organization, there is a possibility of assigning the car to the new organization by the Lease Finance Company. This will need to be mutually decided by the Lease Finance Company and the concerned employee’s new organization. Page 4 of 17 6. Promotions If the employee’s car kitty entitlement changes due to promotion, the difference between the new monthly car kitty entitlement and monthly car lease rent would be added to his/her Personal allowance and paid out with salary on monthly basis. This would be treated as income and taxed accordingly. 7. Transfers In case of inter-location transfers, within the company, the leasing company will organize all the necessary formalities. The concerned employee will be required to contact the Administration Department at HO to initiate necessary processes. In case of transfers to a subsidiary / affiliate / sister company, the car can be assigned to the new company wherever the new company also has an agreement with the said Lease Finance Company. The transfer charges will be borne by the company if the transfer is company initiated and by the employee if the transfer is employee initiated. 8. Rejoining the Car Scheme On completion of the tenure and on returning of the car to the Leasing Company, the employee will be entitled to rejoin the car scheme immediately thereafter. 9. Overall Co-ordination/Clarification/Suggestions 6.4. Car Scheme will be co-ordinated on an all India bases by the Administration Department in Head Office. The department shall maintain an MIS pertaining to the scheme. 6.5. All clarifications with regard Administration Department. to the scheme can be obtained from 6.6. All suggestions for improvement of the scheme should be addressed to the Administration Department. Page 5 of 17 ANNEXURE I 1. The company has entered into an agreement with M/s Sundaram Finance Ltd., a Lease Finance Company to make available a leased car to the eligible employees of the company. 2. Employee has an option to choose tenure ranging from 3 yrs to 5 yrs. Current Lease rentals for the same are indicated in the table below: Tenure 3 Yrs 4 Yrs Resale Value 25 % 20 % Rental per lac per month (plpm)* Rs 2705 Rs 2230 5 Yrs 15 % Rs 1930 * Please contact the Admin Department. for the latest Lease Rentals applicable. 3. The above rentals are based on the current SBI PLR. There could be a variation in the rentals due to variation in any of the following: • • SBI PLR ( In this regard please note that, there has been no increase in this benchmark interest rate in the past 5 Yrs) Change in the Corporate Taxes / Depreciation Rates as prescribed in the Union Budget Kindly refer to the variation tables included herein below: 3.1. Given below is the variation table for the 3 year option: Tenure : 3 years Rent (per month per lac) : Rs.2,705/- Pattern of payment : Monthly in advance Page 6 of 17 Change taking place at the Quantum of change in rent per month end of the month 0.5% p.a. change in cost of funds per lac for Rs. Page 7 of 17 0 27 6 12 18 24 23 21 25 19 3.2. Given below is the variation table for the 4 year option: Tenure : 4 years Rent (per month per lac) Pattern of payment : Rs.2,230/- : Monthly in advance Change taking place at the Quantum of change in rent per month end of the month per 0.5% p.a. change in cost of funds lac for Page 8 of 17 Rs. 0 26 6 12 18 24 23 21 19 30 36 15 13 17 3.3. Given below is the variation table for the 5 year option: Tenure Rent (per month per lac) Pattern of payment : 5 years : Rs.1,930/: Monthly in advance Change taking place at the month end of the month change in cost of funds Quantum of change in rent per per lac for 0.5% p.a. Rs. 26 24 22 0 6 12 Page 9 of 17 18 24 30 18 16 36 42 48 20 15 13 14 3.4. The quantum of change in rentals indicated above is for every half percentage point change in the cost of funds to the lessor keeping the other parameters of the lease at the present level. 3.5. In the 3 year option, the variation in rental for any 0.5% p.a. change taking place after the 24th month shall remain Rs.19/- per month per lac till the end of the lease period. 3.6. In the 4 year option, the variation in rental for any 0.5% p.a. change taking place after the 36th month shall remain Rs.13/- per month per lac till the end of the lease period. 3.7. In the 5 year option, the variation in rental for any 0.5% p.a. change taking place after the 48th month shall remain Rs.13/- per month per lac till the end of the lease period. 3.8. Any change in cost of funds to the lessor taking place between two periods indicated in the table above will entail change in rentals to the extent of change in rentals indicated at the beginning or at the end of the said periods or any magnitude falling in between depending on the exact point in time the change takes place. 3.9. The magnitude of change in rentals indicated above shall be applicable from the immediate rental next falling due and shall be applicable on all the future instalments of the rentals. 4. Stamp Duty 4.1. Stamp Duty cost is also applicable on the Lease Rent Agreement. This amount varies as per the rates applicable from state to state. 4.2. The current Stamp Duty rates in various states are listed below: Orissa Tamilnadu Kerala Karnataka Andhra Pradesh Maharashtra Rs.10/Rs.20/Rs.50/1% of average annual rentals Rs.100/1% of average annual rentals Page 10 of 17 Gujarat Delhi Madhya Pradesh Uttar Pradesh West Bengal Haryana Goa Pondicherry 2% of average annual rentals Rs.50/Rs.50/Rs.50/Rs.20/Rs.20/Rs.20/Rs.20/- 4.3. The same will be recovered from the employee’s salary on receiving delivery of the car. 5. Once lease rentals exceed the car cost, 12.5% VAT will be applicable on the lease rentals and EMI would be enhanced to that effect 5.1. Second year onwards, Insurance will be done by the employee. In case the employee opts for insurance cover by Royal Sundaram or Oriental, the Sundaram Finance can take care of renewals, but the cost has to be borne by the employee. 