FEB.2012 Vol-02,Issue-02 ZENITH INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY RESEARCH ISSN ONLINE: 2231-5780 VOL.2-ISSUE- 2 FEB. 2012

GUEST EDITOR

DR. HARSH SADAWARTI PROFESSOR & DIRECTOR RIMT-Institute of Engineering & Technology Mandi Gobindgarh India

ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 ZENITH INTERNATIONAL JOURNAL OF MULTIDISCIPLINARY RESEARCH Vol.2 Issue 2; February 2012; ISSN 2231-5780

SR. PAGE CONTENTS NO. NO. THE EFFECT OF AUDIT COMMITTEE CHARACTERISTICS ON REAL ACTIVITIES MANIPULATION IN THE TUNISIAN 1. CONTEXT 1-15

ZGARNI INAAM, HLIOUI KHMOUSSI, ZEHRI FATMA AUCTION OF PLAYERS IN INDIAN PREMIER LEAGUE: THE STRATEGIC PERSPECTIVE 2. 16-36

SONALI BHATTACHARYA, SHUBHASHEESH BHATTACHARYA THE EFFECT OF BLOCKHOLDERS ON EARNINGS MANAGEMENT: THE CASE OF TUNISIAN LISTED FIRMS 3. 37-49

KHAMOUSSI HALIOUI, ABIR JERBI A STUDY ON SERVICE QUALITY AND PASSENGER SATISFACTION ON INDIAN AIRLINES 4. 50-63

R.ARCHANA, DR.M.V.SUBHA A STUDY OF ACADEMIC ANXIETY OF SPECIAL NEED’S CHILDREN IN SPECIAL REFERENCE TO HEARING 5. IMPAIRED AND LEARNING DISABLED 64-72

DR. SAMIR KUMAR LENKA, DR. RAVI KANT CARBON TRADING POTENTIALS OF BIO DIESEL- PROSPECTS AND PROBLEMS 6. 73-91

DR.MRS. DHULASI BIRUNDHA VARADARAJAN EVIDENCE ON SCALE ECONOMIES AT DISAGGREGATES

7. 92-111 SOHAIL ZAFAR QURESHI OUTREACHING MICRO FINANCE: A MULTIDIMENSIONAL MODEL FROM SHGS PERSPECTIVE 8. 112-130

NEETU ANDOTRA, POOJA, RACHITA SAMBYAL INTER-STATE COMPARISON OF FISCAL INDICATORS

9. 131-145 DR. SURESH SHANBHOGUE, TALEIGAO PLATEAU www.zenithresearch.org.in

ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 A STUDY ON IMPACT OF VISUAL MEDIA ADVERTISEMENTS ON WOMEN CONSUMERS BUYING BEHAVIOUR IN CHENNAI 10. CITY 146-171

T. RAVIKUMAR BUSINESS WOMEN IN MICRO ENTERPRISES 11. 172-180 DR.V.USHAKIRAN, MS.RAJESHWARI, MS M.V.KARUNASREE EVALUATION OF TRAINING EFFECTIVENESS: A CASE STUDY 12. 181-196

DR. TEJ SINGH, DR. RAJIV RATAN INNOVATIONS IN CLOUD COMPUTING: THE WAY AHEAD 13. 197-205 ABHISHEK PANDE SECURITY MEASURES OF HACKING AND CRIME 14. 206-213 DR.NARENDRA KUMAR, MS.SALVI RATHI PERFORMANCE EVALUATION OF AODV, DSR, DSDV AND TORA ROUTING PROTOCOLS 15. 214-221

ER. SAURABH MITTAL, PINKI A STUDY OF CUSTOMER SATISFACTION IN SPECIAL REFERENCE TO SERVICES PROVIDED BY BANKS AND POST- 16. OFFICES IN N.C.R. 222-239

DR. M. K. GUPTA, NIDHI GUPTA DATA MODELING TECHNIQUES FOR DATA WAREHOUSE 17. 240-246 MS. ALPA R. PATEL, PROF. (DR.) JAYESH M. PATEL INVENTORY MANAGEMENT OF ENGINEERING GOODS INDUSTRY IN PUNJAB: AN EMPIRICAL ANALYSISIS 18. 247-261

DR. ANITA SONI DIMENSIONALITY OF FINANCIAL REFORMS USING XBRL IN AN ORGANIZATION 19. 262-268

ABHISHEK PANDE

FLOURISHING BANCASSURANCE BUSINESS: AN INDIAN

PERSPECTIVE 269-280 20.

S SARVANAKUMAR, U.PUNITHA, S. GUNASEKARAN, S SANKAR

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 THE TECHNIQUES AND RATIONALE OF E- SURVEILLANCE PRACTICES IN ORGANIZATIONS 21. 281-290

DR.AISHA M.SHERIFF, MRS. GEETHA RAVISHANKAR QUALITY OF WORK LIFE, EMPLOYEE PERFORMANCE AND CAREER GROWTH OPPORTUNITIES: A LITERATURE REVIEW 22. 291-300

SHALINI SHEEL, DR BHAWNA KHOSLA SINDHWANI, SHASHANK GOEL, SUNIL PATHAK E – CORPORATE GOVERNANCE: A PROTOTYPE SHIFT IN PUBLIC SECTOR 23. 301-307

PROF. SARIKA. R. LOHANA FINANCIAL REPORTING AND CORPORATE GOVERNANCE - AN EMPIRICAL STUDY 24. 308-319

D.HEMA A COMPARATIVE STUDY OF CORPORATE GOVERNANCE DISCLOSURE BY PRIVATE AND PUBLIC SECTOR BANKS IN 25. INDIA 320-342

DR. HARMEET KAUR A RELATIVE ANALYSIS ON CUSTOMERS’ SATISFACTION OF MICROWAVE OVEN: STUDY ON SELECT COMPANIES 26. 343-356 MR RAJENDRAPRASAD. K.HANAGANDI, DR. FILIPE RODUGUESE MELO, DR. SHRINIVAS PATIL AN INVESTIGATION INTO THE EFFECTIVENESS OF OPEN BOOK EXAMINATION AND TRADITIONAL EXAMINATION 27. METHOD IN SECONDARY SCHOOLS 357-367

DR. DIVYA SHARMA RESTRUCTURING MANAGEMENT EDUCATION TODAY, FOR BETTER TOMORROW 28. 368-377

NEELAM SHEOLIHA, SUDEEP KUMAR AN APPROACH TO PROJECT MANAGEMENT— A BUSINESS NEED OF TODAY 29. 378-386

PROF. MRS. NANDINI M. DESHPANDE FINANCIAL VIABILITY OF SUGAR FACTORIES IN SOUTH GUJARAT-A CASE STUDY 30. 387-399

DR. MARTINA. R. NORONHA, PROF. DILIPSINH THAKOR www.zenithresearch.org.in

ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 A STUDY ON CAPITAL GAINS TAX FROM INTERNATIONAL PERSPECTIVE: A COMPARATIVE OVERVIEW 31. 400-409

DR.D.MAHESHWARA REDDY, K.V.N.PRASAD CASH MANAGEMENT OF MILK COOPERATIVES: A COMPARATIVE STUDY OF MILKFED AND HDDCF 32. 410-421

MANVIR KAUR WHETHER MOBILE MARKETING INCREASES THE BRAND VALUE OF A CAR 33. 422-433

MS.R.SUGANYA, MRS.S.SHANKARI A STUDY ON PSYCHOLOGICAL STRESS OF WORKING WOMEN 34. 434-445

PROF. PARUL TRIPATHI, PROF. SANDEEP BHATTACHARJEE METAPHYSICAL POETRY AND JOHN DONNE: AN OVERVIEW 35. 446-451

PIU SARKAR INTERNATIONAL HUMANITARIAN LAW AND CONCEPT OF HINDUISM 36. 452-458 GAURAV ARORA, GUNVEER KAUR, SUPRITHA PRODATURI, VINAYAK GUPTA THE IMPACT OF CHANGE ON MANAGERS-ON ACCOUNT OF ACQUISITION 37. 459-472

DR. KOMAL, VISMAY VIBHOL

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780

THE EFFECT OF AUDIT COMMITTEE CHARACTERISTICS ON REAL ACTIVITIES MANIPULATION IN THE TUNISIAN CONTEXT

ZGARNI INAAM*; HLIOUI KHMOUSSI**; ZEHRI FATMA***

*Assistante contractuelle à la Faculté des Sciences Economiques et de Gestion de Mahdia. **Maître de conférences à l’Institut Supérieur d’Administration des Entreprises de Gafsa. ***Maître Assistante à la Faculté des Sciences Economiques et de Gestion de Sfax.

ABSTRACT

This study examines the effect of, on the one hand, audit committee characteristics on Real Earnings Management (REM) after the implementation of the Tunisian law n° 2005-96 in 2005 and, on the other hand, the adoption of the law n° 2005-96 on the reduction of the extent of REM in the Tunisian context. Using 319 firm-year observations during the period 2000-2010, we tested whether audit committee variables are significant determinants of REM; we estimated REM proxy using Roychowdhury 2006 model. Results suggest that an audit committee comprising majority independent directors reduces the extent of REM. Furthermore, we find (1) a significant association between the audit committee expertise and sales manipulation and (2) no significant relation between the audit committee expertise and overproduction after the passage of the law n° 2005-96. In addition, a negative association between the number of audit committee meetings and overproduction is shown. Moreover, we have found that the size of the audit committee is positively associated with the level of REM. Our findings suggest that adoption of the law of financial security (2005) doesn’t have any effect on REM.

KEYWORDS: real earnings management, audit committee, law n° 2005-96. ______

I. INTRODUCTION

Corporate scandals and failures such as Enron, WorldCom, Xerox, etc. were highly catastrophic and had a terrible effect on stakeholders. The pressure of globalization and the intense competition have lead to organizations encouraging good corporate governance. These scandals were usually caused by the conflict of interest inherent in the relationship between the owner and managers. In this conflict, it was necessary to establish formulas for government to regulate the actions of all actors involved in companies. Furthermore, to enhance the credibility and transparency of financial information as well as contributing to greater control of managers, different codes and laws of corporate governance were issued such as the Cadbury Report in the UK, 1992; the Vienot I Report in France,1995; the SOX in U.S.A, 2002; the law of financial security n° 2005-96 in Tunisia). www.zenithresearch.org.in

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780

In 2005, a new law was passed in Tunisia. The Financial System Reform Act (Law n° 2005-96 of 18 october 2005) seeks to achieve greater transparency and improve the credibility of financial information by regulating auditors independence and providing for the mandatory creation of audit committees in listed companies. This law forced all Tunisian firms, that traded on the Stock Exchange, to have an audit committee and imposed that the committee president and a majority of its members were independent. This law addresses the following governance matters: shareholder agreements, substantive and disclosure rules of corporate governance, shareholders meetings and duties of directors. Consequently, audit committee should be independent from management so as to be able to conduct effective monitoring which results in less opportunistic management behavior such as REM.

This paper is aimed (1) to determine if significant associations exist between audit committee characteristics and the occurrence of REM in a relatively smaller capital market such as that of Tunisia (2) to examine the effect of the adoption of the law n° 2005-96 on the reduction of the extent of REM in the Tunisian context.

The main objective of this study is to investigate the effect of audit committee characteristics (independence, financial expertise, number of meetings and size) on the reduction of the extent of REM via a decreasing of sales manipulation and overproduction. We have also focused on the impact of the law of financial security (2005) on the reduction of the extent of REM. We carry this out by examining the role that audit committees play in mitigating REM from a sample of 29 non-financial Tunisian companies that traded on the Tunis Stock Exchange between 2000 and 2010. We use logistic regression to determine if any significant associations exist between audit committee and the likelihood of REM.

The current study makes several contributions to the earnings management and corporate governance literature. First, this paper is one of the few studies (Visvanathan 2008, Graven et al., 2009) relating audit committee characteristics to REM. Second, this study expounds the importance of the audit committee as a corporate governance mechanism showing its development over many decades and exploring the changes in its understanding and perceptions. Third, this study provides new evidence on the association between REM and audit committee in Tunisia after the implementation of the law n° 2005-96.

The remainder of this paper is organized as follows: Section II includes a review of the literature and Section III includes details of the research design and the motivation for the expected association of the audit committee characteristics and REM. Section IV summarizes the results and Section V concludes with a discussion of the study’s implications, limitations, and opportunities for further research.

II. LITERATURE REVIEW

Various definitions of REM exist in the academic literature (see Roychowdhury, 2006; Leggett, 2008; Carcello et al., 2008; Xu et al., 2007; Visvanathan, 2008 and Sari et al., 2010). For example, Roychowdhury (2006) defines REM as management actions, which deviate from normal business practices, undertaken with the primary objective to mislead certain stakeholders www.zenithresearch.org.in into believing that earnings benchmarks have been met in the normal course of operations.

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Graham et al. (2005) provide evidence suggesting that managers prefer REM activities compared to accrual-based earnings management since real management activities can be indistinguishable from optimal business decisions, and thus are more difficult to detect although the costs involved in such activities can be economically significant to the firm. Although all of the REM definitions vary slightly, the common theme running through them is clear: REM is undertaken for the benefit of management, not the company’s stockholders.

The audit committee needs to be sensitive to the increased risk of REM arising from pressures on management to meet earnings targets and to satisfy debt covenants. In the same context, Krishnan and Visvanathan (2008) indicate that REM has increased since the passage of the Sarbanes-Oxley Act of 2002. They found a negative association between REM activity and characteristics of audit committees; it is evident that audit committees with certain characteristics may play a role in constraining REM. Whereas, Carcello et al. (2008) showed either no relationship or a positive relationship between certain characteristics of audit committee and REM.

II. 1. AUDIT COMMITTEE AND REAL EARNINGS MANAGEMENT

The audit committee appears to be an effective tool in constraining REM. However, to date very little empirical evidence related to demonstrating an association between the audit committee and the likelihood of REM exists.

In Tunisia, audit committee are responsible for (1) reviewing earnings releases and financial reports (2) assessing the appropriateness of management’s selection of accounting policies and disclosures in compliance with approved accounting standards (3) ensuring timely submission of financial statements by management (4) reviewing significant or unusual transactions and accounting estimates (5) reviewing and understanding management’s representation and (6) assessing whether the financial report presents a true and fair view of the company’s financial position and performance and complies with regulatory requirements.

Based on the recommendations of regulatory and corporate governance codes such as SOX, the Blue Ribbon Committee Report (BRC), The UK (2003) Corporate Governance Combined Code and the Tunisian law n° 2005-96, this study examines the vital characteristics of effective audit committee, namely, independence, expertise, meeting frequency and size. The following sections

discuss prior studies on these four characteristics.

II. 2. AUDIT COMMITTEE INDEPENDENCE

In order to maintain the independence of audit committee, the Tunisian law n° 2005-96 states that the majority of audit committee members must be independent and the chairman should be an independent non-executive director.

Graven (2009) indicates that audit committees appear to play no role in constraining REM. Likewise, Visvanathan (2008) uses pre-SOX data to examine the association between the REM (abnormal cash flow from operations, abnormal discretionary expenses, and abnormal production www.zenithresearch.org.in

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H1: Independence of audit committee is associated negatively with the REM after the law of financial security (2005).

II. 3. AUDIT COMMITTEE'S FINANCIAL EXPERT

Carcello et al. (2008) examine the association between the presence of accounting and nonaccounting audit committee financial experts and two examples of REM activities (the accelerated or delayed recognition of discretionary expenditures and the management of inventory levels). Their results indicate that there is no relation between the management of abnormal production costs and an audit committee financial expert and that there is actually a positive relation between abnormal discretionary expenditures and an audit committee accounting financial expert. Similarly, Krishnan and Visvanathan (2008), using pre-SOX data, look at the association between REM and audit committee expertise as measured by accounting financial expertise, nonaccounting financial expertise and nonfinancial expertise; they find that only accounting financial expertise helps to constrain REM. Krishnan and Visvanathan (2008) find a negative correlation between accounting financial expertise and REM. This study extends the literature and empirically examines the effect of the audit committee expertise on reduced REM after the law of financial security (2005). Thus, we test the following:

H2: the presence of financial expertise on the audit committee is negatively associated with REM after the law of financial security (2005).

II. 4. AUDIT COMMITTEE SIZE

Krishnan and Visanathan (2008) have shown that the objective in determining optimal audit committee size is to have a committee small enough to be manageable but large enough to effectively monitor. Thus, to effectively monitor REM, a committee larger than the required minimum may be needed. In addition, Visvanathan (2008) uses pre-SOX data to examine the association between three types of REM (abnormal cash flow from operations, abnormal discretionary expenses, and abnormal production costs) and the size of the audit committee. He

finds no relation between audit committee size and the three types of REM examined.

The SOX does not require a minimum number of audit committee members. However, in 2005, in Tunisia, the law of the financial security n° 2005-96 recommended a minimum of three members.

Thus, we predict a positive association between the size of the audit committee and the occurrence of REM.

H3: the size of audit committee is positively associated with REM after the law n° 2005-96. www.zenithresearch.org.in

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II. 5. AUDIT COMMITTEE MEETINGS

The frequency of meetings in each year shall depend on the size of business and the duties delegated so as to ensure that the performance of work of the audit committee meets the intended objectives. In general practice, meetings of the audit committee should be held at the average of 4 times per year (SET, 1999).

Menon and Williams (1994) found that an audit committee which holds fewer meetings than the minimum of two per year, as suggested by the American Bar Association, is less likely to pursue their duties diligently. Moreover, Graven (2009) examined the relationship between frequency of audit committee meetings and the occurrence of REM. They didn’t found convincing evidence that companies involved in REM have fewer audit committee meetings; these results are inconsistent with those of Visvanathan (2008) who found a negative association between the number of audit committee meetings and the occurrence of REM through the reduction of discretionary expenses and not through sales manipulation or overproduction, in post-SOX. Therefore, we examine the following hypothesis:

H4: Frequency of audit committee meeting is negatively associated with REM after the law n° 2005-96.

III. RESEARCH DESIGN

In addressing the concerns enumerated in the study objectives, we adopt a deductive research approach and quantitative research strategy relying on secondary data.

The sample has been selected from the Tunis Stock Exchange comprising 29 listed companies and excludes: (1) Financial companies (because their capital structure and profits are different), (2) Companies for which the data could not be found Sources of data collection are annual reports, web sites and direct contacts.

III. 1. MEASURE OF REM

Following the prior studies on real activities manipulation (e.g. Roychowdhury, 2006; Gunny, 2005; Zang, 2005), we examine the following real activities manipulation: sales manipulation and overproduction. We measure the abnormal level of each type of real activities manipulation

as the residual from the following relevant estimation model. To estimate the abnormal CFO and abnormal production costs, we run the following cross-sectional regressions for each firm and year:

Abnormal CFO is the residual from the corresponding industry year regression given by:

CFOi,t /Ai,t-1 = α (1/Ai,t-1) + β1 (Si,t /Ai,t-1) + β2 (ΔSi,t /Ai,t-1) + εi,t where CFOi,t is the cash flow from operations for firm I at period t, Ai,t is the assets at end of year

t, Ai,t-1 is the assets at the end of the prior year, Si,t is the sales during year t and ΔSi,t is the www.zenithresearch.org.in change in sales during year t.

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Production Costs (PROD) is the Cost of Goods Sold + Change in Inventory

Abnormal production cost is the residual from the corresponding industry-year regression:

PRODi,t /Ai,t-1 = α (1/Ai,t-1) + β1 (Si,t /Ai,t-1) + β2 (ΔSi,t/Ai,t-1) + εi,t

Abnormal Inventory is the residual retrieved from the corresponding industry-year regression

∆INVENi,t /Ai,t-1 = α (1/Ai,t-1) + β1 (ΔSi,t /Ai,t-1) + β2 (ΔSi,t-1 /Ai,t-1) + εi,t where ∆INVENi,t is the change in inventory at the end of period t.

III. 2. MEASURES OF AUDIT COMMITTEE CHARACTERISTICS

Table 1 shows the measurements of the independent variables (audit committee characteristic).

TABLE 1: MEASUREMENT OF INDEPENDENT VARIABLES

Independent variables Measurements

ACIND It is a continuous variable that is defined as the proportion of independent directors in the audit committee.

It is a dummy variable that takes the value1 if the audit ACEXPERT committee of firm i includes at least one member with finance expertise in each year during the period 2000-2010, and 0 otherwise.

It is a total of audit committee members.

ACSIZE Number of meetings of audit committees per year.

ACMEET

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III. 3. CONTROL VARIABLES

In addition to the above audit committee variables, we include variables to control other factors that may be correlated with REM. As suggested in Bédard et al. (2004) and Chtourou et al. (2003), we control for the fact that some firms may be in certain situations which give them incentives to manage earnings and which are unrelated to the quality of their corporate governance practices. These include firms with higher growth prospects, with the market-to- book ratio (Graven, 2009) as the measure of growth prospects (MTB), politically sensitive firms, with the natural log of beginning year’s total assets (Kouki et al., 2011) as the proxy for political costs (LOGSIZE), and firms with debt covenant motivations, with total liabilities divided by total assets as the measure for closeness to debt covenant violations (LEV) (Yang and Krishnan 2005, Klein 2002 and Bédard et al. 2004). Finally, we include a variable to control for evidence of accrual earnings management (DA); as Cohen et al. (2008), Roychowdhury (2006) and Zang (2007), Graven (2009) note that firms that manipulate earnings tend to use both REM and AEM. We expect MTB, LEV, and AD to be positively associated with REM and we expect LOGSIZE to be negatively associated with REM.

IV. RESULTS

IV. 1. DESCRIPTIVE DATA

Table 2 reports the descriptive statistics for the research variables. It appears from the table 2 that the average number of audit committee members varies from 2 to 3. The mean percentage of audit committee members that are independent is about 55.2 %. We observed that the average number of meetings of audit committees per year varied from 2 to 3. The expertise of the audit committee is measured by presence of experts is a dummy variable. Table 2 shows that 41.3 % of the audit committee directors possess an accounting and financial expertise. It appears also from the Table 2 that the absolute values of discretionary accrual estimated using the discretionary accruals based on the Jones models are different from zero which proves the existence of earnings management in Tunisian firms (a mean of 0.029620 and a standard deviation of 1.236724). In summary, if AD increases the REM increases too. The mean value of a leverage, defined as the ratio of total debts to total assets, is 34 % with a standard deviation of 2.69 while the mean of firm size, measured by the natural logarithm of total assets, is 7.49 with a standard deviation of 0.66. Firms in the sample are, on average growth, firms with

a mean market-to-book ratio of 0.32.

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TABLE 2: DESCRIPTIVE STATISTICS

Pooled Sample (n=319)

Variable Mean Std. Dev. Min Max

DA 0.029620 1.236724 -13.80061 10.56859

AC 0.532915 0.499699 0 1

ACSIZE 2.868339 1.931590 0 8

ACIND 0.652003 0.548298 0 6

ACEXPERT 0.413793 0.493286 0 1

ACMEET 1.379310 1.452718 0 5

MTB LOGSIZE 0.322379 0.865244 -8.595134 4.993619

LEV 7.495354 0.669160 4.324246 8.461967

2.695202 -.515 941

TABLE 3: DESCRIPTIVE STATISTICS BEFORE AND AFTER THE FINANCIAL SECURITY LAW (2005)

Pre-law (n = 145) Post-law (n = 174)

Variable Mean Std. Min Max Mean Std. Min Max Dev. Dev.

DA -0.0118 1.751 -13.80 10.56 -.04441 0.5067 -5.96 1.54

SIZEAC 1.2482 0.968 0 6 3.2180 1.4298 0 7

ACIND 0.1188 0.496 0 6 0.9827 1.1503 0 6

ACEXPERT 0.1827 0.276 0 1 0.6896 0.4630 0 1

ACMEET 1.1862 0.706 0 4 2.9735 1.1295 0 5

MTB 0.2500 0.840 -6.561 1.099 0.3303 0.9212 -8.59 1.57 LOGSIZE 7.4946 0.652 4.887 8.418 7.4959 0.6847 4.324 8.46 www.zenithresearch.org.in

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LEV 4.4687 0.211 0 958 6.0993 7.341 -0.51 941

Table 3 provides the descriptive statistics of 145 foreign firms in the pre-law n° 2005-96 sample and 174 foreign firms in the post-law n° 2005-96 sample. The means of discretionary accruals are − 0.011 and 0.04 respectively in the pre-law and post-law periods. These results show that the pre-law discretionary accruals are significantly smaller than the post-law discretionary accruals suggesting an increase in REM after the law n° 2005-96. The percentage of independent audit committee members (ACIND) is 0.11 (0.98) in the pre-law n° 2005-96 (post-law n° 2005- 96) period. In addition, the average number of accounting experts in the audit committee is 0.18 (0.69) in the pre-law n° 2005-96 (post-law n° 2005-96) period. Furthermore, the average committee size is 1.24 (3.21) in the pre- law n° 2005-96 (post- law n° 2005-96) period. Moreover, the average number of committee meetings is 1.18 (2.97) in the pre- law 2005-96 (post- law n° 2005-96) period. In conclusion, there is a significant difference in the characteristics of audit committee between pre and post-law periods.

IV. 2. MULTIVARIATE ANALYSIS

We have analyzed the impact of audit committee characteristics (independent variables), measured through the number of members, committee independence, expertise and the number of times it met per year, on REM. We have used a regression model to examine this relationship where the dependent variable is REM measured with the two proxies (the overproduction and sales manipulation). To assess whether our sample suffered from multicolinearity, we have calculated the Pearson correlation coefficient of independent variables (Table 4).

TABLE 4: PEARSON CORRELATION OF THE AUDIT COMMITTEE CHARACTERISTICS.

1 2 3 4 5 6 7 8 9

1 1.0000

2 0.1908** 1.0000

3 0.0110 -0.008 1.0000

4 0.0110* -0.012 0.5070* 1.0000

5 0.0433 -0.015 0.712*** 0.5477* 1.0000

6 0.1261*** 0.0053 0.6020* 0.5232* 0.7516* 1.0000 www.zenithresearch.org.in

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7 0.1051** -0.009 0.7903* 0.5956* 0.7964* 0.6168** 1.0000

8 0.0072 -0.024 0.6611* 0.4570* 0.5866* 0.4398* 0.5746* 1.0000

9 0.1241* 0.0174 0.0929** 0.0441 0.0094* -0.207* 0.6165** 0.0259 1.0000

The sample consists of 319 firm-year observations for the period 2000-2010 corresponding to 29 firms. The correlation coefficients are based on Pearson product momentum correlations. *, ** and *** represent statistical significance at 0.01, 0.05 and 0.10 level respectively. (1) AC is the audit committee existence, (2) ACIND is the proportion of independent directors in the audit committee, (3) ACSIZE is the total of audit committee members, (4) ACEXPERT is the percentage experts and presence of experts is a dummy variable, (5) ACMEET is number of meetings of the audit committee, (6) DA is the discretionary accruals is the proxy for accounting manipulation, (7) MTB is the Market to book ratio i.e. Market value of the firm divided by book value of total assets. Proxy for firm's investment opportunity set, (8) LOGSIZE is the natural logarithm of the current year's total assets of the firm and (9) LEV is the ratio Total long-term debt divided by total assets.

Table 4 shows the results of the Pearson correlation of the audit committee characteristics. There are several significant correlations between the independent variables. From the Table 4, we can say that the correlations between independent variables are significant at 1 and 5%. Furthermore, none of the correlation coefficients is so high (> 0.85) as to present significant multicolinearity problems (Archambeault and DeZoort 2001).

IV. 3. RELATIONSHIP BETWEEN AUDITING COMMITTEE CHARACTERISTICS AND REM

Table 5 provides main results of the relationship between REM (overproduction and sales manipulation) and audit committee characteristics after the Tunisian law n° 2005-96. Results show that explanatory variables are almost significant. Table 5 indicates that the model is significant with an adjusted R2 of 15.43 % for sales manipulation and 35.85 % for

overproduction.

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TABLE 5: THE REGRESSION OF AUDIT COMMITTEE IMPACT ON REM (OVERPRODUCTION AND SALES MANIPULATION AS PROXY OF REM AFTER THE TUNISIAN LAW N° 2005-96).

Models Sales manipulation (REM1) Overproduction (REM2)

Coef. Prob. Coef. Probt.

ACIND -0.803851*** 0.079 -0.4327127* 0.000 ACEXPERT -0.590939** 0.002 0.1647838 0.495 ACSIZE 0.357679* 0.000 0.2715058** 0.018 ACMEET -0.230084* 0.010 -0.1133886 0.320 MTB LOGSIZE 0.0056144 0.868 -0.3655627* 0.000

LEV 0.0707340 0.372 -0.0978376 0.336

DA 0.0041800 0.967 -0.002760 0.831 0.1537594* 0.000 0.1235575 0.024

R-squared 0.1543 0.3585

*, **, *** represents statistical significance at 0.01, 0.05 and 0.10 levels

In the case of auditing committee independency (ACIND), the two coefficients are significantly negative after the passage of the law n° 2005-96; this confirms hypothesis H1. The presence of independent audit committee limits REM behavior and improves control mechanism. We conclude that the presence of independent audit committee limits manager’s opportunistic behavior, bad accounting manipulations and fraudulent behavior. Finally, independent audit committee is undoubtedly an efficient mechanism to limit REM. This result is inconsistent with that of Graven (2009) and Visvanathan (2008) who detect no significant association between REM and independent audit committee.

Hypothesis 2 predicts that audit committee expertise (ACEXPRT) is negatively associated with the REM in the period of post law of financial security 2005 (sales manipulation). The negatively signed coefficient (βREM1 = -0.59; prob. 0.002) of audit committee expertise supports this hypothesis. This suggests that the presence of a financial expert in the audit committee plays an important role in carrying out the committee’s monitoring responsibility and in constraining www.zenithresearch.org.in REM behavior. However, the second type of REM (overproduction) shows insignificant

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 relationships (βREM2 = 0.16; prob. 0.495) in the Tunisian context. The first result is consistent with that of Krishnan and Visvanathan (2008) who found a negative correlation between accounting financial expertise and REM. In contrast, for the second result, Carcello et al. (2008) and Graven (2009) showed no meaningful association between accounting financial expertise and REM.

This finding supports the Tunisian law of the financial security (2005) in that audit committee should include at least one member with relevant financial experience in order to be effective monitors of the financial reporting process.

Audit committee size is positively and significantly correlated with overproduction and sales manipulation. Thus, we can conclude that size forms a motivation for manager to upward earnings. This result is inconsistent with prior researches which found that larger audit committees are associated with lower earnings management (Souid and Stepniewski, 2010 and Yang and Krishnan, 2005). This result is also in disagreement with that of Visvanathan (2008) and Graven (2009) who found no association between the audit committee size and the REM (abnormal cash flow from operations, discretionary expenses and production costs).

The tests for hypothesis 4 regarding the relationship between the number of audit committee meeting and the overproduction show insignificant relationships after the law n° 2005-96 (REM2;  = -0.11 and p-value = 0.32). This result is similar to that of Davidson et al. (2005) who report an insignificant relationship between the number of audit committee meetings and earnings management. This result is also similar to the finding of Graven (2009) who investigated whether audit committees are associated with REM. Their result indicates no association between audit committee meetings and the earnings quality measures. However, a negative association between the number of audit committee meetings and sales manipulation was found after the passage of law n° 2005-96. This result is not in agreement with that of Visvanathan (2008) who found a negative association between the number of audit committee meetings and the occurrence of REM through the reduction of discretionary expenses and not through sales manipulation or overproduction of inventory.

The post-law n° 2005-96 results show a positive association between AD and the characteristics of audit committee. However, the presence of independent members and accounting experts in the audit committee appear to play more important roles in monitoring REM after the law of financial security (2005). In addition, we find that the audit committee characteristics are not significantly associated with leverage (LEV); this is inconsistent with the debt-covenant hypothesis which predicts that firm managers will use REM to reduce the probability of covenant violation in debt contracts. Table 5 shows no significant relation between the market-to-book ratio (MTB) and the natural log of beginning year’s total assets (LOGSIZE) and the extent of the REM in the post-law n° 2005-96 periods.

IV. 3. EFFECT OF THE LAW N° 2005-96 ON THE REM

Tunisia promulgated the law n° 2005-96 which comes to control the companies, improve the transparency of financial information and reduce the manipulation. Before integrating the www.zenithresearch.org.in variable "law" like explanatory variable to test its impact on the REM, we carried out a test of

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 chow which test the stability of the coefficients of regression on two different groups (before and after the law n° 2005-96). We have found that the calculated statistics are lower than the statistics read. Consequently, the two groups are statistically different. Therefore, the test proves that there are differences between the two groups. The result of regression (Table 6) shows that the variable "law" does not have any effect on the reduction of the extent of the REM (t-value = 0.260).

TABLE 6: THE REGRESSION OF THE IMPACT OF AUDIT COMMITTEE ON REM BY INTEGRATING THE VARIABLE "LAW"

Models REM (REM1 and REM2)

Variables Expected sign Coefficient t-value

Intercept ? 1.4705320 0.049*

ACIND - -0.4217826 0.013** ACEXPERT - 0.1025781 0.715 ACSIZE + 0.2795165 0.034** ACMEET - -0.1287446 0.331 MTB - -0.3895648 0.000* LOGSIZE + -0.0292115 0.804 LEV + -0.0036847 0.806 DA + 0.1275870 0.042** Law - -0.3356084 0.260

R-squared 0.1497

*, **, *** represents statistical significance at 0.01, 0.05 and 0.10 levels

In summary, this study provides evidence suggesting that the law of financial security n° 2005- 96 improve slightly the role of audit committee in monitoring manipulations. In addition, the functioning of corporate governance mechanism is also more effective after the law n° 2005-96 but it would appear that recent corporate governance reforms have been largely ineffective in constraining REM. Thus, there is an enormous lack of control and the Tunisian law does not really protect the investors; this result agrees with that reported by Sari et al. (2010).

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V. SUMMARY AND CONCLUSIONS

The objective of this study was focused on the relationship between audit committee characteristics and REM. We have also examined whether the law of financial security (2005), which obliges the companies listed on the Tunisian Stock Exchange to have an audit committee, reduces the extent of REM.

We found that auditing committee independency seems to be efficient in constraining REM and manager’s opportunistic behavior. Moreover, we have found a significant association between the audit committee expertise and sales manipulation and no significant relation between the audit committee expertise and overproduction after the passage of the law n° 2005-96. With regard to audit committee meetings and based on our results, we believe that the more audit committees meet, the better the opportunity to detect sales manipulation. However, a negative and not significative association between the number of audit committee meetings and overproduction was found. It is to be pointed out that Tunisian low n° 2005-96 do not specify a minimum number of meetings. Results have revealed that audit committee size is positively associated with sales manipulation and overproduction. In other words, the detection of any manipulation in the financial statements after the law of financial security (2005) is as difficult as the number of directors in audit committee is great.

Opportunities for further research could investigate other firm-specific factors such as family ownership, political connections, and ownership concentration and other corporate governance mechanisms (beard and audit quality) which could affect the effectiveness of corporate governance in Tunisia.

REFERENCES

 Carcello J., Hollingsworth C., A. Klein A. and Neal T. (2008), «Audit committee financial expertise, competing corporate governance mechanisms, and earnings management», Cahier de recherche, University of Tennessee, Clemson University, and New York University.

 Cohen D., Dey A. and Lys T., (2008), «Real and accrual-based earnings management in the pre-and post-Sarbanes-Oxley periods», The Accounting Review, vol. 83, n° 3, pp. 757-787..

 Graven A. (2009), «The Effect of Board and Audit Committee Characteristics on Real

Earnings Management: Do Boards and Audit Committees Play a Role in its Constraint?», Cahier de recherche, Culverhouse School of Accountancy, Tuscaloosa.

 Graham, J., Harvey C. et Rajgopal S. (2005), «The economic implications of corporate financial reporting», Cahier de recherche, Duke University, National Bureau of Economic Research and University of Washington.

 Krishnan, G.et Visvanathan G. (2008), «Does the SOX definition of an accounting expert matter? The association between audit committee directors’ accounting expertise and accounting

conservatism», Contemporary Accounting Research, vol. 25, n° 3, pp. 827-857. www.zenithresearch.org.in

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 Kouki, M., Elkhaldi, A. and Souid, S (2011), «Does Corporate Governance Constrain Earnings Management? Evidence from U.S. Firms», European Journal of Economics, Finance and Administrative Sciences, vol. 35, pp. 59-68.

 Menon, K., and Williams, J. (1994), «The Use of Audit Committee for Monitoring», Journal of Accounting and Public Policy, Vol. 13, No. 2: pp. 121-140.

 Roychowdhury S. (2006), «Earnings Management through Real Activities Manipulation», Journal of Accounting and Economics, vol 42, pp.335-370.

 Sari R. C., Sony W. and Sri S. (2010), «Does investor protection affect the choice of earnings management methods through real activity manipulation and accrual manipulation? Asian comparison», Journal of Modern Accounting and Auditing, Vol. 6, n° 6.

 Visvanathan G. (2008), «Corporate governance and real earnings management», Academy of Accounting and Financial Journal, vol.12 n°1, pp. 9-22.

 Zang A. (2007), «Evidence of the tradeoff between real manipulation and accrual manipulation», working papers, University of Rochester.

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AUCTION OF PLAYERS IN INDIAN PREMIER LEAGUE: THE STRATEGIC PERSPECTIVE

SONALI BHATTACHARYA*; SHUBHASHEESH BHATTACHARYA**

*Associate Professor, Symbiosis Centre for Management and Human Resource Development, Pune-411057, India. **Professor, Symbiosis Institute of International Business, Pune-411057, India.

ABSTRACT

Indian Premier League (IPL), one of the biggest sporting properties of the world is now in its fourth edition. It is considered as one of the best business model of recent times. On 7th and 8th January, 2011, it had held auctioning of players for the ten franchisees in the contest, which was televised world over by Sony Max. It is of interest to study how the various teams have strategized their decision on setting the final bidding price of the players according to performance of the players in the previous editions of IPL and other similar formats of the game, and team‘s own performance in previous seasons. Also, it has been a revelation how personalities of individual players and team leaders can affect the performance of the team.

KEYWORDS: Indian Premier League, Auction, Game Theory, Strategy. ______

INTRODUCTION

In 2008, Vice President of Board of Control for Cricket in India (BCCI), Lalit Modi partnered with IMG executive Andrew Widblood to initiate India Premier League, a T-20 version of cricket, in which each match was to be of around 3 hours with each competing team facing twenty overs. Teams were auctioned and ownership were won by leading Business tycoons and Bollywood celebrities which ensured pumping in of huge money. The DLF IPL has been rated fourth largest sporting property by Forbes in 2009. The IPL is expected to generate revenue of

nearly $2 billion in the period 2008-19, including proceeds from TV rights ($918 million), promotions ($108 million), and franchises ($724 million). Pune and Kochi are the two new franchisees added in the recent fourth Edition of IPL 2011 to the previous eight. The IPL - has four major sources of central revenue. The first is the sale of media rights for the matches, which is likely to fetch the BCCI $1 billion over a 10-year period. The second includes things like title sponsorship of the tournament, licensed merchandise and so on. From the sale of media rights, IPL keep 20% for itself, give out 8% as prize money for the tournament and distribute the remaining 72% evenly between the franchisees. These proportions will be valid till 2012, after which IPL's share goes up in two stages by 2018, with the shares of both prize money and

franchisees declining. www.zenithresearch.org.in

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The second stream - other central revenues - is shared between IPL, franchisees and prize money in the ratio 40:54:6 up to 2017 after which IPL's share will increase to 50%, the franchisees' share will drop to 45% and the remaining 5% will go for prize money. The third major source is, of course, the amounts bid by the franchisees. The fourth stream comes from the revenues generated by the franchisee rights, of which 20% will be given to IPL.

IPL is reaching two different kinds of agreements with players when it gets them on board. Under one arrangement — called the "firm agreement", the IPL commits a certain fee to the player. If a franchisee bids more for that player in the auction between franchisees for different players, the IPL gets to keep the excess. Under the other - the "basic agreement" – the player gets whatever is bid for him. Not surprisingly, most players so far have opted for the "basic agreement". The players are ensured daily allowance of $100 and can have share of bonus and prize money depending upon the performance of the team. King Fisher Airlines has secured the official partnership right with a $0.02 billion deal and Sony Entertainment Television has won the broadcasting right with a staggering payment of $190 crore for ten years. The present paper is intended to discuss the strategies that have been used by the ten franchisee teams during the auctioning of the players in 2011 IPL season and economical, behavioral factors and cricketing attributes which may have affected the decision of the franchisee.

GAME THEORY APPROACH TO AUCTION

Vickerey (1961) first introduced auction by game theory approach. There are traditionally four types of auction that are used for the allocation of a single item. They are:

First-price sealed-bid auctions in which bidders place their bid in a sealed envelope and simultaneously hand them to the auctioneer. The envelopes are opened and the individual with the highest bid wins, paying a price equal to the exact amount that he or she bid.

Second-price sealed-bid auctions (Vickrey auctions) in which bidders place their bid in a sealed envelope and simultaneously hand them to the auctioneer. The envelopes are opened and the individual with the highest bid wins, paying a price equal to the exact amount of the second highest bid.

Open Ascending-bid auctions (English auctions) in which the price is steadily raised by the auctioneer with bidders dropping out once the price becomes too high. This continues until there remains only one bidder who wins the auction at the current price.

Open Descending-bid auctions (Dutch auctions) in which the price starts at a level sufficiently high to deter all bidders and is progressively lowered until a bidder indicates that he is prepared to buy at the current price. He or she wins the auction and pays the price at which they bid.

Mc Milan (1992) used English open auction for administering license in Spectrum deal by Federal government. The open auction helps in avoiding ―winner‘s curse‖ as would be evident in sealed bid, in which the highest bidder overestimates the value of the entity and often realizes www.zenithresearch.org.in later he has to pay higher price than the actual value. In an open English type auction the bidder

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 has the opportunity to play cautiously and discount its own estimate of the value. In an English auction, a Nash Equilibrium can be reached as a bidder may choose to be in action till the bidding price does not cross his estimated value. If all the bidders follow the same strategy, it will be the weakly dominant strategy. An intelligent bidder may then try to change his strategy.

IPL AUCTION BACKGROUND

In the IPL Auction there are 10 teams, each team had USD 9,000,000 at its disposal which they could use for buying or retaining at least eleven players that will be required to form their team. Two of the teams: Pune Warrior and Kochi were playing for the first time. Each player was priced at a base price depending upon his performance record and experience by the auctioneer. Bidders in order to buy the players were required to quote a price higher than or equal to the base price. To put it mathematically,

th Let ni be the number of IPL players to be purchased by the i team, i = 1, 2,…, 9 (since there are nine teams), where ni ≥ 11(each team requires eleven players to play a match)

n th th i Let Pij be the payment to be made to j player of i team Then, pij USD 9,000,000 j 1

(as each team had USD 9,000,000 at their disposal to spend on the auctioning of the players.)

Suppose ith team decides utility value to be given to a Player for batting, Bowling (wicket taking capability) and fielding respectively is UBi, Uwi and UFi such that UUU 1 . The BWFi i i values of UBi and Uwi can vary according to whether a player is a batsman or bowler or an all rounder. Let us say ith team decides following utility values

Type of player UBi Uwi UFi

Batsman 0.8 0 0.2

Bowler 0.1 0.8 0.2

All Rounder 0.4 0.4 0.2

Then, the team has to decide on the utility they wants to give to a batsman‘s average and strike rate. Let it be wb1 and wb2 such that wb1+wb2 =1. Similarly utility of a bowler can be based on his bowling average, strike rate and economy rate and a fielder‘s performance can be measured by the number of catches and stumpings. The players can be ranked based on their percentile rank in batting, bowling and fielding and bidder‘s assumed utility of each function. Suppose we have a pure batsman has a percentile rank of 0.9 as a batsman and has a percentile rank of 0.4 as

fielder then his expected utility can be taken as 0.8 0.9 + 0.2 0.4 = 0.72+ 0.36 = 1.08 www.zenithresearch.org.in

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PROBABLE FACTORS AFFECTING THE DECISION OF THE BIDDERS

(1) A bidder may then decide how many batsman and bowler he would require to form his team. As in this shorter form of this game bats man has a bigger role to play let us suppose the bidder may decide he will require seven batsmen and four bowlers. So for him we can assume UU BWii

(2) How many players from the top quartile he may like to be in his team. For example he may want to have at least four players from the top quartile.

(3) How many players he wants from top quartile and how much money he desires to put in stake for getting these players from the top quartile. For example: he may decide to spend USD 4,000,000 on getting players from top quartile; then if he wants to secure four players from the top quartile, he may likely to spend USD 1,000,000 on each of these players.

(4) Whether he wants to create the ―team of future‖ then he may prefer to select a very young team.

(5) If and to what extent he/she may want to give opportunity to local players of the region they are representing, though the minimum number of local players or players from the catchment area team has to accommodate was 4.

(6) Similarly, a team can have at most eight foreign players while four players can take the field.

SOME OF THE STATISTICS RELATED TO THE IPL AUCTION, 2011

TABLE 1: NUMBER OF PLAYERS FROM EACH COUNTRY WHO WERE SOLD/RETAINED DURING THE AUCTION

Indi Austral Banglade Englan Netherla Newzeala Sri South West a ia sh d nd nd Lanka Africa Indies

52 38 1 7 1 7 10 20 3

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TABLE 2: SUMMARIZATION OF PRICES AT WHICH PLAYERS WERE PURCHASED/ RETAINED BY VARIOUS FRANCHISEE (IN USD)

Chen Kolk Mu Pune Rajas Royal nai ata mbai Warr than Chall Supe Knig India iors Roya enges r Delhi ht ns ls Bang King Deccan Daredevi Kings XI Ride Koc alore s Chargers ls Punjab rs hi

Avera 4813 7145 4582 7100 5764 7743 54281 ge 88.9 491071.4 485294.1 631363.6 83.3 35.3 00 28.6 75 2.5

Standa rd Deviat 4939 7622 4223 6885 6420 5912 56920 ion 51.1 373858.2 569362.2 414874 82.6 48.1 03 11.3 18.1 9.9

Coeffi cient Skewn 1.41 1.67 1.18 0.81 1.65 0.604 1.072 ess 2008 0.675841 1.782551 0.153705 5985 508 8191 7552 487 869

Numb er of Player s Retain ed/bid succes sfully 18 14 17 11 12 17 12 14 8 16

Some of the highlights of the above statistics are :

(i) Kolkata Knight Riders purchased eleven players and is credited to have won the two

players securing highest final bidding prices and they along with Mumbai Indians are making highest average payments to its‘ players with the greatest spread.

(ii) Kochi, one of the two teams who is participating in the IPL for the first time and Chennai Super king, the most consistent team in the IPL so far, (having won the championship in the last season, and finalist and semi-finalist in the previous two IPL seasons) are statistically proving to be the best strategists in playing the auction. They have now seventeen and eighteen players respectively in their teams and are making the lowest average payments to te players. They have choice of selling later some of their players at higher price. www.zenithresearch.org.in

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(iii)Deccan Chargers with fourteen players in their team are making lowest average payment to its players with low degree of skewness which implies payments have been symmetrically distributed amongst the players.

BUILDING OF A PREDICTIVE MODEL FOR THE AUCTION PRICING

Rastogi and Deodhar (2009) and Karnik (2010) had used hedonic pricing model to determine auction price of players in IPL league in which they used cricketing attributes of players like performance in one-day internationals and test cricket and as well as non-cricketing attributes such as iconic status of the players in the region they represent, as the variables determining the final bidding price. However, IPL is now four years old and have thrown up new heroes like Yusuf Pathan, R Ashwin, Manish Tiwari, Saurabh Tiwari and Robin Uthappa previously unknown in any other format of the games. Also, local icons are no longer proving to be a determining factor for retaining or picking up players as had been proved in earlier sessions of the game . For example neither Saurav Ganguly was picked up by Kolkata Knight Riders and nor Rahul Dravid was picked up by Royal Challengers Bangalore. So we have considered cricketing attributes of the players in Twenty20 format of the game for building our model. Factors considered are:

(i) Batting average implying total number of runs scored by the total number of innings played.

(ii) Batting Striking Rate implying numbers runs scored per hundred balls.

(iii)Bowling Average defined as the total number of runs conceded by the bowlers divided by the number of wickets taken by the bowler, so the lower the average the better.

(iv) Bowling strike rate is defined for a bowler as the average number of balls bowled per wicket taken. The lower the strike rate, the more effective a bowler is.

(v) Economy Rate of Bowlers is the number of runs scored per over bowled by a Bowler. We also took the interaction variables representing interaction of batting average and fielding(catches and stumpings per match) as well as bowling average and fielding.

(vi) Whether a cricketer is a batsman ,bowler or all rounder was represented by two dummy

variables, dummy 1 and dummy 2

a. where dummy1 takes the value one, if a cricketer is batsman only and zero otherwise.

b. Dummy 2 takes the value one, if a cricketer is mainly considered as a bowler and

zero otherwise. www.zenithresearch.org.in

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TABLE 3: CROSS TABULATION OF IPL TEAM AND NUMBER OF CRICKETERS OF EACH TYPE

IPL Team Type Total

All Rounder Batsman Bowler

Chennai Super king 7 6 5 18

Deccan Chargers 3 6 5 14

Delhi Dare Devils 8 6 3 17

Kings XI Punjab 4 3 4 11

Kochi 4 6 7 17

Kolkata Knight 6 3 3 12 Riders

Mumbai Indians 6 2 4 12

Pune Warriors 6 4 4 14

Rajasthan Royals 3 1 4 8

Royal Challengers 4 8 4 16 Bangalore

Total 51 45 43 139

(vii) We also took a dummy variable to represent the IPL idols as the players who played exceptionally well in the previous IPL seasons. We considered the IPLXI players picked up by Crickinfo after the IPL season 2010 as the IPL idols. Following are the

players ( and teams they represented IPL season 2010): www.zenithresearch.org.in

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TABLE 4: IPL XI BY CRICKINFO (2010)

Jacques Kallis - Royal Challengers Bangalore

Sachin Tendulkar - Mumbai Indians

Suresh Raina - Chennai Super Kings

Ambati Rayudu - Mumbai Indians

Mahendra Singh Dhoni (captain and wicketkeeper) - Chennai Super Kings

Robin Uthappa - Royal Challengers Bangalore

Kieron Pollard - Mumbai Indians

Ravichandran Ashwin - Chennai Super Kings

Anil Kumble - Royal Challengers Bangalore

Lasith Maligna - Mumbai Indians

Doug Bollinger - Chennai Super Kings

Data were collected from www.iplcricket.com, www.cricketfundas.com/ and www.espncricinfo.com/ . The Scatter Plot suggested that there exist linear relationship between cricketing attributes and the final bid price of the players. We ignored taking number of wickets or number of scores of 4‘s or 6 ‗s as determining factors as had been taken by earlier authors because we felt in this format of the game there are young players who may have little international exposures , but are locally known for their hard hitting of balls, running between wickets or striking of bowls or agility in the field and hence they may have less number of hits of fours or sixes or number of wickets in total and still may be considered good players in shorter

version of the game.

Following is the Summarization of Statistics used for our study. www.zenithresearch.org.in

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TABLE 5:SUMMARIZED DATA FOR IPL AUCTION 2011

IPL Team Age Batting Batting Bowling Bowling Catches Bowling Average Strike Economy Strike & Average Rate rate Rate Stumping per innings

Chennai Mean 28.5556 21.1750 118.0667 7.5442 19.1182 .3639 25.6042

Std. 3.2760 11.3431 27.6921 .6747 2.8565 .1376 6.8338 Deviation

Deccan C Mean 26.9286 18.3679 117.4800 7.7240 18.6800 .3570 22.4673

Std. 3.7306 10.3028 22.8110 1.1826 4.5217 .1826 7.5575 Deviation

Delhi Da Mean 28.1176 20.8471 121.2676 7.7482 21.3182 .2907 27.0400

Std. 3.0183 11.1212 28.1054 .6089 5.5139 .1413 8.7930 Deviation

Kings XI Mean 29.6364 20.9455 126.1200 7.3250 18.9875 .4314 23.1988

Std. 5.0452 11.3786 12.6932 .4009 3.2817 .2590 4.9047 Deviation

Kochi Mean 29.1765 18.5735 112.2718 7.6058 19.7250 .3599 25.6425

Std. 5.5027 10.7179 21.1216 .6855 5.5151 .1284 6.8579 Deviation

Kolkata Mean 28.7500 20.6667 109.1775 7.4433 19.4000 .3885 24.2722

Std. 5.7386 10.1548 35.8655 .6374 5.5170 .2132 7.7795

Deviation

Mumbai I Mean 29.0833 23.6975 134.5950 7.6560 23.0600 .3684 29.5960

Std. 4.4611 11.0714 21.4751 .5833 9.1629 .1349 12.5295 Deviation

Pune War Mean 27.9286 18.8929 120.5200 7.5136 20.8091 .4287 26.3645

Std. 4.4283 7.4577 18.4337 .7586 7.5336 .2197 11.0661 www.zenithresearch.org.in

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Deviation

Rajastha Mean 31.2500 15.2625 103.0363 7.7986 21.4143 .3387 27.1125

Std. 5.8979 11.2098 31.7765 1.2148 7.4616 9.568E- 13.8587 Deviation 02

Royal Ch Mean 27.8750 19.0525 110.1144 7.5200 27.3088 .3946 37.0213

Std. 5.6080 9.3588 24.1219 .9730 19.8612 .3347 30.0611 Deviation

Total Mean 28.5755 19.8753 117.4538 7.5900 20.8523 .3709 26.6644

Std. 4.6109 10.2770 25.4191 .7654 8.0174 .1964 12.2259 Deviation

The best model which was obtained by step-by-step regression analysis is as follow:

Auction Price (USD) = 936154.5 + 15835.804 Batting Average + 19340.336 Bowling Strike Rate – 137604 Bowling Economy rate. Batting average as expected as positive sign and bowling economy rate and bowling strike rate are having negative sign. The Model has been summarized as follow:

TABLE6: COEFFICIENTS OF THE MODELS

Unstandardized Standardized T Sig. Collinearity

Coefficients Coefficients Statistics Std. Error VIF Model B Beta Tolerance

(Constant) 283469.545 106024.950 2.674 .009 1 Batting 16617.121 5315.627 .310 3.126 .002 1.000 1.000

Average

(Constant) -15724.710 157641.494 -.100 .921

2 Batting 13979.388 5274.807 .261 2.650 .009 .960 1.041 Average

Bowling -16466.826 6563.357 -.247 -2.509 .014 .960 1.041

Strike Rate

3 (Constant) 936154.507 503525.949 1.859 .066 www.zenithresearch.org.in

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Batting 15835.804 5274.763 .295 3.002 .003 .930 1.075 Average

Bowling -19340.336 6619.425 -.290 -2.922 .004 .914 1.094 Strike Rate

Bowling -137603.565 69248.189 -.198 -1.987 .050 .907 1.103 Economy rate a Dependent Variable: Cost

TABLE7: ANOVA TABLE FOR THE MODELS

Model Sum of Squares Df Mean Square F Sig.

