October 30, 2007 SKF Group Slide 0

India Salary Revision -2013

April 2013

October 30, 2007 SKF Group Slide 2

Topics

1. Factors Considered for Salary Review

2. Performance Evaluation Guidelines

3. Salary Increment

4. Salary Correction linked to Industry benchmarks

5. Process Timeline and Communication

October 30, 2007 SKF Group Slide 3

Factors Considered for Salary

Review

October 30, 2007 SKF Group Slide 4

Factors Considered for Salary Review

October 30, 2007 SKF Group Slide 5

GDP & Inflation

Parameters 2012

GDP 4.9%

Wholesale Price Index % 6.9%

Source : HSBC, CSO, Labour Bureau

October 30, 2007 SKF Group Slide 6

Performance Evaluation

Guidelines

Performance Evaluation Rating Scale

SKF India followed a 5- point Rating Scale for performance

ratings with Group PMP process

1. Top Achievement

2. Higher Achievement

3. Full Achievement

4. Partial Achievement

5. Unsatisfactory Achievement

October 30, 2007 SKF Group Slide 7

October 30, 2007 SKF Group Slide 8

SKF in India Status April 2013

Note :

22% Employees were rated as Top / Higher Achievement Vs. the Ideal rating percentage

guideline of 15%

The above curve is an outcome of the ratings given by managers

SKF in India 2013

0%

20%

40%

60%

80%

Current 4% 18% 70% 7% 1%

Ideal 5% 10% 70% 10% 5%

Top Higher Full Partial Unsatis fac tory

October 30, 2007 SKF Group Slide 9

Salary Increment

Compensation Philosophy

October 30, 2007 SKF Group Slide 10

Key elements Salary Review 2013

October 30, 2007 SKF Group Slide 11

Move away from flat increment based approach to a differential range based increments.

Enhanced and more accurate alignment between compensation and performance in the role. Performance level based increments.

Line functions to play key role in compensation decisions, thereby taking Line manager as People Manager initiative to next level.

October 30, 2007 SKF Group Slide 12

Increment Percentages 2013

Performance Ratings 2012 % Salary Increment

Top Achievement 17% - 14%

Higher Achievement 14% - 11%

Full Achievement 11% - 7%

Partial Achievement 5%

Unsatisfactory Achievement 0%

PMS Rating and Increment Dateline

October 30, 2007 SKF Group Slide 13

PMPPMP

Increment

No increment ( 15 months next

Year )

PMS Rating PMS RatingPMS Rating New in Position

Increments prorated based on tenure

Date of

Joining

Employees who joined in Q1, 2 & 3 of 2012 were evaluated as a part of the PMP process

Those Joining in Q4 -2012 ( less than 3 months service ) were given a New in position rating

Those with a joining date in Q-4, 2011 have been given a prorated increase for their tenures in last

quarter of 2011

Increments prorated based on tenure ( for those joining during the year )

Q4 2012 joiners will get 15 months (or prorated from DOJ increment in April 2014

October 30, 2007 SKF Group Slide 14

Correction linked to Industry

Benchmarks

October 30, 2007 SKF Group Slide 15

Market Equity Corrections

1. Eligibility If salary is below market benchmark

Completed minimum 2 full PMP cycles in SKF with consistency in good performance levels

2. Effective- 01 April 2013

3. Comparative Data Mercer Salary Survey Covers leading Auto, Auto Components and Engineering Companies

across India

October 30, 2007 SKF Group Slide 16

Process Timeline & Communication

Summary

October 30, 2007 SKF Group Slide 17

Effective 01 April 2013

Effective 01 April 2013

Increments

In Grade & Cross

Grade Promotions

Communication of Salary Review

All Employees will receive an E-letter It will be uploaded into their payroll account

Any clarifications may be sought from the Manager & Business HR Leader

In case of additional clarifications the respective BU CMT member, BU HR or Director HR may be contacted.

October 30, 2007 SKF Group Slide 18

October 30, 2007 SKF Group Slide 19