6. Foreclosure 6.1. In case of foreclosure, value would be arrived at by discounting the balance rentals and the resale value considered in the package. The discount factor would be the prevailing SBI-PLR (Current PLR is 10.25% p.a.) 6.2. However, if the leasing company obtains the sale proceeds of the vehicle, the employee will be liable to pay only to the extent the net sale proceeds are less than the foreclosure charges. Page 11 of 17 ANNEXURE II Application to join Company Car Scheme Name: _____________________ Department: _________________ Designation: ________________ E-Mail Id: Mobile No: ___________________ _ __________________ Date: To, The Administration Department. Kind Attn: Mr. R K Attal ________________________ Sub: Request for a car under Company Car Lease Scheme Dear Sir, I request you to provide me a car as per the following details. I have read the rules governing the scheme and agree to abide by the same and amendments, if any, to the same. Yours faithfully, Name and Signature of the employee DETAILS OF CAR Car Make/ Model Car Kitty Eligibility per annum Desired Date of Delivery Option Tenure /Resale Value Current Lease Rental plpm (A) Heads Ex-Showroom Cost of Car Insurance  Option 1 3 Yrs / 25%  Option 2 4 Yrs / 20%  Option 3 5 Yrs / 15% Cost To be (Y/N) Rentalized Cost to Rentalized be Page 12 of 17 Registration Octroi / Other Taxes Cost of Accessories Total Cost to be Rentalized (B) Monthly Lease Rental [(A*B)/100,000] Copy of e-mail having HOD’s approval attached herewith Yes No Manager-Admin CFO ANNEXURE III (To Be Executed on Rs. 20/- Stamp Paper) UNDERTAKING Name of the Employee Residential Address : _______________________ : _______________________ _______________________ _______________________ _______________________ ABC India Ltd. Attn: Mr. R.K.Attal Plot No. 5, Off BKC Road, Off CST Road, Santacruz (E), Mumbai - 98 Date: Page 13 of 17 Dear Sir, Car Scheme In consideration of your having admitted me to the company's car scheme and provided me with car ( No.,________________ Make __________________ ) hereinafter called "the car" with effect from ______________ on the terms and conditions of the said scheme, I undertake to the Company as follows :1) I have read all terms and conditions of the scheme and I agree to, accept and abide by all the terms and conditions laid down by the Company in the Car Scheme and amendment if any, thereof. 2) The car is registered in the name of the Company, but shall remain the property of the Leasing Company. 3) In case of any dispute, which may arise between the Company and me, the Leasing Company will have the right to re-posses the car any time during the leasing period. 4) I shall use the car only for my personal and official use. I shall not put the car to use on hire or reward and shall not use the car for any unlawful purpose. 5) In case of my separation from the Company for any reason whatsoever including resignation, retirement, VRS, dismissal, etc., I hereby agree to bear the foreclosure charges and hereby authorize the company to adjust the said charges from my terminal dues and in case of shortfall if any I shall forthwith make good the same to the Company. 6) Not withstanding the aforesaid, I / my legal heirs shall be personally liable to pay to the Company all amounts due from me under this scheme and to pay the same to you on demand and without demur and notwithstanding any dispute/ difference that may be subsisting between me/ my legal heirs and the Company. 7) The agreement shall bind in all respect heirs executors legal representatives and myself. I further agree that the Company shall have the same rights against my heirs, executors and legal representatives, as it has against me under this agreement. 8) I understand that on execution of this Undertaking, monthly pay out to me out of my annual car kitty entitlement will stop. 9) I had been given two salary structures viz. “With Car” and “Without Car” in my initial offer letter / at the time of my salary review. I understand that once I join this scheme, the “With Car” structure will come into effect from the month in which the car lease period starts and same shall be applicable during the period that I am part of the scheme. 10)However, in case the monthly lease rent is less than the one twelfth of the annual car kitty entitlement, the differential amount would be added to the Personal Allowance and paid out to the employee through salary on a monthly basis. The said amount would be taxable. Page 14 of 17 11)The scheme would be governed by the tax regime as applicable from time to time, and any implications thereof would be to my account. Yours faithfully, Signature of the Employee Name: ___________________________ Place: ___________________________ Date: ___________________________ Witness: _________________________ Signature________________________ Name: ___________________________ Address: ________________________ __________________________ ANNEXURE IV Authorization Letter to Lease Finance Company to make the payment to the dealer Date: Sundaram Finance Limited 95, 9th Floor, Maker Chambers III, Nariman Point, Mumbai – 400 021 Subject: Car for Dear Sir, With reference to our leasing arrangement for cars, please find enclosed the proforma invoice dated ___________ raised by , amounting to ______________. The terms of the transactions are as follows: Nature of Asset : Page 15 of 17 Cost of Asset Lease Tenure Lease Rentals Lease Management Fee : : : : You are requested to arrange for the insurance, which may also be capitalized. You are requested to issue a cheque favoring payable at for Rs ___________ and also forward the necessary documents for registration of the vehicle. Thanking you, For ABC (India) Ltd. Authorized Signatory ANNEXURE V Letter of Authority to take the delivery of Car Date: ____________ To, Dealer’s Name Address Reg: Supply of one _______ Car leased to us by M/s Sundaram Finance Limited Ref: Your proforma invoice dated ___________ Dear Sir/ Madam, We hereby authorize of M/s ABC (India) Limited, whose signature is attested below, to collect the ______________ Model which is leased out to us by < Name of Lease Finance Co.>. All documents signed by in this regard shall be binding on the Company. Page 16 of 17 .........................................(Signature of authorized representative) For ABC (INDIA) LTD., CFO Page 17 of 17