1 Regression 2577422498545.020 1 2577422498545.020 9.772 .002

Residual 24264470320603.900 92 263744242615.260

Totala 26841892819148.920 93

2 Regression 4147242581712.270 2 2073621290856.135 8.315 .000

Residual 22694650237436.650 91 249391760850.952

Totalb 26841892819148.920 93

3 Regression 5101083023522.090 3 1700361007840.698 7.039 .000

Residual 21740809795626.830 90 241564553284.743

Totalc 26841892819148.920 93

a Predictors: (Constant), Batting Average b Predictors: (Constant), Batting Average, Bowling Strike Rate c Predictors: (Constant), Batting Average, Bowling Strike Rate, Bowling Economy rate d Dependent Variable: Cost

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STRATEGIES USED BY INDIVIDUAL IPL TEAMS

Before we look into strategies used by various IPL teams let us look into the performance of the eight IPL teams who had been in the IPL seasons of 2008, 2009 and 2010 which played an important role in designing the strategy for picking up the team

TABLE 8: STATISTICS OF IPL TEAM PERFORMANCE

No Title Matche Wo Los Win For Agains Wors Team Span Resul Best s s n t % (r/o) t (r/o) t t

4,75 Chennai 2008 2 / 4,475 / Champion Semi- Super - 1 47 26 20 1 56.38 574. 569.1 s finals Kings 2010 4

4,63 2008 Deccan 7 / 4,694 / Champion 8th of - 1 46 19 27 0 41.29 Chargers 580. 582.4 s 8 2010 2

4,21 2008 Delhi 9 / 4,330 / 5th of - 0 44 24 19 1 54.56 3rd Daredevils 524. 547.0 8 2010 5

4,25 2008 Kings XI 1 / 4,274 / Semi- 8th of - 0 43 21 22 0 48.83 Punjab 531. 529.1 finals 8 2010 1

3,60 Kolkata 2008 2 / 3,585 / 8th of Knight - 0 42 16 24 2 39.74 6th of 8 491. 459.3 8 Riders 2010 3

3,97 2008 Mumbai 7 / 3,898 / Runners- 7th of - 0 44 23 20 1 52.28 Indians 505. 523.1 up 8 2010 3

2008 1 44 25 18 1 55.81 4,28 www.zenithresearch.org.in Rajasthan 4,213 / Champion 7th of - 9 /

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Royals 2010 554. 564.2 s 8 2

Royal 4,26 2008 Challenger 3 / 4,521 / Runners- 7th of - 0 46 21 25 0 45.65 s 587. 574.5 up 8 2010 Bangalore 3

(i) CHENNAI SUPER KINGS

It has been the most consistent team in earlier seasons of the IPL. It had retained four players before the auction and could win the maximum, three players, from IPL idols list. Their Strategy has been more or less to continue with winning combination. Emphasis has been to quote higher price for players who are good batsmen and fielders, though the team has five speacialist bowlers. Following is the model which best describes the bidding strategy of Chennai Super Kings with an adjusted R square of 0.926 as obtained through step-wise regression. The model can be given as :

Auction Price = 56366.404 + 730907.680 (IPL10 IDOLS) + 18357.796 (Interaction of Batting and Fielding).

TABLE 9: CHENNAI SUPER KING: REGRESSION MODEL FOR AUCTION

Unstandardized Standardized t Sig. Coefficients Coefficients

(Constant) 56366.404 56162.759 1.004 .345

IPL10 IDOLS 730907.680 87165.703 .848 8.385 .000

BATFIELD 18357.796 7124.187 .261 2.577 .033

(ii) DECCAN CHARGERS

Deccan Chargers perhaps has been the most inconsistent performer. They had finished bottom of the table in 2008, Champion in 2009 and semifinalist in 2010. Percentage of winnings recorded by the team is higher only to Kolkata Knight Riders and though the number of runs scored by the team is second only to Chennai, runs conceded by them is the highest. The statistically most significant model as obtained by stepwise regression, with an adjusted R-square of 0.96, shows that Age, main effects of Bowling Average, Batting Average, Fielding, and their interactions all proved to be significant factors in their bidding strategy. Average age of the team players is www.zenithresearch.org.in lowest at 26.9286 years and final bidding price of senior players were higher. Their apparent

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 strategy was to get young players who with allround performance . Pragyan Ojha, the player with lowest bowling average in twenty-20 was taken at a final bidding price of USD 500000 and Michael Lumb of England one of top-5 players in Bowling Strike Rate was taken at a bidding price of USD 80000.

The model is given as:

Final Bidding Price = 1354783 + 76007.9 Age +2812494(Catches & Stumping per innings) +32482.3

(Batting Average)- 43044.5 (Bowling Average).

Players with all round performance in batting, bowling and fielding were preferred. Senior players were given premiums.

(iii) DELHI DARE DEVILS

Delhi Dare Devils performance in the earlier seasons of IPL can at best be described as average. They had finished 4th in 2008, 3rd in 2009 and 5th in 2010. Batting has been there forte. In this season of IPl they had retained Virendra Sehwag, one of the finest batsmen in shorter form of the games and one of the top five players in batting strike rate in twenty-20. Aaron Finch, an Australian player with highest strike rate and Robert Frylinck of Australia one of the top most players with high batting average in twenty-20 format were picked up. The best model for Delhi Dare Devil‘s strategy as obtained through step-wise regression is given as

Auction Price = 690342.7 + 960.087 (Interaction between batting average and batting strike rate)

TABLE 10: DELHI DARE DEVILS: REGRESSION MODEL FOR AUCTION BIDDING PRICE

Coefficie Standard nts Error t Stat P-value

2.2406 0.0417 Intercept 690342.7 308101.5 34 85

Interaction between batting average and batting 1.9631 0.0698 strike rate. 960.087 489.0522 59 1

(iv) KING’S XI PUNJAB

Performance of King‘s XI Punjab can be described as below par, semifinalist in the first season and finishing at fifth and eighth position in 2009 and 2010. Confidence on its key player Yuvraj Singh seemed to have lost and it neither retained Yuvraj and nor seemed to be keen in winning www.zenithresearch.org.in him in the auction. Batsman, Shaun Marsh of Australia with a Batting average of 45.3, Wicket

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 keeper and Captain Adam Gichrist and Dinesh Karthik are expected to be their prized procession. Final bidding price of the players picked for the team is fairly symmetrically distributed. The most significant model with adjusted R-square of 0.957 shows picking up bowlers with good strike rate and good fielders has been their key strategy. The model is given as: Auction Price = -2279081.123 - 126019.318 Bowling Strike Rate

TABLE 11: KINGS XI PUNJAB: REGRESSION MODEL FOR AUCTION BIDDING PRICE

Unstandardized Standardized T Sig. Collinearity Coefficients Coefficients Statistics

B Std. Error Beta Tolerance VIF

(Constant) -2279081.123 277183.129 -8.222 .000

Bowling -126019.318 13231.850 .-890 -9.524 .000 .996 1.004 Strike Rate

(v) KOCHI

Though, we could not exactly come out with a statistical model which can explain strategy of incumbent Kochi, but one of their key strategy has been to get key established players of other IPL teams which did not perform up to the mark in previous seasons. It has been able to get Brad Hodge and Brendon McCullum of Australia who have batting average of well above 30 in twenty-20 format at final bidding price of USD 425000 and USD475000 only. Both these players earlier formed part of Kolkata Knight Riders. Other key players will be VVS Laxaman of Australia and Muttiah Muralitharan and Mahela Jayawardene , all of them excellent players but are aged at wrong side of thirty. Another interesting observation is that Kochi team has players with highest average batting strike rate, which also implies focus has been in getting good batsmen and bowlers who are quick between the wickets. Impetus given on getting the two

senior players of Srilanka

(vi) KOLKATA KNIGHT RIDERS

Out of eight teams who have participated in previous three seasons of IPL Kokata Knight Riders performance has been the poorest. They are the only team who have never reached the semi- finals and has only 39.74% winning record in the IPL. In 2011, they have intended to give a new look to their team. Former skipper, Saurav Ganguly was not picked up. Similarly, key former players Brendon McCullum, Brad Hodge and Chris Gyale who in 2009 were being considered for captainship were not even considered for bidding. Two of the players who secured highest

bidding price IPL Auction 2011, Gautam Gambhir and Yusuf Pathan were won by KKR. www.zenithresearch.org.in Gautam Gambhir got the benefit of winner‘s curse for having been first player to be auctioned

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 and will be the captain of the side. They have one of the best all rounders, Jacques Kallis, one of the IPLX idols, Yusuf Pathan, a batsman with second highest batting strike rate and twenty year old Jaidev Unadkat as a potentially good bowler. Statistically, only batting strike rate appear as moderately significant predictor of final bidding price with R square of 43% through stepwise regression. The model is as follow has been tabulated below. The Model is given as:

Auction Price = -302151 + 9312.671 (Batting Strike Rate)

TABLE 12: KOLKATA KNIGHT RIDERS: AUCTION MODEL FOR BIDDING PRICE

Coefficients Standard Error t Stat P-value

Intercept -302151 691458.3 -0.43698 0.671414

Batting Strike Rate 9312.671 6041.561 1.541435 0.154237

(vii) MUMBAI INDIANS

Mumbai Indians who was Runners up in 2010 season had like Chennai Superking retained four of its star performers before the bidding. They are Harbhajan Singh, Sachin Tendulkar, Lasith Malinga and Kieron Pollard. Three of these players also formed part of IPLX idols. Statistically most significant model with an adjusted R-square of 87% show good bowlers and batsmen with good batting average and fielding as well as age came out to significant factors. The model has been tabulated as bellow

TABLE 13: MUMBAI INDIANS: AUCTION MODEL FOR BIDDING PRICE

Coefficients Standard Error t Stat P-value

Intercept 6425589 1729279 3.715763 0.02055

Age -169111 40769.39 -4.148 0.014283

Bowling average -202236 42105.28 -4.80311 0.008629

Bowling Economy rate -126643 61545.88 -2.0577 0.108736

Catches & Stumping per innings -7888177 2245701 -3.51257 0.024615

Batting and Fielding 329807.8 95553.56 3.451549 0.026018

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Auction Price = 6425589 -169111 Age + -202236 Bowling average -126643 Bowling Economy rate -7888177 Catches & Stumping per innings + 329807.8 Batting and Fielding

(viii) PUNE WARRIORS

Pune warriors who were to be playing for the first time in IPL 2011 has played well in the auction. They could grab Yuvraj Singh from Kings XI at final bid price of USD 1800000 and IPL Idol 2010 player Robin Uthappa at USD 2100000. Key strategy has been to pick up players with good batting average. The most significant model with an adjusted R-square of 53% is tabulated below:

TABLE 14: PUNE WARRIORS: REGRESSION MODEL FOR AUCTION BIDDING PRICE

Coefficients Standard Error t Stat P-value

Intercept 39489.78 360775 0.109458 0.91481

IPL idols 1500220 507591.8 2.955563 0.013079

Batting Average 22748.29 18190.61 1.250552 0.237045

Auction Price = 39489.78 + 1500220 IPL idols + 22748.29 Batting Average

(ix) RAJASTHAN ROYAL

Rajasthan Royal‘s performance has been topsy-turvy in IPL. They spend the least in IPL 2008 auction. A young team of unknown local players under the inspired leadership of Shane Warne went on to become the Champion. Their performance was motivated by the famous Oscar nominated film Laagan whose storyline was based on similar theme and on the same locality. In 2009, they however finished at the bottom of table, and reached semifinal in 2010. They did not seem to have the desire to deviate from their once successful model. They had retained Shane Warne and Shane Watson at USD 1800000 and USD 1300000. Only six more players were bid successfully in the auction. Other players is expected to be hired from local areas. Their strength is bowling with only specialist Batsman, Rahul Dravid grabbed from Royal Challengers

Bangalore. The average age of the players are more than thirty and average batting average is lower than the other teams. The final average bidding price of the players are much higher than as predicted by the general model.

(x) ROYAL CHALLENGERS BANGALORE

Royal challengers Bangalore has finished at the bottom of the table in 2008 and went onto become runners up in 2009 and got third position in 2010. They have relied more on talented Indians, with Virat Kohli retained with a price of USD 1800000 and projected as the skipper of

the team. The most significant model explaining biding price strategy of Bangalore has adjusted www.zenithresearch.org.in R-square of 0.87 as given below:

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TABLE 15: ROYAL CHALLENGERS BANGALORE: REGRESSION MODEL FOR BIDDING PRICE

Coefficients Standard Error t Stat P-value

Intercept -1210779 318509.3 -3.80139 0.002936

Bowling Strike Rate -18478.4 3002.163 -6.155031 7.16E-05

Catches & Stumping per innings 1208228 188448.5 6.411449 5E-05 batting strike rate 12381.59 3936.8 3.14509 0.009323 batting average 17786 10548.84 1.68606 0.119906

Auction Price = -1210779 - 18478.4 Bowling Strike Rate + 1208228 Catches & Stumping per innings + 12381.59 Batting Strike Rate +17786 Batting average

SOME INTERESTING ASPECTS OF IPL

(i) Vijay Mallaya, franchisee owner of Royal Challenger Bangalore (RCB) and owner of UB group had clearly stated in 2008 that his objective of being part of the IPL business was to promote his alcohol brand, which otherwise is banned to be promoted directly in India. Much attention was not paid in the composition of the team. The situation worsened due to sacking of team manager, Charu Sharma and pressure being created on the team captain, Rahul Dravid to resign. The result was RCB finishing at the bottom of the table. Their strategy of giving a new look to the team in 2009, with emphasis on youth and good fielders clicked under the leadership of Anil Kumble and they reached the final in 2009 after losing four consecutive matches. Anil Kumble‘s leadership style was of ―leading by example‖. RCB also reached the semifinal in 2010.

(ii) In the first IPL in 2008 the Emerging Media Group, who owns Rajasthan Royals, was the lowest bidder and paid $65 million to become the least expensive franchise in the eight- team IPL. They didn‘t have high profile players in their team and nor had any accomplished celebrity as brand ambassador. What they accomplished was by identifying

young talents through a Cricket Star Reality Show, nurturing them through proper coaching and focusing on their objective of winning. Darren Berry, director of coaching with the Rajasthan Royals had said in an interview that each of the players was assigned a specific role to play during a match and they focused on their role and worked as a team talking to each other in times of crisis. They clung together as a team: when their bagman lost his mother but did not leave the tournament, all the players wore black bands in his mother‘s respect throughout the tournament. Many prodigal players like Yusuf Pathan,

Robin Uthappa who will now be representing other team are discoveries of RR. www.zenithresearch.org.in

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(iii) Now let us look into how some of the players who were not picked up by any of the franchisees in the auction. The top players who were left unsold in the auction with their base prices are as follow:

Sourav Ganguly ($400,000)

Brian Lara ($400,000)

Chris Gayle ($400,000)

James Anderson ($400,000)

Graeme Swann ($400,000)

Luke Wright ($400,000)

Herschelle Gibbs ($200,000)

Graham Manou ($50,000)

Matt Prior ($200,000)

Mark Boucher ($200,000)

Dilhara Fernando ($100,000)

Ajanta Mendis ($200,000)

Chamara Kapugedera ($100,000)

Tamim Iqbal ($100,000)

Saurav Ganguly, aged 38 years has a good enough batting average of 27.07 and was captain of Kolkata Knight Riders (KKR) for the previous three seasons but did not find any takers. Though he recorded great performances in flashes in IPL but most of the time he seemed to stick to the

wicket at a low strike rate not letting other younger players to take the crease and increase the pace of scoring runs. His batting strike rate of 109.09 is just same as the average batting strike rate of present KKR team and lower than average strike rate of all other teams except Rajasthan Royals (which is yet to build its complete team). Saurav Ganguly‘s bowling average is 24.48, bowling economy rate is 7.73, bowling strike rate 19 and catche/stumpings per match is 0.362, which is again comparable with averages of most other teams as can be seen from table 11.. His age, batting strike rate and the fact that his leadership could not win even a semi-final berths for KKR in any of the previous seasons worked against him. Brian Lara, aged 42 years has an experience of only 3 matches in twenty-20 format with batting average of 33 and strike rate of

115.11. His age and inexperience in this format of the game, resulted in none of the teams www.zenithresearch.org.in showing confidence in him. Similarly, Chris Gayle aged 32 years who represented KKR in

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 earlier seasons has batting average of 30 and strike rate 140.16 higher than most players auctioned and also is a useful part-time bowler but was not picked perhaps due to his rash play and showing impatience when the team needed him to stay in the wicket for a while. Also he participated in only nine of the matches out of fourteen which KKR played in the third edition which is evidence of his casual approach in the field. Another surprise omission was Herschelle Gibbs a wicket-keeper batsman with batting strike rate of 125.09 and batting average of 26.05 in twenty-20 and catches/stumpings of 0.51. He was instrumental in Deccan Charger‘s winning the league in the second season but did not perform well with Chargers in other seasons and has also fallen out his national team, South Africa. His age at 37 puts him in the wrong side of thirty. Also, his former team, Deccan chargers has opted this time for a very young team, (infact the average age of the players is least as compare to other teams) and emphasized in getting good bowlers. Another factor which remotely may have worked against him could be his being caught in microphone in making racial comment against section of the crowd in a match in Pakistan which resulted him being banned by ICC from playing couple of matches in 2007. English Players like James Anderson, Graemme Swann, Luke Wight might not have been picked up due to the apprehension that they may not fetch big money as they have domestic cricketing commitments to keep during the IPL seasons. Paul Collingwood has reportedly said that England players were less attractive in the auction because they are expected to play in at least one first- class fixture before the first Test of the 2011 summer, against Sri Lanka at Lord's on 26 May – meaning they will not be available for the latter stages of the IPL, which will run from 8 April to 22 May. Australian Player, Graham Manou‘s performance in twenty-20 has been rather unimpressive with a batting average of 10.37. Dihara Fernando of Srilanka who played for Mumbai Indians in earlier seasons has only one notable bowling figure of 4 for 18 again Royal Challengers Bangalore which won him the ―Man of the Match‖ title. Similarly, Chamara Kapugedera fate was affected by his inconsistencies in performance in IPL 2009 season for Chennai Superking which found him no takers in the next two seasons. Ajantha Mendis had to pay for having been picked for the 2010 season by the low performing team KKR, which did not bring into limelight his performance. Tamim Iqbal of Bangladesh was not picked up for reasons unknown even after Sachin Tendulkar had reportedly advised Mumbai Indians to bid for him.

(iv) Andrew Symonds and Harbhajan Singh will both be playing for Mumbai Indians (MI) in the IPL season IV. They are the players, who were caught in verbal racial argument during an international match between by India and Australia some years back and were

reprimanded by International Cricket Council. Yet, MI represents city of Mumbai which

did not allow two foreign women to perform as cheer leaders during a match in the first IPL season. It is strange how a game of cricket can mend feeling of cross-cultural differences. The presence of the two players, both excellent all-rounders in their own rights will add to the entertainment value. The performance of the KKR team in 2009 edition in South Africa was marred by charges of racial discrimination within team members( http://cricket.zeenews.com/fullstory.aspx?nid=20167).

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REFERENCES

Karnik A (2010).Valuing Cricketers Using Hedonic Price Models, Journal of Sports Economics, 11, 4, 456-469

Vickrey, William (1960). Counterspeculation, Auctions and Competitive Sealed Tenders, Journal of Finance, 16(1), 8-37.

McMillan, John (1992). Games, Strategies, and Managers, New York, Oxford University Press.

Rastogi, S.K., and Deodhar, S .K. (2009). Player Pricing and Valuation of Cricketing Attributes, Vikalpa, 34(2), 15-23. www.iplcricket.com www.cricketfundas.com

www.espncricinfo.com/

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THE EFFECT OF BLOCKHOLDERS ON EARNINGS MANAGEMENT: THE CASE OF TUNISIAN LISTED FIRMS

KHAMOUSSI HALIOUI*; ABIR JERBI**

*Associate Professor of Accounting, College of Economics, Management and Information System, University of Nizwa, Sultanate Oman. **Ph. D Student in Accounting, Faculty of Economics and Management, University of Sfax, Tun.

ABSTRACT

The earnings management is a subject widely discussed in the accounting literature. The object of this research is to study the impact of blockholders on earnings management in 31 Tunisian companies listed on the Tunisian Stock Exchange during the period 1998 - 2009. Four hypotheses were formulated by referring to the previous studies results. Using Kothari et al. (2005) and Zhong et al. (2007) models to estimate the discretionary accruals as a measure of earnings management, the results show that in case of declining premanaged earnings: (1) firms manage their earnings more than others firms, (2) the presence of blockholders affects positively the discretionary accruals; (3) those blockholders are not effective monitors of earnings management.

KEYWORDS: Blockholders, Declining premanaged earnings, Discretionary accruals, Earnings management. ______

1. INTRODUCTION

The accounting and financial information takes more and more importance in the business environment. In particular, during the last decade, when we register numerous bankruptcies of big international companies as well as the last world crisis of 2008, a crisis of confidence in the credibility of the financial information put at the disposal of investors involves instability in the financial markets. In fact, accounting information is the product of a whole long process under

the responsibility of the company manager. For the accounting information truly reflect the operations performed by companies, the normalize has given flexibility to his preparers, thereby encouraging the substance over form.

However, managers can take advantage of asymmetric information to use this discretion in order to manipulate the financial statements, and therefore to influence the design of their entities’ conception to achieve personal gain for them or for the companies they manage. In this case, the revealed accounting result reflects the desire of managers and not the economic reality of company. For this, several mechanisms have been implemented to control the managers to

produce reliable information. www.zenithresearch.org.in

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Some researches examined the role of blockholders in the control of managers’ opportunist behavior, particularly in earnings management (Dechow et al., 1996 and Bos and Donker, 2004).However, there’s no consensus with regard to the result found. In fact, the results of these researches are contradictory and nuanced.

The question of managerial opportunism has been still unanswered and deserves further study. This subject constitutes an interesting research area in particular after the 2008 world crisis which has deepened the crisis of confidence in financial statements reliability.

The crucial question of this research is to determine whether the presence of blockholders in the ownership structure affects the magnitude and direction of earnings management of Tunisian companies listed on the Tunisian stock exchange.

This study may also provide evidence whether the blockholders are effective monitors of earnings management in accordance with the generally accepted accounting principles (GAAP) in case of declining premanaged earnings.

By focusing our study on the companies with declining financial performance, we identify a context in which the managers have motivations to increase earnings management, and accordingly the effect of blockholders on earnings management1can be detected more easily.

To accomplish this work, we first present a review of relevant literature to formulate research hypotheses. Secondly, we propose the methodology and the econometric models. Finally, we analyze and discuss the results.

2. RELATED LITERATURE AND HYPOTHESIS DEVELOPMENT

The separation between ownership and management leads to a situation where the divergence of interests between owners and managers is a problem (Berle and Means, 1932). Indeed, large modern firms are directed by managers who don’t have necessarily the same goals as the shareholders. These managers may use earnings management as a means to enable them to achieve their goals. Indeed, Zhong et al. (2007), for example, found that managers of firms with declining premanaged earnings tend to manage their results upward to hide this decline. This result is consistent with those reported by Burgstahler and Dichev (1997).These authors found that the announcement of income decrease leads to higher costs of transactions with stakeholders

that than if the company declares an increase in the result. This explains the motivation to avoid the announcement of a decrease in result. In addition, they noticed that there are strong motivations to avoid earnings declines according to anecdotal evidence. Indeed, this evidence suggests that managers seek to maintain an increasing income model. To achieve this goal, managers use earnings management as a means to enable them to conceal their declining results.

1 Despite the multitude of definitions of earnings management, the definition given by Shipper (1989) remains the standard definition for several accounting researchers (Dechow et al., 1996; Ching et al., 2006; Zhong et al., 2007). He argues that earnings management is defined as “a purposeful intervention in the external financial reporting

process, with the intent of obtaining some private gain (as opposed to say, merely facilitating the neutral operation www.zenithresearch.org.in of the process)”. Consistent with this definition, earnings management in our study relates principally to accounting practices in conformity with GAAP.

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In addition, they found that 8% to 12% of companies with small decreases in premanaged earnings manage their results upwards.

Thus, we assume that the declining premanaged earnings2 is a factor that encourages managers to manage earnings upward to hide this decline, hence the hypothesis 1 will be formulated as follows:

H 1: “Firms with declining premanaged earnings manage result higher than other firms’’.

However, the practice of earnings management may be limited by blockholders. Indeed, the presence of blockholders constitutes an effective corporate governance mechanisms capable of controlling the actions of managers. The disciplinary power which these blockholders exert on managers was the subject of several researches.

The study of Jensen and Meckling (1976) is one of the first studies which suggested that the monitoring of management by outside blockholders3 may be a way to reduce agency costs. Core (1995) and (2000) also showed that the existence of outside blockholders can reduce agency costs by suggesting that managers are more incited to act in the interest of shareholders and to limit the accounting manipulation. This measure reduces the litigation costs resulting from legal actions brought against failing managers. Similarly, Chtourou (2000), Yeo et al. (2002), Bos and Donker (2004) also found that outside blockholders effectively control the process of preparing financial statements which reduces the tendency to manipulate the results.

Jensen and Meckling (1976) and Shleifer and Vishny (1986) noticed that outside blockholders have more incentives to monitor the decisions taken by managers. This idea was more developed by Zhong et al. (2007). According to them, if the small shareholders are not satisfied with the performance of the company, they can sell their shares quickly. But it is not the case for blockholders, who generally have to adopt a long-term strategy, because the sale of big blocks of shares often involves a decrease in share prices.

Defond and Jiambalvo (1991), Dechow et al. (1996) and Yeo et al. (2002) considered that the existence of outside blockholders improves the credibility of financial statements by exercising meticulous control of earning management practice in the company. Based on these results, we formulate our second hypothesis which states that the presence of blockholders reduces the level

of discretionary accruals.

H 2: “Blockholders have a monitoring role on earnings management’’.

Besides the monitoring role attributed to blockholders, it would be interesting to know whether these shareholders continue to play a monitoring role on management in certain circumstances,

2According to Zhong et al., (2007), “declining premanaged earnings refer to situation in which premanaged earnings for the current year are lower than reported earnings of the prior year”. 3 Outside blockholders are those shareholders who own at least 5% of a firm’s outstanding common stocks and who

are neither the firms’ executive officers nor on the board directors (Shleifer and Vishny, 1986 and 1997; Zhong et www.zenithresearch.org.in al., 2007).

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 especially in case of declining premanaged earnings. Zhong et al. (2007) formulated a hypothesis which states that the existence of outside blockholders reduces earnings management upward to hide the decline of performance. In this research, we formulate the third hypothesis as follows:

H 3: “Blockholders have a monitoring role on earnings management in case of declining premanaged earnings”.

Finally, despite of the fact that the literature on corporate governance outlines the role of blockholders in the meticulous control of management, Shleifer (2004) and Bolton et al. (2006) consider that the presence of blockholders can intensify the excessive pressures of capital markets to concentrate on the short-term results. In the same line, some researchers showed that the presence of outside blockholders may create extra pressure on managers to engage in income increasing earnings management and announce a favorable financial performance (McEachern, 1975; Shleifer and Vishny, 1986; Holderness and Sheehan, 1988; and Barclay and Holderness, 1991).

Likewise, Ely and Song (2000) found that when the company works below its potential, blockholders exercise a pressure on the managers to make specific decisions, otherwise they will be dismissed. This situation explains that the managers in companies with outside blockholders can feel more pressure to manage earnings than those in companies with diffuse ownership structure (Zhong et al., 2007).

In this sense, Zhong et al. (2007) propose that the existence of outside blockholders increases the motivation of managers to manage result upward to hide the decline of performance. In other words, the presence of these shareholders can create additional pressure so that the managers increase earnings management.

In the light of these results, we formulate the fourth hypothesis as follows:

H 4: “The presence of blockholders creates pressure on management to manage earnings upwards to hide declining premanaged earnings”.

3. RESEARCH METHODOLOGY

3.1. SAMPLING AND DATA COLLECTION

Our initial sample is composed of 54companieslisted on the Tunis Stock Exchange. We obtained the financial information from financial statements published on the website of Tunis stock exchange (www.bvmt.com.tn).

We followed the recommendations of some researchers specialized in the accounting domain (such as Zhong et al., 2007) who eliminated banks, insurances and financial institutions because they are characterized by a specific regulations related to the control of financial information.

The final sample consists of an unbalanced panel including 31 firms. www.zenithresearch.org.in

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The observation period chosen to examine the impact of blockholders on earnings management in case of declining premanaged earnings extends from 1998 to 2009.

Considering the missing data and the recent introduction of some firms to the stock exchange in Tunis we retained only 257 firm-year observations.

3.2. EMPIRICAL MODELLING

The model used to test our hypotheses examines the relationship between the presence of blockholders and earnings management. To measure earnings management we use the model of Kothari et al. (2005).This model is presented in the following way:

TAit = δ0 +δ11/ASSETSit-1 + δ2 Δ SALESit + δ 2 PPEit + δ3 ROAit + it (1)

Where TAit is total accruals; ASSETSit-1 is total assets of the previous year; Δ SALESit is the change in sales scaled by lagged total assets; PPEit is net property, plant and equipment scaled by ΑSSETSit-1; ROAit-1 is return on assets in period t-1; and it is the error term for firm i and year t.

The discretionary accruals are calculated as the residuals from the regression model presented above. These residues represent the dependent variable in our empirical model as follows:

DACit= α0 + α1 VARit+ α2 BLOCKit + α3VARit* BLOCKit + α4 DEBTit + α5 SIZEit +

α6 AUDit + it (2)

Where:

DACit:the discretionary accruals estimated from the model of Kothari et al. (2005);

VARit: declining premanaged earnings is a dummy variable that takes the value 1 if VAR is negative and 0 otherwise.

It should be noted that the variation of premanaged earnings of firm i in year t is defined as premanaged earnings of year t less reported income before extraordinary items and discontinued

operations for year t-1 scaled by lagged total assets (ASSETSit-1);

Premanaged earnings for year t defined as current year income before extraordinary items and discontinued operations of year t-1 scaled by lagged total assets (ASSETSit-1) less discretionary accruals for year t. This formula was used by Zhong et al. (2007);

BLOCK: blockholders of the firm i in the year t is a dummy variable equal to 1 if the firm have a 4 blockholder own at least 40 % of a firm’s equity and 0 otherwise;

4

According to previous studies, we can consider the variety of thresholds selected for a shareholder to be considered www.zenithresearch.org.in as blockholders (5% Shleifer and Vishny ,1986 and 1997; Zhong et al.,2007 , 10% Core, 2000; André and Schiehll,2004 , 20% La Porta, Lopez-de-Silanes and Shleifer, 1999) , 40% Le Maux, 2005) ,..).Indeed, there is no

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VARit* BLOCKit: the interaction between declining premanaged earnings (VAR < 0) and discretionary accruals which vary with the presence of blockholders is a dummy variable equal to 1 if the firm have a blockholder and have a declining premanaged earnings and 0 otherwise;

DEBTit: leverage for firm i in the year t is measured by the amount of loan divided by the total asset;

SIZEit: the size for firm i in the year t is measured by the log of the total asset;

AUDit: the external audit quality for firm i in the year t is a dummy variable equal to 1 if the firm is audited by an external auditor in Big 4 and 0 otherwise and; it: the regression residual for firm i and year t.

4. RESULTS AND DISCUSSION

4.1. DESCRIPTIVE STATISTICS

Descriptive statistics on the variables of our explanatory model of the effect of existence of blockholders on earnings management are presented in table 1.Table 2 is used to present descriptive statistics of discretionary accruals depending on the variable VAR, BLOCK and the interaction between these two variables. For the period from 1998 to 2009, these tables show the values minimum and maximum, the mean, and the standard deviation of variables used in our empirical model.

TABLE 1: DESCRIPTIVE STATISTICS OF VARIABLES IN THE EMPIRICAL MODEL

Variables Minimum Maximum Mean SD

DAC -0.2536086 0.1042728 -0.0231502 0.0469064

VAR 0 1 0.307393 0.462314

BLOCK 0 1 0.3501946 0.4779615

VAR*BLOCK 0 1 0.07393 0.2621674

DEBT 0 2.571484 0.1290299 0.2527065

SIZE 15.23332 21.11259 17.78937 0.9273343

precise rule for determining the percent of share required for the formation of a block. Most of the studies choose an arbitrary threshold or in the best cases choose a threshold which is influenced by the local regulations. In this study,

we decided to examine the ownership structure of companies to choose a threshold which suits the Tunisian context. www.zenithresearch.org.in Then, we calculated the mean of capital structure held by the most important shareholder for the sample companies and we retained the 40 % threshold.

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AUDIT 0 1 0.2529183 0.4355327

The examination of table 1 allows us to notice that the mean of the discretionary accruals is negative and equal to 0.0231502. This table indicates that the mean of discretionary accruals is negative and equal to -0.0231502. This is reflected by the fact that managers of Tunisian firms manage earnings downwards.

Also, the variable VAR has a mean of 0.307393. This means that 30.73% of Tunisian firms have declining premanaged earnings.

Moreover, the variable BLOCK has a mean of 0.3501946. This result suggests that 35.01% of our sample firms have blockholders holding at least 40% of the capital of company.

Besides, the mean of variable VAR*BLOCK is equal to 0.07393.That is, 7.39 % of Tunisian firms possessing blockholders have declining premanaged earnings.

For the variable DEBT, the average debt ratio is 0.1290299. This indicates that on average, the debt represents 12.90% of total assets.

Regarding the variable AUDIT, we find that 25.29% of companies in our sample are audited by a Big 4.

TABLE 2: DESCRIPTIVE STATISTICS OF DISCRETIONARY ACCRUALS ACCORDING TO THE EXPLANATORY VARIABLES

VAR N Minimum Maximum Mean SD

Descriptive statistics of discretionary accruals according to the declining premanaged earnings

VAR=1 79 -0.1189251 0.1042728 0.00683419 0.03779528

VAR=0 178 -0,2536086 0.0810106 -0.03645792 0.04442238

Descriptive statistics of discretionary accruals according to the presence of blockholders

DAC BLOCK=1 90 -0,2536086 0,1042728 -0,03455478 0,05093052

BLOCK=0 167 -0,2199795 0,0810106 -0,01700406 0,04351847

Descriptive statistics of discretionary accruals according to the declining premanaged earnings and the presence of blockholders

VAR*BLOCK =1 19 -0,0562655 0,1042728 0,017936221 0,032270359 www.zenithresearch.org.in

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VAR*BLOCK =0 238 -0,2536086 0,0810106 -0,02643024 0,04638284

According to table 2, the mean of discretionary accruals of companies whose have premanaged earnings for the current year is lower than the reported earnings of the prior year is positive and equal to 0.00683419. However, this mean is negative for the companies that don’t have declining premanaged earnings. Thus, we can deduce that declining premanaged earnings can be a factor which encourages the managers to manage earnings upwards to hide this decline.

Besides, we noticed that both the means of discretionary accruals are not very different in the presence or absence of blockholders. It means that the presence or absence of blockholders has no significant impact on earnings management.

We noticed that the coexistence of both variables, declining premanaged earnings and the presence of blockholders, affect positively discretionary accruals (the mean of discretionary accruals is positive and equal to 0, 017936221). Put differently, the presence of blockholders does not prevent upward earnings management in order to hide declining premanaged earnings and announce favorable financial performance. In the contrary case (that is when VAR* BLOCK = 0), the mean of discretionary accruals is negative and equal to 0, 02643024.

4.2. PEARSON CORRELATION MATRIX

Pearson correlation coefficients between the independent variables are presented in Table 3 below.

TABLE 3: PEARSON CORRELATION MATRIX BETWEEN INDEPENDENT VARIABLES

OF EMPIRICAL MODEL

VAR BLOCK VAR*BLOCK DEBT SIZE AUDIT

VAR 1.0000

-0.1355** 1.0000 BLOCK

(0.0299)

0.4241* 0.3849* 1.0000 VAR*BLOCK (0.0000) (0.0000)

-0.1545** 0.1389** -0.1182*** 1.0000 DEBT

(0.0132) (0.0260) (0.0586) www.zenithresearch.org.in

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-0.0911 0.1838* -0.1203*** 0.1195*** 1.0000 SIZE (0.1453) (0.0031) (0.0542) (0.0556)

0.0392 -0.0706 -0.0618 -0.0991 0.1965* 1.0000 AUDIT (0.5318) (0.2594) (0.3240) (0.1128) (0.0015)

*, **, and *** denote statistical significance at the 0.01, 0.05, and 0.10 percent levels respectively.

The examination of Pearson correlation matrix shows that the coefficients of Pearson are lower than 0.6, a limit from which the phenomenon of colinearity becomes more and more pronounced. Thus the problem of bivariate multicollinearity does not appear.

4.3. REGRESSION RESULTS

The results of our regression model explaining the effect of blockholders’s existence on earnings management are presented in Table 4 presented below.

TABLE 4: REGRESSION RESULTS OF EMPIRICAL MODEL

Model Coefficient t Sig

Constant -0.0579048 -1.24 0.216

VAR 0.0301723 5.08 0.000

BLOCK -0.0146228 -2.49 0.013

VAR*BLOCK 0.0233722 2.03 0.043

DEBT -0.0746196 -7.85 0.000

SIZE 0.0023279 0.87 0.383

AUDIT -0.0115082 -2.09 0.036

We find that the coefficient of the variable VAR is positive (0.0301723) and statistically significant (P = 0.000). This result shows that earnings management is an increasing function depending on declining premanaged earnings. Therefore, firms with declining premanaged earnings tend to manage earnings upward to hide this decline. In other words, companies which have premanaged earnings lower than the announced results of the previous year have a higher

earnings management than other companies, which confirms our first hypothesis. This result is www.zenithresearch.org.in

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 consistent with Warfield et al. (1995), Burgstahler and Dichev (1997), Gabrielsen et al. (2002), Sánchez-Ballesta and García-Meca (2007) and Zhong et al. (2007).

Concerning the variable BLOCK, the coefficient is negative (-0.0146228) and significant at the 5% level (P=0.013).Thus, we can notice that earnings management is negatively associated with the presence of blockholders. It means that blockholders play a monitoring role in earnings management. Consequently our second hypothesis is verified. This result confirms the results obtained by Marrakchi et al. (2001), Yeo et al. (2002) and Zhong et al. (2007).

For the variable VAR*BLOCK, the coefficient is positive (0.0233722) and significant at the 5 percent level (P=0.043). This result indicates that the presence of blockholders exacerbates earnings management upward in case of declining premanaged earnings and that their presence increases managers’ incentives to manage earnings to hide this decline. Therefore, hypothesis 3 is rejected while hypothesis 4 is verified. This result is consistent with those found by Ching et al. (2006), Zhong et al. (2007) and Guthrie and Sokolowsky (2009) which consider blockholders as ineffective monitors of earnings management when they benefit from it.

Concerning the variable DEBT, the coefficient is negative (-0.0746196) and statistically significant (P=0.000). This result is consistent with the findings of Lopez Iturriaga and Hoffmann (2005). Besides, the variable SIZE has a positive (0.0023279) and insignificant coefficient (P=0.383). The results of these two variables are not in accordance with the hypotheses of the positive accounting theory. These results are not surprising and can be explained by the nature of the ownership structure. Indeed, if the latter is relatively dispersed in the United States, it is concentrated in Tunisia. Subsequently, the hypotheses of the positive accounting theory do not appear to be important as is mentioned by Breton and Schatt (2003).

Regarding the variable AUDIT, the coefficient is negative (-0.0115082) and statistically significant at the 5 %level (P=0.036). This result shows that the external audit quality affects negatively the earnings management. In other words, auditing firms by a Big 4 can reduce the magnitude of earnings management. This is coherent with the studies of Becker et al. (1998), Gul et al. (2002) and Krichnan (2003).

5. CONCLUSION

This research, which aims to study the impact of three new explanatory variables of earnings management, declining premanaged earnings, the presence of blockholders and the interaction of these two variables in Tunisian companies listed on the Tunis Stock Exchange over the period 1998-2009, has led to three main conclusions:

 Declining premanaged earnings is a factor that encourages managers to manage the result upward to obscure this decline.

 Blockholders play a monitoring role in corporate governance.

 The presence of blockholders creates pressure on managers to manage earnings upward www.zenithresearch.org.in in order to hide declining performance.

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These results confirmed our hypotheses 1, 2 and 4, however, hypothesis 3has not been confirmed.

By comparing our results with those obtained in other contexts, we support the statements that provide that blockholders don’t serve effective monitors of within GAAP earnings management in case of declining premanaged earnings.

However, it should be noted that although this study has focused on two main roles of blockholders in earnings management, in particular the roles of monitoring and pressure, this does not prevents that they can use their power of control to their interest by deriving private benefits at the expense of minority shareholders.

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- Barclay, M.J., and C.G. Holderness., (1991), “Negotiated Block Trades and Corporate Control”, The Journal of Finance, 46, pp. 861-878.

- Becker C., Defond M., Jiambalvo J., and Subramanyam K.R., (1998), “The effect of audit quality on earnings management”, Contemporary accounting research, Vol 15, number 1, pp. 1- 24.

- Bolton, P., J. Scheinkman, and W. Xiong (2006), “Executive Compensation and Short-Termist Behavior in Speculative Markets”. Review of Economic Studies 73(3), 577– 610.

- Bos, A., and H. Donker., (2004), “Monitoring Accounting Changes: empirical evidence from the Netherlands”,Corporate Governance: An International Review, Vol.12, pp. 60-73.

- Breton G. and Schatt A., (2003), « Manipulation comptable : les dirigeants et les autres parties prenantes », La Revue du Financier, 139, p. 18-25.

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losses »,Journal of Accounting and Economics, Vol. 24pp. 99-126.

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- Core J.E., (2000), « Directors and officers’ insurance premiums: An outside assessment ofthe quality of corporate governance », Journal of Law, Economics and Organization, vol. 16,n° 2, www.zenithresearch.org.in pp. 449-477.

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- Dechow, P., R.G. Sloan & A.P. Sweeney., (1996), “Causes and consequences of earnings manipulation: An analysis of firms subject to enforcement actions by the SEC”, Contemporary accounting research, Vol 13, n°1, pp1-36.

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- Gabrielsen, G., Gramlich, J. and Plenborg, T., (2002), “Managerial Ownership, Information Content of earnings, and Discretionary Accruals in a Non-US Settings”, Journal of Business, Finance and Accounting, 29, p. 967-988.

- Guthrie, K., and Sokolowsky, J., (2009), «Large Shareholders and the Pressure to Manage Earnings », Journal of Corporate Finance, Vol. 16, pp. 302-319.

- Holdeness, C.G., and D.P. Sheehan., (1988), “The Role of Majority Shareholders in Publicly Held Corporations: An Exploratory Analysis”, Journal of Financial Economics, Vol 20, pp. 317-346.

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- Kothari, S. P., A. Leone, and C. E. Wasley., (2005), “Performance matched discretionary accrual measures”, Journal of Accounting and Economics 39: 163–197.

- Krishnan, G., (2003), “Audit quality and the pricing of discretionary accruals”, Auditing, 22, pp. 109−126.

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- Lopez Iturriaga F.J., and P.S. Hoffmann (2005), « Earnings management and internal control mechanisms of corporate governance: Empirical evidence from Chilean firms », Corporate Ownership and Control, vol. 3, n° 1, pp.17-30.

- Marrakchi. S, Bédard. J.,and Courteau. L., (2001), « Corporate Governance and Earnings Management », Working Paper, SSRN. 19 pages

- Sánchez-Ballesta, J.P and García-Meca, E., (2007), « Ownership Structure, Discretionary Accruals and the Informativeness of Earnings », Corporate Governance, An International Review, Vol. 15, No. 4, pp. 677-691.

- Shleifer, A., and R.W Vishny., (1986), “Large Shareholders and Corporate Control,” The www.zenithresearch.org.in Journal of Political Economy, pp. 461-488.

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- Shleifer, A., and Vishny. R.W., (1997), “A survey of corporate Governance”, The journal of finance, n°2, pp. 737-783.

- Shleifer, A. (2004), “Does Competition Destroy Ethical Behavior?” The American Economic Review 94 (2), PP. 414–418.

- Warfield, T.D., Wild, J.J., and Wild, K.L., (1995), “Managerial ownership, accounting choices and Informativeness of earnings”, Journal of Accounting and Economics, Vol. 20. pp. 61-91.

- Yeo, G.H.H., Tan. P.M.S., Ho, K.W and Chen, S. S., (2002), “Corporate Ownership Structure and the Informativeness of Earnings”, Journal of Business Finance & Accounting, Vol 29, n.7-8, pp. 1023-1046.

-Zhong, K., D. Gribbin, and X. Zheng., (2007), “The effect of monitoring by outside blockholders on earnings management “, Quarterly Journal of Business and Economics 46, pp. 37-60.

-Gul, F A, Chen, J P and Tsui, J S L., (2002), "Discretionary Accounting Accruals, Managers' Incentives and Audit Fees", AAANZ 2002 Annual Conference, The Accounting Association of Australia & New Zealand, Perth, Australia.

- Le Maux, J., (2005), « La coalition de contrôle : une spécificité du gouvernement d'entreprise français », Paper presented at the XIVth International Conference of Strategic Management, Pays de la Loire, AIMS.

- Berle, Adolf A., and Gardiner C. Means., (1932), “The Modern Corporation and Private Property”, NJ/Transaction Publishers 1991, originally published Hartcourt, Brace &World.

- McEachern, W.A., (1975), “Managerial Control and Performance” (Lexington, Mass.: Lexington Books).

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empirique », Doctoral thesis, Faculty of Administrative Sciences, Laval Universityin Quebec.

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A STUDY ON SERVICE QUALITY AND PASSENGER SATISFACTION ON INDIAN AIRLINES

R.ARCHANA*; DR.M.V.SUBHA**

*Associate Professor, Directorate of Online & Distance Education (DODE), Anna University of Technology, Coimbatore, Tamil Nadu, India. **Research Scholar, School of Management Studies, Anna University of Technology, Coimbatore, Tamil Nadu, India.

ABSTRACT

This study examines the underlying forces of service quality influences on passengers‟ satisfaction in aircraft transport. The study examines which dimensions have a positive influence on service quality and which dimensions have the most and least important impact on service quality in international air travel, as perceived by airline passengers. The findings of this study are based on the analysis of a sample of 270 respondents. This study analyzed the data from passengers of three classes, economy, business and premium. The results suggest that there are different factors of in-flight service quality that are important according to the customer seat class. The dimensionality of perceived service quality in international air travel was explored and three dimensions were identified. These dimensions include in-flight service, in-flight digital service and back-office operations. The findings reveal that these three dimensions are positively related to perceive service quality in international air travel and of these dimensions, Cuisines provided, seat comfort safety are the most important dimension in in-flight service quality. Personal entertainment is the most important dimension as perceived by airline passengers in In- flight digital service quality. Online ticket booking is another dimension in back-office operations. In addition, the findings indicate that passengers‟ satisfaction on different airline companies on basis of the services delivered.

KEYWORDS: Service Quality, Passenger Satisfaction, In-flight services, In-flight digital services, Back-office Operations, Class of Journey, Airline Industry. ______

1. INTRODUCTION

The aviation sector has become the most important segment in the economic development of a nation. It plays a vital role in moving people or products from one place to another, be it domestic or international, especially when the distances involved are far. Stiff competition and favorable initiatives of the Government of India added fuel to enlarge both flights and fleets. Air Deccan was the premier airline, which offered low tariff to the domestic as well as international destinations and created a new landmark in aviation sector in India. Now ordinary citizens easily access the aviation service from their respective air terminals. In a highly competitive environment the provision of high quality services to passengers is the core competitive advantage for an airline's profitability and sustained growth. In the past decade, as the air www.zenithresearch.org.in transportation market has become even more challenging, many airlines have turned to focus on

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 airline service quality to increase service satisfaction. Service quality conditions influences a firm‟s competitive advantage by retaining customer patronage, and with this comes market share. Delivering high-quality service to passengers is essential for airline survival, so airlines need to understand what passengers expect from their services. Service quality can be defined as a consumer‟s overall impression of the relative efficiency of the organization and its services. Understanding exactly what customers expect is the most crucial step in defining and delivering high-quality service. Service quality is one of the best models for evaluating customers‟ expectations and perceptions. The performance of a company leads to passenger satisfaction with a product or service. Passenger satisfaction is fundamental to the practice of consumer sovereignty. Recently many researchers stresses that, customer satisfaction have become an important issue for marketing practitioners because of the rapid business environment. Passenger satisfaction can be defined as a judgment made on the basis of a specific service encounter. Satisfaction and loyalty are not surrogates for each other. It is possible for customers to be loyal without being highly satisfied and to be highly satisfied and yet not loyal. Firms are needed to gain a better understanding of the relationship between satisfaction and behavioral intention in the online environment and to allocate the online marketing efforts between satisfaction initiatives and behavioral intention program. Moreover, the results from this research would assist airline managers to better serve their customers, monitor and develop service quality to achieve the highest level of their passengers‟ satisfaction.

2. PROBLEM STATEMENT

Passenger satisfaction service arises when a company can provide passengers with benefits that exceed passengers‟ expectation and this is considered value-added. If customers are satisfied with the product or service, they will buy more, and do so more often. Passenger gratification is an essential goal for each airline providing passenger services. The on board experience is still something special for the customer. The customer has a wide choice to select the suitable airline product according to their requirements. Therefore, airlines are continuously working on the in-flight product development and innovation to differentiate themselves from competitors. During the last few years a variety of in-flight product innovations have entered into the market. This includes the aircraft seat on long haul flights as an important product element which is continuously being improved and renewed according to its life cycle and changing customer requirements. The current development of business class seat roll-outs shows the significance of this product element which influences the buying decision of the passenger especially on long haul flights. If the passenger is not satisfied, due to the negative experience, the client will reconsider the buying decision for further flights and will probably switch to another airline. This kind of situation belongs to the daily business in the passenger airline industry.

Excellent passenger satisfaction is one of the greatest assets for air business in today‟s competitive environment. There are many factors that can help an airport to build its customer base, and passenger service and satisfaction can be a determining factor in the success of an entire operation. The research related to service quality and customer satisfaction in the airline

industry has been growing in interest because the delivery of high service quality is essential for www.zenithresearch.org.in airlines‟ survival and competitiveness. A number of studies have conducted in service quality

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 related theories and methods in the airline industry. Conversely, most previous airline service studies have relied mainly on passenger satisfaction and service quality to describe passenger evaluations of services and have focused on the effect of airline service quality at the aggregate construct level. Although examining the effect of individual dimensions of service attributes has potentially great utility for airline managers, the effects of individual dimensions of airline service quality has not been fully investigated in previous airline service studies. In addition, the findings would enhance the airliners to improve their customer relations management as well as their brand loyalty.

3. LITERATURE REVIEW

Passenger satisfaction in airline operations has become critically important and Dennett, Ineson, Stone, and Colgate (2000) suggest that as competition created by deregulation has become more intense, service quality in the airline industry has also received more attention. Airline companies also attempted to differentiate their services through the use of computerized reservation systems which were also designed to create customer loyalty in the distribution channels (Lee and Cunningham, 1996). However, despite the airlines‟ efforts to differentiate their services, an extensive survey of frequent fliers conducted by Ott (1993) revealed that consumers did not perceive any difference from one carrier to another.

Cronin and Taylor (1992) originate empirical provision for the idea that perceived service quality led to satisfaction and argued that service quality was actually an antecedent of consumer satisfaction. Bitner and Hubbert (1994) determined that service encounter satisfaction was quite distinct from overall satisfaction and perceived quality. Service quality will vary; the definitions are all formulated from the customer perspective: that is, what customers perceive are important dimensions of quality. Gronroos (1982) and Parasuraman, Zeithaml and Berry (1988) were the pioneers in the conceptualization of the service quality construct, these authors maintained that the overall perception of quality was a disconfirmation of a customer‟s expectation and evaluation of a services delivered.

Saha and Theingi (2009) pointed out that the emergence of low cost airlines has raised concerns on how satisfied are the customers with the services provided. Doyle and Wong (1998) originate that successful companies have a differential advantage in overall company reputation and communicate it as quality to their customers (Solomon, 1985). Often, they are able to command premium prices (Tepeci, 1999). It is found that the most important criterion for customers selecting a bank is reputation (Boyd et al., 1994; Darby, 1999) while Rogerson (1983) stated that good reputation could increase an organization's sales, attract more customers, and reduce customer departures.

Maintaining quality are the main concerns of business today. Providing quality is not a concern of manufacturing companies alone. The delivery of high-quality service becomes a marketing requirement among air carriers as a result of competitive pressure (Ostrowski et al., 1993). Chang and Keller (2002) argue that quality in airline service is difficult to describe and measure due to its heterogeneity, intangibility, and inseparability, and only the customer can truly define service quality in the airline industry (Butler and Keller, 1992).Previous airline www.zenithresearch.org.in service studies are concentrated in modeling the effect of perceived service quality at the

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 aggregate construct level, though examining the effects of individual dimensions of service attributes has potentially great utility for airline managers(Patterson & Spreng, 1997).The perceptions of airline service quality are quite diverse and do not seem to fit any single existing quality model such as the service quality (Haynes & Percy, 1994).

4. OBJECTIVES OF THE STUDY

This study is conducted with four objectives.

These are:

The main objective of this study is to examine the satisfaction of passengers on service quality of different airlines.

To explore the level of passengers‟ satisfaction with the service quality on Indian airlines in terms of three dimensions of service quality instrument i.e., in-fight services, in-flight digital services and back office operations.

