Relationship Between Employee Expenses and Net Profit of Indian Companies: An Empirical Study with Reference to NIFTY 100

The paper discusses about the relationship between a firm’s performance and HR expenses of recent five to ten years of large cap organisations of India. Since these companies make a heavy impact on [ndia’s overall industrial growth and scenario, a study of this nature is considered worth doing. The study uses financial data of ten years (2008-2017) of companies that come under NIFTY. Data was collected for top 30 companies and then overall top 100 companies to understand this relationship between expenses done on employees, and profit after tax. Regression analysis is used to understand the relationship between the independent variable- employee expenses, and the dependent variable- Profit after Taxes. The interpretation is based mainly on the values of adjusted R square and p-value. The data analysis on 30 companies of Nifty Fifty says that 14% of the relationship can be explained whereas, the data analysis of top 100 Nifty companies says that 31.5% of the relationship between the two variables is explained. It establishes that there is a significant relationship between employee expenses (independent variable) and Profit after Taxes (net profit - for this study) as dependant variable. This outcome is very crucial for organisations who are always debating the kind of expenses to be done on human resources. It is of great relevance for both practicing HR managers as they are now widely treated as business partners, and business schools in India where HR as a subject specialisation is offered in management courses. A renewed respect for HR as business partner as well as a specialisation area for graduating students of management is expected.