Human resource accounting in India

Indian companies act 1956, does not provide any scope for showing any information about human resources in financial statement. Due to the development of business and industries, some of the Indian companies, both public and private, value their human resources and report this information in their annual report. The companies, who are presently reporting human assets valuation, includes

• Steel Authority of India Ltd (SAIL).
• Bharat heavy Electrical Ltd (BHEL).
• Oil and Natural Gas Commissioning (ONGC).
• Project and Equipment corporation of India. (PEC).
• Oil India Ltd
• Engineers India limited
• Electrical India Ltd.
• Mineral and Metal trading Corporation of India. (MMTC).
• Hindustan Shipyard Ltd.
• Infosys Technologies Ltd.
• Cement corporation of India. (CCI).
• Tata Engineering and Locomotive Works
• Associated Cement Company Ltd ACC).
• Southern Petrochemicals Industries Corporation Ltd SPIC).
• National Thermal Power Corporation Ltd (NTPC).

Benefits

Calculate Return on Investment (ROI):

The return on investment can realistically be calculated only when the investment on human resources also is taken into account. The ROI is may be good because there is an investment on human beings.

Improving employee efficiency:

It helps in improving the efficiency of employees. The employees come to know of the cost incurred on them and the return given by them in the form of output, and so on, which will motivate them to increase their worth.

Proper investment:

It can be seen whether the business has made proper investment in human resources in terms of money or not. If the investment is in excess, efforts should be made to control it.

Cost of developing human resources:

HRA will give the cost of developing human resources in the business. This will enable the management to ascertain the cost of labor turnover also.

Planning and executing personal policies:

It will help the management in planning and executing personal policies. The management also makes use of its help in taking decisions regarding transfers, promotions, training, retirement and retrenchment of human resources.