To elucidate the relationship between service qualities delivered to passengers and their satisfaction as to different class of journey.

To examine the demographic profile of the respondents and their satisfaction on the services rendered by the airliners.

5. METHODOLOGY

This study covers a sample of 270 respondents and the survey was conducted at the Chennai international terminal of TamilNadu during May-June 2011. Sampling is done by interviewing randomly selected passengers, at different times of the day, on every day of the week, over a four week period. A structured questionnaire was used for data collection. The questionnaire was divided into five sections, the first section reveals the demographic profile of respondents and second, third and fourth sections are designed to evaluate their overall experiences they received from the airline services and the last is dealing with the passenger preference as to different travel class provided by airline companies. The questions were phrased in the form of statements scored on a 5-point Likert type scale, ranking from 1 “highly

dissatisfied” to 5 “highly satisfied”. Exploratory Factor Analysis issued for measuring airline service quality to determine the dimension of airline service quality. Factor analysis is a general name denoting a class of procedures primarily used for data reduction and summarization. Average score analysis is conducted to evaluate the different airline services. Service quality satisfaction has been analyzed on the basis of score assigned in the questionnaire, 5 marks is assigned to highly satisfied, 4 mark for satisfied, 3 mark for moderate, 2 mark for dissatisfied and 1 mark for highly dissatisfied. Pie-chart is prepared to check the passenger willingness to travel in economy, business and premium class in different airlines. The variable and substances

used in data collection is depicted in Table 1. www.zenithresearch.org.in

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TABLE: 1 - VARIABLE MEASUREMENT

Measures Variable Substances Scale

Cuisines Provided

In – Flight child care / Bassinets

Crew friendliness / Language skills

Seat Comfort Passenger Satisfaction and Staff – grooming Service Quality 10 Substances (PSSQ) on In-flight Cleanliness of cabin Services Cleanliness of toilets

Newspapers / Airline magazines

On – Board catering

Provision of Pillow / Blankets etc. 5 Point Music Likert scale Inbound – Outbound theatres

PSSQ on In-flight Personal Entertainment Appliances 5 Substances Digital Services Audio – Video On Demand (AVOD)

Games

Discounts / offers

Choice of aircraft

Online check – in PSSQ on Airline Back office Online seat booking 11 Substances Operations Call center facilities – 24*7

Updating airline website

Reservation / Cancellation facilities www.zenithresearch.org.in

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Tour packages / Holiday packages

Frequent flyer program

Baggage allowance

Handling of delayed flights

(Source: Primary Data)

6. ANALYSIS OF RESPONDENT’S OPINION

The data acquired from the questionnaires were analyzed in three sections: demographic profile of passengers, level of passengers‟ satisfaction with service measured thorough factor analysis and the relationship between different airliners and passenger‟s satisfaction based on average score.

TABLE NO: 2 PROFILE OF PASSENGERS

Attributes Distribution Sample Number Frequency

Male 194 71.9% Gender Female 76 28.1%

18 – 25 13 4.8%

26 – 35 114 42.2%

Age 36 – 45 105 38.9%

46 – 60 34 12.6%

61 – 99 4 1.5%

0 – 3L 61 22.6%

4 – 5L 146 54.0% Income Level 6 – 10L 50 18.6%

10 L and above 13 4.8%

Business 20 7.4% Profession

Government Employee 14 5.2% www.zenithresearch.org.in

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Entrepreneur 81 30.0%

Private Employee 102 37.8%

Student 6 2.2%

Others 47 17.4%

Primary 5 1.9%

Secondary 5 1.9%

UG 124 45.8% Education Diploma 4 1.5%

PG 128 47.4%

Doctorate 4 1.5%

(Source: Primary data)

A detailed demographic analysis of respondents is presented in Table 2. Personal and face-to-face interviews of passengers waiting for their flights were conducted in Chennai international airport. Questionnaires were distributed to the passengers who had undertaken at least one international flight in the past 2 years. 270 completed questionnaires were collected from the respondents. Among the sample data, nearly three fourth (71.9%) respondents are male, 42.2% are in the 26 – 35 age groups, 54% respondents are falling under the income level of 3-5 lakhs, 37.8% are working private concerns, and 47.4% are PG degree holders.

TABLE 3: RESULTS OF FACTOR ANALYSIS

Factor Eigen Cumulative % Factor Variable Loadings Value of Variance

Cuisines Provided 0.846

In – Flight child care / Bassinets 0.823

Crew friendliness / Language skills 0.812 In-flight 11.262 53.686 Services Seat Comfort 0.838

Staff – grooming 0.797

Cleanliness of cabin 0.784 www.zenithresearch.org.in

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Cleanliness of toilets 0.663

Newspapers / Airline magazines 0.618

On – Board catering 0.569

Provision of Pillow / Blankets 0.545

Music 0.586

Inbound – Outbound theatres 0.629 In-flight Digital Personal Entertainment Appliances 0.716 6.398 62.239 Services Audio – Video On Demand 0.486

Games 0.592

Discounts / offers 0.756

Choice of aircraft 0.534

Online check – in 0.678

Online seat booking 0.935

Call center facilities – 24*7 0.851 Airline Back office Updating airline website 0.523 7.832 72.793 Operations Reservation / Cancellation facility 0.816

Tour packages / Holiday packages 0.674

Frequent flyer program 0.753

Baggage allowance 0.722

Handling of delayed flights 0.531

Factors analysis was employed to measure the airline overall service quality on the service provided to satisfy the passengers. The principal factor component analysis with variable rotation was carried out. The overall pattern of rotated factor loadings suggested a three

dimensional solution and the factors are re-titled as in-flight services, in-flight digital services www.zenithresearch.org.in and back-office operations. While checking in-flight services cuisines provided and seat comfort

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 is biggest factor to select aircraft to fly. Personal entertainment is important factor in flying decisions of passenger. Online seat booking, call center facilities and reservation/cancellation is highest influencing factor in flying decisions of the passengers. The overall cumulative percentage of variance is 53.686 to in-flight service, 62.239 to in-flight digital service and 72.793 to back-office operations presented in table 3.

FIGURE 1: PASSENGERS SATISFACTION ON SERVICE QUALITY OF IN-FLIGHT SERVICE

It is evident from the figure 1, average score analysis have been conducted to test the passengers satisfaction on in-flight service quality. According to Likert 5 point scale, 5 point awarded for highly satisfied services, 4 point awarded for satisfied services, 3 point for moderate services, 2 point for dis-satisfied services and 1 point has been given to highly dissatisfied service. The overall performance is very high in Jet Lite, all parameters in in-flight service quality stood in more than 4 point mark. Followed that IT, Air Deccan, 9W, Spice and KF Red crossed 4 point mark and placed as 2, 3, 4, 5, and 6 rank respectively. Indigo performance placed as 7th rank, revealed by the 14 respondents. Likewise two or three factors in Go Air and 17 reached the 4 point mark. From all Indian and Air India in-flight service quality is not touched satisfied mark and many of this service are moderate, this was exposed by 41 and 2 respondents respectively.

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FIGURE 2: PASSENGERS SATISFACTION ON SERVICE QUALITY OF IN-FLIGHT DIGITAL SERVICE

Subsequently figure 2 reveals; passenger satisfaction of in-flight digital services is examined with the same average score testing. Again Jet Lite placed first in all parameters, followed that Go Air, KF Red, 9W, IT, Spice ranked in 2, 3, 4, 5, and 6th place respectively. The performance of digital services is marked as satisfied level to the passengers travelled in the same aircraft. Music, entertainment appliances are in satisfactory level to the Air Deccan flyers and the remaining services are moderate. Similarly, Indian, Indigo are offering moderate digital

services in their aircraft.

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FIGURE 3: PASSENGERS SATISFACTION ON SERVICE QUALITY OF BACK- OFFICE OPERATIONS

Figure 3 reveals the back office performance of sample companies engaged in the aviation services. Here the first preference is given to Air Deccan in terms of reservation/cancellation facility and baggage allowances are marked highly satisfied level, then all other factors are marked as satisfied category. Jet Lite, 9W, IT, KF Red and Spice are offering satisfied back-office services to its passengers. Rest of sample companies‟ back-office services is moderate.

FIGURE 4-6: PASSENGERS WILLINGNESS TOWARDS CLASS OF JOURNEY

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It is evident from the Figure 4, from the sample of 270 respondents, 147 respondents are showing priority to fly with economy class. 33% of respondents are showing interest to travel in 9W and 20% and 18% of respondents interested to fly in Spice and Indian. Figure 5, narrates totally 90 respondents are preferred to travel in business class, 33% of respondents are showing interest to travel in 9W and 17% of respondents interested to travel in Spice. Only 33 respondents are interested to fly in premium class presented in figure 6, from that 43% of respondents are showing interest to IT, then next choice given to Spice by the 24% respondents.

CONCLUSION

The purpose of this study is to investigate the impact of the in-flight service quality on passenger satisfaction. This study entails that airline marketing managers has to develop various policies to provide guaranteed quality services to passengers. Airline service dimensions were found to have significant and positive influences on airline image and passengers‟ satisfaction intentions. In this study, passengers are satisfied to the service provided and overall facilities delivered by the airline companies. The passengers are satisfied with the services quality delivered in in-flight service, in-flight digital service and back office operations. From three kinds of class of journey options, the passengers are highly rated to 9W airlines. While analyzing demographic profile of the passengers, educated and high income passengers are using flights more frequently. Failure to provide quality services to passengers may damage the formation of airline image and cause negative impact on passengers‟ behavioral intentions. These findings imply that airline companies‟ in-flight service quality depends upon the different delivery

strategies deployed. www.zenithresearch.org.in

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REFERENCES

[1] Bitner, M.J. and Hubbert, A.R. (1994), “Encounter satisfaction vs. overall satisfaction and quality”, Sage Publications, pp. 72-94.

[2] Boyd WL, Leonard M, and White C. (1994). “Customer preferences for financial services: An analysis”, International Journal of Bank Marketing, Vol. 12(1), pp. 9-12.

[3] Butler, G. F. and Keller, M. R. (1992). “The cost-constrained global airline industry environment: what is quality?”,Transportation Quarterly, Vol. 46, pp.599-618.

[4] Chang, Y. and Keller, M. R. (2002). “A survey analysis of service quality for domestic airlines”, European Journal of Operational Research, Vol. 139, pp. 166-177.

[5] Cronin, J.J. and Taylor, S.A. (1992), “Measuring service quality: a reexamination and extension”, Journal of Marketing, Vol. 56, pp. 55-68.

[6] Darby, I. (1999). “NatWest hires shop to build community links”, Journal of Marketing, Vol. 26(3), pp. 23-35.

[7] Dennet, C.E., Ineson, M., Stone, G.J., and Colgate, M. (2000), “Pre-Bookable Services in the Chartered Airline Industry: Increasing Satisfaction through Differentiation”, The Service Industries Journal, Vol. 20 (2), pp. 82-94.

[8] Doyle P, and Wong V. (1998), “Marketing and competitive performance, an empirical study”, European Journal of Marketing, Vol. 32(5/6), pp. 514-535.

[9] Gronroos, C. (1982), Strategic Management and Marketing in the Service Sector, Helsinki, Finland: Swedish School of Economics and Business Administration.

[10] Haynes, R., & Percy, J. (1994). “Perception paradox: Airline service quality issues”, Proceedings of Decision Sciences Institute - Annual Meeting, Vol.3, pp. 1950-1952.

[11] Lee, Moonkyu and Cunningham, L.F. (1996), “Customer Loyalty in the Airline Industry”, Transportation Quarterly, Vol. 50, No 2, Spring: pp. 57-72.

[12] Ostrowski, P. L., O‟Brien, T. V., and Gordon, G. L. (1993). “Service quality and customer loyalty in the commercial airline industry”, Journal of Travel Research, Vol. 32, pp. 16-28.

[13] Ott, James. (1993), “Airline Customer Service Rated „Average‟ in Survey”, Aviation Week and Space Technology, Vol. (-), P. 31.

[14] Parasuraman, A., Zeithaml, V.A., and Berry, L. L. (1988), “SERVQUAL: a multiple-item scale for measuring consumer perceptions of service quality”, Journal of Retailing, Vol. (-) pp. 12-40. www.zenithresearch.org.in

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[15] Patterson, P.G., & Spreng R.W. (1997). “Modeling the relationship between perceived value, satisfaction, and repurchase intentions in business-to-business, services context: An empirical examination”, International Journal of Service Industry Management, Vol. 8(5), pp. 414-434.

[16] Rogerson W.P. (1983). “Reputation and product quality”, Bell Journal of Economics, Vol.14, pp. 500-510.

[17] Saha G.C, and Theingi. (2009). “Service quality, satisfaction, and behavioral intentions: A study of low-cost airline carriers in Thailand”, Managerial Service Quality, Vol.19 (3), pp. 350-372.

[18] Solomon M. (1985). “Packaging the service provider”, Service Industry Journal, Vol.5, pp.64-71.

[19] Tepeci M. (1999). “Increasing brand loyalty in the hospitality industry”, International Journal of Contemporary Hospitality and Management, Vol.11 (5), pp. 223-229.

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A STUDY OF ACADEMIC ANXIETY OF SPECIAL NEED’S CHILDREN IN SPECIAL REFERENCE TO HEARING IMPAIRED AND LEARNING DISABLED

DR. SAMIR KUMAR LENKA*; DR. RAVI KANT**

*Director, College of Education, Teerthanker Mahaveer University, Moradabad. **Lecturer, PG Department of Education, Teerthanker Mahaveer Institute of Management and Technology, Moradabad.

ABSTRACT

Children with special need‟s are also the part of our society and resource of the nation. Many disabled persons are also example of excellency in the world. So there is a urgent need to provide special attention, care, education and to do research in this field. So keeping in this point of view the present study was conducted on 60 special needs chidren comprisied of 30 learning disabled and 30 hearing impaired children. The main findings of the study revealed that in all respects of both groups i.e. learning disabled and hearing impaired children have no significant difference in level of academic anxiety and also the study reveals that gender has no role to develop academic anxiety among the learning disablded and hearing impaired children.

KEYWORDS: Hearing impaired children, Learning disabled children, Academic anxiety. ______

INTRODUCTION

All children exhibit difference from one another in terms of their physical attributes and learning abilities. The differences among most children are relatively small, enabling these children to benefit from general education program. It is universal truth that all individuals are different basically from each other physically, mentally, educationally and socially up to a limit. Such children distinctly required special educational care and their adjustment problems have to tackle in a specialized manner. These divided children are often designated as exceptional children.

Thus exceptional child is an inclusive term that refers to children learning or behavior diversity, children with physically disabilities or sensory impairments and children who are intellectually gifted or have a special talent.

Individual differences among students affect their performance in every walk of life. Some students perform very quickly and some perform very poorly in different subject and different fields of life. Today we give more attentions to learning disabled and hearing impaired children. Many learning disabled and hearing impaired children do not have the sensitivity which helps them to adjust. Many of them become problematic children and behave like mentally sick. Due constant ridicule from society they become dull and develop inferior feelings and become timid www.zenithresearch.org.in and submissive. Lack of confidence becomes their one personal quality due to this ignorance.

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Most of exceptional children suffer from emotional problems. No doubt, these children need to experience and a richer environment to stimulate them intellectually but they may well need stability and protected environment for their emotional difficulties. Prof. Wallin says “Children are seriously retarded are thing minded, eye minded and ear minded rather than word minded or thought minded.” The need is immense and there is for to go since this area has been the laggard to special education. Schools have usually been dependent upon the individual contacts of social workers, psychologists and guidance workers to read just pupils. Learning disabled and hearing disabled wants different treatment in learning if they are not attended properly they may develop behavior problems which may cause harm to the individual and to the society. So it is imperative to make special arrangement for their education. Learning disabled and hearing impaired are quite different from normal children as regards their interest, motivation and aims of life.

REVIEW OF LITERATURE

Jason and Hannah (2011)1 in his study found that students with learning disability had higher mean scores on measure of anxiety than non learning disabled students. The overall effect size was statistically significant and medium n magnitude, although substantial heterogeneity of results was found. Manjula etal.(2009)2 in their study revealed that 93% of academically low achieving children were found to be having reading difficulty while 58% had writing difficulty. In writing 87% of high achieving students were good and 5% were found to be having difficulty. On attention task, difficult children made more errors than normal children. In recalling words, numbers and for immediate and delayed recalling, significantly lowest scores were observed among difficult children. Bhavani (2007)3 revealed that children with learning disability compared to slow learners have significantly less externalizing behavior problems. The children with disturbance in one area of learning disability and having disturbance in mere than one area do not show significant difference in their behavior. Lata and Dwiwedi (2001)4 found that music reduced anxiety significantly. Srivastava and Afiah (1992)5 in his study found that there was no significant difference between boys and girls in their disabilities in reading, arithmetic, language and spelling but sex had a definite bearing on the writing disability of the learning disabled. Sharma and Pandey (1992)6 in their study found significant difference on age variables but not so on gender variables among the hearing impaired in both the settings. It was also found that medium of instruction had no impact on science achievement of the hearing impaired. Bhattacharya (1998)7 found that students developed more learning disability in understanding linear equation sums in one unknown than in solving them while they did not develop learning disabilities in the application level. Students developed more learning disability in the application than in the knowledge of linear equation sums in one unknown rather than in solving such sums.

STATEMENT OF PROBLEM

A study of Academic Anxiety of special need‟s children in special reference to hearing impaired and learning disabled.

OBJECTIVES OF STUDY www.zenithresearch.org.in The study aimed at examining the following objectives-

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1. To study about the level of academic anxiety among hearing impaired children.

2. To find out the level of academic anxiety among learning disabled children.

3. To compare the level of academic anxiety between both the groups.

4. To differentiate the level of academic anxiety on the bases of gender.

FORMULATED HYPOTHESES

To examine the objectives following hypotheses were formulated-

1. There is no significant difference in the level of academic anxiety between male and female hearing impaired children.

2. There is no significant difference in the level of academic anxiety between male children of hearing impairment and learning disability.

3. There is no significant difference in the level of academic anxiety of male and female children of learning disabled.

4. There is no significant difference in the level of academic anxiety of female children with hearing impairment and learning disability.

5. There is no significant difference in the level of academic anxiety of hearing impaired male children and learning disabled female children.

6. There is no significant difference in the academic anxiety of hearing impaired female children and learning disabled male children.

7. There is no significant difference in the level of academic anxiety of hearing impaired male children and learning disabled female children.

CLARIFICATION OF TECHNICAL WORDS

HEARING IMPAIRMED

Hearing impaired person has hearing loss in one or both ears due to impairment in the auditory mechanism. The hearing loss is a continuum ranging from mind to severe and profound loss. Deaf person on this continuum are those whose auditory channels fails to some of processing speech. Hearing impairment can be congenital or acquired at any stage of life.

LEARNING DISABILITY

Persons with learning disability are average or above average in intelligence and have no www.zenithresearch.org.in visual or hearing impairment but have specific learning problems in writing, reading,

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specializing, speaking and arithmetic due to a disorder in psychological processes like memory, attention and perception. These conditions are presumed to be associated with dysfunction of the control nervous system.

ACADEMIC ANXIETY

Academic anxiety is a common phenomenon of everyday life. It plays a crucial role in human life because all of us are the victim of anxiety in different ways. In the present study academic anxiety is a kind of anxiety which related to the impending danger from the environment of the academic institutions including teacher in certain subjects like Mathematics, English and Science etc.

SAMPLE

The total sample of 60 children comprised of 30 hearing impaired children selected from two schools- Jivan Dhara Rehabilitation and Research Institute, Bareilly and Government Deaf and Dumb School, Bareilly. Rest of 30 learning disabled children were selected from Pt. Deena Nath Inter College, Bareilly from where researchers has consulted teachers for the appropriate selection of sample.

Total sample = 60 children

Hearing Impaired Learning Disabled

(30) (30)

Male Female Male Female

(22) (8) (25) (5)

INSTRUMENT USED

Considering the objectives of present study researchers used anxiety scale named as “Academic Anxiety Scale for Children” developed by Dr. A.K.Singh (Patna) and Dr. (Mrs.) A.Sen Gupta (Patna). This tool comprising 20 items for which responses have to give yes or no.

ANALYSIS AND INTERPRETATION

(1) Comparison between Male and Female hearing impaired children on academic anxiety www.zenithresearch.org.in scale-

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TABLE 1- MEAN, S.D. AND T VALUE OF ACADEMIC ANXIETY OF MALE AND FEMALE HEARING IMPAIRED CHILDREN

GROUP N MEAN S.D. df „t‟ SIGNIFICANCE

MALE 22 12.41 3.13 28 .61 Significant at .05 level

FEMALE 8 11.36 4.44 - -

The mean scores for males are 12.41 while for females scores are 11.36. S.D. for both groups is 3.13 and 4.44 respectively. The calculated t value is .61 which is found significant on .05 level of significance. Hence no significant difference found between male and female hearing impaired children. The result also revealed that no gender difference found between male and female hearing impaired children hence both the groups present similar level of academic

anxiety.

(2) Comparison between hearing impaired and learning disabled male children on academic anxiety scale-

TABLE 2- MEAN, S.D. AND T VALUE OF ACADEMIC ANXIETY OF HEARING IMPAIRED AND LEARNING DISABLED MALE CHILDREN

GROUP N MEAN S.D. df „t‟ SIGNIFICANCE

H.I. MALE 22 12.41 3.13 45 2.64 Not Significant

L.D. MALE 25 10.60 2.66 - -

The mean scores for hearing impaired male are 12.41 (S.D. =3.13) while for learning disabled males scores are 10.60 (2.66). The calculated t value is 2.64 which are found not

significant on both levels of significance. Hence no significant difference found between hearing impaired and learning disabled male children regarding their level of academic anxiety. The result also revealed that hearing impaired and learning disabled male children have same problems on academic anxiety.

(3) Comparison between male and female children of learning disabled on academic anxiety

scale- www.zenithresearch.org.in

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TABLE 3- MEAN, S.D. AND T VALUE OF ACADEMIC ANXIETY OF LEARNING DISABLED MALE AND FEMALE CHILDREN

GROUP N MEAN S.D. df „t‟ SIGNIFICANCE

L.D. 25 10.16 2.66 28 .94 Not Significant

MALE

5 11.40 2.73 - -

L.D. FEMALE

The mean scores for learning disabled male children are 10.16 (S.D.=2.66) while for learning disabled female children scores are 11.40 (S.D.=2.73). The calculated t value is .94 which

found not significant at any level of significance. Hence no significant difference found between male and female learning disabled children, hence it can be said that both the groups present similar level of academic anxiety.

(4) Comparison between hearing impaired and learning disabled female children on academic anxiety-

TABLE 4- MEAN, S.D. AND T VALUE OF ACADEMIC ANXIETY OF HEARING IMPAIRED AND LEARNING DISABLED FEMALE CHILDREN

GROUP N MEAN S.D. df „t‟ SIGNIFICANCE

H.I. 8 14.25 2.46 11 .12 Not Significant

FEMALE

5 14.40 1.80 - -

L.D. FEMALE

The mean scores for hearing impaired female children are 14.25 (S.D.=2.46) while for

learning disabled female children scores are 14.40 (S.D.=1.80). The calculated t value is .12

which found not significant at any level of significance. Hence no significant difference found between hearing impaired and learning disabled female children, hence it can be said that both the groups present similar level of academic anxiety.

(5) Comparison between hearing impaired male and learning disabled female children on academic anxiety scale-

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TABLE 5- MEAN, S.D. AND T VALUE OF ACADEMIC ANXIETY OF HEARING IMPAIRED MALE AND LEARNING DISABLED FEMALE CHILDREN

GROUP N MEAN S.D. df „t‟ SIGNIFICANCE

H.I. 22 12.41 3.13 25 .72 Not Significant

MALE

5 11.40 2.73 - -

L.D. FEMALE

The mean scores for hearing impaired male children are 12.41 (S.D. =3.13) while for learning disabled female children scores are 11.40 (S.D. =2.73). The calculated t value is .72

which found not significant at any level of significance. Hence no significant difference found between hearing impaired male and learning disabled female children, hence it can be said that both the groups present similar level of academic anxiety.

(6) Comparison between hearing impaired female and learning disabled male children on academic anxiety scale-

TABLE 6- MEAN, S.D. AND T VALUE OF ACADEMIC ANXIETY OF HEARING IMPAIRED FEMALE AND LEARNING DISABLED MALE CHILDREN

GROUP N MEAN S.D. df „t‟ SIGNIFICANCE

H.I. 8 11.36 4.44 31 .72 Not Significant

FEMALE

25 10.16 2.66 - -

L.D.

TheMALE mean scores for hearing impaired female children are 11.36 (S.D. =4.44) while for learning

disabled male children scores are 10.16 (S.D. =2.66). The calculated t value is .72 which found not significant at any level of significance. Hence no significant difference found between hearing impaired female and learning disabled male children.

(7) Comparison between hearing impaired and learning disabled children on academic anxiety scale

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TABLE 7- MEAN, S.D. AND T VALUE OF ACADEMIC ANXIETY OF HEARING IMPAIRED AND LEARNING DISABLED CHILDREN

GROUP N MEAN S.D. df „t‟ SIGNIFICANCE

H.I. 30 12.13 3.55 58 2.71 Not Significant

CHILDREN

30 10.37 2.71 - -

L.D.

TheCHILDREN mean scores for hearing impaired children are 12.13 (S.D. =3.55) while for learning disabled children scores are 10.37 (S.D. =2.71). The calculated t value is 2.71 which found not significant at any level of significance. Hence no significant difference found between hearing impaired and learning disabled children on academic anxiety.

FINDINGS

Findings of this research are as follows-

1. There exists no significant difference of academic anxiety between hearing impaired male and female children. It suggests that there is no role of sex variable among hearing impaired and learning disabled children.

2. This study indicate that there is no significant difference between hearing impaired male and learning disabled male children in academic anxiety. It suggests that hearing impaired male children are no less than learning disabled male children in academic anxiety because they have same difficulties in academic achievement.

3. There is no significant difference between learning male and female children in academic anxiety. It suggests that there is no role of sex variable among learning disabled children. They have same problem in the area of academic achievement.

4. This study indicate that there is no significant difference of academic anxiety of hearing

impaired female and learning disabled female children. It suggests that feminine gender have same level of academic anxiety.

5. There is no significant difference between hearing impaired male and learning disabled female children. It reveals that no gender difference found between male of hearing impairment and female with learning disability regarding their level of academic anxiety.

6. Present study reveals that there is no significant difference in hearing impaired female and learning disabled male children. Both groups have same problems in the area of

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7. There is no significant difference between hearing impaired and learning disabled children regarding the level of academic anxiety. It suggests that learning disabled and hearing impaired children have some specific needs in the area of academic anxiety.

REFERENCES

1. Jason, M. Nelson and Hannah, Harward (2011) Learning disability and anxiety- a Meta analysis. University of North Carolina, Chapel Hill source- www.google.com

2. Manjula P, Saraswati G and Prakash P (2009) Cognitive profile of children with reading and writing difficulties. Journal of community guidance and research, 2009, Vol. 26, No. 2, pp-199-207.

3. Bhavani K (2007) Nature of learning disability and behavior problems of children with age range of 5 to 12 years. Journal of community guidance and research, 2007, Vol. 24, No. 2, pp-173-179.

4. Lata, Sneh and Dwevedi, Kamal (2001) The effect of music on anxiety, Psycholingua.from www.google .com

5. Srivastava, Sushila and Afiah, F.Z. (1992) Learning disability among elementary school childrn: Influence of sex, age and religion. Indian Educational Review, Vol. 27(4), pp 1- 11, NCERT.

6. Sharma, Pandey and Pandey, Savitha (1992) An experimental study to asses the effectiveness of adopted instructional material in science on hearing impaired from IED and special schools. Independent study, Regional college of education Myssore In Fifth survey of educational research, Vol. II, NCERT, pp-1567.

7. Bhattacharya, M (1998) An investigation into the learning disabilities developed by secondary school students in the area of equation sums in algebra. Ph.D. Education,

University of Kalyani In Fifth survey of educational research, Vol. II, NCERT, pp-1546.

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CARBON TRADING POTENTIALS OF BIO DIESEL-PROSPECTS AND PROBLEMS

DR.MRS. DHULASI BIRUNDHA VARADARAJAN*

*Senior professor and Head, (Former) Department of Environmental Economics, School of Economics, Madurai Kamaraj University, Madurai-625021, Tamil Nadu.

ABSTRACT

India has witnessed a steep rise in energy consumption in the recent years and is today the world‟s sixth largest energy consumer with the demand growing at an annual rate of 4.8 percent. The demand for diesel is estimated to grow at an annual rate of 5.8 percent till 2030. Current oil and gas reserves in India are not adequate to fulfill this growing demand. India produces about 30 percent of its annual crude oil requirement of approximately 105 million tones. For the balance 70 percent, the country relies on imports. The transportation sector accounts for almost 50 percent of the total crude oil consumed. This has increased the risk exposure of the country to the high price of the crude oil in the international market. Many countries have developed a keen interest in the potential of biofuels and instituted policies to promote their production. India‟s focus on biofuels is mainly due to its heavy fossil fuel oil import bill. India has a huge potential for biofuels production. The favorable subtropical climate, huge stretches of culturable marginal lands and the natural resource wealth of the country stand testimonials to the fact that the country has good scope for biofuel production. Indian government is very keen and if the National Biofuel Policy . There is lot of awareness about biofuels in the country. Availability of land for biofuel crops cultivation and low cost of production have made India as one of the most potential countries for biofuel production. The scope for producing biodiesel from non-edible seeds like jatropha and pongamia is an advantage to India when compared to rest of the world. Biofuel policy gives a structured approach to all the stakeholders of the biofuel industry like farmers, government organizations and departments and corporates. . If the biofuel policy could address all the necessary issues like pricing and procurement of seeds, the industry shall flourish and sustain on its own. Once the policy is in place, more players shall enter the segment, leading to a competitive situation, which in turn escorts towards an established industrial segment. The use of

biofuels may help to create opportunities for Clean Development Mechanism (CDM) and to achieve the Millennium Development Goals suggested by UN. Biodiesel reduces the release of anthropogenic emissions of Green House Gases such as carbon-dioxide, methane and Nitrogen oxides and can be credited and traded as carbon credits in terms of CER (Certified Emission Reductions) as per the Kyoto Protocol.In this conext thi paper analyses the GHGs emission reduction Potentialities of Bio diesel.

KEYWORDS: CDM, CERS, GHG Emissions. ______

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INTRODUCTION

India has witnessed a steep rise in energy consumption in the recent years and is today the world‟s sixth largest energy consumer with the demand growing at an annual rate of 4.8 percent. The demand for diesel is estimated to grow at an annual rate of 5.8 percent till 2030. Current oil and gas reserves in India are not adequate to fulfill this growing demand. India produces about 30 percent of its annual crude oil requirement of approximately 105 million tones. For the balance 70 percent, the country relies on imports. The transportation sector accounts for almost 50 percent of the total crude oil consumed. This has increased the risk exposure of the country to the high price of the crude oil in the international market. Over the next 20 years, the demand for energy is expected to rise by about 50-60 percent worldwide. The debate on alternative energy sources reached its climax when global crude oil prices peaked at US $127 per barrel in June 2008. Many countries have developed a keen interest in the potential of biofuels and instituted policies to promote their production. India‟s focus on biofuels is mainly due to its heavy fossil fuel oil import bill. According to the Ministry of Petroleum and Natural Gas, in 2008 the country imported nearly 935 million barrels of crude oil, costing US$73 billion per annum.(Prabakar and Mark Elder 2010)

BIO FUEL DEVELOPMENT

Biofuels are going to play an extremely important role in meeting India‟s energy needs. The country's energy demand is expected to grow at an annual rate of 4.8 per cent over the next couple of decades. Most of the energy requirements are currently satisfied by fossil fuels – coal, petroleum-based products and natural gas. Domestic production of crude oil can only fulfill 25-

30 per cent of national consumption. In fact, the crude oil imports are expected to total 147 million tons (Mt) in 2006-2007. With the ever-escalating crude oil prices, if one assumes a price of $57/barrel ($420/ton), the estimated crude oil import bill for 2006-2007 would be $61.74 billion, about 10 per cent of the country's Gross Domestic Product.„biofuels‟ are liquid or gaseous fuels produced from biomass resourcesand used in place of, or in addition to, diesel, petrol or other fossil fuels for transport, stationary, portable and other applications; „biodiesel‟: a methyl or ethyl ester of fatty acids produced from vegetableoils, both edible and non-edible, or animal fat of diesel quality. Global production of biofuels has grown three-fold between 2000 and 2007, although it still accounts for less than two percent of global final energy consumption (Howarth et al. 2009).

The dramatic rise of prices for basic food staples in 2008 was arguably related in part to farmers switching from food crops to biofuels (Mitchell 2008). A growing number of studies have been questioning the ecological-economic sustainability of biofuel energy (Pimentel and Patzek 2005, Pimentel et al. 2007, Russi 2008, Giampietro and Mayumi 2009), and even EU reports warn on the environmental damage of agrofuels (Harrison 2010).

Biodiesel production is rapidly growing in Europe and the United States. Current estimates show production of 2.2 Mt/year in Europe, (Garafalo, R.2004). with Germany (1.1Mt/year), France (0.5Mt/year) and Italy (0.4Mt/year) being the leading producers. The European Union mandated that its members derive at least 2 per cent of their fuel consumption from biofuels by 2005 and www.zenithresearch.org.in 5.75 per cent by 2010. Biodiesel production is about 245,000 t/year in the United States. The

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Government of India has developed an ambitious National Biodiesel Mission to meet 20 per cent of the country‟s diesel requirements by 2011-2012.( Planning Commission, 16 April 2003. )

Since the demand for edible vegetable oil exceeds supply, the Government decided to use non-edible oil from Jatropha Curcas oilseeds as biodiesel feedstock. Extensive research has shown that Jatropha Curcas offers the following advantages: it requires low water and fertilizer for cultivation, not browsed by cattle or sheep, pest resistant, easy propagation, high seed yield and ability to produce high protein manure. The National Biodiesel Mission will be implemented in two stages: 1) a demonstration project carried out between 2003-2007, which will cultivate 400,000 hectares of land and yield about 3.75 tons oilseed per hectare annually. The expected annual biodiesel production from the project is 1.2 t/ha/year for a total of 480,000 tons per annum. The Government will build a transesterification plant with a biodiesel production capacity of 80,000 t/year as part of the demonstration project; and 2) a commercialization period from 2007-2012 will continue Jatropha cultivation and install more transesterification plants which will position India to meet 20 per cent of its diesel needs through biodiesel.

The following table 1 shows the projected demand for petrol and diesel and the amount of ethanol and biodiesel required for 5, 10, and 20 per cent blending (UNCTD2006).

TABLE 1 PROJECTED DEMAND FOR PETROL AND DIESEL, AND BIOFUELS REQUIREMENTS

Year Petrol Ethanol blending Diesel Biodiesel blending requirement demand requirement (in metric Demand tons) (in metric tons) Mt Mt @ 5 per @ 10 @ 20 @ 5 per @ 10 @ 20 cent per cent per cent cent per cent per cent

2006- 07 10.07 0.50 1.01 2.01 52.32 2.62 5.23 10.46

2011 - 12 12.85 0.64 1.29 2.57 66.91 3.35 6.69 13.38

2016-17 16.40 0.82 1.64 3.28 83.58 4.18 8.36 16.72

Source: Planning Commission (2003)

The above demands are based on estimated growth rates of 7.3 and 5.6 per cent for petrol th and diesel, respectively, in the 10 plan (2001-2002 to 2006-2007), 5.0 and 5.0 per cent in the th th 11 plan (2006-2007 to 2011-2012) and 5.0 and 4.5 per cent in the 12 plan (2011-2012 to 2016- 2017).

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Eminent organizations and institutions involved in the research and development of biofuels are ICRISAT, Hyderabad; CRIDA, Hyderabad; and ICAR, New Delhi. Other than these research-focused organizations such as, TNAU, Coimbatore; TERI, New Delhi and FRI, Dehradun; are also engaged in the extensive research of biofuel crops. Indian Oil corporation has taken up Research and development work to establish the parameters of the production of transterified Jatropha Vegetable oil and use of bio diesel in its R&D center at Fariabad.research carried out in Kumaraguru college of Technology at Coimbatore for marginally altering the Engine parameters to suit the Indian Jatropha seeds and to minimize the cost of transesterification.

National mission on biodiesel has given the blending mandate of biodiesel with high speed diesel to be 20 percent by the end of 2012. To execute this mandate, the biodiesel production by the end of the year 2012 has to be 13.38 million metric tonnes. This demands 11.19 million hectares of land in the country to be converted into biofuel plantations.(Bio Spectrum,2009) Blending mandate of 20 percent by the end of the year 2017 and the support package extended by the government in terms of tax sops and incentives are some of the eminent drivers of the industry

Table 2 gives the details of the Area coverage and Blending requirements of Bio- Diesel in India.

TABLE 2 THE AREA COVERAGE AND BLENDING REQUIREMENTS OF BIODIESEL year Dieseal Bio- Area For Bio – Area For Bio- Area for Dieseal 5% Mha Diesel @ 10% Mha Diesel @ 20% Mha Demand 10% 20% MMT MMT MMT

2005-06 49.56 2.48 2.07 4.96 4.14 9.91 8.28

2006- 52.33 2.62 2.19 5.23 4.38 10.47 8.76 2007

2011-12 66.90 3.35 2.79 6.69 5.58 13.38 11.19

Source (www.jatrophabiodiesel.org)

Though Europe has started research on biodiesel in 1970s, industrial production began in the year 1992. Today the EU produces about 48.45 lakh tonnes of biodiesel of which Germany is the largest producer with 21.80 lakh tonnes per year. The US shifted its focus towards biodiesel in early 1980s, and it began its production in early 1990. The biofuels demand is expected to increase to 33 million tonnes by 2010.

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JATROPHA AS BIO FUEL

Oil yield per hectare for Jatropha is among the highest for tree-borne oil seeds. The seed production ranges from about 0.4 tons per hectare per year to over 12 t/ha. There are reports of oil yields as high as 50 per cent from the seed. Typically, the seed production would be 3.75 t/ha, with an oil yield of 30-35 per cent, giving a net oil yield of about 1.2 t/ha.- It can be grown in areas of low rainfall (200 mm per year), on low fertility, marginal, degraded, fallow and waste lands. Canals, roads railway tracks, borders of farmers‟ fields as a boundary fence/hedge in arid areas and even alkaline soils are appropriate for the crop. - Jatropha is easily established in nurseries, grows relatively quickly and is hardy. - Jatropha seeds are easy to collect as they are ready to be plucked before the rainy season and as the plants are not very tall.- Jatropha is not browsed by animals.- Being rich in nitrogen, the seed cake is an excellent source of plant nutrients.

Jatropha biofuel, namely the expected impact on greenhouse gas (GHG) emissions of conversion of tropical ecosystems into Jatropha plantations. A recent CIFOR report (Kanninen et al., 2007) noted that current policies promoting the production and use of biofuels like Jatropha as an environmentally friendly alternative to fossil fuels may have the perverse effect of increasing GHG emissions by stimulating conversion of natural forests and woodlands either directly or indirectly, by turning over existing productive agricultural land to oil plantations while increasing the pressure to expand agriculture into forested areas. This substitution phenomenon has been observed earlier for biofuels such as soy and corn grown in the USA, and is known as 'leakage' (Turner et al. 2007; Faaij and Domac, 2006). In a similar vein, Achten et al.'s (2008) recent Jatropha survey asserts that "the removal of (semi-) natural forest for the introduction of JCL is expected to have a significant negative effect on the GHG balance of the whole life cycle. The caused emission due to removal of (semi-) natural forest is a heavy burden on the initial GHG investment, which will take a significant time span before it is paid back with the GHG emission reduction of the use of the bio-diesel." If these assertions are correct, and if the emerging body of knowledge about the GHG emissions resulting from turning over Southeast Asian forest lands to palm oil plantations is anything to go by, we have indeed reason to worry about the unchecked widespread introduction of Jatropha on vast swathes of tropical woodland and bush land in Latin America, Asia and Africa, since the carbon sink capacity of these areas could be highly significant.In this paper the validity of these claims is investigated through preliminary quantitative estimations of the initial GHG emissions and the GHG pay- back period following the introduction of Jatropha on (semi-)natural tropical wood- and bush lands, i.e. lands which possess particularly suitable conditions for the cultivation of Jatropha. These ecosystems are quite vital for global carbon sequestration (Grace et al., 2006).

The Department of Science and Technology (DST) is the committee member in producing high yield varieties for jatropha along with the coordination of the Ministry of New and Renewable Energy (MNRE) as well as the Ministry of Agriculture. Department of Biotechnology (DBT) is working on production of quality planting material of jatropha, and they have called for proposals for initiating the multi-locational trials of jatropha. Nandan Biomatrix has been selected by DBT for the project of mass multiplication of jatropha curcas saplings through vegetative cuttings since they were convinced with the R&D work taken up by us on www.zenithresearch.org.in

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TABLE 3 ESTIMATED JATROPHA CULTIVATION REQUIREMENT (IN MILLION HECTARES) (MN HA) TO MEET BIODIESEL BLENDING DEMAND IN INDIA

Year At 5% blending At 10% blending At 20% blending

2004-2005 1.18 2.35 4.7

2005-2006 1.24 2.48 4.95

2006-2007 1.57 3.14 6.27

2011-2012 2 3.99 7.98

Source :Bio Spectrum,October ,7 ,2009

Identifying the expected rise in biodiesel requirement and to maintain the biodiesel feedstock supply, the government has decided to provide around 7.7 Million acres of land for jatropha plantation next year (2009). It is also planning to add another 98.8 Million acres of wasteland for planting jatropha. Also, if the mandatory 5% biodiesel blending usage comes into effect in the fiscal 2008-09, India will need nearly 72 Million Metric Tons of biodiesel by 2011- 12 to meet the shooting demand.

The centrepiece of India‟s plans for biodiesel development and commercialization is the National Biodiesel Mission, formulated by the Planning Commission of the Government of India. The implementation of the project consists of two phases. In Phase I a demonstration project that will be carried out between 2003-2007. The project involves the development of Jatropha oilseed nurseries, the cultivation of 400,000 hectares with Jatropha, the setting up of seed collection and Jatropha oil expression centres, and the installation of a 80,000 Mt/year transesterification to produce biodiesel from Jatropha oil. Phase II will consist of a self sustaining expansion of the programme leading to the production of biodiesel to meet 20 per cent of the country‟s diesel requirements by 2011-12.

BIODIESEL EMERGES AS A GLOBAL INDUSTRY

"The global markets for biodiesel are entering a period of rapid, transitional growth, creating both uncertainty and opportunity. In the BRIC nations of Brazil, India and China, key government initiatives are spawning hundreds of new opportunities for feedstock development, biodiesel production, and export" said Biodiesel 2020 author Will Thurmond.( http://www.emerging-markets.com ) . In the year 2007, there were only 20 oil producing nations supplying the needs of over 200 nations. By the year 2010, more than 200 nations will become biodiesel producing nations and suppliers," said Thurmond. "The world is entering a new era of

participation by emerging market nations in global by emerging market nations in global green www.zenithresearch.org.in energy production for transport fuels.

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In the US and the EU, algae-based biodiesel ventures are growing in response to demands for clean fuels. Each of these endeavors clearly demonstrates increased public and private sector interest in non-food, second generation markets," said Thurmond. According to a new research report, “Emerging Biofuel Market in India”, the total biodiesel demand in India is expected to reach 3.6 Million Metric Tons by 2011-12 riding on the good performance of the domestic automobile industry.l. As the Indian government has already launched the second phase of biodiesel usage promotion this year, it is expected that the biodiesel requirement will soar during the forecasted period. (RNCOS, 2008).

CDM BASED BIODIESEL PROJECTS INITIATIVES IN INDIA

Clean Development Mechanism is a market based trading mechanism created by the Kyoto Protocol, functions by delivering a subsidy to the developing world in return for lower emissions of green house gases.( A.S. Ramadhas,2008) India accounts for 5.5% of CO2 emission with the population of 17.2% world share. Human Resource Development report also says that the developing countries like India should cut their emissions by 20%. It would stabilize CO2 equivalent concentration at 450 ppm in the atmosphere, which is currently at 379 ppm( Human development Report 2007/2008). India has good potential to capture the carbon trading market. 772 projects have got approval of host country under CDM. Among these 231 projects in energy efficiency has the potential of 132 million CERs. India is the global market leader in CDM already generated 32 million carbon credits and has another 139 million in the pipeline for sale. Table 4 shows the carbon credits earned by the developing countries in the world. One CER equals one ton CO2 equivalent (CO2e). For Kyoto Protocol gases other than CO2 namely CH4, N2O, HFCs, PFCs and SF6 conversion factors (Global Warming Potentials - GWPs) are to be applied to calculate the corresponding CO2 equivalents.

TABLE 4. CERS ISSUED BY THE HOST COUNTRY

Country CER’s Issued

Brazil 15,373,565

Chile 2,088,741

China 25,721,981

India 32,210,460

Mexico 1,910,664

Others 3,468,015

Republic of Korea 17,760,032

TOTAL 98,533,458 www.zenithresearch.org.in

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Source: (www.unfccc.int)

The use of biofuels may help to create opportunities for Clean Development Mechanism (CDM) and to achieve the Millennium Development Goals suggested by UN. Biodiesel reduces the release of anthropogenic emissions of Green House Gases such as carbon-dioxide, methane and Nitrogen oxides and can be credited and traded as carbon credits in terms of CER (Certified Emission Reductions) as per the Kyoto Protocol. (Institute for Good Governance, www.goodgovernance.in)

India can tap the $52-billion global market for carbon trading by encouraging production and use of biofuels and plantation of trees having oil-bearing seeds and materials, like Jatropha and Pongamia species. According to a recent study by Point Carbon, the potential of global carbon market over the next several years is around $52 billion per annum. Growing at a rate of 4% per year, India, the sixth largest producer of greenhouse gases (GHGs), contributing almost 3% of the world‟s total emissions (including CH4 from waste generated by cattle) is seen as one of the most attractive destinations for CMD linked investments. Estimates put the cumulative foreign direct investment (FDI) on account of such projects at about $2 billion, growing at the rate of $200 per year. Till January 2004, the total volume traded in project based transactions is 78 million tonne of carbon dioxide emissions (CO2e). The buyer side included Japan with 41 per cent, The Netherlands and CFB with 23% each. According to estimates, if the CMD captures at least 35% of the global market, the estimated value to the concerned countries would be $18 billion. A study jointly done by Srikanta K Panigrahi,and A Mohana Reddy, estimated that each tonne of bio-diesel produced or consumed leads to a reduction of GHGs by about three times ie avoids 3 tonne of CO2e. These reductions in GHG emissions can be accumulated and traded as carbon credits. The CMD facilitates selling of these reductions in terms of certified emission reductions (CERs), a unit of which equals to one tonne of CO2e(The Financial Express,2010).

So far, CDM Executive Board registers 80 Indian projects (www.cdmindia.nic.in, www.cdmindia.com)Reduction in CO2 of 3.11 kg for each kg of diesel replaced by biodiesel, assuming that it required 1.1 liter of biodiesel for each liter of diesel replaced [Peterson, C.L., Hustrulid,T.1998]. . However, biodiesel quality to be ensured as per IS 15607 or ASTM D 6751.

1 kg of biodiesel reduces 3.11 kg of CO2. For 1 ton of CO2 reduction, 0.32 ton of biodiesel is required. At current exchange rates (1US$=Rs.40), 0.32 ton of biodiesel (or 1 CER) earns $15 or

Rs. 600 i.e.1 kg of biodiesel can earn Rs.1.88. As per the report of the committee on development of biofuels published by the planning commission of India, the projected diesel consumption in 2011-2012 will be of the order of 67 MMT [Govt, of India, 2003]. Based on this, the projected CER earning potential by blending of biodiesel with diesel is calculated and is given in Table-5

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TABLE 5. PROJECTED CER EARNING POTENTIAL BY BIODIESEL BLENDING WITH DIESEL

Biodeisel Biodiesel Biodiesel

5% 10% 20%

Quantity 3.35 6.70 13.4

(MMT)

CER 10.4 20.8 41.6

Units

(Million)

US $ 156 312 614

(Million)

Rs Cr 624 1248 2496

Source: Report on committee on development of biofuel,

Planning commission, Govt, of India, 2003

Biodiesel CDM projects enable the project promoters to reduce the sale price of the biodiesel in proportion to the benefits received by selling emission reductions. This reduced price enables the biodiesel to penetrate into the market and remove the barriers and motivate to switch over to the biodiesel. Though fleet trials conducted by various organization/ research institutes, there is a lack of will to change from diesel to biodiesel because of the absence of automotive vehicular manufacturer‟s warranty for biodiesel fuel

EMISION POTENTIALS OF BIODIESEL

Biodiesel reduces emissions of carcinogenic compounds by as much as 85% compared with petrodiesel. When blended with petroleum diesel fuel, these emissions reductions are generally directly proportional to the amount of biodiesel in the blend. Carbon dioxide produced from biodiesel combustion does not contribute to new emissions of CO2 as it is part of the carbon cycle. Closed carbon cycle - 80% reduction in CO2. Example: growing oil feedstock consumes four to six times more CO2 than biodiesel exhaust.

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TABLE 6 . BIODIESEL EMISSIONS COMPARED TO CONVENTIONAL DIESEL

Emissions B100 B20

(100 per cent biodiesel) (20 per cent biodiesel)

Regulated Emissions

Total Unburned Hydrocarbons -93 per cent -30 per cent

Carbon Monoxide -50 per cent -20 per cent

Particulate Matter -30 per cent -22 per cent

No +13 per cent +2 per cent x

Non regulated emissions B100 B20

(100 per cent biodiesel) (20 per cent biodiesel)

Polycyclic Aromatic -80 per cent -13 per cent

Hydrocarbons (PAH)

NPAH (Nitrated PAH) -90 per cent -50 per cent

Life cycle emissions

Carbon Dioxide (LCA) -80 per cent

Sulphur Dioxide (LCA) -100 per cent

Source:Planning Commission (2003)

Greenhouse Gases: Carbon dioxide produced from biodiesel combustion does not contribute to new emissions of CO2 as it is part of the carbon cycle. Closed carbon cycle - 80% reduction in CO2. Example: growing oil feedstock consumes four to Carbon dioxide produced from biodiesel combustion does not contribute to new emissions of CO2 as it is part of the carbon cycle. Closed carbon cycle - 80% reduction in CO2. Example: growing oil feedstock

consumes four to six times more CO2 than biodiesel exhaust. www.zenithresearch.org.in

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TABLE-7 SMOG-FORMING POLLUTANTS (OZONE PRECURSORS)

HC 36.73% reduction with B100 (2) 7.35% reduction with B20

CO 46.23% reduction with B100 9.25% reduction with B20

PM 68.07% reduction with B100 13.61% reduction with B20

SOx(3) 100% reduction with B100 20% reduction with B20

Source: www.Jatrophabiodiesel.org

Compared to diesel, biodiesel effects on engine exhaust are in the table that follows: B100 refers to neat biodiesel; B20 refers to 20% biodiesel blended with 2 Diesel: The above data on HC, CO, PM, and SOx is based on data reported by Dr. Groboski in 1998 paper "Combustion of Fat and Vegetable Oil Derived Fuels in Diesel Engines."OAE-BIO3 formulation with low- NOx additive will bring NOx to diesel baseline. Data on effect of biodiesel on NOx is scattered. OAE testing of in-use diesel engines showed NOx reductions of 10-18% compared to diesel baseline. Biodiesel use in in-use diesel engines results in cleaning of injectors which restores the original spray patter (also improves fuel economy), resulting in lowering of NOx. Testing of heavy-duty laboratory engines by research scientist has not shown the reduction levels achieved with the in-use engines. If low- NOx is desired, OAE also offers several other proprietary engine technologies to reduce NOx by 30-40%. Contact OAE representative for low- NOx options. The above data is with laboratory engines (also called golden engines). In use engines tested by OAE showed NOx reductions of 18% with the use of biodiesel due primarily to the fact that biodiesel cleaned injectors and lines resulting in better spray pattern.

TABLE 8 TOXIC EMISSION

Ozone forming potential of biodiesel HC is 50% less for B100, 10% less for B20.

Calculated by OAE due to no sulphur in biodiesel

Polycyclic Aromatic Hydrocarbons 80% reduction w/B100 13% (PAH) reduction w/B20

NPAH (nitrated PAH) 90% reduction w/B100 50% reduction w/B20

Source:www.Jatrophabiodiesel.org

PROPERTIES OF JATROPHA OIL

The component analysis(Pramani and Tripathi,2005). of Jatropha seeds (wt per cent) is as follows: moisture 6.2 per cent, protein 18 per cent, fat 38 per cent, carbohydrate 17 per cent, fibre 15.5 per cent, and ash 5.3 per cent. Jatropha oil mainly consists of tri-glycerides www.zenithresearch.org.in

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(Mittelbach, and Remschmidt(2004). of oleic acid (34-45 per cent), linoleic acid (31-43 per cent) and palmitic acid (14-15 per cent). The characteristics of raw Jatropha oil and transesterified Jatropha oil (biodiesel) are given in Table 9.

TABLE 9. CHARACTERISTICS OF RAW VERSUS TRANSESTERIFIED JATROPHA OIL

Jatropha oil, raw Jatropha oil, transesterified

-3 o Density, g cm at 20 C 0.920 0.879

o Flash point, C 236 191

Cetane number, ISO 5165 23-41 51-52

2 o Viscosity, mm /s at 30 C 52 4.84

Neutralization number, mg 0.92 0.24 KOH/g

Total glycerin, per cent 0.088

Free glycerin 0.015

Sulfur content, ppm 0-13

Sulfated ash, per cent 0.014

Methanol, per cent 0.06

Source: Pramanik.T.and S.Tripathi,2005

GHG emission estimates for Jatropha biofuels is reavealed through the findings of various studies: An early study that adopted the environmental life-cycle methodology by Kritana P. and Gheewala (2006) was based on data from a trial plot of Jatropha of approx 10 ha. in Thailand. It achieved an estimated GHG emission reduction of 77% compared to fossil diesel, but this estimate did not take account of N2O emissions that inevitably result from adding fertilizer or manure to the plants. A methodology applied by Tobin and Fulford (2005) to Indian plantations of D1 Oils (a large Jatropha investor). Biodiesel manufactured from Jatropha and sold either locally or in Europe was found to represent around 30% reduction of GHG emissions compared with fossil diesel. A study, which did take N2O emissions into account, analysed the GHG emission effects of using Jatropha biodiesel in Indian locomotives, as part of a largescale effort by the Indian Railways to change over to renewable energy sources( Whitaker and Heath

2008) www.zenithresearch.org.in

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A detailed life cycle analysis of Jatropha biodiesel production based on data from Pilot projects in India was recently conducted by the Institute for Energy and Environmental Research (IFEU), Heidelberg, with Daimler AG as the leading international party (Reinhardt et al., 2007). This study also included N2O emission effects arising from application of fertiliser. The pilot projects were conducted on three different sites in different parts of the country. The introduction of Jatropha was found to have remarkably different implications depending on the prior vegetation characteristics of the sitesThe clear implication of these results is that unless we are dealing with complete wasteland or severely degraded agricultural land, there is an opportunity cost of cultivating Jatropha, whose value lies in the services provided by the extant use of the land as a carbon sink for our planet. (Dr. Henny A. Romijn,2009)

EMISSION CALCULATION OF BIO DIESEL

While calculating carbon credit or certified emissions reduction (CER), emission incurred for the production of biodiesel and transport to end user to be considered. The calculation of certified emission reduction is explained as follows [www.unfccc.int]. Biodiesel project activity includes CO2 emission from consumption of fuel in the biodiesel plant (Efuel), CO2 emissions from consumption of electricity in the biodiesel plant (Eelect), CO2 emissions from combustion of fossil carbon contained in the alcohols which is chemically bound in the biodiesel and released upon combustion (Ealcohol) and CO2 from transport of both oil to plant and biodiesel from plant to blending unit / end user (Etrans). Project emission PE = Efuel + Eelect + Ealcohol + Etrans in tons of CO2 per annum Emission from fuel consumption:

Emissions from fuel consumption are calculated on the basis of fuel consumption at project site or its external supplier site. Efuel = FC * CV * EFco2,fuel

Where

FC - Fuel consumption in tons

CV - Net calorific value of fuel / MJ

EFco2,fuel - Carbon dioxide emission factor

Emission factor for diesel = 72.0 g CO2/ MJ

Emissions from electricity consumption:

BASELINE EMISSIONS

Baseline emissions (BE) of the biodiesel projects are calculated on the basis of displaced diesel by using biodiesel.

BE= BD* CFdiesel* EF co2,diesel* CVdiesel

BD - quantity of production of biodiesel in tons. www.zenithresearch.org.in

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CFdiesel = Conversion factor, ratio of net calorific value of biodiesel to petro diesel

EFco2, diesel – Emission factor for diesel, in tons of CO2 / MJ CVdiesel – Calorific value of diesel in MJ/ton.

CERTIFIED EMISSION REDUCTION

Certified Emission reduction (CER) is calculated as the difference between baseline emissions and project emissions. CER= BE – PE in tons of CO2/year Rs Cr. 624 1248 2496.

TABLE: 10 GREEN HOUSE REDUCTION POTENTIAL ACTIVITIES ASSOCIATED WITH THE USE OF BIOFUELS

Activity Per unit CER Potential

Growing Jatropha 3-3.5 tons of Carbon/hectare/year

For use in transport sector 0.89tons of Carbon/ton of diesel replaced

Biogas to replace kerosene 0.85 tons of carbon/ton of furnace oil replaced

Outer shell to replace furnace oil in 0.85 tons of Carbon/ton of furnace oil boilers/furnaces replaced

Biofertilisers 0.72 tons of Carbon/ton of furnace oil replaced

Source: Bakker, S. J. A, CDM and Bio fuels, www.ecn.nl

Typical Biodiesel Projects under Clean Development Mechanism:

Sun Care Fuel Thailand Co has st up the biodiesel plant in Thailand. The project capacity is to produce 15,000 tons of biodiesel per year. This project comes under transport sector. The base line could be estimated by considering the differences in fuel consumption and combustion efficiency between biodiesel and petroleum diesel. The energy content of 1 m3 of biodiesel is equal to 0.889 m3 (0.776 t) of petroleum diesel. The estimated emission reduction by this project is 33,000 tons CO2 equivalent per yearwww.sol.net.in]. The bio-diesel plant, with a capacity of 10,000 tons per year, is India's first commercial-size bio-diesel plant (Southern online Biotechnologies Ltd, Hydrabad). It is proposed to use pongamia, jatropha, neem, and other oilseeds grown mainly in degraded areas. This biodiesel plant will avoid 27,000 tons of harmful greenhouse gases. The project has received "host country approval" from India's Ministry of Environment. These types of biodiesel projects are fall under “Switching fossil fuels” category. According to the CDM modalities and procedures, the sectoral scope of the project activities is proposed under “Transport” sector, as the application of the biodiesel is projected in transport vehicles. The project has benefited from a contribution of Rs. 18 lakhs from the German Government through GTZ, the German Technical Cooperation in support of www.zenithresearch.org.in

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 detailedenvironmental studies to meet the terms of the Clean Development Mechanism of the Kyoto Protocol. An additional Rs. 2 crores (Euro 380,000) has just been approved by the German government (BMZ) in supportof the project as part of Public-Private Partnership environment, which entitles the company to sell carbon after receiving appropriate approvals [www.gec.jp, 2004].Naturol Bioenergy has inked strategic technology partnership with De Smet Ballestra Group of Belgium for implementing its Rs 140 Crore integrated biodiesel plant at Kakinada in Andhra Pradesh. It plans on building a 300 tons/day (about 90,000 tons/year) biodiesel plant in Kakinada. Under the project, about 1.20-lakh acre of dry wastelands can be taken up for cultivation based on vegetable oil seed plantations as a part of rural poverty alleviation programme and had potential to create 12,000 jobs in agro sector . The National Biofuel Policy, launched in December 2009, building upon the National Biodiesel Mission of 2003 (NBM2003), aims at blending bioethanol and biodiesel with gasoline and diesel, respectively, at a proportion of 20 percent by 2017. The biodiesel target is planned to be met through the cultivation of 13.4 million hectares of 'wastelands' with Jatropha. The south Indian state of Tamil Nadu is one of the leaders in biodiesel promotion, with a goal of reaching 100,000 ha of Jatropha between 2007 and 2012 (Government of Tamil Nadu 2007c, Government of Tamil Nadu 2009).

Tamil Nadu state in southern India is one of the leading states in Jatropha development with a well-articulated biodiesel policy (Government of Tamil Nadu 2007a, Government of Tamil Nadu 2007b, Government of Tamil Nadu 2009). This policy, launched in 2007-08, was built upon a pilot scheme launched in 2006, and has set a target of promoting 100,000 ha of Jatropha plantations over a period of five years, with district-wise differential targets. The policy involves providing 50 percent input subsidies (for saplings and drip irrigation). (Pere Ariza- Montobbio; Sharachchandra Lele; Giorgos Kallis; Joan Martinez-Alier, 2010) Tamil Nadu is aggressively promoting the plantation of Jatropha to help farmers over come the loss due to irregular rains during the past few years. The government has contracted the development of Jatropha in Tamil Nadu in a large scale to four entrepreneurs. Namely M/s Mohan Breweries and Distilleries Limited. M/s Shiva Distilleries Limited, M/s Dharani Sugars and Chemicals Limited and M/s Riverway Agro Products Private Ltd. Currently the firms have cultivated the plant in about 3 square kilometres as against the goal of 50 km². The government of Tamil Nadu has also abolished purchase tax on Jatropha, but presently government has announced to reduce the 7.5% tolgate charges to 2.5%. the Tamil Nadu Government‟s New Industrial Policyon November 5, 2007. Some of the incentives announced for the bio-diesel industry are excellent and bound to be

welcomed by the stakeholders. The new policy says that 50 per cent subsidy will be granted to farmers for purchase of Jatropha seedlings. Micro-irrigation facilities are also available to farmers who can group themselves as clusters of 25-hectare areas for plantation of Jatropha. Jatropha seeds are not taxed and there is also no VAT for Jatropha oil mills for a period of 10 years right from the date of commencing production. And if read with the Finance Ministers Budget proposals, there is also no Central excise duty for the bio-diesel produced from Jatropha or any vegetable non-edible oils to produce bio-diesel.So, Tamil Nadu is , it seems, a pioneer in promoting alternative fuels and making the manufacturing environment conducive for those in the bio-diesel sector.This is the first time agriculture has been given the top importance that it

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CONCLUSION

CDM is much beneficial to the developing countries to improve their economy and also for the developed countries to offset their emission levels. Most of the developing countries are promoting CDM based bio fuel projects to obtain the benefit of carbon credits. Cultivation of oil yielding trees, bio diesel in transport use, biogas for power generation and bio fertilizer have the potential to earn carbon credits. Biodiesel projects that come in transport sector / energy sector category could reduce the atmospheric pollution and improves national fuel security. Bio fuel projects can earn carbon credits, if proper baseline data is analyzed and got approval from CDM board.

In India, the indicative blending target given by the Ministry of New and Renewable Energy is 20 percent by 2017. This 20 percent blending leaves the players with an overall target production of 16 million metric tones of bio diesel.. Biodiesel producers in India are provided no room to trade or market their produce and they are mandated to sell bio diesel only to the oil marketing companies. There is an urgent need for initiating a proper road map for the implementation of the guidelines mentioned in the biofuel policy. Lofty blending target without proper road map and mismatch in procurement pricing for biofuel are not good signs. “Considering the increasing price of oil and petroleum products there is a huge market potential for biofuel industries in India.

Some hurdles have to be removed to reap the benefits. The purchase price of biodiesel fixed by the Government of India is so low that no one is able to supply biodiesel at that price. On the other hand, there will be some price parity when manufacturers are allowed to sell biodiesel directly in the local market to the bulk consumer. But, according to the notification issued by the petroleum ministry direct marketing of biodiesel is not allowed. The central government should revise the biofuel policy in this favor to enhance the overall growth of the biofuel industry.” All over the world, wherever biofuels are introduced, it is backed up by the government support in terms of incentive to the farmer and industry, which is missing in India. The government purchase price is based on the fuel market in India. “Fuels are sold in India in a subsidized rate. But, Indian government is not keen to pass on same subsidy for biofuels produced in India a. Timelines are difficult to be confirmed since the industry is just set for growing and the policy has just been announced. With further strengthening of the policy guidelines, hastening the implementation, initiatives by the state governments, and expansion plans by the private players would be the key drivers for achieving the ambitious target of blending 20 percent of biofuels well before the set deadline of 2017.

REFERENCES

Achten, W.M.J., Verchot, L., Franken, Y.J., Mathijs, E., Singh, V.P., Aerts, R. and

Muys, B. (2008) 'Jatropha bio-diesel production and use', Biomass and Bioenergy, www.zenithresearch.org.in

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32 (12), pp. 1063-1084.

Alagarsamy S. A., Chennai Biodiesel policy Saturday, Nov 10, 2007

Bakker, S.J.A., CDM and Biofuels, www.ecn.nl

Bio Spectrum (2009) Demand for Bio Diesel Will see a steady Rise, Wednesday, October 07,2009.

Faaij, A.P.C. and Domac, J. (2006) 'Emerging international bio-energy markets and opportunities for socio-economic development', Energy for Sustainable Development, X (1), pp. 7-19.

Garafalo, R. (2004), “Biodiesel in Europe and Worldwide: Overview and Development Perspectives”, Conference on “Renewable Resources, Renewable Energy: A Global Challenge,” Trieste, Italy, 10-12 June 2004

Giampietro, M. and K. Mayumi. 2009. The biofuel delusion: the fallacy of large-scale agrobiofuel production. London: Earthscan.

Government of Tamil Nadu. 2007a. Tamil Nadu State bio-fuel policy. Chennai: Agriculture Department.

Government of Tamil Nadu. 2007b. Draft note Tamil Nadu biodiesel policy. Chennai: Agriculture Department.

Government of Tamil Nadu. 2007c. Status report on promotion of Jatropha cultivation in Tamil Nadu. Chennai: Agriculture Department.

Government of Tamil Nadu. 2009. Promotion of Jatropha cultivation in Tamil Nadu. Tamil Nadu Government Project. Chennai: Agriculture Department.

Grace, J., San José J., Meir, P., Miranda, H.S. and Montes, R.A. (2006) 'Productivity and carbon fluxes of tropical savannahs', Journal of Biogeography, (33), pp. 387- 400.

Harrison, P. 2010. EU drafts reveal biofuel‟s „environmental damage‟. Reuters, 4 March.

Howarth, R.W., et al. 2009. Rapid assessment on biofuels and environment: overview and key findings. In: R.W. Howarth and S. Bringezu, eds. Biofuels: environmental consequences and interactions with changing land use. Proceedings of the Scientific Committee on Problems of the Environment (SCOPE) International Biofuels Project Rapid Assessment, 22–25 September 2008, Gummersbach Germany, pp. 1–13.

Kanninen, M., Murdiyarso, D., Seymour, F. Angelsen, A., Wunder, S. and German, L. (2007) Do Trees Grow on Money?' The Implications of Deforestation Research for Policies to Promote

RRED. Center for International Forestry Research (CIFOR), Bogor. www.zenithresearch.org.in

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Mitchell, D. 2008. A note on rising food prices. Development Prospects Group, World Bank,Policy Research Working Paper Number 4682, July.

Pere Ariza-Montobbio; Sharachchandra Lele; Giorgos Kallis; Joan Martinez-Alier,(2010) “The political ecology of Jatropha plantations for biodiesel in Tamil Nadu, India Journal of Peasant Studies, Volume 37, Issue 4 October 2010 , pages 875 –897.

Peterson, C.L., Hustrulid,T. Carbon cycle for rapeseed oil bioidiesel fuels, Biomass and bioenergy, Vol. 14 (2), 1998

Pimentel, D. and T.W. Patzek. 2005. Ethanol production using corn, switchgrass, and wood; biodiesel production using soybean and sunflower. Natural Resources Research, 14(1), 65–76.

Pimentel, D., T. Patzek and G. Cecil. 2007. Ethanol production: energy, economic, and Planning Commission, Government of India (2003). Report of the Committee on Development of BioFuel, 16 April.

Planning Commission, Government of India (2003). Report of the Committee on Development of BioFuel, 16 April.

Prabhakar S.V.R.K, and Mark Elder(2010) “Not all biofuels are bada:A rural India Case,our world,United Nations University.

Pramanik, T. and S. Tripathi (2005). “Biodiesel: clean fuel of the future”, Hydrocarbon Processing, Vol. 84 No. 2, p.50.

Ramadhas A.S., V.P. Singh, M. Subramaniam, G.K. Acharya, R.B. Koganti, Clean Development Mechanism in Biofuel Sector in India:Opportunities and Challenges, SAE Number 2008-28- 0127,Research & Development Center, Indian Oil Corporation Ltd, Faridabad-121 007, India

Russi, D. 2008. An integrated assessment of a large-scale biodiesel production in Italy: killing several birds with one stone? Energy Policy, 36(3), 1169–80.

RNCOS (2008) RNCOS studies India biofuel market,By Anna Austin Web exclusive posted August 8, 2008 ,Bio Diesel Magazine

The Financial Express,(2010) Biofuels Can Fuel India‟s Carbon Trading Potential , Wednesday 17 november,2010

Turner, B.T., Plevin, R.J., O‟Hare, M. and Farrell, A.E. (2007) 'Creating markets for green biofuels: measuring and improving environmental performance'. Research report UCB-ITS- TSRC-RR-2007-1, University College Berkeley, Cal.

UNCTD(2006) United Nations Conference on Trade and Development (2006)Joseph B.

Gonsalves An Assessment of the Biofuels Industry in India www.zenithresearch.org.in

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(www.unfccc.int www.cdmindia.nic.in www.cdmindia.com

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EVIDENCE ON SCALE ECONOMIES AT DISAGGREGATES

SOHAIL ZAFAR QURESHI*

*Virtual University of Pakistan, Virtual University, Chakwal Campus, Chakwal, Pakistan. Tutor, Allama Iqbal Open University, Chakwal Center, Chakwal, Pakistan.

ABSTRACT

Return to scale is property of the production function indicates the relationship between proportionate change in inputs and resulting change in output. Returns to scale are applicable only in long run, since all inputs are being changed. The estimated value of the coefficient of returns to scale at aggregate level is 1.017. It means that one percentage point change in all input quantities results in 1.017 percent change in output. It turns out that manufacturing sector of Pakistan is characterized by almost constant returns to scale at aggregates and disaggregates.

KEYWORDS: scale economies, translog cost function, aggregates, disaggregates.

I. INTRODUCTION

The scale properties of production technologies are of vital importance for understanding of market structure, such as productivity and economic growth within factor analysis. Economies of scale (eos) is forwarded as a possible important tool for barrier to entry the properties help understand ex-post evolutionary structure of manufacturing’s, usually in empiricism, analyzed by applying both the primal and dual approach assuming constant return to scale technology. As indicated by Boumol et al (1982) there are two types of production economies that may be achieved by any firm in industry, economies of scale and scope. eos are associated with firm size and exists if average production costs decline as output rise. Conversely a firm exhibits diseconomies of scale if average production costs increase with output, diseconomies in scope means higher cost at joint production.

Recently more flexible functional forms have been developed and used one of the most common is the transolg form, which is quadratic second order taylor series approximated. It has linear and non-linear output terms. Translog form can estimate a U-shaped cost curve reflected by data, dualistically well behaved in production relation.

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FIGURE 1

Average Cost AC1 AC2. AC3

LAC

0

Output

If a U-shaped cost curve will estimate, scale economies at smaller firms and diseconomies at larger ones? Unlike Cobb Douglas form quadratic forms detain variation of scale across large scale manufacturing of Pakistan at different sizes, studies such as Humphery (1990) Lawrence and Shay (1986) and Benston et al (1990) found that bank cost curves are weakly U-shaped, eos in banking seem to be relatively limited in comparison with smaller banks. eos in particular coupled with output composition adjustments seem to be the primary Cathrine et al (2004) driving factor for economic performance. Scale economies appear as an average cost curve indicate low costs variation with output, for example short run average cost curve for different sized firms each producing different levels of output, enveloped by long run cost. A downward sloping long run average cost curve reflects scale economies, otherwise diseconomies, Since higher average costs are incurred when more output is produced over the assumption of cross section of different sized firms at a point in time, suppose public limited firms, reveals an appropriate long run curve derived from measure of scale. Thus as smaller firms expand its outputs and costs likely look like larger firms.

II. MODEL

For transolg cost function we denote factor prices by p their respective quantities by x

and level of output by y where as total cost is denoted by c, which is given by c pi x i we use global function defined as tailor series second order twice-differential.

eos here after inferred as elasticity of cost subject to stipulation output, we get 3

lnc/ lny β y β yylny βiylnp i if 1 cost increases more than proportionately with i 1 scale implying diseconomies, 1 implies constant returns to scale, while <1 means

economies of scale, from elasticities it turns out eos 100 (1 ) . www.zenithresearch.org.in

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Where c is the observed total cost taking in consideration βij β ji the symmetry 3 3 3 3 restriction. The regularity conditions are α i 1, βij β ji βiy 0 . These regularity i 1 i 1 i 1 i 1 conditions provide unique correspondence between the cost function and the underlying production function, accordingly cost function must be homogenous and concave in factor prices finally, the transolg function reduces to Cobb-Douglas under certain restrictions.

One potential problem however is that parameters β y and β yy do not appear, cannot be estimated, in share equations. Recently, more flexible functional forms have been developed and used. One solution of existing problem is the transformation, such as quadratic transformation as developed by Lawrence and Humphery (1991) by adding the possibility of multiple outputs either multiple clauses of loans or loans plus certain types of deposits in banking sector both the single output transolg and single output Cobb Douglas form even with adjustment rejected in favor of multiple output transolg, thus it appears that both the possibilities of U-shaped cast curves and complementarities among different banks outputs Humphry (1990) are important generalizations of the single output specification. A functional form that permits the estimated average cost curve to be U-shaped rather monotonic is preferable.

III. DATA

The Census of Manufacturing Industries (CMI) is the only major source of data on different aspects of manufacturing industries in Pakistan, however suffers from severe loopholes such as, under coverage of firms, changes in definitions of variables over time, gaps and irregularity of survey publications. Most of the data are taken from its sixteen most recent publications (1969-70, 1970-71, 1975-76, through 1987-88, and 1990-91) some supplementary information is collected from Monthly Statistical Bulletin and Economic Survey of Pakistan. Pooling of provincial level data for Punjab and Sindh, assuming implicitly that the firms in both the provinces are characterized by similar production technology. This methodology has been practically supported by Battese and Malik (1987, 1988) Malik and Nazli (1989) Khawaja (1991) Lawrence and Humphrey (1991) Burki et al (1997) Zafar (2000) Burki and Mehmood (2004) Zafar and Ahmad (2005). Karaomerlioglu (1999) delved in impact of process control technology on eos in the chemical industry using unit cost reduction as a measure of eos on a snow ball sample of 14 industries economies of mass resources were found declined. As for as prices of capital are concerned estimated by perpetual inventory method. Pk Pk (r δ π k ) where Pk

ind ind is the user cost of capital P is price index of capital goods r is the real rate of interest is the kind capital depreciation rate where as π is defined as π (P P )/P . Price of labor kind kind kind t kind t 1 kind t 1 computed by division of value of labor with labor indexed at 1969-70. Price of raw material is computed by dividing the value of raw material with raw material used, data is normalized at 1969-70.

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IV. EMPIRICAL FINDINGS

The coefficient of scale economies, for the manufacturing sector as a whole is eos = 1.7% where as it is almost same for overall manufacturing sector of Punjab in comparison with manufacturing’s in Sindh. It depict neither economies nor diseconomies of scale see table 1, growth thus appears to enhance Cathrine et al (2004) both scale and technical efficiency. eos in particular associated with output composition adjustments seem to be the primary driving factor for economic performance Mannonen (1998) for example N is the number of projects to be financed and risk are a decreasing function of N it leads to increasing return to scale. Analysis is restricted to the Manufacturing’s of Sindh and Punjab as almost 80% of the firms located in either province. For spread of manufacturing see part a of figure 2 and map of Pakistan in part b.

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FIGURE 2: SPREAD OF MANUFACTURING’S IN PAKISTAN

Part (a): Spread of Manufacturing Part (b): Map of Pakistan

Spread of Manufacturing's in Pakistan

20%

1 2

80%

Part (a) Part (b) www.zenithresearch.org.in

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We estimate system of equations by Zellners Efficient Method and examine for monotonicity and curvature properties we find that calculated input cost shares are positive at the mean as well as for each observation. The calculated factor shares at the mean of the data confirm monotonicity in factor prices at aggregates, as well as at disaggregates. The curvature condition checked by computing the eigen values for each ownership status of firms while the estimates of cost constrained to satisfy symmetry and homogeneity. The results of scale economies and return to scale are shown in table-1 and table-2.

TABLE 1

Returns to Scale

Manufacturing's Sindh Punjab Pooled

Public limited Firms 1.012 1.068 1.021

Private limited Firms 1.019 1.05 1.027

Individual Ownership 0.985 0.823 0.534

Partnership 0.951 1.068 0.805

All Clauses 1.028 1.028 1.017

Convergence at 0.01% level of significance.

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TABLE 2

Scale Economies

Manufacturing's Sindh Punjab Pooled

Public limited Firms -1.20% -6.80% -2.10%

Private limited Firms -1.90% -5.00% -2.70%

Individual Ownership 1.50% 17.80% 46.60%

Partnership 4.90% -6.87% 19.50%

All Clauses -2.80% -2.80% -1.70%

Convergence at 0.01% level of significance.

The coefficient of scale economies for cost function is almost unity for public limited firms in Punjab indicating almost constant return to scale and decreasing returns to scale in individual ownership in Punjab, it can be attributed to loss of control of the top management once the firm has surpassed an optimum size. Large farms gain a cost advantage such as Cathrine et al (2004) by taking advantage of scale and diversification of economies increasing competitiveness of large enterprises. Thus one reason could be the decisions of the top management not optimal if the information on which they are based is inaccurate or matched by time lags, during which crucial changes in policy of the firms in clauses may take place Podinovski (2004) strategic decision of mergers of units or splitting into smaller units, uncertainty from the market

conditions and the reaction of competitors could be another reason, increases the competition with in large size firms leading to diseconomies. The private limited firms operate at constant returns to scale eos for the firms in partnership is 19.5% which is more then public or private limited firms any increase in scale let the expectation for new technologies reduce barrier to entry for small and medium sized firms but it does not hold for large scale industries large scale industries enjoy more advantages of increased scales, more competitive due to reduced prices increased production performance and high quality production. Thus we infer from our result thresearch.org.in that technological development Burki and Mahmood (2004) in the Manufacturing sector of

Pakistan let substitute inputs scaled.

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There is evidence of constant return to scale every where, except individual ownership in Sindh see table 1 this result seem to suggest that firms in the manufacturing sector of Sindh are still developing being at an early stages of development in the manufacturing sector of Pakistan. It had to produce a more varied output mix in order to remain in competition It does not pay for the firms to become specialized capital intensive in production. Scale nor scope economies justify monopoly argument, eos are not sufficient for monopoly to be least cost production. As a whole manufacturing sector of Pakistan seem to operate at reserve capacity the technology in the manufacturing units. In Manufacturing sector such as Pakistan, employees prefer to work for larger firms even if they can earn more for the small unknown firms Shea’s argument have important implication in this context. Larger scale allow division of labor and specialization of the labor force β iy the intensity of labor is 1.07 in public limited firms while the estimate is negative for individual ownership and partnership.1 The intensity of capital is negative for individual ownership –0.013 it means capital as well as labor are not intensive factor inputs.

The magnitude of for Individual ownership is slightly low one reason could be the mismanagement since most firms do not support their technologies and investment complementarities it lag in capacity utilization, in particular suppose economies associated with composition of output adjustments could be the primary factor for economic efficiency of inputs.

V. CONCLUSION AND POLICY IMPLICATIONS

Return to scale is a property indicates the relationship between a proportionate change in all inputs and the resulting change in output. The coefficient of returns to scale is 1.017 for the manufacturing sector of Pakistan. Manufacturing sector of Pakistan is characterized by almost constant returns to scale seemingly operating at reserve capacity, at the disaggregate level results are consistent either for Punjab or Sindh. From results some practical conclusions may be inferred. First there seem to be little evidence of decreasing return to scale a cost enhancing nature, in the manufacturing sector either at disaggregates or at aggregates. There are important economic issues related to the size of scale economies such as reduction of profitability in production units beneath their full potential. Further research could shed light focus eos with distortion affect.

REFERENCE

Battese, G. E., and Malik, S. J., (1987) “Estimates of Elasticities of Substitution for CES Production Functions Using Data on Selected Manufacturing Industries of Pakistan” The Pakistan Development Review 26:2, 161-177

Battese, G. E., and Malik, S. J., (1988) “Estimates of Elasticities of Substitution for CES and VES Production Function Using Firm Level Data for Food Processing Industries” The Pakistan

Development Review 27:1, 59-71 thresearch.org.in

Bonsten, G., Gerald, H., and Humphry, D., (1990) “Scale Economies in Banking: A

Restructuring and Reassessment” Journal of Money Credit and Banking 4, 435-456 www.zeni

1 See appendix table 1-5

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Boumol, W. J., J. C. Panzar., and R. D. Willing., (1982) “Contestable Markets and Theory of Industry Structure” New York: Harcourt Braxce Jovanovich, Inc.

Burki, Abid, A., Mushtaq, A, Khan., and B, Bratsberg., (1997) “Parametric Tests of Allocative Efficiency in the Manufacturing Sectors of India and Pakistan” Journal of Applied Economics Vol 29(1): 11-22

Burki, Abid. A., and Mehmood-ul-Hassan Khan., (2004) “Effect of Allocative Inefficiency on Resource Allocation and Energy Substitution in Pakistan’s Manufacturing” CMER Working Paper, Published Journal of Energy Economics 26, 371-388

Catherine, M., Richard, N., David, B., and Agapi, S., (2004) “Scale Economies and Efficiencies in U. S Agriculture: Are Traditional Farms History?” Journal of Productivity Analysis 22, 185- 205

Government of Pakistan, Census of Manufacturing Industries Islamabad. Federal Bureau of Statistics. (Various issues)

Government of Pakistan, Economic Survey Islamabad. Economic Advisors Wing Ministry of Finance. (Various issues)

Humphrey, D., (1990) “Why Do Estimation of Scale Economies Differ” Economic Review Federal Reserve Bank of Richmond May/June, 24-38

Karaomerlioglu, D., (1999) “Does Microelectronics Reduce Economies of Scale? A Case Study in the Turkish Chemical Industries” Review of Industrial Organization 14, 219-238

Khawaja, J., (1991) “Production Relations in the Selected Manufacturing Industries of Pakistan” Unpublished M.Phil Dissertation Department of Economics, Quaid-i-Azam University, Islamabad Pakistan

Lawrence, B., Humphrey, D., (1991) “Scope Economies: Fixed Costs Complementarily and Functional Form” Working Paper 91-3 School of Business Administration College of William and Mary Williamsberg Viginia 23189 USA

Lawrence, C., Robert, S., (1986) “Technology and the Financial Intermediation in a Multiproduct Banking Firm: An Economic Study of U.S Banks 1979-1982” in C. Lawrence and R. Shay editors, Technical Innovation. Regulation and The Monetary Economics Ballinger Baosten MAA, 53-92

Malik, S. J., Mushtaq, M., and Nazli, H., (1989) “An Analysis of Production Relations in the

Large Scale Manufacturing Sector of Pakistan” The Pakistan Development Review 28:1, 27-42 thresearch.org.in

Mannonen, P., (1998) “Competition in Banking and the Efficiency of Financial Intermediation With a Single Currency” Turku School of Economics and Business Administration Finland,

Series of Discussion and Working Papers No 1 www.zeni

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Podinovski, V., (2004) “Efficiency and Global Scale Characteristics on the “No Free Lunch” Assumption Only” Journal of Productivity Analysis 22, 227-257

Zafar, S., (2000) “Evidence on Economic Efficiency in the Manufacturing Sector of Pakistan: A Comparison Across Alternative Ownership Status of Firms” Unpublished M.Phil Dissertation Department of Economics, Quaid-i-Azam University Islamabad Pakistan

Zafar, S., Ahmad. E., (2005) “Eevidence on Allocative Efficiency and Elasticity of Substitution

in the Manufacturing Sector of Pakistan” The Pakistan Development Review Vol 44:4, 795-803

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APPENDIX

TABLE 1

PARAMETER ESTIMATE AT DISAGGREGATES IN THE MANUFACTURING SECTOR OF PAKISTAN

Punjab Sindh Pooled

Public Limited Firms

Parameters Estimates t-statistics Estimates t-statistics Estimates t-statistics

14.4821 234.135* 14.7005 246.162* 14.6022 305.390*

k 0.16813 3.32510* 0.28991 5.59415* 0.24474 6.12299*

l 0.14433 5.73070* 0.13952 8.98201* 0.16592 7.62358*

m 0.68754 17.4206* 0.57057 0.9082 0.58934 12.3836*

ll -0.0767 -4.3315* 0.03492 3.45329* -3.30E-03 -0.1725

kk 0.50625 2.04498* 0.10893 4.40986* 0.08699 4.42518*

mm -0.025 -0.8761 1.64676 4.24618* 0.11798 3.12385*

ml 0.07615 3.74500* -0.0453 -3.3504* -0.01385 -0.6045

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lk 5.32E-04 0.42986 0.01041 1.40736 0.01715 1.59401

mk -0.0512 -2.6024* -0.1193 -3.9745* -0.1041 -4.4032*

y 1.07088 11.5912* 0.84178 15.7491* 0.93882 15.8533*

yy 0.02024 0.17740 0.12084 2.36749* 0.0583 0.93832

yl 5.86E-03 0.53349 -0.0528 -7.8465* -0.0391 -3.4798*

yk 0.01127 1.00902 -0.0375 -3.0630* -0.0284 -2.6855*

ym -0.01863 -1.26672 0.090227 5.55035* 0.067495 3.97519*

*: Significant at 5% level of significance

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TABLE 2

PARAMETER ESTIMATE AT DISAGGREGATES IN THE MANUFACTURING SECTOR OF PAKISTAN

Punjab Sindh Pooled

Private Limited Firms

Parameters Estimates t-statistics Estimates t-statistics Estimates t-statistics

13.9215 445.85* 14.2793 284.93* 14.0417 273.978*

k 0.133583 8.10572* 0.140195 4.01136* 0.1469 6.83185*

l 0.053967 3.84425* 0.113726 6.65665* 0.110307 7.27328*

m 0.81245 29.6112* 0.746079 15.6561* 0.742793 26.1719*

ll 0.00665 0.477032 0.05902 9.88966* 0.068736 7.98568*

kk 0.045477 5.44717* 0.052148 3.14048* 0.053398 5.03335*

mm 0.006061 0.208855 0.106609 3.30951* 0.125675 5.67016*

ml 0.016383 0.894986 -0.05674 -5.05139* -0.07051 -5.98585*

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lk -0.02303 -3.20869* -0.00228 -0.28031 0.00177 0.24178

mk -0.02244 -1.60183 -0.04987 -2.22976* -0.05517 -4.01773*

y 1.00143 13.8609* 0.569249 6.18746* 1.03123 8.723*

yy 0.089417 0.946585 0.584205 5.33117* 0.028036 0.185108

yl -0.02226 -3.17601* -0.05098 -6.43033* -0.05475 -7.68114*

yk 0.008663 1.56714 0.008278 0.606018 -0.00045 -0.06281

ym 0.013599 1.22177 0.042702 2.11874* 0.055199 4.52453*

*: Significant at 5% level of significance

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TABLE 3

PARAMETER ESTIMATE AT DISAGGREGATES IN THE MANUFACTURING SECTOR OF PAKISTAN

Punjab Sindh Pooled

Individual Ownership

Parameters Estimates t-statistics Estimates t-statistics Estimates t-statistics

12.4851 226.031* 11.4843 146.34* 11.9584 165.462*

k 0.1749 13.2981* 0.1462 4.0179* 0.1135 5.2058*

l -5.91E-03 -0.3248 0.1694 4.6944* 0.0693 4.0761*

m 0.831 32.7392* 0.6845 12.261* 0.8171 33.9385*

ll -0.0219 -1.1018 0.0656 1.7456 -0.0106 -0.6847

kk 0.0688 8.3628* 0.0496 2.6568* 0.0379 3.2868*

mm -0.0398 -0.877 0.1789 0.1789 6.58E-03 0.222

ml 0.0652 2.1918* -0.0974 -2.2018* 0.021 1.0484

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lk -0.0433 -4.0852* 0.0318 1.7387 -0.0104 -1.1599

mk -0.0255 -1.53 -0.0814 -2.8192* -0.0275 -1.9297*

y 0.5616 5.7686* 0.7555 6.2733* 0.4101 5.9418*

yy -0.4383 -5.4207* 0.1831 1.9048 0.1988 2.2016*

yl -0.0201 -1.0086 -0.0547 -2.8507* 3.40E-03 0.5265

yk -0.0131 -1.1728 -0.0269 -2.2848* 4.43E-03 1.1937

ym 0.0333 1.1523 0.0815 3.2281* -7.83E-03 -0.8644

*: Significant at 5% level of significance

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TABLE 4

PARAMETER ESTIMATE AT DISAGGREGATES IN THE MANUFACTURING SECTOR OF PAKISTAN

Punjab Sindh Pooled

Partnership

Parameters Estimates t-statistics Estimates t-statistics Estimates t-statistics

13.7651 443.071* 13.3217 402.039* 13.6351 238.648*

k 0.034342 1.29963 0.078929 5.30725* 0.070088 5.48324*

l 3.21E-03 0.104888 0.082167 7.0669* 0.055644 3.97737*

m 0.962447 17.4893* 0.838903 34.6268* 0.874269 34.5862*

ll -5.76E-03 -0.21568 0.015947 2.17177* 0.019653 1.58968

kk 3.98E-03 0.268675 0.025922 3.33488* 0.022888 3.27184*

mm -0.06646 -0.92462 0.031958 1.35127 0.024346 0.775194

ml 0.038102 0.888727 -0.01099 -0.8877 -0.01056 -0.5576

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lk -0.03234 -1.85592 -4.96E-03 -0.79953 -9.10E-03 -1.18941

mk 0.028359 0.910646 -0.02097 -1.62907 -0.01379 -0.99152

y 1.09141 31.0228* 0.996303 28.4785* 0.893906 11.9474*

yy -4.14E-03 -0.05194 -0.05402 -0.74154 -0.15347 -1.44925

yl -0.02588 -1.44725 -0.04001 -8.92083* -0.03326 -3.98088*

yk 8.20E-03 0.635621 -7.49E-03 -1.56618 -4.71E-03 -0.88865

ym 0.01768 0.591957 0.047503 5.51789* 0.037963 2.93549*

*: Significant at 5% level of significance

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TABLE 5

PARAMETER ESTIMATE AT AGGREGATES IN THE MANUFACTURING SECTOR OF PAKISTAN

Punjab Sindh Pooled

All

Parameters Estimates t-statistics Estimates t-statistics Estimates t-statistics

15.4633 431.205* 15.3808 209.913* 15.4379 363.45*

k 0.196047 10.9118* 0.205616 4.01468* 0.198134 6.45465*

l 0.069496 6.0188* 0.094919 5.66443* 0.078693 7.72247*

m 0.734456 57.1321* 0.699465 11.2313* 0.723173 20.3542*

ll 0.045116 3.33687* 0.040898 3.2051* 0.057418 5.64329*

kk 0.066736 7.61592* 0.079264 3.4161* 0.071369 4.83114*

mm 0.059719 4.0756* 0.096166 2.6167* 0.087717 3.93044*

ml -0.01905 -1.40378 -0.0289 -2.04657* -0.03688 -3.52754*

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lk -0.02607 -4.73127* -0.012 -1.49993 -0.02054 -4.16682*

mk -0.04067 -6.45317* -0.06727 -2.36528* -0.05083 -2.95376*

y 0.738345 9.99075* 0.900541 10.4149* 0.800242 13.5719*

yy 0.425874 4.58333* 0.167708 2.02175* 0.288369 4.61247*

yl -0.0556 -6.02307* -0.04709 -5.21051* -0.05802 -8.45203*

yk 9.19E-03 1.77924 0.014095 0.872966 0.013328 1.49617

ym 0.046411 5.00306* 0.032994 1.61416 0.044688 3.82924*

*: Significant at 5% level of significance

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 OUTREACHING MICRO FINANCE: A MULTIDIMENSIONAL MODEL FROM SHGS PERSPECTIVE

NEETU ANDOTRA*; POOJA**; RACHITA SAMBYAL***

*HOD Commerce, University of Jammu, J&K, India. **Assistant Professor, Department of Commerce, Govt. Degree College, Udhampur. ***Relationship Executive (IT), J&K Bank, Jammu.

ABSTRACT

The removal of the impediments of micro finance outreach (MFO) to rural entrepreneurship could be a powerful mechanism for growth. This paper analyses factors contributing to MFO in rural SHGs along with the fourteen MFO stimuli and their proximity to one another. For assessing Micro Finance Outreach (MFO) to Self Help Groups (SHGs), and also ensuring comparison among three viable SHG clusters namely Kathua, Udhampur and Basholi with similar topography an equal respondents of 147 each (total = 441) were selected using convenience sampling technique. The paper through an application of two-group discriminant function, K-Means Clustering Procedure and Multidimensional Scaling (MDS) Technique measures the strength of relationship between micro finance groups and independent outreach variates, mean differences across three clusters towards four outreach dependents of procedural formalities, repayment schedule, place benefits and disbursement time and proximity of MFO stimuli. The results reveal significant variation across two outreach groups, significant mean differences across three clusters for outreach dependents and closeness in MFO stimuli except for simplified loan procedure, informal linkage, area development, social enhancement in personality, quality of life and standard of life thereby inviting strategic action by Micro Finance Institutions (MFIs) for redesigning stimuli configuration and promoting rural entrepreneurship.

KEYWORDS: Canonical Discriminant Function, MDS, Micro Finance Outreach (MFO), SHGs. ______

INTRODUCTION

In the last ten years, assisting micro-enterprises with the provision of micro-credit and saving services has proved a successful strategy for job creation and income generation among the very poor, and the participation of the poor in credit and savings systems has been correlated positively with betterment of family welfare and human development (CGAP, 1995 and Berenbach and Churchill, 1997). A number of institutions provide credit to the small and micro enterprise sector in J&K State. These include commercial banks, non-bank financial institutions, non government organizations, multilateral organizations, business associations, and rotating savings and credit associations. In addition, financial transactions also take place between traders, friends, relatives and landlords, as well as commercial moneylenders. Infact, a proactive www.zenithresearch.org.in

approach and the use of outreach activity is essential if business support is to effectively reach

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 dispersed micro enterprises since many rural enterprises have been outside the main target groups of Business Links in recent years. Working primarily with rural entrepreneurs, MFIs promotes Self-Help Groups (SHGs), trains them in sound financial practices, facilitates access to micro credit loans, and equips them with business skills (Andrew & Frith 2005 and Ramji & Tripathi 2009). The rural non-farm sector covers a wide spectrum of activities including handlooms, handicrafts, cottage and village industries, agro processing units, and service and transport activities. The products manufactured by SHGs include embroidered sarees, paintings, wooden handicrafts, jute products, sculptures, metal idols, leather bags, sea shells, cushion covers, etc. Efficiency of micro finance operations is related to attaining the highest possible ratio of output for input, i.e. achieving outreach and human development, while reaching sustainability (Berenbach and Churchill 1997). Keeping into view these wide spectrum of activities covered by rural SHGs, it becomes pertinent for MFIs to outreach micro financial assistance to such rural enterprises for their long-term sustenance and growth. This paper identifies and analyses micro finance outreach variables and their impact on MFO.

RESEARCH FRAMEWORK AND PROPOSITIONS

The broader objective of this paper is to measure Micro Finance Outreach (MFO) across two outreach (high & Low) groups, clusters (local grouping of competitive firms with common markets) and fourteen micro finance stimuli for operationalisation of existing pattern of preferences, testing of model fitness and accordingly redesigning the existing bundle of micro finance stimuli for strategic-orientation of retailers dealing in SSI products. There are three specific objectives and hypotheses of this paper, each of them are expressed in the form of a research questions (RQ) and propositions (P).

RQ1: Whether canonical discriminant functions are contributing towards sharing optimal linear relationship between dependent and independent variables.

RQ2: Whether canonical weights and loadings provide identity of relative contribution of each function.

P1: There exist significant variances in the relative contribution of discriminant functions in predicting independents of procedural formalities, rate of interest, repayment schedule, place benefits, size of loan & loan term and disbursement time for dependent outreach of micro finance variables in rural SHGs.

2. RQ2: Whether final cluster are at distance to each other

RQ2: Whether there exist 0.000 probabilities that an F-ratio of this size would appear by chance.

P2: There are significant mean differences across three clusters of rural SHGs towards outreach dependents of procedural formalities, repayment schedule, place benefits, and disbursement time.

3. RQ1: Whether preference ratings for fourteen outreach stimuli exhibit distance.

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RQ2: Whether Kruskal‟s Stress Formula and R2 as measures of fitness can be operationalised in practical business settings.

P3: Perceptions of respondents are at propinquity to one another with respect to fourteen micro finance stimuli namely, Social-enhancement in personality, social reputation, confidence, poverty reduction, education, financial -enhancement in income, employment, quality of life, standard of living, savings, area development, informal linkage, simplified loan procedure and convenient repayment mode.

RESEARCH DESIGN AND METHODOLOGY

For assessing the outreach factors and stimuli of Micro Finance to Self Help Groups (SHGs), and also ensuring comparison among three viable SHG clusters namely Kathua, Udhampur and Basholi with similar topography and equal respondents of 147 each (total = 441) were selected using convenience sampling technique. These SHGs covers a wide spectrum of activities including handlooms, handicrafts, paintings, wooden handicrafts, jute products, sculptures, metal idols, leather bags, cushion covers, etc.

EVALUATION PROCEDURE AND ANALYSES

ITEM ANALYSIS

The first step in purifying the instrument was to compute coefficient Alpha and item-to-total correlations to delete “garbage items” (Churchill‟s 1979 paradigm). The sub-scales of micro finance outreach with respect to rate of interest, size of loan & loan term, social & economic sustainability, area development, poverty reduction, financial-enhancement in income, employment, area development and convenient repayment mode pertaining to micro finance dimensions failed to achieve acceptable levels of internal consistency (0.50 recommended by Brown et al. (2001) and Kakati and Dhar (2002) and also their item to total correlation was below 0.40 (Wang et al. 2001). During this process, seven items were deleted and reliabilities of the remaining sub-scales ranged from 0.61 to 0.91. Further, items namely social & economic sustainability and area development were retained for further analyses because of high mean score and strong linkage with micro finance outreach.

EXPLORATORY FACTOR ANALYSIS (EFA)

An exploratory factor analysis was subsequently performed on the remaining 13 items to identify the factor structure of micro finance outreach. The suitability of the data set for EFA was examined using the KMO statistic and Barlett‟s test of sphericity. The KMO statistic which measures the overall sampling adequacy of the factor analysis produced a value of 0.72 which falls into the range of being „satisfactory‟ (Field 2000, p.455). Barlett‟s test yielded X2 value of 2.420E3 (p<0.0001) which suggests that the inter-correlation matrix contains sufficient common variance to render factor analysis appropriate. The sample data was then examined using principal components analysis as the extraction technique and varimax as the orthogonal rotation method. To improve the construct validity through EFA, two commonly employed decision rules were initially applied to identify the factors underlying customer outreach of micro finance: (1) deleting items with insignificant factor loadings (FL > 0.50) and (2) excluding single item factors www.zenithresearch.org.in

from the standpoint of parsimony. The outcome of EFA suggested a 4-factor solution,

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 accounting for 65.074% of the variance (Table 2). As emerging factors comprised as many as 13 items, EFA was repeated to reduce the items to a more tractable number. A more stringent criterion specifying that items with loadings less than 0.50 on a given factor be deleted was introduced (Shimp and Sharma 1987). Out of 23 items, 13 survived this process, loading on 4 distinct factors.

CONSTRUCT AND PREDICTIVE VALIDITY

KMO value was 0.72, indicating satisfactory construct validity of the construct (Hair et al. 1995). The four dependent variables of micro finance outreach have shown a definite relationship with the outreach independents in prior multivariate technique, notably canonical correlation. Given the relationship, significant differences in aforesaid variables across the segments have been observed. If significant differences do exist on these four dependent variates, segments (clusters) do depict groups that have predictive validity.

DATA ANALYSIS AND INTERPRETATION

RESULTS OF TWO-GROUP CANONICAL DISCRIMINANT FUNCTION

A factor analysis was completed for 4 factor-wise outreach dimensions. Factor analysis was used to reduce the number of variables and for each dissonance variable and to simplify the second component of data analysis of canonical discriminant function. Two-group discriminant analysis was used to assess the strength of outreach independents used in classifying individuals as high outreach group (5) and low outreach group (1). The procedure was appropriate for this use because of the nature of the predefined categorical groups and the interval scales used to generate individual factor scores. The eigen values associated with the first function in procedural formalities, repayment schedule, place benefits and disbursement time satisfies the criteria of greater than equal to 1 at 1.130 accounting for variance of 92.7%. However, first function was found to be superior to the subsequent functions resulting in maximum canonical correlation at 0.728. The values of Wilks‟ in first function was 0.431 transformation of which resulted into significant (p<0.05) chi-square values of 366.736 (df = 12) for dependent outreach variables. This clearly shows that the subsequent functions do not contribute significantly to group differences. The standardised coefficients also termed as canonical weights indicated large and positive coefficients on function 1 in dependent variable of micro finance outreach with respect to procedural formalities (0.269) and disbursement time (0.672); large coefficient on function 2 for outreach dependent for place benefits (0.947); positive but low coefficients on

function 1 with respect to repayment schedule (0.099) & place benefits (0.488) and negative weights for procedural formalities, repayment schedule and disbursement time on function 2 . These independents variates with large weights have contributed more to the discriminating power of the function than variables with smaller weights. A similar conclusion has reached by an examination of the structure matrix also called as canonical loadings that measures the linear correlation and relative contribution of each variable to each canonical function. The largest absolute correlation (*) between each variable and discriminant function has been highlighted in Table 3. An overall analysis reveals that three micro finance dependent variates across high & low outreach groups namely, procedural formalities, repayment schedule and place benefits were significantly and highly related with the outreach groups on Function 1 except for fourth www.zenithresearch.org.in

dependent (disbursement time) that exhibited significant coefficient on second function. The

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 above results reveal highest contribution by first function and significant variations between all the functions. Research questions were also provided answers for having relative contribution of Function 1 in exhibiting linear association between variables and also significant variation appeared among all functions. This provides acceptance to first proposition that first function emerged as the major contribution in strengthening the relationship between micro finance groups and independent outreach variates and also four functions accounted significantly to group variances. Since significant variations were observed (Examination of group centroids given in territorial map) across two outreach groups for procedural formalities, repayment schedule, place benefits and disbursement time on segments in function 1, cluster-wise assessment of variation for these dependent variates was important.

CLUSTER-WISE ASSESSMENT OF VARIATION USING K-MEANS CLUSTERING PROCEDURE

K-means clustering procedure as a part of nonhierarchical clustering methods was used for describing an algorithm that assigns each item to the cluster having the nearest centroid (mean). The current iterations were 6 with minimum distance between initial clusters at 7.874. The distance between the final clusters (Table 4) indicate that the pairs of three clusters are well separated. The univariate F test for each clustering variable is only descriptive. Mean squares (X2) represent the unsystematic variation within clusters. The observed significance levels explain that there are 0.000 probabilities that an F-ratio of this size would appear by chance thereby explaining significant variation among clusters for outreach of micro finance regarding procedural formalities, repayment schedule, place benefits and disbursement time. Final clusters are significantly at distance to one another as revealed by F-ratio to answer second research questions. The above results fulfill second proposition that „there are significant mean differences across three clusters towards four outreach dependents of procedural formalities, repayment schedule, place benefits and disbursement time‟.

ASSESSMENT OF PERCEIVED RELATIVE IMAGE OF FOURTEEN MICRO FINANCE STIMULI USING MULTIDIMENSIONAL SCALING (MDS) TECHNIQUE

MDS also known as perceptual mapping procedure was used to determine the perceived relative perception of micro finance beneficiaries with respect to fourteen stimuli. To formulate strategic- orientation for transforming customer outreach of micro finance into abundance, fourteen micro finance stimuli ranked in order of preference: Social-enhancement in personality, social reputation, confidence, poverty reduction, education, financial -enhancement in income,

employment, quality of life, standard of living, savings, area development, informal linkage, simplified loan procedure and convenient repayment mode by 441 respondents were input as separate matrices (magnitude of 1) to illustrate the general pattern of proximities. Data in ranking form was standardised by transforming values into counts using Kruskal‟s Stress Formula 1 for assessing the overall model fit and appropriate dimensionality. This measure indicates the proportion of the variance of the disparities not accounted for by the MDS model.

Stress = (dij – ƌij)2 / (dij – ƌ)2

Ƌ = the average distance ( dij/n) on the map. www.zenithresearch.org.in

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Ƌij = derived distance from similarity data. dij = original distances provided by respondents.

Table 5 details the average preference ratings of high proximities in fourteen stimuli (greater than 3.5) as well as the lowest proximity of 0.2. R-square as a measure of goodness of fit and stress as a measure of badness of fit have been highlighted in Table 6. R-square that yielded a mean value of 0.99 as acceptable indicated the proportion of variance of the optimally scaled data that can be accounted for by MDS procedure whilst mean value of stress at 0.05 was termed as poor as per Kruskal‟s formula thereby indicating relative inconsistencies in fit values. Perceptual map for nonmetric MDS two-dimensional configuration (high outreach vs low outreach) is shown in Figure 1. The distance across fourteen stimuli implies differences in preferences for micro finance stimuli. On the horizontal axis, seven stimuli namely, social reputation, education, confidence, convenient repayment mode, poverty reduction, financial enhancement in income and employment maintained little bit of closeness with one another whilst „simplified loan procedure‟ was located on wider distances explaining large value on vertical axis thereby explaining greater variations in preferences. Other stimuli situated on the vertical axis namely informal linkage, area development, social enhancement in personality, quality of life and standard of life exhibited extremely low values and closer association with one another.

The results of the fitness of model can be observed in a scatterplot (Figure 2) of actual distances versus fitted distances from the perceptual map. If a consistent set of objects or individuals is identified as outliers, they can be considered for deletion. The given figure 2 reveals that the respondents are quite homogeneous in their preferences with respect to five stimuli but with rest of the micro finance stimuli the distinctive clusters emerge. Stimuli weights not falling on a straight line indicated inconsistent weights between dimension 1 and II. The distance of each stimuli weight from the origin indicates lack of fit of the model being closer in distance from the origin. This answers research questions that distance in preference ratings ranges between highest of 3.5 to lowest of 0.2 and stress and R2 measures can operationalised only after modification in existing micro finance stimuli configuration. The above results provide more than partial acceptance to third proposition that certain micro stimuli namely, informal linkage, area development, social enhancement in personality, quality of life, standard of life, social reputation, education, confidence, convenient repayment mode, poverty reduction, financial enhancement in income and employment exhibit positive association and closeness to one another in preference ranking accorded by the respondents and disparity in other invite strategic action for redesigning stimuli configuration. Thus, no stimuli should be eliminated due to a poor fit in the two-dimensional solution and rather invites modification in the existing pattern of micro finance stimuli offered by MFIs that will reduce the finance outreach to SHGs.

CONCLUSION AND FUTURE RESEARCH

Examination of group centroids given in territorial map across two outreach groups for procedural formalities, repayment schedule, place benefits and disbursement time on segments in function 1 that exhibit significant variation elucidates and emphasises on further research to be taken up to identify the reasons and impediments causing such variation. From the second www.zenithresearch.org.in

proposition it is evident that MFO significantly differs across three clusters thereby nature and

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 extent of financial incentives offered to SHGs can be assessed in the future research. Modifications are required in the existing pattern of micro finance stimuli offered by MFIs that will reduce the finance outreach to SHGs. Future research must focus on the SHGs located in the adjoining areas and districts so that effective strategy for the sustenance and growth of SHGs can be developed and formulated by Micro Finance Institutions (MFIs) and government at the state level.

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(2001) „Growth and agglomeration‟ International Economic Review 42, pp. 947-968

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Ramji, Minakshi and Stuti Tripathi (2009) „Micro-Housing Loans for Micro-Entrepreneurs: A Needs Assessment‟, The Micro Finance Review, a peer-reviewed journal produced by the Bankers Institute of Rural Development, Vol. 1(1), (June) pp. 51-71.

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Sisodia, N S, M B N Rao, Vijay Mahajan, V Leeladhar, M P Vasimalai, Rama Reddy, and Brij Mohan R Srinivasan and M S Sriram (Coordinators)

(2005). „Rural Finance in Contemporary Times: Interface with Microfinance, Workshop on Microfinance held on 4th September, 2004 at Indian

Institute of Management, Ahmedabad, Vikalpa, Vol 30, No 2, pp. 81-112.

Wang, Y.-S., T.-I. Tang and J.-T. E. Tang (2001),`An Instrument for Measuring Customer Satisfaction Toward Web Sites that Market Digital Products and Services‟, Journal of Electronic Commerce Research 2(3,pp.1-19.

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TABLE 1: ASSESSMENT OF RELIABILITY AND VALIDITY OF THE SCALE ITEMS

Factors Alpha Items Cronbach’s Alpha if item deleted Inter-item coefficient included correlations

F1 0.908 3 0.848, 0.807 and 0.932 Criteria of 0.40

F2 0.724 4 0.609, 0.697, 0.638 and 0.698 Criteria of 0.40

F3 0.864 2 0.872 and 0.857 Criteria of 0.40

F4 0.79 4 0.784, 0.794 and 0.793 Criteria of 0.40

Total Alpha after deleting 0.80 13 irrelevant scale items = 0.80

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TABLE 2: SUMMARY OF RESULTS SHOWING FACTOR LOADINGS AND VARIANCE EXPLAINED AFTER SCALE PURIFICATION (ROTATED COMPOUND METHOD)

Factor-wise Dimension (X) S.D F.L Eigen %Variance CV Communalities value

F1 3.900 20.003 20.003

Social Reputation 3.71 2.41 0.807 0.872

Confidence 3.10 1.92 0.859 0.890

Education 3.64 1.70 0.892 0.809

F2 1.873 17.585 37.588

Procedural formalities 4.10 1.46 0.796 0.641

Repayment Schedule 4.30 1.22 0.670 0.591

Place benefits 3.91 1.50 0.771 0.610

Disbursement time 4.39 1.50 0.633 0.590

F3 1.538 15.786 53.374

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Saving 4.84 0.42 0.885 0.822

Convenient Repayment 4.73 0.72 0.816 0.819

Standard of life

Informal linkage

F4 1.149 11.700 65.074

Informal linkage 4.67 0.901 0.683 0.606

Standard of life 4.73 0.717 0.656 0.541

Social enhancement in personality 4.70 0.790 0.521 0.791

Quality of life 4.84 0.421 0.578 0.548

Footnotes: KMO Value = 0.722; Bartlett‟s test of sphercity = 2.420E3, df = 78, sig. = .000; Extraction Method: Principal Component Analysis;

Rotation Method: Varimax with Kaiser Normalization. Rotation converged in 8 iterations; „X‟ stands for mean, „S.D‟ for standard deviation,

„F.L‟ for factor loadings and „CV‟ for cumulative variance

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TABLE 3: RESULTS OF TWO-GROUP CANONICAL DISCRIMINANT FUNCTION RANGING FROM EXTREMELY HIGH CUSTOMER OUTREACH (5) TO LOW OUTREACH (1)

Customer Summary Discriminant Standardised Structure Outreach of Functions Coefficient Dimensions Canonical Matrix

Eigen % Variance Canonical Wilk’s 2 Df Sig. value Correlation Lambda

Function 1 1.130 92.7 0.728 0.431 366.736 12 0.000

Function 2 .090 7.3 0.287 0.918 37.375 5 0.000

1. Procedural 0.269 0.767* formalities -0.319 -0.428

2. Repayment 0.099 0.569 Schedule -0.265 -0.190

3. Place 0.488 0.094* benefits 0.947 0.003

4. 0.672 -0.007 Disbursement time -0.413 0.242*

Note: Pooled within-group correlations between discriminating variables and standardised canonical discriminant functions variables

ordered by absolute size of correlation within function. * Largest absolute correlation between each variable and any www.zenithresearch.org.in

discriminant function.

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TABLE 4: RESULTS OF NONHIERARCHICAL CLUSTERING FOR MEASURING OUTREACH OF FINANCE

A. Distance between Final Cluster Centers

Cluster Clusters

1 2 3

1 3.688 5.104

2 3.688 3.612

3 5.104 3.612

B. ANOVA

Cluster Error

Outreach variables Mean Df Mean Df F Sig. square square

1. Procedural formalities 126.432 2 1.553 438 81.396 .000

2. Repayment schedule 106.459 2 1.018 438 104.556 .000

3. Place benefits 184.661 2 1.411 438 130.905 .000

4. Disbursement time 242.747 2 1.139 438 213.084 .000

C. Number of Cases in each Cluster

Cluster 1 139.000 www.zenithresearch.org.in

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2 197.000

3 105.000

Valid 441.000

Missing .000

Note: Iteration = 6; Minimum distance between initial clusters is7.874.

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TABLE 5: AVERAGE PREFERENCE RATINGS FOR FOURTEEN OUTREACH STIMULI USING NONMETRIC MULTIDIMENSIONAL SCALING (MDS) TECHNIQUE

Stimuli Average Preference Rating

1 2 3 4 5 6 7 8 9 10 11 12 13 14

1. Social .000 enhanceme nt

in personality

2. Social 2.44 .000 reputation 4

3. 2.35 0.42 .000 Confidence 4 2

4. Poverty 1.47 3.83 3.46 .000

reduction 2 5 3

5. 1.61 0.96 0.70 2.87 .000 Education 6 4 7 8

6. Financial 1.61 3.85 3.46 0.42 2.87 .000 enhanceme 6 8 3 2 8 nt

in income

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7. 2.21 4.28 3.83 0.70 3.36 0.70 .000 Employme 5 8 5 7 3 7 nt

8. Quality 0.07 2.53 2.35 1.46 1.57 1.47 2.08 .000 of life 4 1 4 5 0 2 8

9. Standard 0.17 2.54 2.37 1.46 1.61 1.57 2.08 0.02 .000 of life 8 7 6 1 6 0 8 7

10. Savings 1.21 1.61 1.26 2.32 1.26 2.34 2.67 1.21 1.21 .000 9 2 8 4 8 7 8 9 9

11. Area 0.42 2.32 2.20 1.80 1.21 1.89 2.32 0.33 0.42 1.47 .000 developme 2 7 7 0 9 4 4 2 2 2 nt

12. 0.17 2.34 2.32 1.61 1.46 1.80 2.32 0.17 0.17 1.26 0.17 .000 Informal 8 7 4 6 1 0 4 8 8 8 8 linkage

13. 2.67 3.55 2.87 2.20 2.87 2.08 2.07 2.67 2.67 2.20 2.89 2.87 .000 Simplified 8 4 8 7 8 8 8 8 8 7 5 8

loan procedure

14. 1.26 1.26 1.21 2.35 1.21 2.44 2.87 1.21 1.26 0.17 1.26 1.26 2.21 .00 Convenient 8 8 9 4 9 4 8 9 8 8 8 8 5 0 repayment

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TABLE 6: ASSESSING OVERALL MODEL FIT AND DETERMINING THE APPROPRIATE DIMENSIONALITY

Two-dimensional solution for measuring stress & squared correlation in distances using Kruskal’s Stress Formula 1

Iterations S-stress Improvement (R-squared)

1. .06901

2. .05269 .01632

3. .04801 .00468

4. .04504 .00297

5. .04287 .00216

6. .04130 .00157

7. .04039 .00092

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Note: Iterations stopped subject to stress improvement less than .001000

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DERIVED STIMULUS CONFIGURATION

FIGURE 1: EUCLIDEAN DISTANCE MODEL

1.0 ᴼᴼ INFORLINK AREADEV SOENHPERS QUAOFLIF ᴼᴼ STDLIFE 0.5 EDUC ᴼ POVRED 0.0 SOREP ᴼ ᴼ FIENHINCOᴼ EMPLOY

-0.5 ᴼ CONREPAYᴼ ᴼ SAVING CONF -1.0 ᴼ

-1.5

-2.0 SIMLOPROC

ᴼ -- 3 -2 -1 0 1 2 3

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FIGURE 2: EUCLIDEAN DISTANCE MODEL

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INTER-STATE COMPARISON OF FISCAL INDICATORS

DR. SURESH SHANBHOGUE*; TALEIGAO PLATEAU**

*Joint Director, Directorate of Planning, Statistics and Evaluation, Government of Goa, Junta House, Panaji, Goa – 403001. **Assistant Professor, S.S. Dempo College of Commerce and Economics, Taleigao Plateau, Panaji, Goa – 403001.

ABSTRACT

Although, 25 out of 29 States have achieved ‘Zero Revenue’ deficit in the year 2006-07 ahead of Twelfth Finance Commission target date, it will be a challenge for the State Governments to sustain this level in view of pay hike to government employees and recession in the economy. Increasing level of debt stock to GSDP ratio indicates that the States resorted to borrowing every year to meet the revenue deficit gap and capital expenditure. In the year 2006-07, 16 out of 29 States were within the TFC norm of 3% of Fiscal Deficit to GSDP, ahead of targeted date, but sustaining this level will be a challenge for the reasons mentioned above. In the year 2006-07, 22 out of 29 States were in primary surplus on account of low fiscal deficit and revenue surplus position, an improvement in comparison with earlier years. Interest payment being a vicious circle of revenue deficit, fiscal deficit and debt stock, is expected to worsen although in the year 2006-07, 16 out of 29 States were within 15% norm ahead of targeted date. As regards debt stock to GSDP ratio, in the year 2006-07, 24 out of 29 States were in above the 30.8% norm of Twelfth Finance Commission. However, Andhra Pradesh, Bihar, Goa, Gujarat, Himachal Pradesh, Madhya Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Orissa, Punjab, Rajasthan, Sikkim Tripura, Uttaranchal, Uttar Pradesh and West Bengal are not likely to achieve this norm by 2009- 10 as the current ratio in the year 2006-07 being very high.

KEYWORDS: Fiscal Deficit, Revenue Deficit, Primary Deficit, Debt Stock, GSDP. ______

INTRODUCTION

Managing public finances is a major challenge in the process of governance. Growing public expenditure has been continuously exerting pressure on the State Governments to maintain fiscal balance. There is wide variation in the fiscal position of different States in India. Revenue deficit, fiscal deficit, primary deficit, debt serving and debt stock are the important fiscal indicators that determine fiscal health of a State. The Twelfth Finance Commission in its report covering the award period 2005-10 has made significant recommendations to improve fiscal position of State and Central Governments. Enacting of Fiscal Responsibility and Budget Management (FRBM) legislation is an important step adopted by the State and Central

Governments in this direction. So far all the State Governments except Sikkim and West Bengal www.zenithresearch.org.in

have enacted this legislation stipulating various fiscal targets to be achieved with time frame.

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The FRBM also envisages preparing Medium Term Fiscal Plan by the State Governments by defining priorities, policies and rolling targets for different fiscal parameters. Incidentally, introduction of Value Added Tax in India also took place from 1-4-2005, a year before the beginning of TFC award period. All the States have implemented VAT in lieu of State sales tax, Uttar Pradesh being the last State to implement from 1-1-2008. Implementation of VAT has augmented the revenue collection of the State Governments substantially.

An attempt is made in this paper to examine the fiscal position of different States in India at different points of time viz. 1990-91, 1995-96, 2000-01 and 2006-07.

CONCEPTS AND DEFINITIONS

There is no single criterion to measure the resource gap in the Government finances. The choice of a particular measure is, therefore, purpose specific. In the context of Indian public finance, the traditional approach while measuring the resource gap takes into consideration revenue account gap, capital account gap and overall gap. Of late, there has been a frequent mention of the concept of gross fiscal deficit (GFD) by researchers while analyzing the finances of the State Governments; one variant of GFD viz., primary deficit, which is analytically useful to examine the current operations of the Government finances, has been introduced in Indian public finance. The different measures of deficit (resource gap) are set out below.

(a) Revenue Deficit (RD) denotes the difference between revenue receipts and revenue expenditure. Revenue Account Gap = Revenue Deficit (RD) = Revenue Receipts (RR) – Revenue Expenditure(RE)

(b) Capital Deficit denotes the difference between capital receipts and capital disbursements. Capital Account Gap = Capital Account Deficit (CAD) = Capital Receipts (CR) –Capital Disbursements (CD).

(c) Conventional deficit (budgetary deficit or overall deficit) is the difference between all receipts and expenditure, both revenue and capital.

Overall Gap = RD+CAD = (RR-RE) + (CR-CD) = [(RR+CR) – (RE+CD)]

(d) Gross Fiscal Deficit (GFD) is the difference between aggregate disbursements net of debt repayments and recovery of loans and revenue receipts and non-debt capital receipts. Gross Fiscal Deficit (GFD)

= RE + [CD-(Discharge of Internal Debt (DID) + Repayment of Loans to Centre (RLC) + Recoveries of Loans & Advances (RLA)] – RR

= RE + [Capital Outlay (CO) + Loans & Advances by States (LAS) + DID+RLC –(DID

+RLC+RLA)] - RR

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= (RE-RR)+[CO+(LAS-RLA)+(DID-DID)+(RLC-RLC)] = RD+CO+ Net Lending (NL)

(e) Net Fiscal Deficit (NFD) is the gross fiscal deficit less net lending of the State Governments. Net Fiscal Deficit (NFD) = GFD – (LAS-RLA)

(f) Gross Primary Deficit (GPD) is defined as GFD minus interest payments. Primary Deficit (PD) = GFD – Interest Payment (IP)

(g) Primary revenue balance denotes revenue deficit minus interest payments. Primary Revenue Balance (PRB) = RD – IP

As absolute figures among different States are not comparable, the standard way of comparing them is in the form of ratio normally to Gross State Domestic Product. Accordingly, absolute figures have been converted in to ratios for the purpose of comparison and analysis.

(I) REVENUE DEFICIT

The most desirable fiscal position any State likes to maintain is revenue surplus. This will enable the State to use its revenue surplus towards creation of assets as capital expenditure exerting less pressure on borrowings.

It is evident from table 1 that in the year 1990-91, 18 out of 25 States were in revenue deficit. In the year 1995-96, 16 of 26 States were in revenue deficit. It appears that due to implementation of Fifth Central Pay Commission scales and also State Pay Commission Scales the situation worsened again and in the year 2000-01, 23 out of 28 States were in revenue deficit. However, due to introduction of Value Added Tax from 1-4-2005 and on account of higher level of devolution in central taxes as recommended by the Twelfth Finance Commission for award period 2005-10, the revenue receipt position in the States improved significantly from 2005-06. Thus, it is evident from table 1 that in the year 2006-07, only 4 out of 29 States were in revenue

deficit.

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TABLE 1: RATIO OF REVENUE DEFICIT TO GROSS STATE DOMESTIC PRODUCT (PER CENT)

Sl.No. State RD/GSDP

1990-91 1995-96 2000-01 2006-07

1 Andhra Pradesh 0.46 0.93 2.57 -1.04

2 Arunachal Pradesh -19.70 -25.41 -2.91 -20.44

3 Assam 1.35 1.03 2.48 -3.47

4 Bihar 2.14 4.41 6.30 -2.52

5 Chattishgarh - - -1.10 -4.12

6 Goa -0.57 -0.99 2.94 -0.97

7 Gujarat 2.51 0.31 5.81 -0.95

8 Haryana 0.14 1.43 1.82 -1.73

9 Himachal Pradesh 3.37 6.08 24.54 -0.67

10 Jammu and Kashmir 3.14 -9.15 8.53 -6.59

11 Jarkhand - - - 1.74

12 Karnataka 0.34 -0.11 1.78 -2.21

13 Kerala 2.99 1.04 4.51 1.85

14 Madhya Pradesh 0.66 1.00 1.79 -2.60

15 Maharashtra 0.08 0.39 3.28 -0.16

16 Manipur -10.78 -4.48 2.96 -8.38

17 Meghalaya -4.74 -5.19 -1.41 -3.38

18 Mizoram -46.07 -6.65 10.93 -8.44

19 Nagaland 0.79 3.54 0.01 -9.70

20 Orissa 0.18 2.98 4.96 -2.48

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21 Punjab 2.88 1.17 3.54 1.92

22 Rajasthan -0.81 1.48 3.33 -0.55

23 Sikkim -13.42 -11.54 -10.23 -11.06

24 Tamil Nadu 1.77 0.40 2.44 -1.01

25 Tripura 0.16 -6.56 1.82 -8.28

26 Uttaranchal - - -0.09 -3.02

27 Uttar Pradesh 2.21 2.20 3.63 -2.08

28 West Bengal 2.93 1.69 5.42 4.03

29 NCT Delhi - -1.48 -2.79 -4.96

(-) indicates ‘surplus’

The Twelfth Finance Commission has recommended that the State’s should achieve ‘Zero’ revenue deficit by the year 2008-09. Interestingly, 25 out of 29 States achieved the target of ‘Zero’ revenue deficit much ahead of target date set by the Twelfth Finance Commission. However, the TFC has desired that after attaining the ‘Zero’ revenue deficit, the States have to strive to sustain the same for a longer period. This is basically a challenge for the States due to implementation of Sixth Pay Commission pay scales by the Government of India recently, which is being followed by many State Governments. There will also be pressure on the States that are not following central pay commission but having their own pay commission to expedite their pay hike.

It is evident from table 1 that 4 States viz. Arunachal Pradesh, Meghalaya, Sikkim and NCT Delhi were in revenue surplus in all the four years. As North Eastern States receive higher level of central grants being special category States they mostly remain in revenue surplus. The ratio of revenue deficit/surplus to GSDP is very high in case of North Eastern States may be due to the fact that there are no major economic drivers to boost the State income. Kerala, Punjab and West

Bengal were in revenue deficit during all the four years.

It is important to note that pay hike of government employees will increase the revenue expenditure without having any improvement in their productivity. Besides, creation of new posts, increasing pension liability, interest payment burden etc will increase the revenue expenditure on continuing basis. Thus, the States have to either go in for additional resource mobilization through taxation and user charges or resort to higher level of borrowings to meet the increased expenditure. The State’s do have the option of taking various revenue expenditure

curtailment measures, which is generally a least preferred option.

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(II) FISCAL DEFICIT

Today, performance of elected representatives is seen more in terms of development activities brought by them in their constituencies. Therefore, every elected representative makes efforts to bring in more and more infrastructure development in his/her constituency and also tries to give maximum benefit of beneficiary oriented Government schemes to the people of his/her constituency. Therefore, State Governments try to garner more and more resources for infrastructure development. In the process, the States try to fix higher Annual Plan size every year. Though, there is a borrowing limit for each State fixed by the Ministry of Finance, Government of India in the light of FRBM, most of the time higher level of borrowing plan is allowed by the Central Planning Commission while finalizing the Annual Plan size of each State.

As regards sustainable level of fiscal deficit, there are different targets envisaged in India at different points of time. For instance, the Eleventh Finance Commission (2000-05) had envisaged a fiscal deficit of 6.5 per cent of GDP as the desirable target to be achieved by 2004- 05. The Tenth Five Year Plan (2002-07) had set a target of average fiscal deficit as 6.8 per cent of GDP during the plan period. The Government of India in its Fiscal Responsibility and Budget Management (FRBM) legislation has set a target of achieving fiscal deficit as 3 per cent of GDP by the year 2008-09. The Twelfth Finance Commission (2005-10) has envisaged a fiscal deficit of 3% of GSDP to be achieved by 2008-09. Recently, the Government of India has further relaxed this norm to 3.5% and advised the State Governments to amend the FRBM legislation accordingly.

It is evident from table 2 that in most of the States there is decline in fiscal deficit. Interestingly in the year 2006-07, 6 States viz. Arunachal Pradesh, Assam, Chattisgarh, Haryana, Orissa and Tripura were in fiscal surplus. Out of 29 States, in case of 13 States the ratio of Fiscal Deficit to GSDP was in above 3% norm of Twelfth Finance Commission. The remaining 16 States had achieved the 3% target ahead of target date mainly due to VAT and higher level of devolution in central taxes as mentioned earlier. However, the State’s may have to struggle to sustain this level with the implementation of pay commission scales to Government employees and the impact of

recession in the economy.

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TABLE 2: RATIO OF FISCAL DEFICIT TO GROSS STATE DOMESTIC PRODUCT (PER CENT)

Sl.No. State FD/GSDP

1990-91 1995-96 2000-01 2006-07

1 Andhra Pradesh 2.79 3.03 5.21 2.10

2 Arunachal Pradesh 5.08 4.10 11.78 -3.12

3 Assam 5.34 3.36 4.89 -1.11

4 Bihar 6.03 6.42 10.40 3.05

5 Chattishgarh - - -0.19 -0.05

6 Goa 7.65 2.93 5.36 3.35

7 Gujarat 6.42 2.43 7.36 3.04

8 Haryana 2.83 4.06 6.79 -1.28

9 Himachal Pradesh 9.90 21.08 34.02 3.25

10 Jammu and Kashmir 22.74 1.19 14.69 5.04

11 Jarkhand - - - 8.39

12 Karnataka 2.40 2.59 4.04 2.49

13 Kerala 5.66 3.36 5.56 2.68

14 Madhya Pradesh 3.35 3.41 3.68 2.15

15 Maharashtra 2.50 2.63 3.76 2.27

16 Manipur 4.82 6.44 8.03 8.89

17 Meghalaya 4.63 2.60 6.70 1.08

18 Mizoram -27.68 7.55 21.22 6.40

19 Nagalanrd 15.56 12.74 9.75 2.75

20 Orissa 5.65 5.15 8.57 -0.90

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21 Punjab 6.58 3.53 5.91 4.81

22 Rajasthan 2.63 5.44 5.46 3.39

23 Sikkim 8.63 7.71 5.20 4.69

24 Tamil Nadu 3.59 1.61 3.60 1.51

25 Tripura 8.30 1.48 8.45 -1.27

26 Uttaranchal - - 1.11 2.98

27 Uttar Pradesh 5.53 4.12 5.88 4.07

28 West Bengal 4.69 3.65 7.81 5.53

29 NCT Delhi - 1.96 2.57 0.46

(-) indicates ‘surplus’

(III) PRIMARY DEFICIT

Primary balance (deficit or surplus) is an important indicator of debt accumulation. It is considered to be a true reflection of fiscal performance in that it separates the committed interest payment on the Government’s past borrowings. Higher level of primary deficit indicates that the contracting of new loans is increasing which accelerates accumulation of debt. If the States are in primary surplus then it can be inferred that in that year the fiscal deficit of the State will also be low. It may be seen that in the year 1990-91, out of 25 States except Mizoram all the States were in primary deficit. Although, there is no defined bench mark to be achieved as ratio of GSDP, it is evident that in the year 1990-91, Goa, Himachal, Jammu & Kashmir and Nagaland had a very high Primary Deficit to GSDP ratio of over 5%. However, in the year 1995-96, six out of 26 States viz. Arunachal Pradesh, Bihar, Jammu & Kashmir, Punjab, Tamil Nadu and Tripura were in primary surplus. In most of the remaining States the Primary Deficit to GSDP ratio remained low in 1995-96. In the year 2000-01, although two out 28 States viz. Chattisgarh and Sikkim were in primary surplus, in most of the remaining States the Primary Deficit to GSDP ratio had worsened. However, the position was comfortable in the year 2006-07, as 22 out of 29 States were in primary surplus on account of low fiscal deficit and revenue surplus position as explained above.

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TABLE 3: RATIO OF PRIMARY DEFICIT TO GROSS STATE DOMESTIC PRODUCT (PER CENT)

Sl.No. State PD/GSDP

1990-91 1995-96 2000-01 2006-07

1 Andhra Pradesh 1.09 1.11 2.51 -0.61

2 Arunachal Pradesh 2.01 -0.27 5.01 -8.65

3 Assam 2.87 0.85 2.14 -3.49

4 Bihar 3.18 -0.40 5.34 -0.40

5 Chattishgarh - - -1.36 -1.65

6 Goa 5.26 0.22 2.61 0.41

7 Gujarat 4.52 0.58 4.48 -0.69

8 Haryana 1.05 1.77 2.32 -3.74

9 Himachal Pradesh 5.98 9.55 19.30 -2.64

10 Jammu and Kashmir 15.20 -4.25 8.96 0.90

11 Jarkhand - - - 7.15

12 Karnataka 0.53 0.73 1.75 0.24

13 Kerala 3.25 0.98 2.32 -0.26

14 Madhya Pradesh 1.66 0.99 0.41 -0.99

15 Maharashtra 1.13 1.33 1.57 -0.02

16 Manipur 1.11 2.89 1.96 3.48

17 Meghalaya 2.62 0.08 3.65 -1.84

18 Mizoram -37.42 3.82 15.49 -1.27

19 Nagaland 8.93 8.36 4.48 -2.19

20 Orissa 2.31 1.72 2.68 -4.40

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21 Punjab 4.82 -0.32 2.36 0.25

22 Rajasthan 0.22 2.83 1.23 -1.48

23 Sikkim 4.19 2.13 -2.90 -0.87

24 Tamil Nadu 2.14 -0.05 1.38 -0.59

25 Tripura 4.60 -2.39 4.16 -5.05

26 Uttaranchal - - 0.32 -0.26

27 Uttar Pradesh 3.22 0.99 1.57 -0.37

28 West Bengal 2.89 1.46 4.05 0.27

29 NCT Delhi - 1.63 1.42 -2.01

(-) indicates ‘surplus’

(IV) INTEREST PAYMENT

Interest payment is a vicious circle of revenue deficit, fiscal deficit and debt stock. As revenue deficit increases the tendency of Governments to borrow more to meet the revenue deficit gap and capital expenditure for asset creation would also increase. Thus, the debt accumulation takes place at a much faster pace which in turn increases the interest payment burden. Increasing interest payment burden will further increase the revenue expenditure of the State and the vicious circle continues. The ratio of interest payment to total revenue receipt is taken as an important measure to assess the interest payment sustainability but there is no definite norm of sustainability. For instance, the Eleventh Finance Commission (EFC) has observed that the ratio of interest payment to total revenue receipt should be about 18 per cent and thus recommended that the States should consider this as their medium term objective. The Ministry of Finance, Government of India earlier used to classify States as debt stressed or not, based on a cut off IP/RR ratio of 20 %. However, the Twelfth Finance Commission in its suggested path of fiscal restructuring has recommended that the interest payment to total revenue receipt ratio be

gradually brought down to 15 per cent by the end of the award period i.e. 2009-10.

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TABLE 4: RATIO OF INTEREST PAYMENT TO TOTAL REVENUE RECEIPT (PER CENT)

Sl.No. State IP/TRR

1990-91 1995-96 2000-01 2006-07

1 Andhra Pradesh 11.02 15.48 19.47 16.45

2 Arunachal Pradesh 4.36 5.62 12.57 7.25

3 Assam 14.78 14.44 15.35 11.09

4 Bihar 17.44 22.60 20.85 14.80

5 Chattishgarh - - 15.30 8.96

6 Goa 10.62 10.99 14.31 16.36

7 Gujarat 15.73 15.54 19.90 22.36

8 Haryana 12.65 11.08 22.69 12.62

9 Himachal Pradesh 13.70 16.27 26.21 21.30

10 Jammu and Kashmir 18.92 13.52 15.56 10.03

11 Jarkhand - - - 7.66

12 Karnataka 11.19 12.26 16.11 11.27

13 Kerala 14.17 17.04 25.86 23.04

14 Madhya Pradesh 11.28 13.39 17.64 15.68

15 Maharashtra 10.13 12.41 17.67 18.74

16 Manipur 7.71 8.33 16.95 10.09

17 Meghalaya 5.07 7.37 10.04 9.48

18 Mizoram 7.19 5.56 12.22 11.63

19 Nagaland 10.44 10.17 13.66 10.10

20 Orissa 16.80 23.89 33.13 17.68

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21 Punjab 16.82 28.73 24.99 24.72

22 Rajasthan 13.67 16.17 26.93 22.28

23 Sikkim 6.52 3.08 9.12 5.43

24 Tamil Nadu 8.95 12.20 17.05 13.46

25 Tripura 7.71 9.46 13.80 11.64

26 Uttaranchal - - 10.53 13.07

27 Uttar Pradesh 15.39 21.85 30.13 17.29

28 West Bengal 15.26 21.91 36.15 42.12

29 NCT Delhi - 4.09 13.17 18.12

It is evident from table 4 that in the year 1990-91, all the 25 States except Jammu & Kashmir had interest payment to total revenue ratio of below 18% considering EFC norm as bench mark. How ever, in the year 1995-96, 5 out of 26 States viz. Bihar, Orissa, Punjab, Uttar Pradesh and West Bengal were in above 18% norm.

In the year 2000-01, the situation worsened in most of States and the ratio increased. In many States though the ratio worsened they were within the norm of 18%. But, 11 out of 28 States were in above 18% norm with West Bengal having the highest ratio of 36.15%. In the year 2006- 07, on account of higher growth in revenue receipt due to VAT and higher central tax devolution, the ratio improved in many States. Still, 8 out of 29 States were in above 18% norm and in West Bengal the ratio further worsened to 42.12%. As regards TFC norm of 15% to be achieved by 2009-10, it may be noted that in the year 2006-07, 16 out of 29 States were within 15% norm ahead of targeted date. However, the States have to sustain this level for a longer period for fiscal sustainability.

(V) DEBT STOCK

The debt stock of a State Government comprises internal debt of the State Government, loans from Government of India, external loans and general provident fund of Government employees. However, this does not include off-budget borrowing by the State Owned PSUs and autonomous institutions, which are normally termed as contingent liabilities of the Government. As both State and Central Governments are contracting new loans every year the debt stock is on the increase. Similar is the situation worldwide including developed economies. For instance, Japan's debt position is already almost double its GDP size, while the national debt in the US and UK are expected to soon equal or exceed their respective GDPs. In comparison, the Indian government's

total debt would still remain well below the country's GDP size, although it is also increasing due www.zenithresearch.org.in

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The studies of Seshan (1987), Report of the Controller and Auditor General of India (1988) and Rangarajan, Basu, Jadhav (1992) expressed trepidation over the increasing levels of domestic debt in India. Chelliah (1991) suggested reducing the primary deficit to 2.5 per cent of GDP by the year 2000-01 to slow down the growth of public debt and contain the total deficit at around 8 percent of GDP. While assessing the sustainability of Central Government finances, Pattnaik (1996) observed that towards attaining fiscal sustainability the debt-GDP ratio be brought down to 50 percent by the end of fiscal 2000 from the 1996-97 level of 54 percent. Rajaraman and Mukhopadhyay (2000) observed that in order to stabilize the domestic debt to GDP ratio at 40 per cent, the permissible primary deficit would be 1.6 percent of GDP aggregating across Central and State Governments. The TFC (2004) has desired that the States should achieve a debt to GDP ratio of 30.8% to become sustainable.

TABLE 5: RATIO OF DEBT STOCK TO GSDP (PER CENT)

Sl.No. State DS/GSDP

1990-91 1995-96 2000-01 2006-07

1 Andhra Pradesh 19.48 18.99 25.44 40.92

2 Arunachal Pradesh 66.93 65.05 54.57 77.82

3 Assam 39.87 28.13 32.40 30.37

4 Bihar 34.93 67.67 72.00 50.38

5 Chattishgarh - - - 21.75

6 Goa 67.30 35.16 29.33 39.98

7 Gujarat 22.25 15.48 27.46 48.44

8 Haryana 20.69 23.80 39.50 31.12

9 Himachal Pradesh 46.07 123.05 145.17 63.76

10 Jammu and Kashmir 122.94 56.48 59.39 68.11

11 Jarkhand - - - 34.08

12 Karnataka 19.88 17.60 21.20 28.99 www.zenithresearch.org.in

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13 Kerala 31.51 26.14 34.27 36.69

14 Madhya Pradesh 21.41 25.75 35.65 42.10

15 Maharashtra 15.29 11.58 18.71 31.37

16 Manipur 43.12 34.91 57.95 83.02

17 Meghalaya 23.26 21.65 28.08 40.51

18 Mizoram 35.78 44.50 62.18 110.99

19 Nagaland 66.87 51.85 51.86 59.13

20 Orissa 41.55 34.61 56.72 45.68

21 Punjab 36.33 35.30 42.16 55.95

22 Rajasthan 27.70 25.77 38.79 60.86

23 Sikkim 61.11 53.27 75.28 67.78

24 Tamil Nadu 17.55 16.05 20.33 25.88

25 Tripura 46.17 37.02 41.94 54.14

26 Uttaranchal - - - 44.77

27 Uttar Pradesh 27.38 28.21 38.37 71.07

28 West Bengal 22.62 20.85 33.78 59.72

29 NCT Delhi - 5.26 11.23 28.57

The ratio of debt stock to GDP ratio in different States is given in table 5. If the TFC norm of 30.8% is taken as bench mark it is evident that in the year 1990-91, 14 out of 25 States were not within the norm. The ratio in respect of Arunachal Pradesh, Goa, Jammu & Kashmir, Nagaland and Sikkim was alarmingly high. In the year 1995-96, 12 out of 26 States were in above 30.8% norm. In case of Goa and Jammu & Kashmir the ratio improved significantly and in case of Nagaland and Sikkim the ratio declined to some extent. But, in case of Bihar and Himachal Pradesh the ratio worsened considerably in comparison with 1990-91. The ratio worsened further in the year 2000-01, as 18 out of 26 States were not within the norm of 30.8%. It is evident from table 5 that in the year 2006-07, 24 out of 29 States were in above the 30.8% norm of Twelfth Finance Commission. It may be noted that Andhra Pradesh, Bihar, Goa, Gujarat, Himachal

Pradesh, Madhya Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Orissa, Punjab, Rajasthan, www.zenithresearch.org.in

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Sikkim Tripura, Uttaranchal, Uttar Pradesh and West Bengal are not likely to achieve this norm by 2009-10 as the current ratio in the year 2006-07 being very high.

REFERENCES

1. Assessing Sustainability, International Monetary Fund, Policy Development and Review Department, May 28, 2002.

2. Guidelines for Fiscal Adjustment, Fiscal Affairs Department, International Monetary Fund, Washington, D.C.

3. Handbook of Statistics on State Government Finances, RBI 2004.

4. Rajaraman, Bhide & Pattnaik, A Study of Debt Sustainability at State Level in India, Reserve Bank of India, Mumbai, January 2005.

5. Report of the Eleventh Finance Commission (2000-05), Government of India.

6. Report of the Twelfth Finance Commission (2005-10), Government of India.

7. Report of the Working Group on States’ Resources for the Eleventh Five Year Plan (2007- 2012), July 2007.

8. State Finances – A Study of Budgets of 2006-07, Reserve Bank of India, November 2006

9. State Finances, A study of Budgets of 2006-07, RBI, November 2006.

10. State Finances, A study of Budgets of 2007-08, RBI, November 2007.

11. State Finances, A study of Budgets of 2008-09, RBI, December 2008.

12. The Economics Times, dated 21-6-2009.

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A STUDY ON IMPACT OF VISUAL MEDIA ADVERTISEMENTS ON WOMEN CONSUMERS BUYING BEHAVIOUR IN CHENNAI CITY

T. RAVIKUMAR*

*Assistant Professor, ISSM, Chennai -97.

ABSTRACT

Advertising has been emerging great prominence as the potent tool on the marketing of goods and services by both the industrial and non- industrialized nations. It is regarded more as an investment than expenditure in the developing nations too. It has now been acknowledged as a major business function in India. The attitude towards advertising has been ever changing at a rapid pace with diversifications and dynamism. The advertiser, the agency, the media and the consumers view advertising according to their desires, expectation and opportunities. Hence advertising is no longer viewed as a secondary business activity, but has come to be accepted as a supportive service and a contributory input for diversified growth. The goals of advertising have been changed, modified, adjusted and re-defined over the years in India. This article makes on attempt to sudy about impact of visual media advertisements on women consumers buying behaviour in Chennai city in this LPG era. ______

INTRODUCTION

Consumption is the soul and the purpose of all production. So peter ducker was apt in saying, “it is consumer who determines what the business is”. A consumer is one who does some physical activities and deliberates to take decisions concerning purchase and to dispose off on to evaluate products and services. Consumer is “an individual who purchases products or services for his own or his family‟s personal use”.

Consumer behavior reflects the totality of consumers‟ decisions with respect to acquisition, consumption and disposition of goods, services, time and idea by (human) decision making units (over time). It also includes whether, why, when, where, how, how much and how often and how long consumer will use or dispose of an offering. Consumer purchasing behavior covers “all activities and decisions which relate to choosing products, purchasing and post- purchasing use”.

The markets are consumer driven these days and the target of all marketing activities is consumers. To understand the consumers, are not easy jobs as his behavior is mostly unique and unpredictable. This has made the firms to step in to the shoes of the consumers to understand their selection and purchase of products and services from their point view. Marketers need to identify the end users of product and services and frame marketing plans than considering the

wholesalers and retailers who actually are the intermediaries in the process of purchase. www.zenithresearch.org.in

Marketers, therefore, should consider the consumers and then develop their plans of action. Here

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The consumers differ from each other by age, income, life style, character, sex etc and all these influence their purchasing decisions. The consumer is not as trusting, loyal and malleable than in the past. Having and preserving their independence and individuality is highly valued by today‟s consumers, even more than being in conformity with social norms.

Veiko Jurisson professor in Audentes University in Estonia wrote in 2006 that Today‟s developed countries‟ consumers have no problems obtaining necessity products; there is over abundance of things. Therefore, more and more meaningful purchases.

Jurrison says that two principle processes have taken place in today‟s information based society; globalization and individualization. Consumers‟ significantly risen knowledge forces all producers around the world to become more flexible in order to live up to consumers‟ expectation. Products‟ dictatorship is being replaced with consumers‟ pressure to diversify the choices and make then as individual as possible.

The process of consumption has long been associated with sex and gender, thus, it comes no surprise that consumer researchers often examine the effects of these variables on consumer behavior. Men and women are different consumers. Paco Underhill who has researched retail shopping over 20 years wrote in his book “why we buy: The science of shopping”, Men are less predictable than women. He says that, for example, men move faster between the shelves of retail shop and as a rule they don‟t like to ask personnel for help. Underhill pointed out some of research statistics: 65 % of men who try something on also buy it; only 25% of women do the same. 86% of women look at product‟s price tag dewing the purchasing process, whereas only 72% of men do that. Men are more easily influenced by salient displays and children‟s requests (men can‟t say “no” to children). From this, it is clear that men are emotional in purchase while women are rational in it. Therefore, the present study has researched “consumer behavior and attitudinal preference of women towards advertisement”.

Attitude is an important concept in research on marketing. Fishbone defined an attitude as “a learned predisposition of human being”. Based on this predisposition, “an individual would respond to an object (or an idea) or a number of things (or opinions)”. Kotler stated that “an attitude is a person‟s enduring favorable or unfavorable evaluations, emotional feelings and

action tendencies toward some object or idea”. The relationships between attitude, intention and behavior have been studied and confirmed in numerous studies.

Advertising is a measure of growth of civilization and an indication of the striving of the human race for betterment and perfection. The explicit function of advertising is to make the potential audience aware of the existence of the product, service or idea which could help them fulfill their self needs and spell out the differential benefit in a competitive situation. It is also an instrument for developing the basic motivations for creating resources for buying goods and

services or generating favorable conditions for the acceptance of an idea.

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STATEMENT OF THE PROBLEM

Advertising has been emerging great prominence as the potent tool on the marketing of goods and services by both the industrial and non- industrialized nations. It is regarded more as an investment than expenditure in the developing nations too. It has now been acknowledged as a major business function in India. The attitude towards advertising has been ever changing at a rapid pace with diversifications and dynamism. The advertiser, the agency, the media and the consumers view advertising according to their desires, expectation and opportunities. Hence advertising is no longer viewed as a secondary business activity, but has come to be accepted as a supportive service and a contributory input for diversified growth. The goals of advertising have been changed, modified, adjusted and re-defined over the years in India.

Now a day, the economic, social, cultural, political and business environments of the country has tremendously changed and these changes have brought about a significant change in the attitude of the people towards advertising. Advertising is being used not only for economic and business gains but also for political, social, cultural, religious and governmental motives and objectives. The parameters for judging advertising have witnessed a sharp change in India and the quality and performance of advertising agencies in our country have also improved. Gradually, advertising has been maturing itself as a profession in the country. This has influenced significantly the psychology, sociology and economics of the advertiser, the agency and the media. Thus, advertising in India, which was considered as an unnecessary evil during the 1960‟s, had become a necessary evil by 1980‟s and is now being viewed as an absolute necessary.

In India, growth of advertising industry is phenomenal. In 1974, the amount spent in India for advertising was as low as Rs. 75 crore. In 1990, it jumped to Rs. 1504 crore and in 2003, it reached the height of Rs.15000 crore, which indicates the increased relevance of advertising in Indian economy.

Advertising in India has been gaining sophistication during recent years. Besides, there has been a considerable increase in sales promotion activities of incentive merchandising schemes which have increased considerably in the last decade. Most of these were naturally for low prices mass consumer non- durables such as Soaps, toiletries, tooth pastes, herbal products, curry powders, confectionaries, cigarettes etc. Readymade garments, ready to eat items, two wheelers television sets, washing machines, mixies, fridges, fans, ovens have also become as popular in India consequent upon the emergence of T.V as a powerful media of advertising.

From a scenario in the seventies where options were limited and the print medium was the single most dominant medium, there has been a sudden proliferation of options in 1980‟s with T.V. overriding all other media in the country. In 1984, press constituted the single largest media of advertising which accounted for 77 percent of the total media in the country while the relative shares of T.V, outdoor media, radio and cinema represented 7 percent, 6 percent, 5 percent and 4 percent respectively. But, by 1989, the relative shares of press, radio and cinema has declined to 67 percent, 3 percent and 1 percent respectively. During the period, the relative share of T.V, in Indian media, has showed a tremendous increase from 7 percent to 19 percent www.zenithresearch.org.in

and the outdoor media to 10 percent of the total.

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The boom in electronic media commenced with the introduction of colour transmission of television in 1984 to coincide with the Asian games hosted by India. Major developments like the growth in Doordarshan‟s network, Hindi films being legalized on the video circuit in 1987 and the invasion of satellite TVs in to the Indian media scene since 1991 have spurred this boom. Consequently, a dramatic increase in home entertainment options was seen in the Indian society in general and in Tamilnadu particularly. Most of the people especially women used to spend a substantial part of their leisure hours in front of Television. Moreover, there is a steady increase in usage of internet due to information technology explosion by the end of 1990‟s. Consequent upon these factors, the lifestyles, paten of consumption, tastes and preference, purchasing behavior etc. of an average Indian have also been undergoing a drastic change and are being dictated at present by television programming advertisements and online (internet) advertisements. Therefore, it is essential to study about impact of visual media advertisements on consumer behavior and attitudinal preference of women.

OBJECTIVES OF THE STUDY

The objectives of this study include

1.To study about attitudes of women consumers in Chennai city towards visual media advertisements.

2.To analyze impact of visual media advertisements on consumer buying behavior of women in Chennai city.

3. To study about consumer preferences of women in Chennai city

REVIEW OF LITERATURE

In the marketing context , the term consumer refers not only to the act of purchase itself , but also to patterns of aggregate buying which include pre- purchase and post purchase activities . Pre – purchase activity might consist of the growing awareness of a need or want, and a search for and evaluation of information about the products and brands that might satisfy it. Post - purchase activities include the evaluation of the purchased item in use and reduction of any anxiety which accompanies the purchase of expensive and infrequently bought items. Each of these has implications for purchase and repurchase and they are amenable in differing degrees to

market influence.

Engel, et al define consumer behavior as “those acts of individuals directly involved in obtaining, using and disposing of economic goods and services, including the decision processes that precede and determine these acts”.

This section of this study reviews available review of literature on consumer behavior and impact of visual media advertisements to find the research gap.

In this chapter, a detailed literature survey on consumer behavior is presented by

classifying consumer behavioral patterns under five heads; www.zenithresearch.org.in

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* Consumer preferences

* Consumer attitude

Further, literature survey on advertisement is reviewed classifying those under four heads;

* Advertisements

* Visual media advertisements

CONSUMER PREFERENCE: CONCEPT AND IMPORTANCE

Consumer preferences are defined as the subjective (individual) tastes, as measured by utility, of various bundles of goods. They permit the consumer to rank these bundles of goods according to the levels of utility they give the consumer. Preferences are independent of income and prices. Ability to purchase goods does not determine a consumer‟s likes or dislikes. One can have a preference for Porsches over Fords but only have the financial means to drive a Ford.

Consumer preference is used primarily to mean an option that has the greatest anticipated value among a number of options. This is an economic definition and doesn‟t tap in to wishes or dreams, but for all practical purposes is an appropriate definition. Preference and acceptance can in certain circumstances mean the same thing, but, it is useful to keep the distinction in mind with preference tending to indicate choices among neutral or more valued options while acceptance indicating a willingness to tolerate the status quo or some less desirable option.

Therefore, to design and evaluate new product or service strategies, managers require an understanding of how consumer form preferences and how they will behave if a new product or service is launched. Accurate predictions on consumer response coupled with models of production costs, tax rates, cash flow and product line considerations can lead to more successful products and can reduce the risk of failure.

CONSUMER ATTITUDE

In general, attitudes are mental states used by individuals to structure the way they perceive their environment and guide the way they respond it. As it is known from theory of Reasoned Action and theory of planned Behavior, attitudes have a considerable impact on behavior. A major influencing factor on attitude toward an advertisement is the general attitude toward the advertising medium. Consumer attitudes consist of three components that is cognition, affect and conation.

According to Fishbein‟s attitude theory, a stimulus, such as visual media advertisements of a particular brand, has an effect on a Consumer‟s belief system which in turn influences and leads to the consumer developing a specific attitude towards the advertised brand. The attitude which a consumer has with regards to a brand has an impact on a consumer‟s intention to

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Attitude towards advertising in general were expected to influence the success of any particular advertising. It seemed reasonable to anticipate a person‟s predisposition to respond consistently towards advertising in general, either favorable or unfavorable, world mediate the effectiveness of any given ad. Interest in the attitudes towards advertising in general construct gained momentum as researchers showed it was an important underlying determinant of attitude towards the ad.

An advertisement affects advertising effectiveness since it was found to be an important antecedent of brand attitudes. Over the years, researchers have tried to measure attitudes towards advertising among adult consumers and among student samples and these attitudes have been the focus of comparisons on a cross- cultural basis. Until the early 1960s, studies measured general advertising attitudes as an overall favorability or unfavorability factor. Bauer and Greyser suggested advertising had important economic and social effects, and developed a set of belief items related to positive and negative outcomes of advertising in these specific areas. Other researchers expanded the belief inventory to include perceptions related to other aspects sexual content and use of women, ethics, deception and falsehood.

During 1990s, thought listings in reaction the word “ advertising “ were categorized in to areas such as function , affective response , practice , industry and user related , to measure attitudes towards adverting in general. Mihal used customized rating scales to measure attitudes specifically towards television advertising.

ADVERTISING

Advertising is an important marketing communication strategy, in marketing mix. It is an external stimulus that arouses dormant needs. It results in „inner tension‟ among prospective buyers. Ultimately, It leads to different stages of decision-making process namely identification of alternatives, evaluation of alternatives, purchase behavior. Generally speaking, advertising fills “consumer information gap”. But the specific meaning attributed to advertising should be viewed from different angles.

According to David Ogilvy, who popularized the concept of „Brand Image‟ in 1953 and promoted world-renowned advertising agency O&M (Ogilvy &Mather), every ad should be thought of as a contribution to the brand image. In this sense, advertising is basically a brand

exercise.

From the communication point of view, advertising is the art of moving an idea from one man‟s head into the head of another. The single crucial reason that advertising does not work is that in specific instances the information it conveys never reaches the consumer at all, or is judged by the consumer to be redundant, meaningless or irrelevant. In fact, advertising is communication that provides generally useful, relevant and pertinent information upon which the consumer either acts immediately or stores for later reference, application and use.

Form the viewpoint of sending and receiving message, advertising is a fraction of the

incoming messages that the individual receives. Advertising messages seek to attract our www.zenithresearch.org.in

attention and to convert our allegiance to products, services and institutions, in competition both

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When compared to other communication mixes, advertising is a much cheaper way to reach target consumer since it uses mass media. Advertising can use complex visual and emotional devices to increase the persuasiveness of the message. The relevance of advertising is that it is the most effective way for reaching mass audience, creating awareness and building preferences.

In general, advertising has two objectives namely, Behavioral or action objective and sales objective. From the behavioral point of view, it is an important tool that influences the buyer behavior of consumers. It is an accepted fact that all behavior starts with motivation. Ad motivates people by arousing or stimulating their dormant needs. Ad can effectively arouse both biogenic and psychogenic needs. An intellectually planned ad can be the door opener in the decision-making process in buying.

An article titled “To succeed in advertising, believe the hype‟ highlights the impact of advertising. It reads “Advertising can create awareness”. Brand awareness alone works in 3 important ways:1) It creates the possibility of purchase 2) It helps people see a brand in the store 3) It biases people in favor of the known brand advertising can create a model people wish to identify with and imitate. Advertising can communicate new information. Advertising can suggest, and humans are suggestible being” (Thomas, 1996).

There are a set of opponents who hold that advertising is a pack of lies and a manipulation. They even go further and say that it can persuade people to buy inferior products. The existence of this cynical view aroused the interest of researcher in knowing how ads work and whether all ads work? It is an accepted fact that all ads do not work in the some direction and are not equally effective. Then, the motivation turns to probe the reasons for the success of some ads based on the psychology of advertising. Aaker et.al (1997) quotes that the competent advertising man must understand psychology. The move he knows about it, the better. He must learn that certain effects lead to certain reactions, and use that knowledge to increase results and avoid mistakes.

Of course, various factors contribute in different dimensions to the success of an advertisement. The basic principles in successful advertising are: Developing a central sales idea;

having a central sales idea, give it news; having a central sales idea, make it swing. But, according to Devoe (1956), it was through the interpretation of “make it swing” that creative ability comes to its full flow in advertising. People could develop central theme, they could give it news, but only an expert, only a skilled man , only a master could “make it swing”.

In Jerome D. Scott‟s (1943) opinion the effects on advertising outlays upon profit and liquidity are important considerations in setting outer limits for advertising. He also describes that normally a time lag occurs between advertising outlay and sale results. In his opinion the

firm‟s resources set a real limit on advertising outlay.

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Analyzing the maximum extent up to which a firm can spend on advertising. Joel Dean (1951) observes that the advertising expenditures for each product should be pushed to the point where the additional outlay equals the profit from the sales caused by the outlay.

Martin Mayer (1958) puts forward three basic concepts with regard to a good advertisement: in his opinion, an advertisement must basically be a believable one. Simple techniques, such as the use of pictures or diagrams also increase the believability of the advertisement. Repetition is another key concept in the case of advertising. He suggests that it is better to have a long series of small advertisements than one extremely large advertisement as these act as memory ticklers among the consumers. The third concept put forward by him is the concept of the impression of message. In his opinion, messages should be clear, complete and attractive.

In Roose Reeves (1967) opinions, all products are not equally advertsable. They are of the view that there are five factors, viz, the Primary demand, buying motives, hidden qualities, differential advantage and money in every marketing situation, which must be analyzed carefully to determine the advertiseability of a product.

In C.B. Mamoria and R.L. Joshi (1968) state an effective advertisement should be done strictly in the language of the customer and it should be inserted at the right time in the right place and also in the right media. Moreover the advertisement should be communicated to the people on whom it is aimed.

VISUAL MEDIA ADVERTISING

Visual media advertising is defined as “paid non – personal communication, from an identified sponsor, using visual media like television, cinema trailer, internet etc., about organization, product, service or idea, intended to persuade the audiences or spectators to purchase or take some action upon products , ideas or services”.

Television, as we know it, is broadcast to a large section of the public. As such, it is generally described and thought of a one-way, passive medium. According to Freed (2000), this very passivity was at the core of the advertising strategy of television networks.

Producers of early television programs relied on this passivity to sell advertising. They

knew that once the family had tuned in a channel and settled back on the comfortable sofa, they were likely to stay watching that channel all evening. There was no remote control yet, no channel surfing. Another point worth noting is that the role of television as an information medium has not declined significantly after the acceleration of Internet use.

According to the Benton Foundation (2000): Despite the current frenzy surrounding new media, TV is still the most watched and most trusted source of information in the US. Ninety- three percent of Americans watch a network television program in the course of a week, and 69

percent of Americans say TV is the most trusted source of information.

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Interactive digital television can be seen as the product of the convergence of computer communications and broadcast technology. Torris et al. (2000) define interactive digital television as relying on three main elements:

1) A combined set-top box that delivers digital broadcasts, pay TV and interactivity

2) Interactive services carried in the broadcast signal

3) An interactive return channel through phones or cable wires.

The interactivity element is expected not only to change the face of the technology but to foster a radical shift in viewing habits, transforming the „couch-potato viewers‟ of yesterday in full participants, totally „in charge‟ of their viewing experience.

The advent of remote controls, fragmentation of TV channels and increase in the size and number of ad slots has resulted in viewers increasingly paying even less attention to the commercials. Consequently, effective media placement decisions are becoming more important than ever before.

The internet provides the means for “interaction” between buyers and sellers to such a degree that some have suggested this is the defining characteristic of the internet. This interaction can be “human-machine,” “machine-machine,” and “human message,” among others. “Interactive Communication” refers to, for example, “human-message” interaction where the user relates to and, in some cases, modifies the message with which he/she is interacting. Clicking on a banner ad represents a low level of interaction of this nature while choosing an ending among many for an online movie represents a higher level of interactive communication with a message.

There are dramatic changes in the use of internet advertising formats. For example, banner ads gradually declined from 56 percent in 1998 to 21 percent in 2003. Sponsorships observed a similar decrease from 33 percent in 1998 to 10 percent in 2003. On the other hand, rich media gained from 2 percent in 2002 to 8 percent in 2003, and the greatest rise is for keyword search, from 1 percent in 2002 to 35 percent in 2003, becoming the leading format of internet advertising.

RESEARCH METHODOLOGY

This study involves an examination of impact of visual media advertisements on women consumers‟ buying behavior and on their attitude towards visual media advertisements. The primary data for the study was collected through well structured questionnaire from women in Chennai city. The sample size was 576. Data collected was analysed using SPSS 17 version. Various statistical tools like mean, standard deviation, one way ANOVA, t test and factor

analysis were employed.

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DATA ANALYSIS AND INTERPRETATION

ANALYSIS OF DEMOGRAPHIC CHARACTERISTICS OF WOMEN CONSUMERS

The demographic characteristics of the sample women reveal certain features which are summarised in coming paragraphs.

TABLE – 1:DEMOGRAPHIC VARIABLES OF THE RESPONDENTS

No. Of Respondents

No Particulars Percentages

I AGE

Up to 18 yrs 31 5.4

19 yrs to 40 yrs 347 60.2

41 yrs to 60 yrs 188 32.6

More than 60 yrs 10 1.7

Total 576 100

II OCCUPATION

Government employees 98 17

Private sector employees 286 49.7

Self employed 47 8.2

Professionals 89 15.5

House makers 56 9.7

Total 576 100

III EDUCATION

Up to HSC 50 8.7

UG 235 40.8

PG 237 41.1

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Professionals 54 9.4

Total 576 100

IV MONTHLY INCOME

Up to Rs 10000 279 48.4

Rs 10001 to Rs 20000 167 29.0

Rs 20001 to Rs 30000 48 8.3

Rs 30001 to Rs 50000 53 9.2

More than 50000 29 5.1

Total 576 100

V MARITAL STATUS

Married 395 68.6

Unmarried 181 31.4

Total 576 100

Source: Primary data

Important demographic characteristics of the sample women are presented below.

1. With regard to the age group, 60.2% of the women belong to the age group of 19 yrs to 40 yrs.

2. About 49.7% of the respondents are working in private sector. Further, 17% of the respondents work in government sector.

3. Sample population reveals that 41.1% (237) of the women have completed their post graduation

and 40.8% (235) of the women have completed under graduation. It indicates that there is a sharp increase in female literacy in India. It is also an indicator of increased rate of higher education among Indian female.

4. Women with monthly income up to Rs 20000 constitute 77.4% of the sample and those with above Rs 20000 constitute 22.6%.

5. The study shows that 68.6% of the women are married and the rest (31.4%) are unmarried.

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ANALYSIS OF WOMEN CONSUMERS’ PREFERENCES

Consumer preferences of the sample with regard to television programmes, satellite channels, advertisements and visual media advertisements have been presented below:

TABLE – 2: CONSUMER PREFERENCES OF THE RESPONDENTS

No Particulars No. of Respondents Percentages

I DO YOU WATCH T.V. PROGRAMMMES REGULARLY?

Yes 511 88.7

No 65 11.3

Total 576 100

II THE MOST PREFERRED TIMING OF WATCHING T.V

06.00 AM to 10.00 AM 10 1.7

10.01 AM to 05.00 PM 18 3.1

05.01 PM to 07.00 PM 104 18.1

07.01 PM to 11.00 PM 373 64.8

11.01 PM to O5.59 AM 6 1.0

Total 511 100

III THE MOST PREFERRED T.V. PROGRAMME

Movie and its related 75 13.0

programmes

Mega serials 152 26.4

Sports and Games 41 7.1

News 70 12.2

Songs 209 36.3

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Others 29 5.0

Total 576 100

IV THE MOST PREFERRED TAMIL SATELLITE CHANNEL

Podhigai 9 1.6

Sun T.V. 268 46.5

Kalaingar T.V. 27 4.7

Jaya T.V. 5 0.9

Star Vijay 182 31.6

Raj T.V. 27 4.7

Others 58 10.1

Total 576 100

V THE MOST PREFERRED NON -TAMIL SATELLITE CHANNEL

Asianet 19 3.3

Gemini 111 19.3

Zee 92 16.0

Discovery 234 40.6

Pogo 49 8.5

Others 71 12.3

Total 576 100

VI THE MOST PREFERRED NEWS CHANNEL

Sun News 234 40.6

Kalaignar News 47 8.2

NDTV 103 17.9

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Times Now 75 13.0

CNN – IBN 28 4.9

BBC 51 8.9

Headlines Today 28 4.9

Others 10 1.7

Total 576 100

VII THE MOST PREFERRED SPORTS CHANNEL

DD Sports 69 12.0

Star sports 209 36.3

ESPN 66 11.5

Neo sports 39 6.8

Ten sports 169 29.3

Others 24 4.2

Total 576 100

VIII DO YOU WATCH MOVIES IN THEATERS

Yes 490 85.1

No 86 14.9

Total 576 100

IX FREQUENCY OF WATCHING MOVIES IN THEATERS

Frequently 39 6.8

Weekly 5 0.9

Monthly 77 13.4

Occasionally 372 64.6

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Total 493 100

X DO YOU USE INTERNET

Yes 416 72.2

No 160 27.8

Total 576 100

XI FREQUENCY OF USE OF INTERNET

Frequently 57 9.9

Daily 121 21.0

Weekly 120 20.8

Monthly 38 6.6

Occasionally 80 13.9

Total 576 100

XII DO YOU WATCH ADVERTISEMENTS

Yes 468 81.3

No 108 18.7

Total 576 100

XIII THE MOST PREFERRED MEDIUM OF AD

Print media 79 13.7

Radio 5 0.9

Visual media 492 85.4

Total 576 100

XIV THE MOST PREFERRED VISUAL MEDIA ADS

T.V. Ads 467 81.1

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Movie Ads 57 9.9

Internet Ads 52 9.0

Total 576 100

XV THE MOST PREFERRED KIND OF VISUAL MEDIA ADS

Related to durable goods 128 22.2

Related to cosmetics 189 32.8

Related to FMCGs 28 4.9

Related to health care goods 118 20.5

Related to financial services 15 2.6

Related to investment and 24 4.2 insurance

Related to automobiles 21 3.6

Related to luxurious goods 42 7.3

Others 11 1.9

Total 576 100

XVI FEATURE OF VISUAL AD THAT ATTRACTS THE VIEWERS

Picturization 181 31.4

Innovative ideas used 194 33.7

Celebrity 115 20.0

Exhibition of product 77 13.4 features

Others 9 1.6

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Source: Primary data

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The consumer preferences of the sample women show certain distinct features which are listed below

1. The study shows that 88.7% of women watch television programmes regularly. Only 11.3% of the women do not watch television programmes regularly, but, they may watch television programmes occasionally or when they find time. It indicates that watching television programmes have become part of daily life for most of the women. It is also indicator of penetration of Television in to day to day life of the sample women.

2. 07.01 PM to 11.00 PM is the most preferred time of watching television programme for the sample women (64.8%), followed by 05.01 PM to 07.00 PM (18.1%).

3. Nearly, half of the sample women (49.3%) prefer to watch movie, movie related programmes and songs. It is interesting to note that 26.4% of the sample women prefer to watch mega serials.

4. Among the most preferred regional (Tamil) satellite channel, Sun television dominates (46.5%) among the sample women followed by Star Vijay (31.6%).

5. As far as the most preferred non-Tamil satellite channel is concerned, 40.6% of the respondents prefer to watch Discovery channel. Further, 19.3% of the women prefer to watch Gemini Television (Telugu) and 16% of the women prefer to watch Zee Television (Hindi). It indicates that good number of Telugu origin and Hindi origin women are in Chennai. It strengthens the researcher‟s idea of taking women in Chennai city as sample for this study to represent the population.

6. The study reveals that, among the news satellite channels, the most preferred news satellite Channel is Sun news (40.6%) which is broadcasted in Tamil. 49.6% of the respondents watch English news channels namely NDTV (17.9%), Times Now (13%), BBC (8.9%), CNN-IBN (4.9%) and Headlines Today (4.9%).

7. The study shows that the most preferred sports satellite channel is Star Sports (36.3%) followed by Ten Sports (29.3%) and DD Sports (12%). Here, it is worth to be mentioned that Star Sports and Ten Sports share first and second places respectively among the most preferred sports satellite channel as it seems that those channels used to telecast more cricket events.

8. The sample population indicates that 85.1% of the respondents watch movies in cinema theatres and the rest (14.9%) do not watch movies in cinema theatres.

9. More interestingly, 64.6% of the respondents watch the movies in cinema theatres occasionally only, not weekly or monthly. It may be the reason for the downturn of film industry in India in general and in Tamilnadu in particular.

10. The study indicates that 72.2% of the respondents use internet and the rest (27.8%) do not use

internet.

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11. Based on sample data, it is clear that 21% of the respondents use internet on daily basis. Further, 20.8% of the respondents use internet on weekly basis.

12. About 81.3% (468) of the respondents are used to watch advertisements shown in television, cinema theatres and internet.

13. The dominant sample population (85.4%) indicates that visual media advertisement is the most preferred medium of advertisement.

14. As far as kind of visual media advertisement is concerned, visual media advertisements related to cosmetics (32.8%) is more preferred by the respondents. It is quite obvious that women are more inclined towards cosmetics.

15. The sample specifies that innovative ideas used in visual media advertisements attract them mostly (33.7%). 31.4% of the respondents indicate that picturization of the advertisement attract them mostly.

ANALYSIS OF DIFFERENCES IN WOMEN CONSUMERS‟ ATTITUDE TOWARDS VISUAL MEDIA ADVERTISEMENTS BASED ON DEMOGRAPHIC VARIABLES

TABLE – 3: AGE AND WOMEN CONSUMERS’ ATTITUDE TOWARDS VISUAL MEDIA ADVERTISEMENTS

Age Mean Value F value P Value Result

Up to 18 yrs 67.3806

19 yrs to 40 yrs 67.9493

41 yrs to 60 yrs 65.6255

More than 60 yrs 78.4000

9.245 .000 Significant

Source: Primary data

*At 1% level of significance **At 5% level of significance

The table reveals that there is a significant difference between age and attitude of women consumers‟ attitude towards visual media advertisements. Mean scores keep on increasing positively with the advancement of age, but, mean score decreases in the age group of 41 yrs to 60 yrs. This result of ANOVA is supported by the study conducted by Haghirian, Parissa and

Madlberger, Maria (2007) on “Consumer attitude toward advertising via mobile devices – an www.zenithresearch.org.in

empirical investigation among Austrian users”. Haghirian, Parissa and Madlberger, Maria

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TABLE – 4:OCCUPATION AND WOMEN CONSUMERS’ ATTITUDE TOWARDS VISUAL MEDIA ADVERTISEMENTS

Occupation Mean Value F value P Value Result

Government 66.3592 employees

Private sector 67.8797 employees

Self-employed 69.0383 11.304 .000 Significant

Professionals 65.1146

House makers 68.4286

Source: Primary data

*At 1% level of significance **At 5% level of significance

The table shows that there is significant difference between occupation and women consumers‟ attitude towards visual media advertisement. There is the highest difference (69.0383) in attitude level towards visual media advertisements among self employed women. Professional women have lower level of attitude (65.1146) towards visual media advertisements.

TABLE – 5: MONTHLY INCOME AND WOMEN CONSUMERS’ ATTITUDE TOWARDS VISUAL MEDIA ADVERTISEMENTS

MONTHLY Mean Value F value P Value Result INCOME

Up to Rs 10000 68.7599

Rs 10001 to Rs 65.8731 20000

Rs 20001 to Rs 66.8167 30000 16.887 .000 Significant

Rs 30001 to Rs 64.4528

50000

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More than Rs 50000 68.3034

Source: Primary data

*At 1% level of significance **At 5% level of significance

ANOVA table shows that based on the monthly income, women consumers‟ attitude towards visual media advertisements differs. When monthly income is up to Rs 10000 and more than Rs 50000, women have higher positive attitude (Mean scores: 68.7599 and 68.3034) towards visual media advertisements. When the monthly income is between Rs 10001 to Rs 50000, women have positive, but, moderate attitude towards visual media advertisements as compared to the women earning the monthly income of up to Rs 10000 and more than Rs 50000. This result is contradicted by Shavitt, Lowrey and Haefner, (1998). According to Shavitt, Lowrey and Haefner, (1998) Persons with less education and lower income generally report a more favourable attitude toward advertising in general.

TABLE – 6:EDUCATION AND WOMEN CONSUMERS’ ATTITUDE TOWARDS VISUAL MEDIA ADVERTISEMENTS

EDUCATION Mean Value F value P Value Result

Up to +2 66.8000

UG 67.9353 Not Significant

PG 66.9063 1.101 .324

Professional 67.1704 qualification

Source: Primary data

*At 1% level of significance **At 5% level of significance

The above ANOVA analysis indicates that education of the women does not play any significant role in forming attitude towards visual media advertisement. Ozhan (2004) report that as educational level increases, the level of negative attitude towards mobile phones increases also. These findings are supported by Sarker and Wells (2003) who consider economic conditions as an influencing factor on adoption and usage of mobile phones (Sarker and Wells, 2003). Therefore, it is concluded that the respondents with a higher level of education show a

more negative attitude towards visual media advertising and perceive a lower value.

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TABLE – 7:MARITAL STATUS AND WOMEN CONSUMERS’ ATTITUDE TOWARDS VISUAL MEDIA ADVERTISEMENTS

Marital status Mean value F value t value P value Result

Married 66.9043 .317 -2.492 .573 Not significant

Unmarried 68.2961

Source: Primary data

*At 1% level of significance **At 5% level of significance

Student‟s “t” analysis indicates that women‟s consumer buying behaviour do not differ based on attitude of the women consumers‟ attitude towards visual media advertisement. Unmarried women consumers have attitude towards visual media advertisements (68.2961) than married women consumers (66.9043).

RELATIONSHIP BETWEEN WOMEN CONSUMERS’ BUYING BEHAVIOUR AND OTHER VARIABLES

HYPOTHESIS

Ho: There is no significant relationship between women consumers‟ buying behavior and other variables

H1: There is significant relationship between women consumers‟ buying behavior and other variables

In this part of the analysis women consumers‟ buying behavior and other variables are entered in step wise regression analysis. The independent variables are advertising value and women consumers‟ attitude towards visual media advertisements and the dependent variable is

women consumers‟ buying behavior.

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TABLE – 8 RELATIONSHIP BETWEEN WOMEN CONSUMERS’ BUYING BEHAVIOUR AND OTHER VARIABLES

Model Summary

Model R R Square Adjusted R Square Std. Error of the Estimate

1 .117a .014 .008 6.56268 a. Predictors: (Constant), advertising value, women consumers‟ attitude towards visual media advertisements.

The above table shows the model summary for the R, R2, adjusted R2 and standard error of the estimate. The R2 value indicates the percent of variance in the criterion (dependent variable) that is accounted for by the linear combination of predictor (independent) variables. Model 1 has R2 value of .014 which indicates the variance accounted for by the linear combination of advertising value and women consumers‟ attitude towards visual media advertisements.

TABLE – 9 RELATIONSHIP BETWEEN WOMEN CONSUMERS’ BUYING BEHAVIOUR AND OTHER VARIABLES

ANOVAb

Sum of Model Squares Df Mean Square F Sig.

1 Regression 215.582 2 107.791 2.503 .083a

Residual 15633.955 363 43.069

Total 15849.537 365

a. Predictors: (Constant), advertising value, women consumer attitude towards visual media advertisements. b. Dependent Variable: women consumers‟ buying behavior

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TABLE – 10 RELATIONSHIP BETWEEN WOMEN CONSUMERS’ BUYING BEHAVIOUR AND OTHER VARIABLES

COEFFICIENTSa

Un standardized Standardized Coefficients Coefficients

Model B Std. Error Beta T Sig.

1 (Constant) 56.537 3.870 14.608 .000

Women consumer -.112 .054 -.116 -2.079 .038 attitude towards visual media advertisements

Advertising value .057 .038 .085 1.515 .131

a. Dependent Variable: women consumers‟ buying behavior

Source: Primary data

The above table shows that women consumers‟ buying behavior has significant relationship women consumers‟ attitude towards visual media advertisements, but not with advertising value. The “F” test for the model 1 is not statistically significant also. Hence, it can be concluded that there is significant relationship between women consumers‟ buying behavior and women consumers‟ attitude towards visual media advertisements and that there is a relationship between women consumers‟ buying behavior and advertising value, but, women consumers‟ buying behavior does not have significant relationship with advertising value.

CONCLUSION

In this study, respondents being women, it is found that women consumers‟ attitude towards visual media advertisements and women consumers‟ buying behavior are directly related with each other. Advertising value is closely related with women consumers‟ attitude

towards visual media advertisements.

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REFERENCES

1. Philip Kotler and Harry Armstrong, (1995), “Principles of Marketing”, Prentice Hall inc., P.140.

2. Vihalem, Ann “Marketing bases”, Tallinn University; Kulim, 2003.

3. Mauring, Tonu, (2008), “Marketing bases – I” http://www.mtk.ut.ee/doc/ Turundus.doc

4. Ibid, Marketing Bases, 2003.

5. Vriko Jurisson, (2007), “Creativity feeds the engine of economic development”, February, 2007.

6. Vriko Jurisson, “The successful creative economy”, Estonian Paealhet, 30th September, 2006.

7. Paco Underhill, (2006), “Why we buy: The science of shopping”, Estonian Newspaper Eesti Express Publishers, 2006.

8. Fishbein, M., (1967), ”Readings in attitude theory and measurement”, New York , John Wiley publications , 1967,pp.477-492.

9. Philip Kotler and Harry Armstrong, (2003), “Principles of Marketing”, prince Hall inc., p.590.

10. Foxall, G.R., (1987), consumer Behavior, pp.124 -146.

11. Engel, J.F., Blackwell, R.D., and Minimart, P.W. (1986),”Consumer Behavior” 5th Edition, Dryden.

12. Chris Fife schwa and et al. (2007), “Assessing customer preferences for drinking water services – Methods for water utilities”, Report presented by TECHNEAU, integrated project funded by European Commission, pp.5.

13. Chris Fife schwa and et al. (2007), “Assessing customer preferences for drinking water services – Methods for water utilities”, Report presented by TECHNEAU, integrated project funded by European Commission, pp.5.

14. Shugan, S.M and Balachandran, V., (1977), “A Mathematical programming model for optional

product line structuring”, Discussion paper No: 265, NorthWestern University, the centre for Mathematical studies in Economics and Management science, Evanston, April 1977.

15. Aaker, D.A., Kumar, V., and Day. G., “Marketing Research”, Wiley, 1995, New York.

16. Ajzen, I., & Fishbein, M., “Understanding attitudes and predicting social behavior”, Prentice Hall, Englewood Oliffs, 1980, New Jersey.

17. Ajzen, I., (1991), “The theory of Planned behavior,” Organization behavior and Human decision

processes, Vol.50 (2), pp.179-211.

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18. Churchil, G.A.J., and Iacobucci,D., “Marketing Research : Methodological Foundations”, South- Western publishing , 2002, Mason, Ohio.

19. Larkin, E.F., (1979), “Consumer perceptions of the media and their advertising content”, Journal of Advertising, Vol.8 (2), pp.5-48.

20. Du plessis P.J., & Rousseau, G., “Buyer behavior”, 4th edition, Oxford press, 2007, Cape Town.

21. Anderson, A., & Nilsson, J., “Wireless advertising effectiveness: Evaluation of an SMS advertising trial”, Availableon:http://web.hhs.se/cic/courses/underbridge/wireless-ad-eff.pdf.

22. Mehta Abhilasha and Scott C. Purvis., “When attitudes towards advertising in general influence advertising success”, Article presented at the conference of the American Academy of Advertising. Norfolk, VA, 1995.

23. Lutz, Richard J., (1985) “Affective and cognitive antecedents of attitude towards the ad: A conceptual framework”, Psychological Processes and Advertising effects: Theory, Research and Applications, Linda Allowed and Andrew Mitche, eds, Hillsdale, New Jersey.

24. Mehta, Abhilasha, (1994), “How Advertising response Modeling (ARM) can influence Research”, Vol.33 (3), pp.62-74.

25. Mittal, Banwari (1994), “Public assessment of TV advertising: Faint praise and Harsh criticism”, Journal of Advertising Research, Vol.34 (Jan- Feb), pp.35-53.

26. Ogilvy, David. Ogilvy on advertising, London: Prion Books Limited; 1995: p. 14.

27. Wielbacher, & William, M., “Advertising”, McMillan Publication Co; 1984: p. 13, 195, 471, 198,141. pp. 4-5, 192-194.

28. Ibid, “Advertising”, McMillan Publication Co; 1984.

29. Thomas, Jerry, W., “To succeed in advertising, believe the hype”, Nation‟s Restaurant News, 30, 43: 1996, p. 30.

30. Aaker, David A., Myer, John G. and Batra, Rajeev, “Advertising Management”, Prentice Hall of

India (Pvt) Ltd: 1997, pp. 3.

31. Devoe, Merill, “Effective advertising copy”, McMillan Publication Co: 1956, pp. 88-89.

32. Jerome D. Scott (1943), “Advertising When Buying is Restricted”, Harvard Business Review, Vol. XXI (4) (summer, 1943), pp.443-454.

33. Joel Dean (1951), “Advertising Budget”, Harvard Business Review, Vol.29, January – February,

1951, pp. 65-74.

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34. Martin Mayer (1958), “What is Advertising Good for?” Harper‟s Magazine, May 1958, pp. 25- 31.

35. Reeves Roose (1961), “Reality in Advertising”, Alfred Knopf Inc., New York, (1961).

36. C.B.Mamoria and R.L.Joshi (1968), “Principles and Practices of Marketing in India”, Kitab Mahal, Allahabad, P. 391.

37. Haghirian, Parissa and Madlberger, Maria (2007) “Consumer attitude toward advertising via mobile devices – an empirical investigation among Austrian users”, Vienna University of Economics and Business Administration, Vienna, Austria.

38. 33. Shavitt, S., P. Lowrey and J. Haefner (1998), “Public Attitudes towards Advertising: More Favourable than you might think”, Journal of Advertising Research, 38(4), 7 - 22.

39. 34. Ozhan Dedeoglu, A. (2004), “The Symbolic Use of Mobile Technology among Turkish Consumers”, Journal of Euro-Marketing, 2(3), 143 - 162.

40. 35. Sarker, S. and J. D. Wells (2003), “Understanding Mobile”, Communications of the ACM, 46(12), 35 - 40.

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BUSINESS WOMEN IN MICRO ENTERPRISES

DR.V.USHAKIRAN*; MS.RAJESHWARI**; MS M.V.KARUNASREE***

*Department of Commerce, Osmania University College for Women, Koti, Hyderabad. **Department of Commerce, Osmania University College for Women, Koti, Hyderabad. ***Department of Commerce, Osmania University College for Women, Koti, Hyderabad.

ABSTRACT

The early history of entrepreneurship in India reflects from the culture, customs and tradition of the Indian people. Entrepreneurship has its heredity in the occupational pursuits opted by the individual under the caste system in India. Entrepreneurship plays an important role in the economic growth and development of the nation. It is a purposeful activity which includes an initiation, promotion and distribution of wealth and service. An entrepreneur is a critical factor in economic development and an integral part of the socio-economic transformation. The entrepreneurial career cannot be developed over night. It is a risk taking activity and challenging task, needs utmost devotion, total commitment and greater sincerity with fullest involvement for his/ her personal growth and personality. Further if such activities are taken up by women, they need to put double the effort compared to men.

A survey of women entrepreneurs owning different micro enterprises is initiated to understand the source of motivation behind their entry into entrepreneurship. The study also focuses on the problems and challenges that emerge in women entrepreneurship. Entry of women into male dominated field gives them a real empowerment in terms of economic independence and decision role. ______

INTRODUCTION

In traditional India, most of the women were homebound. But the scenario is gradually changing and now all most all the fields are women inclusive. Business domain could not stand as an exception to this fact. Globalization and liberalization brought a sea change in the roles played by women. They carved a niche for themselves in the male dominated world. (www.indiatogether.org) Almost all countries have seen an upsurge in Women owned businesses over the last few decades. The veiled entrepreneurial abilities of women in India have witnessed steady alterations with the increasing sensitivity to her role and economic standing in the society. The modern women are fast growing from job aspirants to job creators. They are making their

mark as interior decorators, publishers, garment manufacturers, fashion designers, etc and are www.zenithresearch.org.in

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 equally and significantly contributing to the nation's economy. The primary motive for the women to enter the entrepreneurship is for engaging in some economically gainful activity, making money or more money to support the family and a desire for gainful time structuring (Bharathi Kollan and Indira J Parekh,2005). Spread of education, growth in financial institutions and banks and their encouragement to women with special training cells and schemes also helped in the increased women entrepreneurship activity. The Government of India has defined a woman entrepreneurship as "an enterprise owned and controlled by a woman having a minimum financial interest of 51% of the capital and giving at least 51% of the employment generated in the enterprise to women". According to the Centre for Women's Business Research (2008), 10.1 million firms are owned by women (40% of privately owned businesses), employing more than 13mn people and generating $1.9 trillion turnover in United States (Paramjit Mahli, 2008). In India, women constitute around 48 percent of the population but their participation in the economic activities is only 34 percent. As per the Human Development Report (2007), India ranks 96 on the gender related development index of 137 nations. The gender empowerment measures, which estimate the extent of women participation in the country's economic and political activities, rank India as 110th of the 166 nations.

Women need to be acknowledged for their unrelenting efforts in keeping their work and family life balanced. Early 50’s saw the women entering the businesses only when they had to earn for the family. But the 21st century women enter into the businesses to prove their competencies and expertise, to be self reliant, economically independent and to enjoy the decision making powers. Women entrepreneur is defined as an individual who undertake exigent role to fulfill her personal requirements and in the process become financially self-sufficient. A women entrepreneur always aspire to do something fruitful and positive in the field of business besides bestowing values to family and social life (Business Ideas for Women, 2010) . In this process it is essential for the women to keep themselves motivated to face the challenges which emerge in all the domains where they are working.

OBJECTIVES OF THE STUDY

The present study is emperical in nature and makes an attempt to understand the source of motivation and analyse the problems and challenges that emerge in women entrepreneurship.

RESEARCH METHODOLOGY

The study is based on both primary and secondary sources of data. The primary data has been collected through a questionnaire administered to sixty women entrepreneurs located in and around Hyderabad chosen on a convenience basis. These women are managing micro business enterprises. The data collected from secondary source include news paper reports, articles published in journals and websites.

PROFILE CHARACTERISTICS OF WOMEN ENTREPRENEURS

The business women represent various demographic features. They differ in the nature of

businesses, size of the business, leadership style and form of ownership. Therefore it is essential www.zenithresearch.org.in

to map out their socio economic profile. Businesses do not have any gender discrimination.

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TABLE-1 PROFILE OF BUSINESS WOMEN

Characteristic Number Percentage

Nature of the Business

Service 18 30

Retail 30 50

Fashion Designing and Toy making 12 20

Education Levels

Below Intermediate 35 58

Upto PG 25 42

Experience as Entrepreneurs (Years)

Less than 2 17 28

2-6 23 38

6-10 09 15

More than 10 11 19

Hours Dedicated to the Business per day : 9 hours

Average Age : 39 Years

Average Turnover : Rs. 3.75 Lakhs

Capital Investment : < Rs.5 Lakhs (90%), Rs5lakhs to 20 lakhs (10%)

Source : Primary data

The skills required differ from one business to another. Entrepreneurs start a business depending on their skills, abilities and qualifications. Many studies concluded that women mostly operate in women oriented businesses such as beauty care, tailoring, fashion designing, pickle making, textile selling and so on. Majority of the entrepreneurs under study opted to operate in service sector which included beauty care, finance, travels, schools, marriage bureau and gas agency. The retailing sector is also equally appealing to business women where businesses like pharmacy, jaggery trading, textiles, retail stores and sale of Tupperware are being adopted by

them.

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Toy Making, fashion designing are generally women oriented businesses which require aptitude, creativity and interest towards them rather than educational background. Education gives technical skills and problem solving skills. However, certain businesses do not require the educational support. It is observed that women with lower education i.e., below intermediate are equally competing with those with higher qualifications. It is observed that 58% of business women has studied upto Intermediate and 42% upto P.G. Women are very critical when it comes to themselves - can I really do this, am I good enough, maybe I have to learn more, others can do it better. It is quite interesting that many successful women have been educated in only girls colleges and schools, which often deliver a safe environment to try out ones personal strengths, learn to overcome weaknesses and be proud of oneself.

The enterprises under study are basically micro in nature with capital investment ranging from Rs.2 lakhs to Rs.20 lakhs. A majority of the entrepreneurs (90%) are maintaining an average turnover of below 5 lakhs with others in the range of Rs. 5 lakhs to Rs.30 lakhs. These enterprises are generating employment to a minimum of three and maximum of five. They are managed by married women. The average age of the respondents is calculated at 39 years. Their experience as business women varies from less than 2 years to more than 10 years. 72% of the entrepreneurs are found to have more than 2 years of experience. They add value to family as well as business by being devoted to business for an average time of 9 hours daily.

SOURCE OF MOTIVATION

There are certain driving forces which decide the decision making patterns of people. Entering into business is a risky decision which needs an aptitude, courage and determination. These attributes are either internally cultivated or groomed by other motivating personalities.

TABLE-2 SOURCE OF MOTIVATION

Source Number Percentage

Family 11 27

Friends 09 21

Self 21 50

Training 01 02

Total 42 100

Source : Primary data

It can be noted that only 42 women revealed their source of inspiration. It is really a noteworthy finding that 50% of them are self motivated followed by getting motivated by family (26%) and

friends (21%). Some times the training also helps the people to establish businesses.

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PROBLEMS OF WOMEN ENTREPRENEURS

The greatest deterrent to women entrepreneurs is that they are women. Entrepreneurs generally face different kinds of problems such as finance, management, technical, entrepreneurial, marketing and accounting. These problems assume more seriousness in case of women entrepreneurs as they face gender discrimination while solving them. In addition, women have to face social barriers and family problems. A kind of patriarchal – male dominant social order is the building block to them in their way towards business success. The male members think that financing the ventures run by women is a big risk.

I. FINANCIAL PROBLEMS

The financial institutions are skeptical about the entrepreneurial abilities of women. The bankers consider women loonies as higher risk than men loonies. The bankers put unrealistic and unreasonable securities to get loan to women entrepreneurs. According to a report by the United Nations Industrial Development Organization (UNIDO), despite evidence that women's loan repayment rates are higher than men's, women still face more difficulties in obtaining credit, often due to discriminatory attitudes of banks and informal lending groups (UNIDO, 1995b).

Entrepreneurs usually require financial assistance of some kind to launch their ventures - be it a formal bank loan or money from a savings account. Women in developing nations have little access to funds, due to the fact that they are concentrated in poor rural communities with few opportunities to borrow money (Starcher, 1996; UNIDO, 1995a). The women entrepreneurs are suffering from inadequate financial resources and working capital. The women entrepreneurs lack access to external funds due to their inability to provide tangible security. Very few women have the tangible property in hand.

The financial institutions discourage women entrepreneurs on the belief that they can at any time leave their business and become housewives again. The result is that they are forced to rely on their own savings, and loan from relatives and family friends

It is observed that 86% have reported facing financial problems. The problems identified under this category are working capital, sanctioning of loan, disbursement of loan, management of finance, complicated procedure of bank loan, delay in getting loan, reimbursement of loan and lack of guarantee. Inadequate working capital is reported by majority (50%) of them followed by

complicated procedure of bank loan.

II. MANAGEMENT PROBLEMS

The management problems generally faced by entrepreneurs are planning, organizing, coordinating, and controlling. Ninety percent of the entrepreneurs reported to have faced all most all these problems. The major problems identified are planning the business (62%), organizing the business (22%) and coordinating and controlling (16%).

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III. TECHNICAL PROBLEMS

The technical problems of the entrepreneurs include old and obsolete method of production, lack of adequate training, upgrading of the skills, little designing skills, lack of skilled workers, modern machineries, ideas and time to develop the product, research facilities and low budgets on research development. Knowledge of latest technological changes, know how, and education level of the person are significant factor that affect business. The literacy rate of women in India is found at low level compared to male population. Many women in developing nations lack the education needed to spur successful entrepreneurship. They are ignorant of new technologies or unskilled in their use, and often unable to do research and gain the necessary training (UNIDO, 1995b, p.1). Although great advances are being made in technology, many women's illiteracy, strucutural difficulties, and lack of access to technical training prevent the technology from being beneficial or even available to females ("Women Entrepreneurs in Poorest Countries," 2001). According to The Economist, this lack of knowledge and the continuing treatment of women as second-class citizens keeps them in a pervasive cycle of poverty ("The Female Poverty Trap," 2001). The studies indicates that uneducated women donot have the knowledge of measurement and basic accounting. The respondents reported that getting skilled workers and upgrading their own skills are major problems.

IV. ENTREPRENEURIAL PROBLEMS

Entrepreneurial problems include lack of experience, lack of training, inconvenience in procuring raw material, low profits, financial problem, low risk taking attitude, complicated trade license procedures, lower participation in trade fair, no access to bank loans and financial institutions, no membership with the chamber of commerce, missed profitable orders and buyers, inaccessibility to export and import related sectors. Knowledge of alternative source of raw materials availability and high negotiation skills are the basic requirement to run a business. Getting the raw materials from different source with discount prices is the factor that determines the profit margin. Lack of knowledge of availability of the raw materials and low-level negotiation and bargaining skills are the factors, which affect women entrepreneur's business adventures. Twenty four percent of women expressed that they face the export and import related problems. . Low-level risk taking attitude is another factor affecting women folk decision to get into business. Low-level education provides low-level self-confidence and self-reliance to the women folk to engage in business, which is continuous risk taking and strategic cession making profession. Investing money, maintaining the operations and ploughing back money for surplus generation requires high risk taking attitude, courage and confidence. Though the risk tolerance ability of the women folk in day-to-day life is high compared to male members, while in business it is found opposite to that. Low risk taking attitude (46%) and financial problems (52%) are identified as entrepreneurial risks.

V. GOVERNMENT SUPPORT

Both Central and State governments are implementing various assistance, schemes for the promotion of women entrepreneurship. But in practice the respondents face many difficulties in

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Government extends support to women entrepreneurs in the form of priority loan lending, concessional interest, specially designed schemes, training facilities, tax concessions and so on. Majority of the entrepreneurs (82%) reported lack of government support as a problem while 44% of the entrepreneurs expressed that they lack knowledge about concessions offered by the government where as 23% reported that they do not know any information about tax concessions.

VI. MARKETING PROBLEMS

Another argument is that women entrepreneurs have low-level management skills. They have to depend on office staffs and intermediaries, to get things done, especially, the marketing and sales side of business. Here there is more probability for business fallacies like the intermediaries take major part of the surplus or profit. Marketing means mobility and confidence in dealing with the external world, both of which women have been discouraged from developing by social conditioning. Even when they are otherwise in control of an enterprise, they often depend on males of the family in this area.

Acceptance of product, lack of bargaining skills, publicity, market information, supportive network and proper training, no accessibility to foreign market are major marketing problems. All the entrepreneurs felt that marketing is the major problem. Missing networks - through centuries business men have build up their networks but women still have to learn to catch up 31% reported that lack of publicity is causing great problem, 18% complained that right price is not received by them because of their lack of bargaining skills while selling and purchasing.

VII. SOCIAL BARRIERS

Family restrictions and religious belief and traditional customs are the social barriers. Indian women give more emphasis to family ties and relationships. Married women have to make a fine balance between business and home. More over the business success is depends on the support the family members extended to women in the business process and management. The interest of the family members is a determinant factor in the realization of women folk business aspirations. The study reveals that 50% of women entrepreneurs do not face any social barriers. However, it

is found that 30% of them suffer from family restrictions and 20% reported problems on account of religious beliefs and traditional customs.

VIII. ACCOUNTING PROBLEMS

Maintaining books of accounts, computerization of accounting, lack of knowledge and approach to a professional accountant are the accounting problems. 87% of the women entrepreneurs felt that maintaining books of accounts is the biggest problem while 36% reported that they do not have knowledge of accounting and 11% felt that non computerization of accounts has become a

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IX. FAMILY PROBLEMS

Less time for the family, children education and personal hobbies, lack of support from family members are the major family problems faced by women entrepreneurs.

It is clear, that women have the responsibility of getting children and taking care of them. Very few societies accept fathers taking over the role of staying home and taking care of the children. Once these children are old enough to take care for themselves, they have to bear an additional responsibility of taking care of elder parents. If they want to become entrepreneurs, the society expects them to be able to do both: take care of family and home and do business. 93% women entrepreneurs reported that family life and work life blend becomes a problem. They felt that they are not able to spend enough time with family (39%), concentrate on children’s education (30%)and have lack of support from family (11%) and less time for personal hobbies and relations (7%).

X. DISCRIMINATION

Discrimination - The male - female competition is another factor, which develop hurdles to women entrepreneurs in the business management process. Despite the fact that women entrepreneurs are good in keeping their service prompt and delivery in time, due to lack of organisational skills compared to male entrepreneurs women have to face constraints from competition. The confidence to travel across day and night and even different regions and states are less found in women compared to male entrepreneurs. This shows the low level freedom of expression and freedom of mobility of the women entrepreneurs. It is hard to believe but women are still treated differently in our society. Women do get lower salaries compared to men doing the same job, women do not have access to men dominated networks who take their decisions about successors.

Discrimination in business may arise due to gender, caste and education, etc. It is observed that only 42% of women entrepreneurs reported discrimination. Further, it is observed that discrimination on account of education is faced by 19% followed by gender (16%) and caste (6%). It can be concluded that gender discrimination is not a major problem and women can overcome it very easily.

ADVICE OR CONSULTANCY AND SUPPORT

A question was posed to women entrepreneurs whether they require any consultancy in the area of finance, taxation, technical, legal or accounting. It was found that 10% do not require any consultancy whereas 50% of them wanted financial advice. Technical advice is sought by 25%, whereas 10% require legal advice. Therefore government should create a single window through which the entrepreneurs are given consultancy in various areas while entering into business and even during the running of business. All women entrepreneurs unanimously agreed that their organizations will be successful only then they get support from government, financial

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EMERGING CHALLENGES IN WOMEN ENTREPRENEURSHIP

Various challenges emerge in entrepreneurship and the art of entrepreneurship lies in managing them. The respondents identified competition (39%), lack of capital (34%), accessibility to market (20%), lack of specific information and high cost of production (7%) as major challenges.

CONCLUSION

Irrespective of the problems and challenges that emerge in the process of entrepreneur ship, women are going ahead in the business domain. Their entry into this male dominated world is definitely bringing a fresh air as they can add valuable innovation to entrepreneurship. Their innate mental flexibility, vision for long-term planning, patient attitude, sincerity and the ability to tolerate ambiguity and changes are a valuable asset for business ventures. The Government and other financial institutions should enhance support lending activities to these women thorough single window schemes. More awareness camps have to be conducted. Educational institutes too need to inculcate the entrepreneurial skills in the women. All the players in the field should understand that motivation and environmental demography plays a crucial role in the increased women entrepreneurship activity.

REFERENCES

1. Aida Idris, A profile of the innovative women entrepreneurs, April 2008, Vol I No-2 International Business Research

2. Bharathi Kollan and Indira J Parekh, A refection on the Indian Women on the entrepreneurial world, WPno2005- 08-07August 2005.IIMA Working Series

3. Bharathi N., Women entrepreneurs: Motivational factors and Problems, Asia Pacific Business Review, Jan – March 2009

4. Dileep Kumar M., Problems of Women Entrepreneurs in India, www. Indianmba.com.

5. Kavitha Raman, Anantharaman, R.N. and Sharmila Jayasingam, Affecting Entrepreneurial Decision: A Comparison between Malaysian Women Entrepreneurs and Women Non Entrepreneurs, www. Ibima publishing.com

6. Suganthi .J, Influence of motivational factors on women entrepreneurs in SMEs, Asia Pacific Business Review, Jan – March 2009.

7. SurinderSingh, An insight into the emergence of women owned businesses as economic force in India, ezinarticles.com

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EVALUATION OF TRAINING EFFECTIVENESS: A CASE STUDY

DR. TEJ SINGH* DR. RAJIV RATAN**

*Associate Professor, M.D. University (PG) Regional Centre, Rewari-123401, Haryana, India **Income-Tax –Officer, Income Tax Department, Rewari-123401, Haryana, India.

ABSTRACT

Every organization big or small, productive or non-productive, economic or social, old or newly established should provide training to all employees irrespective of their qualification, skill, and suitability for the job. Training is not something that is done once to new employees; it is used continuously in every ell run establishment. Further, technological changes, automation, require updating the skills and knowledge. As such an organization has to retain the old employees. The paper attempts to study the effectiveness of training and its sub-systems in the Income-tax department by using the Mean, Standard deviation, Standard error and„t‟ test. The study is based on both the primary and secondary data. The paper also tries to analyse and compare the opinion of managers on the effectiveness of various sub- systems of training in sample unit. The result found that there are divergent views of different managers on the effectiveness of training and its various sub-systems in the Income-tax department.

KEYWORDS: Induction training; Need based training; Planned training and Utilisation. ______

INTRODUCTION

Organizations and individuals should develop and progress simultaneously for their survival and attainment of mutual goals. So every modern management has to develop the organization through human resource development. Employee training is the important sub- system of human resource development. Employee training is a specialized function and is one of the fundamental operative functions for human resources management.

After an employee is selected placed and introduced, he or she must be provided with training facilities. Training is the act of increasing the knowledge and skill of an employee for doing a

particular job. Training is a short-term educational process and utilizing a systematic and organized procedure by which employees learn technical knowledge and skills for a definite purpose. Dale S. Beach defines training as the organized procedure by which people learn knowledge and skill for a definite purpose. In other words, training improves, changes, moulds the employee‟s knowledge, skill, behaviour, aptitude, and attitude towards the requirements of the job and organization. Training refers to the teaching and learning activities carried on for the primary purpose of helping members of an organization, to acquire and apply the knowledge, skills, abilities and attitudes needed by a particular job and organization. Thus, training bridges the differences between job requirements and employee‟s

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The importance of human resource management to a large extent depends on human resource development. Training is the most important technique of human resource development. As stated earlier, no organization can get a candidate who exactly matches with the job and the organizational requirements, hence, training is important to develop the employee and make him suitable to the job. Job and organizational requirements are not static, they are changed from time to time in view of technological advancement and change in the awareness of the Total Quality and Productivity Management (TQPM). The objectives of the TQPM can be achieved only through training as training develops human skill and efficiency. Trained employees would be a valuable asst to an organization. Organizational efficiency, productivity, progress and development to a greater extent depend on training. Organizational objectives like viability, stability and growth can be achieved through training. Training is important as it constitutes significant part of management control.

Training & Development was used to assess the extent to which the training function is being effectively managed. This function contributes to growth and development of employee competency and motivation. If training has to effective it has to be need-based, well-planned, evaluated monitored and useful. Both the senior line officers and the staff become partners in ensuring the effectiveness of training. Training effectiveness comprises four variables viz; (i) Induction training; (ii) Need based training; (iii) Planned training and (iv) Utilisation.

OBJECTIVES OF THE STUDY

The study has the following objectives:

To examine the effectiveness of training and its sub-systems in the Income-tax department.

To compare and analyse the opinion of managers on the effectiveness of training in sample unit.

To test statistically whether there is significant difference in the opinion of managers regarding effectiveness of training in Income-tax department.

METHODOLOGY

UNIVERSE OF THE STUDY

The Central Board of Direct Taxes (CBDT) is a part of Department of Revenue in the

Ministry of Finance of Government of India. On one hand, CBDT provides essential inputs for policy and planning of direct taxes in India, at the same time it is also responsible for administration of direct tax laws through the Income Tax Department. The Central Board of Direct Taxes is a statutory authority functioning under the Central Board of Revenue Act, 1963. The officials of the Board in their ex-officio capacity also function as a Division of the Ministry dealing with matters relating to levy and collection of direct taxes. Thus, the whole

Income Tax department of Government of India is the universe of the proposed study.

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SELECTION OF SAMPLE & RESPONDENTS

This is basically an empirical study about the measuring the training effectiveness, based on the perception of employees/officers working in Income Tax department selected for this purpose. Income Tax Department is large one spread all over the country. So, we are constrained to limit our study to Haryana Region only.

The sanctioned manpower of the Income-tax Department is 61463 all over India. This includes 10647 Gazetted Officers, 42413 non-gazetted staff and 8403 Peons, etc. There is one Chief Commissioner of Income Tax for the Haryana Region comprising of 5 Commissioners of Income Tax at Rohtak, Hisar, Faridabad, Karnal and Panchkula. Each Commissioner has 3 Ranges headed by Additional Commissioner of Income Tax and each Range has one Assistant Commissioner and 4 Income Tax Officers. Besides, staff in the cadre of Inspectors, Office Superintendent, Senior tax Assistants, Tax Assistants, Stenographers, Daftari and Peons is provided. There is large concentration of manpower / human resources in field offices itself. Our respondents would be officers / employees posted in field offices of Haryana Region only.

TABLE 1

TOTAL MANPOWER OF INCOME TAX DEPARTMENT

(AS ON 31.3.2010)

Offices Non Officers Gazetted Sub-staff Total staff

Total manpower of Income Tax Offices in Haryana Region under 149 401 197 747 study

Total manpower of Income Tax 10647 42413 8403 61463 Offices in India

Source: www.incometaxindia.gov.in

TABLE 2

SELECTION OF RESPONDENTS

Total Selected Percentage Respondents respondents Offices

Commissioner‟s Office 97 22 22.68 www.zenithresearch.org.in

Jt./Additional Commissioner‟s Office 122 19 15.57

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Asstt./Dy. Commissioner‟s Office 130 21 16.15

Income Tax Officer‟s office 398 76 19.09

Total 747 138 18.47

TABLE 3

DISTRIBUTION OF OFFICERS REGARDING PLACEMENT

Station of Respondents & Percentage

Placement Respondents %

Stations of Commissioner‟s Office 22 15.94

Stations of Additional/ Jt. Commissioner‟s Office 19 13.77

Stations of Asstt./Dy. Commissioner‟s Office 21 15.22

Stations of Income Tax Officer‟s office 76 55.07

Total 138 100.00

Table 3 exhibits that there are four categories of Officers posted in Income Tax Offices in Haryana i.e. (i) Stations of Commissioner‟s Office; (ii) Stations of Additional/Joint Commissioner‟s Office (iii) Stations of Asstt./Dy. Commissioner‟s Office (iv) Stations of Income Tax Officer‟s office.

TABLE 4

DISTRIBUTION OF OFFICERS REGARDING HIERARCHY

Level of Hierarchy Respondents & Percentage

Respondents %

Higher-level 3 2.18 management

Middle-level 17 12.31 management

Lower-level 118 85.51 management

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Table 4 reveals that there are three levels of Hierarchy management in Income Tax Department viz; (i) Lower level of management; (ii) Middle level of management and (iii) Higher level of management. While lower level of management comprises officials of cadre of Dy. Commissioner and below; middle level of management comprises officers of cadre of Joint/ Additional Commissioners and higher level of management consists of Commissioners and Chief Commissioner of Income Tax. There are 3 (2.18%) officers at higher level; 17 (12.31%) officers at middle level and 118 (85.51%) officers/officials at lower level out of total 138 respondents in the Income Tax Department in Haryana Region. So, we have to again satisfy with a lower number of respondents at the level of higher management due to reluctance on their part to share adequate information.

TABLE 5

DISTRIBUTION OF OFFICERS REGARDING QUALIFICATION

Respondents & Percentage Category of Managers Respondents %

Upto Graduates 102 73.91

Post Graduates 32 23.19

Professionals 4 2.90

Total 138 100.00

Table 5 exhibits that there are three types of officers according to qualification such as; (i) Graduates & below; (ii) Post graduates and (iii) Professionals like B.E., CA, MBA, CS and ICWA. In Income Tax department, there are upto graduate qualified 102 (73.91%); Post Graduates 32 (23.19%) and Professionals 4 (2.90%) out of total respondents of 138.

TABLE 6

DISTRIBUTION OF OFFICERS REGARDING EXPERIENCE

Respondents & Percentage Category of employees Respondents %

Low Experienced 43 31.16

Mediocre 67 48.55 Experienced

High Experienced 28 20.29

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Table 6 exhibits that there are three types of officers according to the length of experience in Income Tax Department such as; (i) Low experienced (Below 8 years); (ii) Medium experienced (Between 8-18 years) and (iii) Highly experienced (Above 18 years) personnel. There exists 'Low experienced' 43 (31.16%); 'Mediocre experienced' 67 (48.55%) and 'Highly experienced' 28 (20.29%) out of total 138 respondents.

DATA COLLECTION

The paper is based on both the types of data viz; primary as well secondary. The secondary data is mainly collected through the memorandum, articles, brochures, annual reports and extracts from the books and website of the Income tax department selected for the study. The primary data is collected through a questionnaire administered on Officers/employees of Income Tax department working in Haryana Region. The said questionnaire instrument was developed by Rao, T.V. However, it applied with slight modifications here and there so that respondents can easily respond to it as well as it can facilitate the analysis work. According to this questionnaire first section was meant to collect personal information about respondents regarding their age, qualifications, experience, pay scale and hierarchy level etc. in the Income Tax Department. The second part is related to the training effectiveness and its various sub-systems such as (i) Induction training; (ii) Need based training; (iii) Planned training and (iv) Utilisation.

SCORING PATTERN

There are five choices for each statement on the basis of Five- Point- Scale.

INDUCTION TRAINING: - There are 6 statements in total. Thus the score below 12 exhibits that this training function is „Ineffectively‟ performed in the organisation; score 12- 18 „Effectively‟ and score above 18 „Highly effectively‟.

NEED BASED TRAINING: - There are eight statements in all. So the score below 16 denotes „Ineffectively‟; score 16-24 „Effectively‟ and score above 24 „Highly effectively‟ performed in the Organisation.

PLANNED TRAINING: - There are two statements in total. So the score below 4 explains that this training function is performed „Ineffectively‟; score 4-6 „Effectively‟ and score above 6 „Highly effectively‟.

UTILISATION: - There are four statements in all. So the score below 8 means that this function is performed „Ineffectively‟ in the organisation; score 8-12 „Effectively‟ and score

above 12 „Highly effectively.‟

TOOLS OF ANALYSIS

The following statistical tools would be applied for the purpose of analyzing the collected data:

„t‟ Test -„t‟ Test would be used to determine whether the mean of a sample deviates

significantly from the population mean. The value of the„t‟ – test is calculated as under: www.zenithresearch.org.in

x u t n s

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Where

x = The mean of the sample

u = Populations mean

n = The sample size

S = The Standard deviation of the sample.

If the calculated value of„t‟ exceeds the table value at desired level of confidence, this shows that difference between x and u is significant. On the other hand, if the calculated value of „t‟ is less than the table value at desired level of confidence, the difference between x and u is not statistically significant and hence the sample might have been drawn from a population with mean = u.

In addition to above some other statistical tools such as Mean, Standard deviation, Standard Error and Percentage have also been used in accordance with the requirement of the subject matter and the nature of inference to be drawn.

DATA ANALYSIS AND FINDINGS

Here, in this paper an attempt has been made to study as to how the training effectiveness is being performed in the Income tax department. The primary data has been analyzed on the basis of placement, hierarchy, qualification and experience of the officers/officials of Income-tax department. Training effectiveness sub-systems are being analysed in Tables No. 7, 8, 9 and 10 according to placement, hierarchy, qualification and length of experience of officers/officials of Income Tax Department.

PLACEMENT BASED ANALYSIS

Table 7 reveals mean score values along with SD and 't' values in connection with four variables explained to begin with, According to placement of the personnel of Income Tax Department i.e. (i) Commissioner‟s Office; (ii) Jt./Additional Commissioner‟s Office; (iii) Asstt./Dy. Commissioner‟s Office and (iv) Income Tax Officer‟s office.

Regarding Induction Training variable, the mean values along with‟t‟ values are 14.8 (t-.96); 15.99 (t-1.78); 17.18 (t-2.61) and 12.98 (t-2.01) for the four categories of personnel respectively. The mean values indicate that this training function is effective in the Income Tax Department as perceived by all the four classes of personnel. The‟t‟ values indicate that the mean score value pertaining to the officers of Commissioner‟s office and Jt. /Addl. Commissioner‟s office does not differ from the grand mean value. However, the mean score value for other two groups i.e. Asstt./Dy. Commissioner‟s Office and Income Tax Officer‟s offices differs from the grand mean value. So this variable is done effectively in the Income Tax Department as viewed by the officers/officials of all the four categories. However, there is still room for improvement i.e. to be highly effective. It is worth noting that the perception of managers of Commissioner‟s office, Asstt. /Dy. Commissioner‟s office and Income Tax

Officer‟s offices is in harmony with that of population as evident by„t‟ values.

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In respect of Need Based Training variable, the mean values along with 't' values are 18.01 (t-1.31); 18.95 (t-1.40); 16.06 (t-0.18) and 14.15 (t-1.98) for the Commissioner‟s office, Jt./Additional Commissioner‟s Office, Asstt./Dy. Commissioner‟s Office and Income Tax Officer‟s office respectively. The mean values indicate that this function is performing effectively in the Income Tax Department as viewed by the personnel of Commissioner‟s office, Jt./Additional Commissioner‟s Office, Asstt./Dy. Commissioner‟s Office. However, the function is discharged effectively as perceived by the personnel of Income Tax Officer‟s office. The‟t‟ values show that means score values for all the four classes of personnel does not differ from the grand mean value. Thus, this variable is done effectively in the Income Tax Department as viewed by the personnel of Commissioner‟s office, Jt./Additional Commissioner‟s Office, and Asstt./Dy. Commissioner‟s Office, However, the personnel of Income Tax Officer‟s office view that the job is done ineffectively. But none considers that the Income Tax Department is highly effective in performing this function. So, Income Tax Department has to travel long distance in order to achieve the goal i.e. being highly effective in this regard. It is satisfying that the perception of all the four categories of personnel is in conformity with that of population as evident by„t‟ values.

In connection with Planned Training variable, the mean values along with‟t‟ values are 4.15 (t-1.35); 4.67 (t-0.99); 4.17 (t- 0.98) and 3.76 (t-1.85) for the four classes of personnel respectively. The mean values indicate that this function does not perform effectively in the Income Tax Department as viewed by the personnel of Commissioner‟s office, Jt./Additional Commissioner‟s Office, and Asstt./Dy. Commissioner‟s Office. However, the function is performed ineffectively in the Income Tax Department as perceived by the personnel of Income Tax Officer‟s office. The 't' values indicate that the mean score value pertaining to all the four classes of officers does not differ from the grand mean value. So, none holds the view that Income Tax Department is highly effective in discharging this function. Thus, the Income Tax Department needs to do much more in order to be highly effective in performing this function. It is satisfying that the views of all the four categories of officers are in agreement with that of population as witnessed by„t‟ values.

In respect of Utilization variable, the mean values along with‟t‟ values are 8.96 (t-2.12); 7.20 (t-1.29); 7.66 (t-0.98) and 6.98 (t-3.65) for the four groups of officers respectively. The mean values indicate that this function is performed effectively in the Income Tax Department as perceived by the personnel of Commissioner‟s office. However, the function is performed ineffectively as viewed by the personnel of other three categories. The 't' values indicate that the mean score value pertaining to the officers of Commissioner‟s office and personnel of Income Tax Officer‟s office differs from the grand mean value. However, the mean score values for other two categories of officers viz; Jt. /Additional

Commissioner‟s Office, and Asstt./Dy. Commissioner‟s Office do not differ from the grand mean value. In fact, the crux of the problem is that the training is not being utilised properly in the Income Tax Department. So, Income Tax Department should take necessary steps to utilise the training in effective manner. It is bit disturbing that the perception of officers of Commissioner‟s office and personnel of Income Tax Officer‟s office differs from that of population as proved by „t‟ values.

HIERARCHY BASED ANALYSIS

Table 8 exhibits the mean score values along with SD and 't' values regarding four www.zenithresearch.org.in

variables explained to begin with, according to the Hierarchy level of personnel viz. (i)

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Lower level of management (ii) Middle level of management and (iii) Higher level of management.

Regarding Induction Training variable, the mean values along with‟t‟ values are 13.98(t-1.47); 14.89(t-1.12) and 19.95(t-9.47) for the lower; middle and higher level of management respectively. The mean values show that this function is performed effectively in the Income Tax Department as viewed by the officers of lower and middle level management. However, the job is done in highly effective manner in the Income Tax Department as perceived by the higher level of management. The‟t‟ values indicates that the mean score value for the lower and middle level of management does not differ from the grand mean value. However, the mean score value pertaining to the Higher level of management differs from the grand mean value. So, Income Tax Department can improve a bit or at least maintain its present position in this regard. The views of higher level of managers only are not in harmony with that of population as evidenced by „t‟ values. It appears that they have inflated opinion in this respect.

In connection with Need Base Training variables, the mean values along with 't' values are 14.90(t-2.01); 16.98(t-1.97) and 23.91(t-4.32) for the three hierarchy level of management respectively. The mean values indicate that this function is performed ineffectively in the Income Tax Department as viewed by the lower level of management. However, the function is discharged effectively as perceived by the managers of middle level. But the Job is done in highly effective manner in the Income Tax Department as opined by the higher level of management. The‟t‟ values show that the mean score value for the managers of lower and higher level of management differs from the grand mean value. However, the mean score value pertaining to the middle level of management does not differ from the grand mean value. So under such situation, it is very difficult to draw out inference about the extent the need-based-training is imparted in the Income Tax Department. However, there is no harm if Income Tax Department takes steps in identifying and, accelerates need-based-training programmes in future for the employees. The views of lower and higher level managers are not in agreement with that of population as shown by„t‟ values.

In respect of Planned Training variable, the mean score values along with 't' values are 4.02(t-0.98); 4.06(t-0.05) and 7.04(t-6.42) for the three hierarchy level of management respectively. The mean values indicate that this function is discharged effectively in the Income Tax Department as viewed by the managers of lower and middle level management. However, the function is performed highly effective in the Income Tax Department as perceived by the higher level of management. The‟t‟ values show that the mean score for the lower and middle level of management does not differ from the grand mean value. However, the mean score value pertaining to the managers of higher level management differs from the grand mean value. So let the Income Tax Department maintain its present position in this regard. The perceptions of higher level of management only are in sharp contrast to that of population as proved by„t‟ values. It seems they might have inflated their views in this regard.

In connection with Utilization variable, the mean values along with‟t‟ values are 6.69(t-5.01); 10.23(t-3.69) and 10.34(t-1.76) for the lower, middle and higher level of management respectively. The mean values indicate that this function is performed

ineffectively in the Income Tax Department as viewed by the managers of lower level www.zenithresearch.org.in

management. However, the function is discharged effectively as viewed by the other two

9

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 hierarchy levels of management i.e. middle and higher level of management. The‟t‟ values show that the mean score values for the lower and middle level management differs from the grand mean value. However, the mean score value pertaining to the higher level of management does not differ from the grand mean value. Thus, this variable is discharged ineffectively in the Income Tax Department as viewed by the lower level of management. However, the job is done effectively as perceived by the middle and higher level of management. But none considers that training is utilised in highly effective manner in the Income Tax Department. So it is better if Income Tax Department takes steps to see that training is utilised in an effective manner in the organisation. The perceptions of lower and middle level managers are not in harmony with that of population as proved by„t‟ values.

QUALIFICATION BASED ANALYSIS

Table 9 reveals mean score values along with‟t‟ values regarding four variables as explained to begin with, according to the qualification of personnel i.e. (i) Upto Graduates ; (ii) Post Graduates and (iii) Professionals like B.E., B.Tech., MBA, CA, ICWA, CS etc.

In respect of Induction Training variable, the mean values along with‟t‟ values are 12.67(t-2.78); 15.54(t-2.28) and 15.02(t-.81) for the three classes of managers respectively. The mean values indicate that this function is performed effectively in the Income Tax Department as perceived by personnel effectively in the Income Tax Department as perceived by performed of all the four groups. The‟t‟ values show that the mean score values for the managers of categories (i) and (ii) differ from the managers of categories (i) and (ii) differ from the grand mean value. However, the mean score values pertaining to the personnel of class (iii) do not differ from the grand mean value. Thus, the function, „Induction Training‟ of training effectiveness is conducted effectively in the organisation as viewed by the managers of all the three categories. However, none is of the opinion that the Income Tax Department is highly effective in discharging this function. So, there is still room for improvement in this respect. It is bit disturbing that the perception of I and II categories of managers is not in harmony with that of population as evident by„t‟ values.

In connection with Need Based Training variable, the mean values along with‟t‟ values are14.28 (t-2.01), 17.12(t-2.59) and 15.17(t-1.07) for the three classes of managers respectively. The mean values indicate that this training function is discharged ineffectively in the organisation as perceived by the managers of groups (i) and (iii). However, the function is done effectively as viewed by the personnel of category (ii). The‟t‟ values show that the mean score values pertaining to the managers of classes (i) and (ii) differ from the grand mean value. However, the mean score value for iii category managers of do not differ from the grand mean value. Thus, there is every need for exploring the possibility of need- based-training for the employees in the Income Tax Department. It is bit disturbing that views of I and II categories of managers are not in agreement with that of population as„t‟ values prove.

In respect of Planned Training variable, the mean score values along with‟t‟ values are 3.67(t-2.12); 4.29(t-1.02) and 4.13(t-.04) for the three categories of personnel respectively. The mean values show that this function is done ineffectively in the Income Tax Department as viewed by the managers of group (i). However, the function is discharged effectively as perceived by the personnel of groups (ii) and (iii). The‟t‟ values indicate that the mean score value for the managers of I category differs from the grand mean value. www.zenithresearch.org.in

However, the mean score values pertaining to the managers of II and III groups do not differ

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 from the grant mean value. So, it can be inferred that there is need to improve planning aspect of training in the Income Tax Department. It is better if training function is performed in planned way rather in haphazard manner. The views of III category of managers only are in contrast to that of population as proved by„t‟ values.

In connection with Utilization variable, the mean values along with‟t‟ values are 6.84(t-1.19), 7.23(t-.05) and 7.67(t-1.21) for the three categories of managers respectively. The mean values indicate that this training function is performed ineffectively in the Income Tax Department as viewed by all the three groups of personnel. The‟t‟ values show that the mean score value for each of the three categories of personnel does not differ from the grand mean value. Thus, the „Utilisation‟ aspect of training effectiveness is ineffectiveness in the organisation as perceived by the managers of all the three categories. This is really somewhat unpleasing situation. So, Income Tax Department should take necessary steps for the utilisation of training effectively in the organisation. It is satisfying that the perceptions of all the three categories of managers match with that of population as witnessed by„t‟ values.

EXPERIENCE BASED ANALYSIS

Table 10 depicts the mean score values along with SD, SE and 't' values regarding three variables explaining begin with, according to the length of Experience of the personnel of Income Tax Department i.e. (i) Low experienced (Below 8 years); (ii) Medium experienced (Between 8-18 years) and (iii) Highly experienced (Above 18 years) personnel.

In respect of Induction Training variable, the mean values along with‟t‟ values are 13.57(t-1.96); 14.57(t-.04) and 14.74(t-1.29) for the managers of three categories respectively. The mean values indicate that this training function is performed effectively in the Income Tax Department as viewed by all the three category of personnel. The‟t‟ values show that the mean score value pertaining to all the three categories of managers doesn't differ from the grand mean value. So, the „Induction Training‟ aspect of training effectiveness is done effectively in the Income Tax Department as perceived by all the three categories of managers. However, there is still room for improvement i.e. being highly effective in this regard. So let the Income Tax Department maintain its present position in discharging this function. It is also satisfying that the perception of all the three classes of managers is in conformity with that of population as proved by„t‟ values.

In respect of Need Based Training variable, the mean values along with‟t‟ values are 15.01(t-2.09); 16.13(t-.40) and 17.03(t-1.24) for the managers of three groups respectively. The mean values indicate that this function is done ineffectively in the Income Tax Department as viewed by the Ist group of managers. However, the function is discharged effectively as perceived by the personnel of (ii) and (iii) categories. The‟t‟ values show that the mean score value for the managers of I Category differs from the grand mean value. However, the mean score value pertaining to the II and III groups of personnel does not differ from the grand mean value. So, none is of the view that the Income Tax Department is highly effective in discharging this function. Thus, Income Tax Department needs to do much more in order to strengthen need-based-training for employees in the organisation. The perception of I category of managers only differs from that of population as„t‟ value proves.

In respect of Planned Training variable, the mean scores along with‟t‟ values are 3.76(t-2.03); 4.23(t-.79) and 4.12(t-.29) for the three classes of personnel respectively. The www.zenithresearch.org.in

mean values show that this function is performed ineffectively in the Income Tax Department

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 as perceived by the managers of class (i). However, the function is discharged effectively as viewed by the personnel of classes (ii) and (iii). The‟t‟ values indicate that the mean score value pertaining to I category of managers differs from the grand mean value. However, the mean score values for the managers of second and third groups do not differ from the grand mean value. So, department needs to improve itself in this regard. The perception of I category of managers only differs from that of population as„t‟ value proves.

In respect of Utilization variable, the mean values along with‟t‟ values are 6.98(t- 1.09); 7.34(t-.74) and 7.43(t-.17) for the managers of three categories respectively. The mean values indicate that the function is discharged ineffectively in the Income Tax Department as viewed by all the three grouping manager. The‟t‟ values show that the mean score value for the each of the two categories of personnel does not differ from the grand mean value. Thus, the function, „Utilisation‟ of training effectiveness is ineffective in the organisation as viewed by the managers of all the three categories. This is reason enough for Income Tax Department to think over as to how training can be utilised in a highly effective manner. It is good that the views of all the three categories of managers are in agreement with that of population as evident by‟t‟ values.

REFERENCES

Dale S.Beach, (1980), Personnel, Machmillan, New York, p.290.

Khandelwal, A.K., (1978), “Challenges of Training in Banks” Indian Journal of Training and Development, Vol.8, No.2, March-April, PP. 25-30.

Lippit, and Nadler Leonard (1979), “Emerging role of Training Director”, Training and Development, Vol. 33, No.6, June, PP. 26-30.

Lloyed L. Byars and Leslie W. Rue, (1984), Human Resource and Personnel Management, Richard D. Irwin, p.312.

Poonia, O.P.,(1990),”Training philosophy in State Bank of India”, a study paper submitted to Bhartiya Vidya Bhawan, Dayanand College of Communication and Management, Chandigarh.

Rao, T.V., (1995), The HRD missionary, Oxford & IBH Publishing Co. Pvt. Ltd; New Delhi, PP51-87.

Rao, Subba, P., (2010), Management: Theory and Practice, Himalaya Publishing House, New

Delhi, PP324-350.

Singh, B.R., (1982), “Designing Training and Development Systems”, Indian Journal of Training and Development, July-Sept. and Oct.-Dec., PP. 1-6. http://incometaxindia.gov.in http://irsofficersonline.org/

http://taxinfo-nwr.org/

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TABLE 7: PLACEMENT BASED ANALYSIS

MEAN & STANDARD DEVIATION OF TRAINING & DEVELOPMENT IN INCOME TAX DEPARTMENT

ALONGWITH ‘t’ VALUES

Variables Commissioner Office Addl. Commissioner Dy. Commissioner Office ITO‟s office Office

Grand „t‟ „t‟ „t‟ „t‟ Mean S.D. S.E. Mean S.D. S.E. Mean S.D. S.E. Mean S.D. S.E. Mean Value Value Value Value Value

I. Induction 14.8 5.45 .41 0.96 15.99 4.27 0.89 1.78 17.18 3.49 .84 2.61** 12.98 5.99 .57 2.01* 14.67 Training

II. Need Base 18.01 6.22 .46 1.31 18.95 7.47 1.49 1.40 16.06 4.12 .94 0.18 14.15 7.23 .59 1.98* 16.53 Training

III. Planned 4.15 1.78 .12 1.35 4.67 1.56 0.32 0.99 4.17 2.23 .48 0.98 3.76 2.08 .25 1.85 4.07

Training.

IV. Utilisation 8.96 5.67 .42 2.12* 7.20 7.19 0.72 1.29 7.66 2.27 .57 0.98 6.98 3.51 .31 3.65** 8.01

* Significant at 1 % level (1.96)

** Significant at 5 % level (2.54)

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TAVKE 8: HIERARCHY BASED ANALYSIS

MEAN & STANDARD DEVIATION OF TRAINING & DEVELOPMENT IN INCOME TAX DEPARTMENT

ALONGWITH ‘t’ VALUES

Grand Variable Lower Management Level Middle Management Level Higher Management Level Mean

't' 't' 't' Mean SD SE Mean SD SE Mean SD SE Values Values Values Values

1 Induction Training 13.98 5.78 .44 1.47 14.89 4.88 .51 1.12 19.95 2.09 .58 9.47** 14.27

2 Need Base Training 14.90 6.78 .47 2.01* 16.98 5.53 .53 1.97* 23.91 5.47 1.57 4.32** 16.21

3 Planned Training. 4.02 2.09 .12 0.98 4.06 1.59 .15 0.05 7.04 1.41 .42 6.42** 4.12

4 Utilisation 6.69 3.57 .24 5.01** 10.23 6.14 .59 3.69** 10.34 4.23 1.23 1.76 8.14

* Significant at 1 % level (1.96)

** Significant at 5 % level (2.54)

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TABLE 9: QUALIFICATION BASED ANALYSIS

MEAN & STANDARD DEVIATION OF TRAINING & DEVELOPMENT IN INCOME TAX DEPARTMENT

ALONGWITH ‘t’ VALUES

Grand Variable Upto Graduates Post Graduates Professionals Mean

't' 't' 't' Mean SD SE Mean SD SE Mean SD SE Values Values Values Values

1 Induction Training 12.67 6.29 .61 2.78** 15.54 4.88 .42 2.28* 15.02 5.36 .52 0.81 14.52

2 Need Base Training 14.28 6.67 .69 2.01* 17.12 6.23 .53 2.59** 15.17 5.22 .53 1.07 15.73

3 Planned Training. 3.67 2.01 .19 2.12* 4.29 2.03 .14 1.02 4.13 2.01 .20 0.04 4.01

4 Utilisation 6.84 3.11 .32 1.19 7.23 3.35 .29 0.05 7.67 3.31 .32 1.21 7.08

* Significant at 1 % level (1.96)

** Significant at 5 % level (2.54)

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TABLE 10: EXPERIENCE BASED ANALYSIS

MEAN & STANDARD DEVIATION OF TRAINING & DEVELOPMENT IN INCOME TAX DEPARTMENT

ALONGWITH ‘t’ VALUES

Grand Variable Low Experienced Medium Experienced Highly Experienced Mean

't' 't' 't' Mean SD SE Mean SD SE Mean SD SE Values Values Values Values

1 Induction Training 13.57 5.19 .52 1.96* 14.57 5.87 .52 0.04 14.74 5.48 .52 1.29 14.52

2 Need Base Training 15.01 5.59 .58 2.09* 16.13 6.23 .61 0.40 17.03 6.78 .64 1.24 16.17

3 Planned Training. 3.76 1.72 .17 2.03* 4.23 2.13 .19 0.79 4.12 2.02 .19 0.29 4.03

4 Utilisation 6.98 3.01 .32 1.09 7.34 3.54 .32 0.74 7.43 3.53 .33 0.17 7.01

* Significant at 1 % level (1.96)

** Significant at 5 % level (2.54)

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INNOVATIONS IN CLOUD COMPUTING: THE WAY AHEAD

ABHISHEK PANDE*

*Faculty, Orange School of Business, Nagpur, Maharashtra.

ABSTRACT

The strategic vision has been set. The current state of IT is understood in terms of how,what is in place today from a process, organizational and technology perspective. The future state of IT within the business has been defined. Now is the time to plan out how the organization will need to change in order to achieve its vision for the future.Most companies today are under tremendous pressure to reduce costs wherever possible. IT budgets are traditionally targets for cost cutting initiatives. These cost cutting initiatives often lead to failed or partially implemented systems, often intended to replace aging systems, which were poorly integrated. Further exacerbating the problem, the systems that were being replaced were never retired, leading to functionality split between numerous applications, causing complex and sometimes manual processes to be implemented and maintained across the old and new systems.

KEYWORDS: Components, Enterprise Architecture, IaaS, PaaS, SaaS, Strategy, Technology. ______

INTRODUCTION

The business today starts with the vision that organization has defined related goals and objectives required to achieve that vision. An organization with the goal of reducing IT spend over number of years may as an example use reduced capital expenditures as a component to the case for pursuing a solution. New organizations primarily concerned with growth may use the rapid prov isioning time for a solution as a component to drive the case for a solution base. In the space, both of these can be achieved through the implementation of standardized software and/or hardware infrastructures.From an organizational perspective, the structure with the IT business will become more aligned as a business and

less like a department within the business. The process to make this change requires planning and insight to be successful.From a technology perspective, the IT infrastructure will become more standardized, less complex, and to some extent productized when viewed from the perspective of its clients. IT will sell products rather than provide services.These organizational and technology changes cannot and should not happen overnight. Incremental steps should be planned and executed to move the organization in the direction of running IT as a business, and to alter the technology infrastructure to enable IT to sell its product portfolio.Growth through M&A is a strategy employed by many organizations today as a means to expand their customer base, increase in products lines, breaking into

emerging markets, and a variety of other reasons. This growth usually involves the www.zenithresearch.org.in

acquisition of new IT personnel, processes, applications, and technologies. These all result

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 in duplication in many layers of IT, a high level of IT complexity, and related high IT infrastructure and support costs.

REVIEW OF LITERATURE

While there are many definitions and nuances of Cloud Computing, we see that the National Institute of Standards & Technology (NIST) 1, definition is gaining popularity in and around the world.Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider.There are many ways to implement cloud computing today. Some are more successful than others. The ones that have been successful have applied a discipline to the methods utilized in their creation. A framework and standard architectural development process focusing on the needs of the business has achieved the greatest success.The amount of time it takes to implement a cloud based solution (public or private) is a critical factor on making the business case. It is important to realize that there are multiple milestones and perhaps different business justifications at various phases. These steps will involve process, system, organizational and other types of change. To ensure ongoing executive support, it should be a key principle to achieve a business benefit at each milestone.

CHARACTERISTICS OF CLOUD COMPUTING

Cloud computing provide real cost savings and agility to its customers in all cloud service models. These companies all had a vision for their business that used cloud computing as an enabler.What is your company's vision for cloud computing ? This question forms the foundation for a cloud computing strategy. Whether trying to create a private cloud to better serve internal customers or building a public cloud for an external customer base, there are several key considerations that are linked to successful cloud initiatives.

 Understand the IT service portfolios, service-level requirements and service costs before building a private cloud service.

 Develop a separate strategic plan for all services under consideration, as well as an analysis against external service offerings.

 Build a private cloud service only after developing a complete business case analysis.

 Evaluate and constantly benchmark the solution against external cloud service

offerings, and ensure that flexibility is designed in at the onset.

ENTERPRISE ARCHITECTURE OF CLOUD COMPUTING

A company's business architecture plays a key role in determining how cloud should be leveraged to achieve goals and objectives. This business architecture can be broken down into two primary components, the business strategy and the structure utilized to implement that strategy.The organizational strategy regarding the use of IT, definition on how business processes operate, and the level of business and IT alignment as well as organizational and

1 NIST is the federal technology agency that works with industry to develop and apply technology, www.zenithresearch.org.in

measurements, and standards.

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 architectural maturity all help determine how cloud services should be leveraged.The business structure defines the core capabilities of the organization and what business processes support those capabilities.This business goal can be implemented through a consolidation and virtualization strategy.The business processes supporting this strategy would be those revolving the methods and procedures for requesting hardware services from the IT department.

Enterpri se architecture is the glue between the business strategy and IT execution of that strategy,this is especially true in the case of cloud computing.IT is acting as a business when delivering cloud services to its users. It needs to establish a product portfolio to sell (cloud services), market this portfolio (to internal and/or external users), provide a financial model to charge or recoup costs for services provided, provide customer services.Cloud providers know that scale brings prices down and that to attract customers they need to minimize entry barriers to make it a no brainer for customer to join. They do this by selling blocks of capacity to customers with T-Shirt pricing2. They allow customers to own the blocks or lease them over time to ensure profitability.They make it easy to join with a one- stop-shop offering.With this type of solution, customers do not need to build their own data centers, hire and train staff,negotiate license deals, procure and set up hardware, or provide support.In order for companies to achieve greater levels of process standardization and integration, a change in organizational structure is often necessary. For this to be successful, well defined governance processes need to be in place to help guide the required changes.

The successful deployment of clouds within organizations depends on a number of factors, some technical and some organizational. These include :

 The extent of infrastructure standardization among the existing application silos of the current state architecture.

 The complexity and degree of customization and integration of the current state architecture.

 The willingness of lines-of-business to share infrastructure instead of owning their own.

 The extent to which the current state architecture must accommodate legacy systems.

 Past experience of the IT department in deploying technologies and concepts critical

for clouds, such as standardization, consolidation, virtualization, clustering, and more.

Understanding the current levels of maturity for an organization will help guide efforts in building cloud solutions, and will provide necessary inputs to the steps required for a successful implementation. From an enterprise architecture perspective, future state business, application, information, and technical models will be developed to show how the business capabilities can be implemented with a cloud solution.

2 T-Shirt pricing companies have different policies about what services they charge for and what services they www.zenithresearch.org.in

do not charge for.

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FIGURE 1. MAPPING OF ARCHITECTURE

CASE 1

At a large financial services firm focused on growth, the IT organization had become very good at building applications in support of the business needs. They had well defined methodologies in place for developing applications and had established procedures to bring those applications into production. After several years and with over 1800 applications in production, they came to the realization that, although they had well defined, mature methodologies and procedures, the IT environment was getting harder to manage, was difficult to scale, and had year over year increase in operational costs to support. Their project based approach to new functionality had resulted in server sprawl, an extremely www.zenithresearch.org.in

large number of applications, poor quality, challenging maintenance and production support,

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 and a very complex IT environment.In order to solve these problems, and to help the business achieve a competitive edge, the company standardized on a single development language, build re-usable components, and better utilize hardware. They chose to do this by building a private cloud to supports Platform-as-a-Service using industry standard hardware and middleware in order to support their standard programming environment (Java)3.They have been able to achieve a 35% reduction in operating costs, a 30% reduction in project costs, a 10% decrease in running costs year-over-year, and a 1 to 10 shared server consolidation ratio. In addition, they have increased their customer satisfaction scores, and doubled their capacity while reducing power consumption by 44 % over 4 years through virtualization.

CASE 2

A state government, faced with mounting budged issues, established a central IT organization in order to consolidate operations and help reduce the overall cost of government.

This central IT organization was faced with the need to :

 Perform a statewide data center consolidation.

 Produce new streams of revenue.

 Foster an effective IT organization and culture that supports a shared services model.

 Provide a sustainable infrastructure and business continuity.

 Leverage compliance, standards, and optimization to become an agile, secure, efficient and effective service provider.

The IT organization, in meeting these challenges, were able to set up a sustainable, manageable and marketable cost recovery model with an offering that is easy to manage and adheres to stringent security and compliance regulations. The first of several solutions was to set up a private cloud supporting Database-as-a-Service (DbaaS) for the various state agencies and local governments.The ability to deploy strategic applications based on specific customer needs is of high importance. However, if or when growth potential is reached, these companies will move towards a model more geared towards cost optimizations and maximum profitability from their existing

customer base.

COMPONENTS OF CLOUD COMPUTING

Architectural components of cloud computing are IaaS, PaaS, and SaaS, that can use to accomplish business goals.Many companies are building cloud services today. The market has progressed from Infrastructure as a Service (IaaS) offerings to more complex offerings around Platform as a Service (PaaS) and Software as a Service (SaaS). Following are two examples of organizations that have solved particular business problems by utilizing PaaS.

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3 Java is a programming language originally developed by James Gosling at Sun Microsystems.

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FIGURE 2. DIAGRAMATIC REPRESENTATION OF COMPONENTS

Many companies today are adopting Software-as-a-Service as a model for implementing business functionality. Among other things, SaaS promises to lower capital expenditures, decrease IT support costs, and provide better cash flow by spreading out payments for the service over the life of the contract. Businesses also like the fact that SaaS solutions tend to have a higher user adoption rate, and have the ability to scale up and down with demand. The potential benefits of SaaS are well advertised. All of these benefits can and have been realized by many organizations implementing SaaS based applications. It is important however, to do a full analysis of any given SaaS solution in order to determine if it is a good fit for the specific business need of the organization. For example, an organization that currently has a CRM application with a high degree of customization and integration needs may not find a competitive SaaS based solution that can fulfill their functional requirements for the application.

When examining the cost factors of a SaaS solution, both hard and soft costs must be taken into account. Soft costs include such things as training staff on the new application, and the modification the existing business processes that may need to occur based on the functionality of the new SaaS solution. Hard costs include integration requirements for the new application into existing systems.All changes are risky to an organization. The understanding and management of the risks associated with a SaaS solution can greatly improve its overall chance of success. An example of such a risk revolves around functionality provided by a given SaaS solution. If the solution does not provide for all the functionality require by the business, the organization can build what is required on top of

the SaaS solution, or go to multiple providers to get all the functionality required.Finally, in www.zenithresearch.org.in

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 downturned economies, there are several reasons for implementing SaaS. Tight capital budgets are generally the norm today in most organizations. SaaS has the ability to greatly reduce CAPEX4 in an organization. Many companies today have limited available resources because of IT staff reduction activities. SaaS generally requires far fewer support resources not only for implementation, but ongoing support needs as well. Last, SaaS vendors can offer favorable payment schedules to help cash flow. Costs for the applications can be spread out over the life of the contract rather than be paid out in lump sums up front.

In many cases, organizations will go through an IT Optimization process to facilitate this change. In line with the MIT Sloan Architecture Maturity model5 (Figure 3), organizations will progress from IT Silos where there is little technology standardization and potentially complex integrations between stand alone systems, into the Standardized Technology stage where standards are in place and companies begin to shift IT spend from local applications to a shared infrastructure model, into the Optimized IT Core stage where processes are digitized and companies move from a local view of data and applications to a more enterprise view, and finally into the Business Modularity phase where the digitized processes put in place in the previous phase are exposed as services to IT clients.

FIGURE 3. STANDARD IT OPTIMIZATION

4 CAPEX, an abbreviated word that signifies "capital expenditure."

5 MIT Sloan School of Management has defined,the model that can be used to drive architecture and www.zenithresearch.org.in

infrastructure related Technology.

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Viewed from a cloud perspective these stages align with the IT transformation that organization will progress through on the roadmap to cloud services. As an example, database as a service starts with local applications utilizing their own database software and hardware to provide business functionality.Figure 3 depicts a high level generic roadmap for an organization to move from a Business Silo architecture maturity level into a shared services maturity level. It is important to note that the evolution from one state of architectural maturity to another also requires organizational change.

CONCLUSION

Organizations entering the public cloud space as a way to generate new sources of revenue or as a way to extend more services to their existing client base will need to consider their level of organizational maturity when determining the costs associated with bringing a public cloud solution to market. As an example, public cloud providers require a high level of process standardization to be successful. If that level of standardization is not in place, then the company will need to invest in building out standard processes and undergo some level of organizational change to affect the use of those standards prior to launching their cloud solution. This will impact time to market for the initiative, as well as the ROI6 for the offering, at least in the short term. More than anything else, good governance is the key enabler of cloud computing. Determining what to create, who should create it, and how it should be created are all decisions that impact many areas of a company.The creation of business cases centering around financial returns for cloud computing sets the direction for IT organizations looking to operate as a business and achieve the benefits of cloud computing.Cloud computing is not the end goal for an organization. Providing value in the drive to achieve business objectives is the end goal. Cloud is one way to achieve that goal.

REFERENCES

JOURNALS

Wu, X., Zhang, C. and Zhang, S. (2005) ‘Database classification for multi-database mining’, Information Systems, Vol. 30, No. 1, pp.71–88.

Yen, S.J. and Lee, Y.S. (2006) ‘An efficient data mining approach for discovering interesting knowledge from customer transactions’, Expert Systems with Applications, Vol. 30, No. 1, pp.650–657.

Yin, X. and Han, J. (2005) ‘Efficient classification from multiple heterogeneous databases’, Proc. Ninth European Conference on Principles and Practice of Knowledge Discovery in

Databases, pp.404–416.

Zhang, S., Wu, X. and Zhang, C. (2003) ‘Multi-database mining’, IEEE Computer Intelligence,

Vol. 2, No. 1, pp.5–13, http://www.dbis.informatik.hu-berlin.de/dbisold/lehre/WS0405/KDD/ paper/ZWZ03.pdf.

6 ROI (return on investment) is how much profit or cost saving is realized as a result. www.zenithresearch.org.in

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STANDARDS

ACM (Association for Computing Machinery) : http://www.acm.org/

ANSI (American National Standard Institute) http://www.ansi.org/

Common Object Request Broker Architecture (CORBA®) 7

IEEE (Institute of Electrical and Electronic Engineers) http://www.ieee.org/portal/site

OMG (Object Management Group) http://www.omg.org/

The Open Group http://www3.opengroup.org/

Unified Modeling Language™ (UML®) and Model Driven Architecture® (MDA®)8

W3C (World Wide Web Consortium) http://www.w3.org/

WEBSITES http://www.amd.com/cloud http://content.dell.com/us/en/enterprise/cloud-computing.aspx http://www.ibm.com/cloud-computing/us/en/ http://www.microsoft.com/en-us/cloud/default.aspx?fbid=_nyzTI-GdiV http://www.netapp.com/in/solutions/infrastructure/cloud/ http://www.oracle.com/us/technologies/cloud/index.html http://www.salesforce.com/cloudcomputing/ http://www.rackspace.com/cloud/what_is_cloud_computing/

http://www.wikinvest.com/concept/Cloud_Computing

7 The Common Object Request Broker Architecture (CORBA) [OMG:95a] is an emerging open distributed object computing infrastructure being standardized by the Object Management Group (OMG). www.zenithresearch.org.in

8 The Model-Driven Architecture approach defines system functionality using a platform-independent model

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SECURITY MEASURES OF HACKING AND CRIME

DR.NARENDRA KUMAR*; MS.SALVI RATHI**

*Professor, Alpine College of Engineering, G.B Nagar, Greater Noida **Assistant Professor, Alpine College of Engineering, G.B Nagar, Greater Noida.

ABSTRACT

Computer crimes encompass unauthorized or illegal activities perpetrated via computer as well as the theft of computers and other technological hardware. There are various kinds of computer and internet related crimes. The most common amongst there is the use of various to corrupt and/or destroy data store in computer system.

These viruses can be attached to e-mails, FTPed programmes, etc. Other forms of fraud, robbery and forgery also exist. Internet also makes defamation, assault on a person’s character etc. Relatively easier and the possibilities of a person being caught and held liable are remote. Infect the growth of crime on the internet is directly proportional to the growth itself and so is the variety of crimes being committed or attempted.

Hacking typically involves compromising the security of networks, breaking the security of application software, or creating malicious programs such as viruses. Hacking is not a simple operation or sequence of commands as many people think. Hacking is a skill. To hack you must change and adapt your approach depending on the obstacles you come across. Hacking is not a specific term. The impact of computer hacking varies from simply being simply invasive and annoying to illegal.

KEYWORDS: Self Protection, Information Security, Competitiveness of Nations, Information Separation and Firewalls etc. ______

INTRODUCTION

Crime is a social and economic phenomenon and is as old as the human society. Crime is a

legal concept and has the sanction of the law. Crime or an offence is “a legal wrong that can be followed by criminal proceedings which may result into punishment”. To provide this self- protection, organizations should focus on implementing cyber security plans addressing people, process, and technology issues.

Organizations need to commit the resources to educate employees on security practices, develop thorough plans for the handling of sensitive data, records and transactions, and incorporate robust security technology such as firewalls, anti-virus software, intrusion

detection tools, and authentication services throughout the organizations' computer systems.

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HACKING

"Hacking" refers to "Unauthorized Access to a Computer Network" which may otherwise be called an "Unauthorized Intrusion”. Hacking is the act of gaining access without legal authorization to a computer or computer network. And the person who performs it called “Hacker”. Many hackers just like the challenge of breaking through a computer security system but not all hackers are harmless. It must also be said that not all hackers are bad. Government and huge companies use hackers to maintain their security systems.

If individuals can successfully enter computers via a network, they may be able to impersonate an individual with high level security clearance access to files, modifying or deleting them or introducing computer viruses or Trojan horses. Hacking is defined as:“Whoever with the internet to cause or knowing that he is likely to cause wrongful loss or damage to the public or any person, destroys or deletes or alters any information in a computer resource or diminishes its value or utility or affects it injuriously by any means commits hacking”. There is an aura of mystery that surrounds hacking, and a prestige that accompanies being part of a relatively "elite" group of individuals who possess technological savvy and are willing to take the risks required to become a true "hacker"

 A person who practices hacking is called a hacker.

 Hacking can be just to find out how it works without criminal intent.

 Hacking can be simply to crack a code

 A hacker can be breaking into a computer that's yours, often not wanted, and now prohibited by law.

DIFFERENCE BETWEEN HACKER AND CRACKER

Cracker is a person who breaks security on a system. The cracker is looked down upon in the hacker group. The crackers are usually more secretive and have small groups in which they share their knowledge although they like to refer to themselves as hackers. Crackers are potentially more harmful than the true hacker who just wants to know the workings of a system.

A person who enjoys exploring the details of programmable systems and how to stretch their capabilities, as opposed to most users, who prefer to learn only the minimum necessary, is called Hacker. Hackers are becoming a menace so uncontrollable that even the

largest companies in the world are finding it difficult to cope up with their incessant attacks.

TYPES OF HACKING

 WHITEHAT HACKING: Whitehat hacking is nothing but, using the hacking techniques for finding the exploits and tweak them. Whitehat Hackers are the real legends of the internet, because they are always try to finding the exploits and fix them before somebody find it.Whitehat hackers work from around the world,

according to some geeks it is a secret that “A group of White hackers community www.zenithresearch.org.in

always monitoring the whole Internet traffic to protect us.

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 BLACKHAT HACKING: Blackhat hackers are nothing but the malicious hackers, these people are the bad guys who always try to use the exploits in to their favor in order to get advantage. These hackers always trying to find the exploits and make it profit for them. These type of hackers always concentrating on the weak parts of the internet users.Blackhat hacking is divided in to many Categories.

IS HACKING CRIME

Computer hacking that is done for the purpose of committing financial fraud is a white collar crime that is taken very seriously in the United States. Federal law defines computer hacking as intentionally accessing a computer without authorization or exceeding authorization in order to access restricted information. People started thinking that Hacking is a crime, hackers are criminal.

Doing hacking is illegal. Unfortunately people started commenting about hacking that it is illegal without any knowledge. If the hacking is done for illegal things it is called as Malicious hacking. In some cases, individuals move on to programming and destruction of other individuals programs through the writing of computer viruses and Trojan horses programs which include computer instructions to execute a hacker's attack.

MEANING OF CRIME

A computer crime is any crime that takes place using a computer as a key instrument in that crime. . Unauthorized access and damage to property, theft and distribution of obscene and indecent material are the crimes with which we have become familiar. These crimes have assumed new dimensions with the emergency of the internet. The internet is fast becoming a way of life for millions of people. Cyber crime is subset of computer crime which itself is a subset of the universal set of digital crime. The phenomenal growth of internet has provided new vista for computer crimes.

This can be understood with the help of the following diagram:

Digital Crime

Computer Crime Cyber Crime

CrimeCrime

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CLASSIFICATION OF CRIMES

Cyber crime has been classified on the basis of nature and purpose of the offence and has been broadly grouped into three categories depending upon the target of crime. It may be against person, property, or government. The cyber crimes against person include like hate message, stalking defamation and transmission of pornographic material. Cyber crimes involving property includes unauthorized computer trespass, vandalism and transmission of harmful programmes unauthorized possession of computerized information. Third category of cyber crimes is more popular as Cyber-terrorism.

(A) Where computer is the target of the crime, e.g. theft of data/information, theft of intellectual property such as computer software, unlawful access to criminal justice and government records etc.

(B) Where computer facilities the commission of crime e.g. fraudulent use of Automated Teller Machine (ATM) Card, Credit Card frauds, telecommunication frauds involving stock transfer etc.

(C) Whether computer is incidental to the crime e.g. these crimes can be divided into two broad categories:

a. Internet crimes- such as theft of information, theft of passwords, espionage, spamming, launch of malicious programmes etc.

b. Web based crimes such as web sites based programmes, crimes through e- mail, use net related crimes, internet relay chat crime etc.

CYBER CRIMES AND INFORMATION TECHNOLOGY

Information Technology Act which was passed with the objective of promoting a secure electronic environment deals with issues subsidiary to secure electronic environment such as contravention relating to electronic transaction and information technology offences. It also seeks to set up various authorities to help regulate an information technology regime.

PENALTIES AND ADJUDICATION: Indian Parliament has adopted two-fold strategy cyber crimes. It has amended Indian Penal Code (IPC) expressly and has provides provisions in the Information Technology Act, which was enacted to facilitate in electronic commerce in India, to deal with compute related crimes. The Information Technology Act has extra-territorial jurisdiction and applies to any

offence or contravention of the Information Technology Act. This feature of Information Technology Act is not unusual. Similar provision is found in the Information Technology legislation of other jurisdiction also.

Section 43 of the Information Technology Act provides penalty for damage to computer system and says that if any person without permission user of computer:

 Securities access to,

 Downloads, copies or extracts data from,

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 Introduces or causes to be introduced any computer viruses to.

 Damages or causes to be damaged causes disruption to,

 Tempers or manipulates any computer, computer system or network.

Section Offence Punishment

65,43 Damage to computer, Computer Compensation of Rs. 1 crore. system etc.

44(a) Failing to furnish any document Penalty not exceeding a lakh Rs. 50 thousand rupees.

44(b) Failing to file any return or furnishing Penalty not exceeding 5 thousand rupees information within the time for ever day during which such failure prescribed. continues.

44(C) Not maintaining books of account or Penalty not exceeding 10 thousand rupees records. for every day during which the failure continues.

45 Offences for which no penalty is Compensation not exceeding 25 thousand separately provided. rupees.

65 Tampering with computer source Imprisonment upto 5 years and fine upto document. Rs. 2 lakh rupees or both.

66 Hacking with computer system with Imprisonment upto 3 years or fine which the intend or knowledge to cause may extend upto 2 lakh rupees or both. wrongful loss.

67 Publication of obscene material in an Imprisonment upto 5 years and fine upto electronic form. 1 lakh and in the event of second or subsequent conviction, imprisonment upto 10 years and fine upto Rs. 2 lakhs or both.

69 Failing to extend facilities to decrypt Imprisonment upto 7 years. information which is against the interest of sovereignty or integrity of India.

70 Securing or attempting to secure access Imprisonment which may extend to 10 to a protected system. years and fine.

71 Misrepresentation before controller or Imprisonment upto 2 years or fine upto www.zenithresearch.org.in

certifying authority for obtaining

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digital signature licence. Rs. 1 lakh or both.

72 Break of confidentiality and privacy. Imprisonment upto 2 years of fine upto Rs. 1 lakh or both.

73 Publishing of digital signature -do- certificate for fraudulent purpose.

74 Publication of digital signature -do- certificate for fraudulent purpose.

76 Any computer, computer system, Liable to confiscation. floppies, compact disks, tap drives or any other accessories related there to use for contravention of this Act, rules, orders or regulations made there under.

THE CYBER REGULATIONS APPELLATE TRIBUNAL: The Information Technology Act provides for establishment of Cyber Regulations Appellate Tribunal (CRAT) to decide appeals against the orders passed by the controller and Adjudicating Officer. The Act provides for specialized adjudicatory machinery, as the experience suggests, is bound to enhance decision making quality in many respects.

The central Government shall, establish one or more appellate tribunals to be known as the Cyber Regulations Appellate Tribunal. The Act envisages a need to have more than one appellate tribunal because of the increase in workload in future and unfeasibility of one central appellate tribunal for those who are residing at far off places.

SECURITY MEASURES

Computer security is concerned with preventing information stored in or used by computers from being altered, stolen, or used to commit crimes. The field includes the protection of electronic funds transfers, proprietary information (product designs, client lists, etc.), computer programs, and other communications, as well as the prevention of computer viruses. Fortunately, companies looking to protect themselves from computer crime can choose from a broad range of security options. Some of these measures are specifically

designed to counter internal threats, while others are shaped to stop outside.

Following directions by National Security Advisor, the National Technical Research Organization (NTRO) is all set to strengthen the cyber security of the ATC. Cyber Security Co-ordination Centre will also be set up for the controller. Hacking has been a mainstay in the PC era, and moving into mobile, but where else can a hacker go? Each day, reports concerning “hacking” grow and have increased dramatically. As our world becomes more advanced technologically, the hacking method has also become more sophisticated.

 The first phase of a document destruction security plan is to control the exit of

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leave the building to be destroyed rather than in regular waste or even worse in someone’s briefcase.

 The second step is to have personnel adhere to and enforce the written policies and procedures. One element of this is training every company employee on how to determine what documents need to be destroyed and how to handle and collect those documents

 The third step is to have physical security measures in place to help facilitate the security of the documents. These measures can include access control systems for the exterior or interior parts of the building to restrict access to documents, CCTV systems for visual identification and verification and burglar alarm systems for after hours.

WAYS TO MINIMIZE POTENTIAL FOR HACKING

There are a number of ways for schools to minimize potential for hacking.

 Schools need to clearly establish acceptable use policies and delineate appropriate and inappropriate actions to both students and staff.

 Students and staff need to instructed regarding hacking, the mentality associated with it, the consequences of various hacking actions and possible consequences of interacting and forming online relationships with anonymous individuals who claim to be proficient in invading others' privacy.

 The use of filters may be considered in reducing access to unauthorized software serial numbers and hacking-related materials, newsgroups, chatrooms and hacking organizations.

 Teachers need to be aware of student activities in the computer labs and pay special attention to things they hear in terms of hacking behavior.

CONCLUSION

The most common computer crime committed daily, some aware and many not, are the illegal sharing of computer software. Software is any of the programs used in operating a digital computer, as input and output programs. A computer crime is any crime that takes place using a computer as a key instrument in that crime. Some well-known computer crimes are hacking, cracking, plagiarism, and fraud. Hacking has become such a problem in today's computer dependent society that stronger measures must be implemented to stop hackers, and if hackers are still successful, they should be severely punished.

To conclude we can say that crime is a new form of crime that has emerged due to the computerization of various activities. With the rapid growth of information technology cyber crimes are increasing leaps and bound with the increase for internet connectivity. To deal with the problem, Information Technology Act, 2000 provides penalty for the offences relating to internet So we can safely conclude by saying that every possible care is taken by

the Information Technology Act to cope up with the problems. www.zenithresearch.org.in

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REFERENCES

1. http://www.intergov.org/public.administration/information/latest_web_stats.html.

2. http://www.cyberspacelaws.com/crimes.asp

3. Indian Police Journal, April-June (2004).

4. http://www.goesi.com/prelea.000321.html

5. Peter H Lewis, “Loses from Computer Breaches are on the rise” in N.Y. Times June 18 (1996).

6. Michael Rustard & Lori E Eisenschmidt, “The Commercial Law of Internet Security” High Technology Law Journal 215, vol.10:2 (1995).

7. Arati Dubey, “Cyber Law and Terrorism”, National Conference on Cyber Laws and Legal Education, NALSAR University of Law 38 (2000).

8. Subhas P.Rathore & Bharat B.Das, “Cyber Crimes: The Emerging Trends and Challenges” National Conference on Cyber Law & Legal Education, NALSAR University of Law 55-67 (2001).

9. Joseph Polony, “Computer Frauds Law Enforcement Response” FBI Bulletin, vol. VI, NO. 5, May (1998).

10. Dr. Farooq, Cyber Law in India 318 (2000

11. Http://www.accessorh.net/-cyberwar/cyberpunk.html.

12. Nandan Kamath, a Guide to Cybeslaws & the Information Technology Act 2000 with Rules.

13. Burlesom V. State 502, Sec.60 2d, (App.1991).

14. Dr. Farooq, Cyber Law of India 324. (2000).

15. Http: //www. Natlconsumersleague.org/top10net.

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PERFORMANCE EVALUATION OF AODV, DSR, DSDV AND TORA ROUTING PROTOCOLS

ER. SAURABH MITTAL*; PINKI**

*Sr. Assistant Professor, HCTM, Kaithal - 136027. **HCTM, Kaithal - 136027.

ABSTRACT

In this paper we are considering the performance evaluation of three routing protocols in Mobile Ad-hoc Networks (MANETs). We have tested the effect of speed, no. of packets transmitted, lost, bytes, bitrate and packet delay for Destination Sequence Distance Vector (DSDV) protocol, Dynamic Source Routing (DSR), Ad-hoc On Demand Distance Vector (AODV) and Temporally Ordered Routing Algorithm. By results we can say that TORA and DSR shows the better performances as compared to AODV and DSDV routing protocols.

KEYWORDS: MANETS-Mobile Adhoc Networks, AODV-Adhoc On demand Distance Vector, DSR-Dynamic Source Routing, DSDV-Destination Sequence Distance Vector, TORA-Temporally Ordered Routing Algorithm. ______

INTRODUCTION

1. MOBILE ADHOC ROUTING PROTOCOLS

Mobile Ad hoc Networks (MANETs) (Jiang, 2002) are future wireless networks consisting entirely of mobile nodes that communicate in the absence of any centralized support. Nodes in these networks will both generate user and application traffic and carry out network control and routing duties. Routing protocols in ad hoc networks has received wide interest in the past years due to the fact that existing internet routing protocols were designed to support fixed infrastructure and their properties are unsuitable for mobile ad hoc networks. The up to date standardized protocols are classified into reactive and proactive protocols. Reactive protocols, such as AODV (Jiang, 2002) and DSR (Mahmood, 2009), find the route only when there is data to be transmitted and as a result, generate low control traffic and routing overhead. Proactive protocols like OLSR and DSDV (Chaudhry, 2005), on the other hand, find paths in advance for all source and destination pairs and periodically exchange topology

information to maintain them.

Destination Sequence Distance Vector (DSDV), Dynamic Source Routing (DSR), and Ad- hoc On Demand Distance Vector (AODV) are classified under flat ad-hoc routing protocols where all nodes play an equal role in routing and the addressing scheme is flat.

DSDV is a flat proactive (or table-driven) protocol. It sets up tables required for routing regardless of any traffic that would require routing functionality. An advantage of a proactive protocol is that it can give QoS guarantees related connection set-up, latency or other real-

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Both DSR and AODV are flat reactive (or on-demand) protocols. They set up a path between the sender and the receiver only if a communication is waiting. An advantage of a reactive protocol is its scalability as long as there is only light traffic and low mobility. The disadvantages of these protocols are: (a) the initial search latency may degrade the performance of the interactive applications, (b) the quality of the path is unknown in advance, and (c) route caching mechanism is useless in high mobility networks as routes change frequently (Chaudhry, 2005).

1.1 ADHOC ON DEMAND DISTANCE VECTOR (AODV)

AODV (Jiang, 2002) uses different messages to discover and maintain links. In route discovery, a node broadcasts a Route Request (RREQ) to all nodes in the network till either the destination is reached or another node is found with a valid route entry for the destination whose associated sequence number is at least as great as that contained in RREQ. Then a Route Reply (RREP) is sent back to the source and the discovered route is made available. In route maintenance, when a node detects that a route to a neighbor node is not valid, it removes the routing entry and sends a Route Error (RERR) message to the active neighbors that use the route. This procedure is repeated at nodes that receive RERR messages.

1.2 DYNAMIC SOURCE ROUTING (DSR)

DSR (Mahmood, 2009) is an on-demand protocol. It is composed of route discovery and route maintenance. In route discovery, a node tries to discover a route to destination if it has to send data to this destination and there is currently no known route(s). A node broadcasts a route request (RREQ) with a unique identifier and the destination address as parameters. Any node that receives RREQ does the following:

1. If it has already received the request, it drops the request packet.

2. If it recognizes its own address as the destination, then the request has reached its target.

3. Otherwise, the node appends its own address to a list of traversed hops in the packet and broadcasts this updated route request.

In route maintenance, a node is continuously sending packets via a route. The node has to make sure that the route is held upright. If a node detects problems with the current route, it

has to find an alternative route.

1.3 DESTINATION SEQUENCE DISTANCE VECTOR (DSDV)

DSDV (Patney, 2008) routing protocol is an enhancement to distance vector routing for ad- hoc networks. A sequence number is used to tag each route. A route with higher sequence number is more favorable than a route with lower sequence number. However, if two routes have the same sequence number, the route with fewer hops is more favorable. In case of route failure, its hop number is set to infinity and its sequence number is increased to an odd

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1.4 TEMPORALLY ORDERED ROUTING ALGORITHM (TORA)

TORA (Chaudhry, 2005) is a source-initiated on demand routing protocol, which uses a link reversal algorithm and provides loop-free multi-path routes to a destination node. In TORA, each node maintains its one-hop local topology information and also has the capability to detect partitions. TORA is proposed to operate in a highly dynamic mobile networking environment. The key design concept of TORA is the location of control messages to a very small set of nodes near the occurrence of a topological change. The protocol performs three basic functions (a) route creation (b) route maintenance (c) route erasure.

2 TESTING ENVIORNMENT

In this paper, we used NS simulator for simulating different routing protocols. NS simulator uses a visual tool called NAM. NAM is a Tcl/TK based animation tool for viewing network simulation traces and real world packet trace data. The design theory behind NAM was to create an animator that is able to read large animation data sets and be extensible enough so that it could be used in different network visualization situations.

The first step to use NAM is to produce the trace file. The trace file contains topology information, e.g., nodes, links, as well as packet traces. Usually, the trace file is generated by NS. During an NS simulation, a user can produce topology configurations, layout information, and packet traces using tracing events in NS. When the trace file is generated, it is ready to be animated by NAM. Upon startup, NAM will read the trace file, create topology, pop up a window, do layout if necessary.

Our simulation scenario consists of tcl script that runs two TCP connections over a 4-nodes network over an area of a size of 500m over 400m as shown in Figure 1.

FIGURE 1: THE TOPOLOGY OF THE NETWORK AT TIME 0

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3 TEST CASES OF AODV, DSR, DSDV AND TORA ROUTING PROTOCOLS

AODV, DSR, DSDV and TORA routing protocols are tested using 20, 30 AND 75 nodes. Time is taken constant i.e. 30 seconds.

Different test cases are as follows:-

3.1 NUMBER OF PACKETS TRANSMITTED PER SEC

In case of 20 nodes DSR transmits more protocols as compared to DSDV, TORA & AODV protocols, but when we simulate these protocols by using 30 nodes then we get DSR as best in this case. DSDV performs worst in both cases In case of 75 nodes TORA performs best and DSDV performs worst.

3.2 NUMBER OF PACKETS LOST PER SEC

In case of 20 nodes DSR performs best because packet loss is minimum in DSR and TORA performs worst. In case of 30 nodes AODV performs best and TORA performs worst. In case of 75 nodes DSR performs best and TORA performs worst.

3.3 BYTES TRANSMITTED PER SEC

TORA performs best and DSDV performs worst with 20 nodes. With 30 nodes DSR performs best and TORA performs worst. In case of 75 nodes TORA performs best and DSR performs worst in this case.

3.4 BITRATE PER SEC

TORA performs best and DSDV performs worst for 20. For 30 nodes DSR performs best and TORA performs worst. In case of 75 nodes TORA performs best and DSR performs worst in this case.

3.5 PACKET LOSSRATE PER SEC

In case of 20 nodes DSR performs best and TORA performs worst. In case of 30 nodes TORA performs worst and AODV performs best In case of 75 nodes DSR performs best and TORA performs worst in this case.

3.6 PACKET DELAY PER SEC

In case of 20, 30 and 75 nodes DSR shows best performance by minimum packet delay rate.

4 RESULTS

In this section we discuss the number of packets transmitted, number of packets lost, number

of bytes transmitted, bitrate, packet lossrate and packet delay of the mobile ad-hoc network.

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4.1 PACKETS TRANSMITTED VERSUS TIME

When nodes are taken as 20, speed is taken as 100 m/s and time is taken as 30 seconds, DSDV transmits less number of packets as compared to AODV & DSR, because DSDV starts transmitting after very long time. DSR starts transmitting very soon that’s why DSR transmits more packets. With 30 nodes DSR performs well and TORA do not perform well. With 75 nodes TORA protocol is better in this case, because TORA transmits 1720 packets, AODV transmits 1520 packets, DSDV transmits 375 packets and DSR transmits 182 packets.

4.2 PACKETS LOST VERSUS TIME

DSR performs better than DSDV, when we take case of 20 nodes. The no. of packets lost is less as compared to DSDV. AODV performs better than DSDV. TORA performs worst. When 30 nodes are taken, then AODV performs best by minimum packet loss. DSDV performs worst than AODV. DSR performs worst than both AODV and DSDV in this case. With 75 nodes the results given shows that DSR is better routing protocol in this case, because the numbers of packets lost in case of DSR are very less, in case of AODV is 2300, in case of DSDV is 1420 and in case of TORA is 15100.

4.3 THROUGHPUT VERSUS TIME

The no. of bytes transmitted per sec is performed well by TORA in case of 20 nodes as well as 30 nodes. AODV performs better than DSDV and DSDV performs worst in both cases. Performance of DSR is best in simulation results. With 75 nodes TORA transmits more bytes as compared to AODV, and when AODV is compared with DSR and DSDV, and then we come to know that AODV is better as compared to DSR and DSDV and DSDV is better than DSR in this case.

4.4 BITRATE VERSUS TIME

When performances of protocols are evaluated by using bitrate in case of 20 nodes, TORA performs best because TORA transmits protocols at best bitrate as compared to DSDV & AODV. In case of 30 nodes DSR performs well. The performance of DSDV is worst in both cases. With 75 nodes TORA bitrate can be measured as 30.5 at the end of 30 sec simulation time. So we can say that TORA performs better in this case.

4.5 PACKET LOSSRATE VERSUS TIME

The packet lossrate of TORA is maximum and of DSR is minimum in case of 20 nodes. The packet lossrate of DSR is maximum and of AODV is minimum,When DSDV, DSR, TORA and AODV are simulated, TORA performs worst in case of 30 nodes and DSDV performs worst in case of 20 nodes. With 75 nodes DSR shows best performance because packet- lossrate do not increase till the end, the packet-lossrate remains approximately constant.

4.6 PACKET DELAY VERSUS TIME

When packet lossrate per sec is evaluated, then DSR performs well for all cases of 20 nodes,

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Table shows the best protocol individually when DSDV, AODV and DSR are compared.

TABLE 6.2 – BEST PROTOCOL INDIVIDUALLY

Parameters 20 nodes 30 nodes 75 nodes

Npkts DSR DSR TORA

Nlost DSR AODV DSR

Bytes TORA DSR TORA

Bitrate TORA DSR TORA

Bitra TORA DSR TORA

lastPktTime DSR DSR TORA

Packet-lossrate DSR AODV DSR

Packet_delay DSR,TORA DSR,TORA DSR,TORA

Table shows best protocol for 20, 30, 75 nodes after simulation results.

5 CONCLUSIONS

In this paper we have presented the simulation of NS 2 as well as compared the performance of DSDV, AODV and DSR routing protocols by taking 6 parameters versus time.

5.1 DSR

DSR performs best in our simuation results. DSR performs well for 20 nodes as well as 30 nodes for almost all parameters. DSR shows worst performance in case of packet lost by using 30 nodes. For 75 nodes TORA performs well as compared to DSR.

5.2 AODV

AODV performs better in case of packet lost by using 30 nodes. And for remaining cases AODV neither performs best nor worst.

5.3 DSDV

DSDV performs worst for almost all cases when we use 20 nodes as well as 30 nodes & 75 nodes in our simulation.

5.4 TORA

TORA performs best in 11 out of 24 cases. With 75 nodes TORA performs well. So we can

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REFERENCES

A.S.M. Mahmood, “Comparative performance analysis of DSR and AODV protocol based on Mobility factor”, IEEE Journal on Computer and Information Technology, pp. 681-685, March 2009.

Azzedine Boukerche, “Performance Evaluation of Routing Protocols for Ad Hoc Wireless Networks”, Journal on Mobile Networks and Applications, Volume 9, Issue 4, pp. 333–342, August 2004.

A. Nagaraju, CH Ramya Krishna, “Performance Evaluation of ADV with AODV For Mobile Ad-Hoc Networks”, IEEE Journal on First International Conference on Networks & Communications, pp. 376-380, Dec 2009.

B.Malarkodi,P.Gopal and B.Venkataramani, “Performance Evaluation of Mobile Adhoc Networks with different Multicast Routing Protocols and Mobility Models”, 2009 International Conference on Advances in Recent Technologies in Communication and Computing, pp. 364-369, 2009 IEEE.

Chin-Yang Tseng, “A Specification-based Intrusion Detection System for AODV”. Journal on Security of ad hoc and sensor networks , pp. 305-310, March 2003.

C. Mbarushimana, “Comparative Study of Reactive and Proactive Routing Protocols Performance in Mobile Ad Hoc Networks”, IEEE Journal on 21st International Conference on Advanced Information Networking and Applications Workshops (AINAW'07), Volume 2, pp. 679-684, May 2007.

Dirk Westhoff, “Context Aware Detection of Selfish Nodes in DSR based Ad-hoc Networks”. Journal on project IPonAir, pp. 340-344, March 2005.

Eman Abdelfattah & Guinshin Liu, “Performance Evaluation of Mobile Ad-Hoc Routing Protocols”, Springer Journal on Novel Algorithms and Techniques in Telecommunications, Automation and Industrial Electronics, pp. 330-334, Dec 2008.

Gorka Hernando, “Implementation and Comparison of AODV and OLSR Routing Protocols in an Ad-Hoc Network over Bluetooth”,Springer Journal on Ad-Hoc, Mobile and Wireless Networks, pp. 347–353, August 2009.

Hong Jiang, “Performance Comparison of Three Routing Protocols for Ad Hoc Networks”,

IEEE Journal on Computer Communications and Networks, Volume 3, pp. 547-554, August

2002.

Hiroaki Higaki and Shingo Umeshima, “Multiple-Route Ad hoc On-Demand Distance Vector (MRAODV) Routing Protocol”, IEEE Journal on Parallel and Distributed Processing Symposium, pp. 237, June 2007.

Joo-Han Lee, “Performance Comparison of Mobile Ad Hoc Multicast Routing Protocols”, IEEE Journal Conference on Advanced Technologies for Communications, pp. 399-402,

October 2008.

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Morshed U. Chowdhury, Dharani Perera, “A Performance Comparison of Three Wireless Multi hop Ad-hoc Network Routing Protocols when Streaming MPEG4 traffic”, IEEE Journal on Multitopic Conference, pp. 516-521, August 2005.

Monis Akhlaq, “Addressing Security Concerns of Data Exchange in AODV Protocol”, Journal on World Academy of Science, Engineering and Technology, pp. 216-221, Dec. 2006.

Nor Surayati Mohamad Usop, “Performance Evaluation of AODV, DSDV & DSR Routing Protocol in Grid Environment”, IJCSNS International Journal of Computer Science and Network Security, VOL.9, Issue 1, pp. 261-268, July 2009.

Ritun Patney, S.K. Baton, and Nick Filer, “Performance Evaluation of Mobile Ad-Hoc Routing Protocols”, Springer Journal on Novel Algorithms and Techniques in Telecommunications, Automation and Industrial Electronics, pp. 330-334, Dec 2008.

Suman Deswal and Sukhbir Singh , “Implementation of Routing Security Aspects in AODV”, International Journal of Computer Theory and Engineering, Vol. 2, pp. 135-138, February 2010.

The Institute of Electrical and Electronics Engineers, Inc. IEEE Std 802.11 – “Wireless LAN Medium Access Control (MAC) and Physical Layer (PHY) specifications,” 1999 edition.

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A STUDY OF CUSTOMER SATISFACTION IN SPECIAL REFERENCE TO SERVICES PROVIDED BY BANKS AND POST-OFFICES IN N.C.R

DR. M. K. GUPTA*; NIDHI GUPTA**

*Associate Professor, Department of Commerce, Pt. J. L. N. Government P. G. College, Faridabad-121002, Haryana, India **Research Scholar, Department of Commerce, Pt. J. L. N. Government P. G. College, Faridabad-121002, Haryana, India.

ABSTRACT

"If you cannot measure it, you cannot improve it." - Lord William Thomson Kelvin (1824-1907).

The working of the customer's mind is a mystery which is difficult to solve and understanding the nuances of what customer satisfaction is, a challenging task. The customer's requirements must be translated and quantified into measurable targets. This provides an easy way to monitor improvements, and deciding upon the attributes that need to be concentrated on in order to improve customer satisfaction. In today‟s ever changing world, service quality and customer satisfaction are becoming the most important factors of business success for Post-Offices. Post-Offices have been expanding their network day by day and providing services competitive to banks. This paper is an attempt to study the perception of customers regarding services provided by Banks and Post-Offices. Present research has been carried out in the four cities of NCR i.e. Delhi, Noida, Gurgaon and Faridabad. Researcher has used Factor analysis to analyse the data. Results conclude that Post-offices should pay attention on certain dimensions to attract & retain more customers.

KEYWORDS: customer satisfaction, services, Post-Offices, Banks, Factor Analysis. ______

INTRODUCTION TO CUSTOMER SATISFACTION

Satisfaction is the sum total of customer's expressions of service quality and depends upon customer's own perceptions and expectations. Service Satisfaction of the customers is an invaluable asset for the modern organizations, providing unmatched competitive edge. It

helps in building long term relationship as well as brand equity. the best approach to customer retention is to deliver high level of customer satisfaction that results in, strong customer loyalty. Satisfaction being a judgment, that a product or service feature or the product or service itself, provides a pleasurable level of consumption related fulfilment, is dynamic in nature. Customer satisfaction is a very important construct in today's market. An organization cannot survive in the long run if its customers are not satisfied. Customer is a very important person in the market. Infact, he is the king of the market. Therefore, it is the utmost duty of an organization to safeguard his interests and meet his expectations with the products/services offered. When a customer expects a certain level of service and he actually perceives more than what he expected then he will be satisfied and if he perceives less than www.zenithresearch.org.in

his expectation then he will be dissatisfied. Customer satisfaction construct is more important

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Satisfaction is the basic tenet of modern concept of marketing. It is the basic philosophy of management, which forces the organisation to align its actions with market mandates.

Customer satisfaction has been an important theoretical and practical issue for most marketing practitioners and consumer Customer researchers since 1970s (Churchill and surprenant, 1982; Dabholkar etc.al. 2000).Customer Satisfaction is a global evaluation tool that is widely used by practitioners to measure the effectiveness of marketing from customer‟s perspective (woodruff, 1997). Customer Satisfaction can be defined as an overall evaluation of performance based on all prior experiences with a firm and has been linked to a firm‟s overall performance and health of an organisation. The introduction of liberalisation in service sector changed the Indian Consumer‟s perception a lot. Getting closer to customers and effectively responding to their needs is a way to boost their loyalty and encourage deeper business relationship. The Intensifying competition in market and the resultant increase in choice have made the customers more demanding with regards to the value of firm or an offer provides. As the consumer became more “active informed and connected” (Prahalad & Ramaswamy 2004) firms attempted to retain them with customer loyalty programs. These efforts were in many cases, not effective in reducing customer switching & developing loyalty, but instead made customer‟s deal-prone (Grahme, Dowling & wuncles 1997; Fournier et.al.1998).

Customer Satisfaction has been used as a tool to measure consumer evaluation of organization efforts to deliver products & service of value- “to bring the „voice of customer‟ into quality efforts” (Woodruff 1997, 139). By providing superior customer satisfaction the company obtain several competitive advantages that lead to higher profitability.

Less wasted motion.

The firm gets a price advantage.

Customers come back more often.

Transaction Costs are lower.

Communication costs are lower.

Customers don‟t jump immediately to a new product.

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Any business without a focus on customer satisfaction is at the mercy of the market. Without loyal customers eventually a competitor will satisfy those desires and customer retention rate will decrease and customer attrition will be at rise. In today‟s highly competitive & increasingly considered world, offering personalised & differentiating services can be critical to Post Office success.

LITERATURE REVIEW

There was an increase in conducting customer satisfaction surveys by many service industries (Danaher and Haddrell, 1996). Customer satisfaction is defined generally as the feelings or judgments of the customer towards products or services after they have been used (Jamal and Naser, 2003). Customer satisfaction in service industries has been approached differently by equity theory, attribution theory, the confirmation and disconfirmation paradigm, and satisfaction as a function of perception (Parker and Mathews, 2001).Service quality can be defined as the conformance to customer requirements in the delivery of a service (Chakrabarty et. al., 2007). Service quality is important to service firms because it has been shown to increase profit levels, reduce costs, and increase market shares (Parasuraman et. al., 1985). Moreover, service quality has been shown to influence purchase intentions (Sullivan and Walstrom, 2001), and is used by some firms to strategically position themselves in the marketplace (Brown and Swartz, 1989). Service quality is an abstract and elusive construct, and in the absence of objective measures, consumers' perception of service quality is commonly assessed.

Service quality is the key determinant of customer satisfaction and reliability is the most important dimension of service quality followed by assurance (Zhou, 2004; Lopez, et at., 2007 and Vaniarajan and Nathan, 2008). This finding necessitates that the bank management should conduct training programmes for their employees so as to deliver succeed in retaining satisfied customers in the long run.

Yavas, et al. (2004) and Singh and Saklani (2004) observed that service quality is an antecedent to customer satisfaction and it is positively associated with commitment, word-of- mouth and complaint and switching behaviour of customers. It reliable, timely and trustworthy services to the customers and by doing so, it will definitely implies that by improving service quality satisfaction, a bank can get its business increased, as its satisfied customers will become lifelong asset for the banks and ambassadors of the bank products as well by recommending to their friends, relatives, etc. Therefore, to avoid complaints and switching behaviours of customers, bank management should focus on delivering best

quality services to its customers.

Yavas, Belgin and Shemwell in their study “Service Quality in Banking Sector in an Emerging Economy: A Consumer Survey” focused on the relationship of service quality with customer satisfaction, complaint behaviour and commitment. The study has revealed a positive relationship of good service quality with customer satisfaction and long term commitment of the customers to the The relationship between good service quality and compliant behaviour of the customers, bank. however, has been found to be negative. Better the quality, lower will be the number of complaints received from the customer and vice

versa.

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McCain, Jang and Clark in their study “Service Quality Gap Analysis Towards Customer Loyalty” have found that service quality gap i.e. the gap between customer expectation and satisfaction in American banks is more because of gap in functional quality rather than the gap in technical quality. Satisfaction is related to the size and direction of the disconfirmation experience where disconfirmation is related to the person‟s initial experience. This is supported by Olyson and Dover (1977) as they stressed that perceptions of performance which are close to expectations are within latitude of acceptable performance, and are assimilated towards the expectation. Performance which is above or below the norm, but within the indifference zone, leads to satisfaction which, in turn, may lead to positive response such as brand or stone loyalty, favourable word of mouth, and “complementing behaviour”.

Oliver (1997) in his article, has stated that in customer satisfaction literature, after service delivered affective states arising from service performance are based on perceptions of whether before service delivered expectation are confirmed or disconfirmed. He stated that a customer would be satisfied if perceptions matched expectations (if confirmation (Donna J. Hill, 1986) were reached). Dissatisfaction is conceptualized as the affective states resulting from the cognition of negative disconfirmation, where perceived actual performance is less than the expected.

OBJECTIVES OF THE STUDY

The main objectives of the study are following:

1. To analyse the customer satisfaction regarding banking services provided by Banks.

2. To have an overview of the customer satisfaction regarding banking services provided by Post Offices.

3. To make a comparative study of customer satisfaction regarding services provided by Banks and Post Offices.

SIGNIFICANCE OF THE STUDY

The findings of this study should be useful to Post Offices to develop or improve their marketing strategies pertaining to customer services & their brand image. The study will help Post offices to enhance market share & compete more effectively with competitors. The government can use the findings of the study about consumer‟s view on various services provided by Post Offices for further governmental contributions to improve services & image

of Post Offices in India. The Findings of this study should also provide useful information & insights to consumers who are seeking Postal services. Finally the findings from this study will be of interest to research in many disciplines.

RESEARCH METHODOLOGY

This paper will describe the methodology for the proposed topic “A Study of Customer Satisfaction In special Reference To services Provided By Banks and Post-offices in N.C.R.” Employed to collect & analyze data to develop the measurement scale & test the

proposed research models. This Chapter discuss the „what‟, „why‟ and „how‟ question related www.zenithresearch.org.in

to methodological choice & their consequence in terms of the reliability & validity of the

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PRIMARY DATA

The primary data was collected with the help of self-developed questionnaire to make a comparative study of customer satisfaction between post-offices and Banks regarding various services provided by these institutions. Various questions on age, income, parking space, convenient timings, skills ,schemes etc. were asked from the respondent. Respondents were asked to denote their perception of the quality of performance of different parameters on a five-point Likert rating scale where 1 denoted highly dis-satisfied and 5 denoted highly satisfied. Out of 223 questionnaires served 204 people responded. The response rate was 91.48%. The survey was conducted over a period of 4 months i. e. from March 2011 to June 2011. It has been tried that selected sample covers all classes of people and of different age groups. Convenient sampling method has been used as sample technique for the study.

SECONDARY DATA

As per requirement & availability of data secondary data has been used in study but to a limited extent. These are collected from the magazines, journals, newspapers and internet. Various libraries have been visited to collect significant and important data.

TABLE 1:

TABLE SHOWING FREQUENCIES OF AGE GROUP

Age Group

Frequency Percent Cumulative Percent

Valid Between20-30 35 17.2 17.2

Between30-40 55 27.0 44.2

Between40-50 60 29.4 73.6

More Than 50 54 26.4 100.0

Total 204 100.0

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TABLE 2:

TABLE SHOWING FREQUENCIES OF GENDER

Gender

Frequency Percent Cumulative Percent

Valid 1 .5 .5

Male 121 59.3 59.8

Female 82 40.2 100.0

Total 204 100.0

TABLE 3

TABLE SHOWING FREQUENCIES OF INCOME GROUP

Income Group

Frequency Percent Cumulative Percent

Valid Below 1 Lakhs 20 9.8 9.8

Between 1-2 Lakhs 25 12.3 22.1

Between 2-3 Lakhs 40 19.6 41.7

Between 3-4 Lakhs 47 23.0 64.7

Between 4-5 Lakhs 41 20.1 84.8

More Than 5 Lakhs 31 15.2 100.0

Total 204 100.0

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TABLE 4

TABLE SHOWING FREQUENCIES OF EDUCATIONAL BACKGROUND

Education

Frequency Percent Cumulative Percent

Valid Illiterate 24 11.8 11.8

Undergraduate 97 47.5 59.3

Post Graduate 83 40.7 100.0

Total 204 100.0

TABLE 5

TABLE SHOWING FREQUENCIES OF OCCUPATIONS

Occupation

Frequency Percent Cumulative Percent

Valid Farmer 29 14.2 14.2

Businessman 76 37.3 51.5

Serviceman 99 48.5 100.0

Total 204 100.0

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TABLE 6

TABLE SHOWING FREQUENCIES OF TYPE OF FINANCIAL INSTITUTIONS

Financial Institutions

Frequency Percent Cumulative Percent

Valid Post Office 97 47.5 47.5

Govt. Bank 49 24.1 71.6

Private Bank 38 18.6 90.2

Foreign Bank 20 9.8 100.0

Total 204 100.0

1) ANALYSIS FOR BANKING SECTOR

In order to establish scale dimensionality, the researcher used a factor analyses method using component analyses as the starting point. There are two objectives of factor analyses: the first objective is to reduce data set to a manageable level and the second objective is to establish the underline dimensions in the data.

Total variance explained with the help of banking data can be represented with the following

table:

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TABLE 7

TABLE SHOWING THE TOTAL VARIANCE EXPLAINED AND EXTRACTED FACTORS

TOTAL VARIANCE EXPLAINED

Initial Eigen values Extraction Sums of Squared Loadings

% of % of Component Total Variance Cumulative % Total Variance Cumulative %

1 4.272 32.859 32.859 4.272 32.859 32.859

2 1.426 10.972 43.831 1.426 10.972 43.831

3 1.356 10.434 54.264 1.356 10.434 54.264

4 1.063 8.176 62.441 1.063 8.176 62.441

5 .903 6.948 69.388

6 .860 6.618 76.006

7 .730 5.615 81.621

8 .603 4.641 86.262

9 .511 3.932 90.194

10 .443 3.407 93.601

11 .363 2.791 96.392

12 .266 2.049 98.441

13 .203 1.559 100.000

Extraction Method: Principal Component Analysis.

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TABLE 8

TABLE SHOWING THE PRINCIPAL COMPONENT MATRIX FOR BANKING

COMPONENT MATRIXa

Component

1 2 3 4

Location of Branch is easy to .489 -.337 .037 .288 reach

Parking facility is available for .804 -.162 -.166 .087 the customers

Sitting facilities/ toilet/ drinking water/ fans etc provided to .666 -.445 -.274 -.030 customers

Security arrangement of branch is .201 .204 .179 .846 satisfactory

Response to customer complaints .546 .126 .214 .257 is fast

Less complexities are associated with opening a deposit account in .593 -.126 .506 -.073 Bank

Waiting time required for depositing money & withdrawing .679 -.073 -.239 .033 money is less.

Staff is punctual, cooperate & .741 -.168 .036 -.250 friendly

Varieties of deposits schemes are .484 .700 -.319 -.043 available in Banks.

Interest Rate Paid on deposit is .568 .569 -.345 -.126

competitive to Post Offices.

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Availability of modern banking facilities such as ATM, online banking, credit/debit cards, draft .210 .399 .584 -.099 making creates great convience to customer.

Banks has convenient timing .403 .069 .546 -.290

In case of emergency need, Bank .691 -.062 -.016 -.096 Manager is easily accessible

Extraction Method: Principal Component Analysis. a. 4 components extracted.

Factor 1 Location & Efficiency Location of Branch is easy to reach. Parking facility is available for the customers.

Sitting facilities/ toilet/ drinking water/ fans etc provided to customers.

waiting time required for depositing money & withdrawing money is less.

Staff is punctual, cooperate & friendly. In case of emergency need, Bank Manager is easily accessible.

Factor 2 Tangibility Varieties of deposits schemes are available in Banks.

Interest Rate Paid on deposit is competitive to Post

Offices.

Factor 3 Product Accessibility & Availability of modern Friendliness banking facilities such as ATM, online banking, credit/debit cards, draft making creates great convince to customer. Less complexities are associated with opening a deposit

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Banks has convenient timing.

Factor 4 Security Security arrangement of branch is satisfactory.

Response to customer complaints is fast.

2) ANALYSIS FOR POST-OFFICES

Total variance for Post-Office data can be explained with the help of following data :

TABLE 9

SHOWING THE TOTAL VARIANCE EXPLAINED AND EXTRACTED FACTORS

TOTAL VARIANCE EXPLAINED

Initial Eigen values Extraction Sums of Squared Loadings

% of % of Component Total Variance Cumulative % Total Variance Cumulative %

1 2.106 16.202 16.202 2.106 16.202 16.202

2 1.815 13.963 30.165 1.815 13.963 30.165

3 1.459 11.221 41.387 1.459 11.221 41.387

4 1.198 9.215 50.602 1.198 9.215 50.602

5 1.039 7.991 58.592 1.039 7.991 58.592

6 .985 7.580 66.172

7 .852 6.556 72.728

8 .820 6.306 79.034

9 .744 5.725 84.760

10 .618 4.753 89.513

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11 .538 4.140 93.653

12 .479 3.685 97.338

13 .346 2.662 100.000

Extraction Method: Principal Component Analysis.

TABLE 10

TABLE SHOWING THE COMPONENT MATRIX OF POST OFFICES

COMPONENT MATRIXa

Component

1 2 3 4 5

Location of Branch is easy to .481 .184 -.556 .104 .139 reach

Parking facility is available -.297 .767 -.169 .228 .067 for the customers

Sitting facilities/ toilet/ drinking water/ fans etc -.269 .799 -.042 .271 .107 provided to customers

Security arrangement of -.289 .049 .452 .449 -.415 branch is satisfactory

Response to customer -.069 -.119 -.371 .466 .128 complaints is fast

Less complexities are associated with opening a .306 -.059 .412 .158 .572 deposit account in Post Office

Waiting time required for depositing money & .378 .336 -.200 -.332 -.348 withdrawing money is less.

Staff is punctual, cooperate .303 -.402 -.231 .487 .222

& friendly

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Varieties of deposits schemes .569 .267 .358 -.084 .158 are available in Post Offices.

Interest Rate Paid on deposit is competitive to Post .309 .251 .602 .139 .049 Offices.

Availability of modern banking facilities such as ATM, online banking, .154 .169 -.004 -.389 .238 credit/debit cards, draft making creates great convience to customer.

Post Office has convenient .689 .285 -.142 .102 -.140 timing

In case of emergency need, Post Master is easily .617 -.127 .064 .287 -.463 accessible

Extraction Method: Principal Component Analysis. a. 5 components extracted.

Location of Branch is easy to reach. Factor 1 Location & Timeliness Waiting time required for depositing money & withdrawing money is less.

Varieties of deposits schemes are available in Post Offices.

Post Office has convenient timing.

In case of emergency need, Post Master is easily accessible.

Parking facility is available for the customers. Factor 2 Basic Amenities Sitting facilities/ toilet/ drinking water/ fans etc

provided to customers.

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Security arrangement of branch is satisfactory. Factor 3 Product Accessibility & Friendliness Less complexities are associated with opening a deposit account in Post Office.

Interest Rate Paid on deposit is competitive to Post Offices.

Response to customer complaints is fast. Factor 4 Efficiency Staff is punctual, cooperate & friendly.

Availability of modern banking facilities such as Factor 5 Easiness ATM, online banking, credit/debit cards, draft making creates great convince to customer.

RESULTS AND DISCUSSION

Factor analysis of banking data extracted four factors i.e. Factor 1: Location & Efficiency, Factor 2: Tangibility, Factor 3: Product Accessibility & Friendliness, Factor 4: Security.

While analysis of Post-Office data give five factors naming Factor 1: Location & Timeliness, Factor 2: Basic Amenities, Factor 3: Product Accessibility & Friendliness, Factor 4: Efficiency & Factor 5: Easiness.

Factor 1: Factor 1 in banking data includes the statements like Location of Branch is easy to reach. Parking facility is available for the customers. Sitting facilities/ toilet/ drinking water/ fans etc provided to customers. Waiting time required for depositing money & withdrawing money is less. Staff is punctual, cooperate & friendly. In case of emergency need, Bank Manager is easily accessible.

While Factor 1 in Post-Office data include statements like Location of Branch is easy to reach. Waiting time required for depositing money & withdrawing money is less. Varieties of deposits schemes are available in Post Offices. Post Office has convenient timing. In case of emergency need, Post Master is easily accessible.

Hence we can say that highest loading factor in banks and Post-offices are almost same except in Post-offices people gave emphasis on varieties of deposits schemes available in www.zenithresearch.org.in

Post Offices.

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Factor 2: Factor 2 in banking data includes the statements like Varieties of deposits schemes are available in Banks. Interest Rate Paid on deposit is competitive to Post Offices.

While Factor 2 in Post-office data includes the statements like Parking facility is available for the customers. Sitting facilities/ toilet/ drinking water/ fans etc provided to customers.

Here we can say that in post-offices people gave more preference to basic amenities than tangibility factor which is Important factor in banks.

Factor 3 : Factor 3 in Banking data include the statements like Availability of modern banking facilities such as ATM, online banking, credit/debit cards, draft making creates great convince to customer. Fewer complexities are associated with opening a deposit account in banks. Banks has convenient timing.

While Factor 3 in Post-office data include the statements like Security arrangement of branch is satisfactory. Fewer complexities are associated with opening a deposit account in Post Office. Interest Rate Paid on deposit is competitive to Post Offices.

Results conclude that people in Post-offices gave emphasis on security arrangement & interest paid on deposits.

Factor 4: Factor 4 in banking data includes the statements like Security arrangement of branch is satisfactory. Response to customer complaints is fast.

While Factor 4 in Post-office data include the statements like Response to customer complaints is fast. Staff is punctual, cooperate & friendly.

According to analysis post-offices should pay attention on behaviour of its employees towards customers. Employees should be more cooperative & friendly.

While Factor 5 in Post-office data include the statement Availability of modern banking facilities such as ATM, online banking, credit/debit cards, draft making creates great convince to customer.

In order to attract more customer Post-Offices should initiate modern banking facilities as mention above.

RECOMMENDATIONS

Pose-offices may start new deposit schemes with competitive interest rate to retain

and attract customers.

Services counter should be increased in post-offices so that people can avoid standing in long queues.

Basic amenities like Parking space, sitting arrangement, toilet facility, drinking water, fan etc. should be focus area of post-offices.

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relationship management.

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Post-offices should improve their infrastructure and use the latest technology.

Consumer grievance handling system should be fast so that consumer can be satisfied.

Special discounts and new attractive schemes should be provided to attract corporate sector.

BIBLIOGRAPHY

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Bahia, K and J Nantel (2000), A Reliable and Valid Measurement Scale for Perceived Service Quality in Banks", International Journal of Bank Marketing, Vol. 18, No. 2, pp. 84-91.

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Bebko C P (2000), “Service intangibility and its impact on consumer expectations of service quality”, Journal of Services Marketing, Vol. 14(1), 9-26.

Bhat, M A (2003), "Service Quality in Public Sector Banks An Empirical Investigation", The Business Review, Vol. 9, No. 2, March, pp. 44-52.

Bhat, M A and A Gani (2003), "What Makes a Quality Service In Banks Customer Speaks his Mind", Management and Change, Vol. 7, No. 2, pp. 259-273.

Blanchard, R F and R L Golloway (1994), "Quality in Retail Banking", International Journal of Service Industry Management, Vol. 5, No. 4, pp. 5-23.

Bloemer, J; K Ruyter and P Peeters (1998), "Investigating Drivers of Bank Loyalty: The complex Relationship between Image, Service Quality and Satisfaction", International Journal of Bank Marketing, Vol. 16, No. 7, pp. 276-286.

Cardozo R N (1965), “An Experimental Study of Customer Effort, Expectation and

Satisfaction”, Journal of Marketing Research, Vol. 2, No. 3, pp. 244-249.

Coulthard Morrison, J. Lisa. 2004. “Measuring service quality.” International Journal of Market Research. 4:479-497.

Coyles S and Gokey T (2002), “Customer Retention Is Not Enough”, The Mckinsey Quarterly, Vol. 2, May, pp. 81-89.

Crosby, leon B.; DeVito, Raffaele; J. Micheal, Pearson. 2003. “Manage Your Customers

Perception of Quality.” Review of Business. 24(1): 18-24. www.zenithresearch.org.in

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File K M and Prince R A (1992), “Positive Word-of-Mouth: Customer Satisfaction and Buyer Behaviour”, International Journal of Bank Marketing, Vol. 10, No. 1, pp. 25-29.

Hanagandi Rajendraprasad K. (2010), “Customer Satisfaction in Response to Select Washing machine Brands: An Empirical Study”, Journal of Commerce and management Thought, Vol. 1, No. 2, pp. 116-131.

Kotler and Armstrong (1999), Principal of Marketing, Prentice Hall India Pvt Ltd.

Milind M. Lele with Jagdish N.Sheth (1991), “The Customer is Key”.

Mishra Anubhav Anand (2010), “Factors Affecting Customers Satisfaction and Their relative Importance in the Retail Banking Sector: An Empirical Study”, IUP Journal of Management Research, Vol. IX, No. 3, pp. 6-23.

Richard F Gerson (2004), “Measuring Customer Satisfaction”.

Tripathy Naliniprava (2007), “ Knowledge of CRM in emerging Banking System”, Mangalmay Journal of Management & Technology, Volume 1, No. 2, pp. 24-33.

Watson, “Managing the Relationship with corporate customer”, International Journal of Bank Marketing, Vol. 4, No. 1.

http://www.customersatisfaction.com

http://www.indiapost.gov.in

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DATA MODELING TECHNIQUES FOR DATA WAREHOUSE

MS. ALPA R. PATEL*; PRO F. (DR.) JAYESH M. PATEL**

*R. K. Achchhariwala College of Computer & Applied Sciences, Vapi, Dist.-Valsad (South Gujarat), Veer Narmad South Gujarat University, Surat. **Gujarat Technological University, Sankalchand Patel College of Engineering, Sankalchand Patel Sahakar Vidhyadham, Visnagar, Dist. – Mehasana, North Gujarat.

ABSTRACT

The conceptual Entity-Relationship (ER) is extensively used for database design in relational database environment, which emphasized on day-to-day operations. Multidimensional (MD) data modeling, on the other hand, is crucial in data warehouse design, which targeted for managerial decision support. It supports decision making by allowing users to drill-down for a more detailed information, roll-up to view summarized information, slice and dice a dimension for a selection of a specific item of interest and pivot to re-orientate the view of MD data. When designing a MD model regardless whether it is a star or snowflake schema, it involves the identification of a fact, dimensions and measure attributes.

This paper will explore on how the Multidimensional model can be used as the yardstick of data warehouse design instead of ER Model.

KEYWORDS: Entity-Relationship Model, Multidimensional Model, Fact, Dimensions, Attributes. ______

INTRODUCTION

1 DATA MODELING TECHNIQUES

Two data modeling techniques that are relevant in a data warehousing environment are ER modeling and Multidimensional modeling.

ER modeling produces a data model of the specific area of interest, using two basic concepts: entities and the relationships between those entities. The ER model is an abstraction tool because it can be used to understand and simplify the ambiguous data relationships in the business world and complex systems environments.

Multidimensional modeling uses three basic concepts: measures, facts, and dimensions. Multidimensional modeling is powerful in representing the requirements of the business user in the context of database tables.

Both ER and Multidimensional modeling can be used to create an abstract model of aspecific

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1.1 ER MODELING

An ER model is represented by an ER diagram, which uses three basic graphic symbols to conceptualize the data: entity, relationship, and attribute.

1.1.1 ENTITY

An entity is defined to be a person, place, thing, or event of interest to the business or the organization. An entity represents a class of objects, which are things in the real world that can be observed and classified by their properties and characteristics.

1.1.2 RELATIONSHIP

A relationship is represented with lines drawn between entities. It depicts the structural interaction and association among the entities in a model. A relationship is designated grammatically by a verb, such as owns, belongs, and has. The relationship between two entities can be defined in terms of the cardinality. This is the maximum number of instances of one entity that are related to a single instance in another table and vice versa. The possible cardinalities are: one-to-one (1:1), one-to-many (1:M), and many-to-many (M:M).

1.1.3 ATTRIBUTES

Attributes describe the characteristics of properties of the entities. For clarification, attribute naming conventions are very important. An attribute name should be unique in an entity and should be self-explanatory.

When an instance has no value for an attribute, the minimum cardinality of the attribute is zero, which means either nullable or optional.

In ER modeling, if the maximum cardinality of an attribute is more than 1, the modeler will try to normalize the entity and finally elevate the attribute to another entity. Therefore, normally the maximum cardinality of an attribute is 1.

1.2 MULTIDIMENSIONAL MODELING

In some respects, Multidimensional modeling is simpler, more expressive, and easier to understand than ER modeling. But, Multidimensional modeling is a relatively new concept and not firmly defined yet in details, especially when compared to ER modeling techniques.

1.2.1 BASIC CONCEPTS

Multidimensional modeling is a technique for conceptualizing and visualizing data models as a set of measures that are described by common aspects of the business. It is especially useful for summarizing and rearranging the data and presenting views of the data to support data analysis. Multidimensional modeling focuses on numeric data, such as values, counts, weights, balances, and occurrences

Multidimensional modeling has several basic concepts:

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Dimensions

Measures (variables)

1.2.2 FACT

A fact is a collection of related data items, consisting of measures and context data. Each fact typically represents a business item, a business transaction, or an event that can be used in analyzing the business or business processes.

In a data warehouse, facts are implemented in the core tables in which all of the numeric data is stored.

1.2.3 DIMENSION

A dimension is a collection of members or units of the same type of views. In a diagram, a dimension is usually represented by an axis. In a Multidimensional model, every data point in the fact table is associated with one and only one member from each of the multiple dimensions. That is, dimensions determine the contextual background for the facts. Many analytical processes are used to quantify the impact of dimensions on the facts.

Dimensions are the parameters over which we want to perform Online Analytical Processing (OLAP). For example, in a database for analyzing all sales of products, common dimensions could be:

Time

Location/region

Customers

Salesperson

Scenarios such as actual, budgeted, or estimated numbers

DIMENSION MEMBERS: A dimension contains many dimension members. A dimension member is a distinct name or identifier used to determine a data item’s position. For example, all months, quarters, and years make up a time dimension, and all cities, regions, and

countries make up a geography dimension.

DIMENSION HIERARCHIES: We can arrange the members of a dimension into one or more hierarchies. Each hierarchy can also have multiple hierarchy levels. Every member of a dimension does not locate on one hierarchy structure. A good example to consider is the time dimension hierarchy as shown in Figure 1.

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FIGURE 1: MULTIPLE HIERARCHIES IN A TIME DIMENSION

1.2.4 MEASURE

A measure is a numeric attribute of a fact, representing the performance or behavior of the business relative to the dimensions. The actual numbers are called as variables. For example, measures are the sales in money, the sales volume, the quantity supplied, the supply cost, the transaction amount, and so forth. A measure is determined by combinations of the members of the dimensions and is located on facts.

Considering Relational context, there are two basic models that are used in dimensional modeling: (i) star model and (ii) snowflake model.

The star model is the basic structure for a dimensional model. It has one large central table

(fact table) and a set of smaller tables (dimensions) arranged in a radial pattern around the central table. (We show an example in Figure 2). The snowflake model is the result of decomposing one or more of the dimensions. The many-to-one relationships among sets of attributes of a dimension can separate new dimension tables, forming a hierarchy. (Figure 3 shows an example). The decomposed snowflake structure visualizes the hierarchical structure of dimensions very well.

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FIGURE 2: STAR MODEL

FIGURE 3: SNOW FLAKE MODEL

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3 MULTIDIMENSIONAL MODEL Vs RELATIONSHIP MODEL

ER is a logical design technique that seeks to remove the redundancy in data. This coupled with normalization of data enables easy maintainability and improves data integrity which is a necessity for transaction processing applications. End user comprehension and the data retrieval are major show stoppers; as such a database is proliferated with dozens of tables that are linked together by a bewildering spider web of joins. Use of the ER modeling technique defeats the basic allure of data warehousing, namely intuitive and high- performance retrieval of data.

MD is a logical design technique that seeks to present the data in a standard, intuitive framework that allows for high-performance access. Every Multidimensional model is composed of one table with a multipart key, called the fact table, and a set of smaller tables called dimension tables. Each dimension table has a single-part primary key that corresponds exactly to one of the components of the multipart key in the fact table. This characteristic "star-like" structure is often called a star join.

Each dimensional table is logical and user identifiable and serves a business purpose by serving as an object of interest to the user. It is also maintained by the ETL process of the data ware housing application .Hence it is considered as an internal Logical file and included in the data function count.

4 WHY ER IS NOT SUITABLE FOR DATA WAREHOUSES?

End user cannot understand or remember an ER Model. End User cannot navigate an ER Model. There is no graphical user interface or GUI that takes a general ER diagram and makes it usable by end users.

ER modeling is not optimized for complex, ad-hoc queries. They are optimized for repetitive narrow queries

Use of ER modeling technique defeats this basic allure of data warehousing, namely intuitive and high performance retrieval of data because it leads to highly normalized relational tables.

5 CONCLUSION

In this paper, we examine that an E-R structured data warehouse, absent associative entities, i.e. fact tables, is a not viable concept given recent developments in data warehousing.

A number of conclusions are supported by the arguments.

Not every E-R model can be represented as a set of star schemas containing equivalent information

But every properly constructed E-R data warehousing model can be so represented

Many E-R data warehouse models are not properly constructed in that they don't explicitly recognize many-many relations and the need to resolve them with

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To use data warehousing E-R models specifying atomic data dependency relationships without fact tables is to ensure poor query response performance in large databases, and therefore discourage, and often prevent, execution of a multi-stage analysis process. In effect, it is to make the data warehouse no more than a big staging area for data marts, with no independent analytical function of its own.

Given the development of ODSs and non-queryable centralized staging areas for storing, extracted, cleansed, and transformed data and for gathering centralized metadata.

We don't need another non-queryable staging area called a data warehouse. What we do need, instead, is a dimensionally modeled data warehouse for enterprisewide DSS, prepared to provide the best in query response performance and to support the most advanced OLAP functionality we can devise.

REFERENCES

1) A Conceptual Model for Multidimensional Data By Anand S. Kamble, Department of Information Technology, Government of India, New Delhi, India

2) An Overview of Data Warehouse Design Approaches and Techniques, Alejandro Gutiérrez, Adriana Marotta Instituto de Computación, Facultad de Ingenieria, Universidad de la República, Montevideo, Uruguay October 2000

3) C. Li and X. S. Wang, “A Data Model for Supporting On-Line Analytical Processing” Fifth International Conference on Information and Knowledge Management, 1996, pp. 81–88.

4) Conceptual Multidimensional Model, By Manpreet Singh, Parvinder Singh, and Suman, World Academy of Science, Engineering and Technology 36 2007

5) Data Modeling Techniques for Data Warehousing By Chuck Ballard, Dirk Herreman, Don Schau, Rhonda Bell, Eunsaeng Kim, Ann Valencic

6) Dimensional Modeling and E-R Modeling In The Data Warehouse By Joseph M. Firestone, Ph.D. White Paper No. Eight, June 22, 1998

7) Dimensional Model Data Warehouse: An Overview, Dan Kirpes, Fireman’s Fund

Insurance Company, Novato, CA

8) Estimation Model for Data Warehousing Projects Presented In 2nd Annual International Estimation Colloquium 2007,By Karthikeyan Sankaran & Sujatha Sivaraman ,Hexaware Technologies

9) Kimball, Ralph, The Data Warehouse Toolkit: The Complete Guide to Dimensional Modeling, New York, NY: John Wiley and Sons, Inc., 2002. 436pp.

10) Len Silverston, W. H. Inmon, and Kent Graziano, The Data Model Resource Book

(New York, NY: John Wiley & Sons, Inc., 1997).

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INVENTORY MANAGEMENT OF ENGINEERING GOODS INDUSTRY IN PUNJAB: AN EMPIRICAL ANALYSISIS

DR. ANITA SONI*

*Head, Department of Commerce and Business Administration, Chak Alla Baksh, Mukerian, District –Hoshiarpur.

ABSTRACT

In the present study, an attempt has been made to study in depth the inventory management practices of engineering goods industry in Punjab by using the panel data set for the period 2004-2009. The adequate and timely flow of inventory determines the success of an industry. The analysis of inventory management of engineering goods industry in Punjab reveals that size of inventory has increased marginally over the period under study as compared to increase in current assets, and net working capital. Half of the gross working capital is being used for meeting out inventory requirements. Such a huge investment in the inventory has resulted into overstocking of inventory due to low velocity/circulation of inventory and high holding period, particularly of finished goods and raw material. Raw material and finished goods cover greater portion of inventory followed by work in progress and stores. The reasons for the increase in inventory may be due to an increase in demand, increase in the sales of the units and favorable market conditions.

Fluctuation in price is considered the main reason for shortage of inventory by some of the sample units. Regression analysis between inventory and sale shows that there is a significant effect of sale on the inventory at 99% confidence level. It has been observed that the sales have increased proportionally at faster rate as compared to inventory ______

INTRODUCTION

Inventories constitute a major element of working capital. It is, therefore, important that investment in inventory is properly controlled. The objectives of inventory management are, to a great extent, similar to the objectives of cash management. Inventory management overcomes a large number of problems including fixation of minimum and maximum levels, determining the size of inventories to be carried, deciding about receipts and inspections procedure and keeping check over obsolescence and ensure control over movement. Good Inventory management is considered to be as indicator of good financial management, as inventory occupies the most strategic position in maximization of income. A study of corporate balance sheet shows that 15 to 30 per cents of the total capital is invested in inventory.

OBJECTIVES OF THE STUDY

The main objective of the present study is to examine the working capital management in the engineering goods industry in Punjab. However, the pinpoint objectives of the study are as follows; i). To examine the effectiveness of inventory management practices of the engineering goods www.zenithresearch.org.in

industries in Punjab by ratio analysis.

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HYPOTHESES OF THE STUDY

On the basis of above mentioned objectives, the following hypotheses in the context of engineering goods industry in Punjab have been developed. i). Proper management of inventory improves liquidity and profitability position. ii). There is a significant relationship between inventory and profitability.

SOURCE OF DATA

The data for the study have been collected through interviews with the respondents, personal observations, and occasional informal discussion, however, the experience in the collection of primary data was not so encouraging. Various secondary sources from where data has been collected for the present mainly the secondary data was collected from the Officials reports of Directorate of Industries, various magazines, journals, books, websites and news paper.

SAMPLE SIZE

According to Directorate of Industries, Punjab, the engineering industry of Punjab has been divided into 8 codes. It is evident from table 1 that eleven groups of engineering units have been selected out of 3951 registered units for present study. Sample units are selected mainly out of code number 28, 29, 31, 34. An intensive and comprehensive survey of industry has been conducted for the last five years .On the basis of concentration of engineering units in the selected districts, proportionate sample has been drawn from the four selected districts of the study state namely; Ludhiana, Jalandhar, Amritsar and Kapurthala, as more than eighty percent.

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TABLE 1.SAMPLE SIZE : PRODUCT WISE

Code No. Products Total Sample Products Total

Screw Valve 21 Metal products 1158 Steel Furniture 2 28 Steel furniture Safe, Hand tools, Nut bolts agricultural Implements Hand Tools 6 hardware items, utensil Pipe Fitting 5

Machine except electrical goods Machine & 17 radiators investors combines etc. Machinery Part 1349 29 machine tools parts

Accessories of non electrical Machine Tools 15 machine

31 Electrical Goods 152 Electrical Goods 12

Rail Components 18 34 Motor Vehicle &Trailors Parts 45 8 Motor Vehicles 8

Cycle Parts 12 35 Bicycle Parts, Auto Parts 834 Auto Parts 34

Total 3951 150 of the engineering goods units are concentrated in these districts only by applying multistage sampling.

TOOLS OF ANALYSIS

Apart from using simple arithmetical tools like; percentage, simple growth ,compound growth and average growth, the statistical techniques like arithmetic mean, standard deviation, co-efficient of variance, linear regression analysis and test of Significance ( t-test & X2 – test) have also been used. Various accounting and statistical tools which have been used in the present study are discussed in brief as Such as Ratio Analysis and Statistical Tools Standard Deviation its Co-efficient of Variation, Linear Regression Analysis ,trend Indices and Coefficient of Correlation and simple mathematical tools like; percentage, simple

average and compound growth rate have also been used.

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RESULTS AND DISCUSSION

INVENTORY TO CASH RATIO

Inventory to cash ratio of different units as shown in Table 2 reveals that the mean of inventory to cash ratio of different units varies between 2.2 to 2.9. Inventory to cash ratio was found highest of 7.3 times in case of machine & machinery parts units while lowest of 0.8 times in the steel furniture units. Inventory to cash ratio in machine & machine parts , hand tools, rail components, electrical goods and pipe fitting units has declined over the years. Inventory to cash ratio in steel furniture units which was .8 up to 2007-08, abruptly increased to 3.5 times in 2008-09.Growth rate of this ratio varies between 23.8 to 34.7 per cent.

TABLE 2 INVENTORY TO CASH RATIO

Years Compound 2004-05 2005-06 2006-07 2007-08 2008-09 Mean Growth Units

2.33 Auto Parts 2.5 2.33 2.47 2.39 2 -4.12 (8.3)

4.49 Cycle Parts 3.66 4.8 5.2 6.42 2.41 -5.30 (16)

Machine& 5.50 6 5.27 7.33 4.68 4.26 -7.72 Machinery Parts (19.5)

1.99 Hand Tools 3.33 1.69 2.04 2.14 0.76 -23.79 (7.1)

1.78 Rail Components 2.28 2.09 1.52 1.5 1.53 -10.68

(6.3)

2.39 Electric goods 3.17 1.76 2.37 2.56 2.11 -4.30 (8.5)

1.90 Pipe Fitting 2.75 1.83 2.17 1.44 1.32 -15.66

(6.7)

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2.16 Motor Vehicles 2.33 1.81 1.76 2.17 2.73 5.11 (7.7)

2.03 Machine tools 2.18 2.33 1.66 2.04 1.95 -3.51 (7.2)

2.25 Screw, Valve 2.58 2.22 2.28 2.15 2.02 -5.05 (8)

1.33 Steel furniture 0.81 0.76 0.77 0.78 3.54 34.66 (4.7)

Mean 2.87 2.44 2.68 2.57 2.23

SD 1.27 1.35 1.89 1.60 0.98

CV 44.47 55.47 70.39 62.35 44.18

INVENTORY TO SALES RATIO

Study of inventory to sale ratio of different engineering goods units as depicted in table 3 reveals that in auto parts units, this ratio over the years has declined from 13 per cent in 2004- 05 to 9 per cent in 2008-09 whereas, in rail components parts units, it declined from 18 per cent to 13 per cent during the same period which shows the efficiency as far as the inventory management is concerned.

2002-03 2003-04 2004-05 2005-06 2006-07

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TABLE 3. INVENTORIES TO SALES RATIO

Years

2004-05 2005-06 2006-07 2007-08 2008-09 Mean C.G

Units

0.11 Auto Parts 0.13 0.12 0.11 0.10 0.09 -8.17 (5.8

0.11 Cycle Parts 0.10 0.10 0.10 0.11 0.11 2.68 (5.8)

Machine & 0.26 0.22 0.25 0.29 0.27 0.27 5.10 Machinery Parts (13.7

0.18 Hand Tools 0.19 0.17 0.18 0.17 0.19 0.41 (9.5

Rail 0.15 0.18 0.15 0.14 0.13 0.13 -7.94 Components (7.9)

0.20 Electrical goods 0.16 0.17 0.26 0.21 0.21 7.59 (10.5)

0.15 Pipe Fitting 0.15 0.15 0.15 0.16 0.15 0.32 (7.9)

0.18 Motor Vehicles 0.19 0.18 0.16 0.17 0.18 -1.41

(9.5)

0.17 Machine Tools 0.16 0.17 0.18 0.17 0.17 1.58 (8.9)

0.33 Screw Valves 0.40 0.35 0.29 0.27 0.34 -5.70

(17.4)

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0.06 Steel furniture 0.06 0.06 0.06 0.06 0.06 -0.16 (3.2)

MEAN 0.18 0.17 0.17 0.17 0.17

S.D. 0.09 0.08 0.08 0.07 0.08

C.V. 49.12 44.64 43.94 39.46 46.68

In contrast, inventory to sales ratio in machinery parts (26%), electrical goods (20%), and screw values units (33%) has increased during the period under study ,thus showing inefficiency in inventory management. Inventory to sales ratio of cycle parts (11%), hand tools (17%) and steel furniture units (6%) during the period under study remains almost unchanged.

INVENTORY TO CURRENT ASSETS RATIO

It is revealed from the table 4 that share of inventory to current assets in auto parts units was found 24 per cent in comparison to 25 per cent in cycle and machinery parts, 32 per cent in hand tools, 28 per cent in rail components, 35 per cent in electrical goods, 21 per cent in pipe fitting, 18 per cent in machine tools, 31 per cent in screw valves and 21 per cent in steel furniture units.

TABLE 4 INVENTORIES TO CURRENT ASSETS RATIO

Years

2004-05 2005-06 2006-07 2007-08 2008-09 Mean C.GR

Units

0.24 Auto Parts 0.23 0.24 0.24 0.24 0.26 -2.28 (8.2)

0.25 Cycle Parts 0.22 0.24 0.26 0.294 0.27 -3.49

(8.6)

0.25 Machine & Machinery Parts 0.25 0.25 0.24 0.25 0.27 -2.02 (8.6)

0.32 Hand Tools 0.27 0.29 0.30 0.35 0.39 -6.58

(11.0)

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0.28 Rail Components 0.28 0.29 0.27 0.30 0.30 -4.71 (9.6)

0.35 Electrical goods 0.34 0.31 0.36 0.37 0.38 -3.21 (12.0)

0.21 Pipe Fitting 0.23 0.21 0.23 0.20 0.19 -4.61 (7.2)

0.18 Motor Vehicles 0.06 0.07 0.22 0.27 0.31 -0.97 (6.5)

0.30 Machine Tools 0.271 0.29 0.28 0.33 0.35 -3.99 (10.3)

0.31 Screw Valves 0.3 0.29 0.303 0.31 0.37 -3.98 (10.7)

0.21 Steel furniture 0.2 0.18 0.183 0.2 0.33 7.75 (7.2)

MEAN 0.52 0.50 0.49 0.48 0.47

S.D. 0.07 0.08 0.08 0.07 0.05

C.V. 13.945 15.957 17.339 16.179 12.551

Source: Computed from Primary Data

Inventory to current assets ratio of cycle parts, auto parts, hand tools, rail components, electrical goods and motor vehicles during the period under study has increased, whereas,

among other units, it remained more or less unchanged.

SEPARATE INVENTORY MANAGEMENT DEPARTMENT

Inventory management department is formed to exercise control over the inventory level, its usage and obsolesce. It is evident from table 5 that more than three fourth of selected units (76%) are not having separate inventory department. It has been found by applying fisher exact test that there is significant difference between the mean values of different industrial units. More than 80 per cent of the units engaged in by rail components (94.4%), machine

tools (93.33%), screw valves (90.48%), motor vehicles (87.5%) and pipe fittings units (80 %) www.zenithresearch.org.in

are not having separate inventory management department.

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TABLE 5. SEPARATE INVENTORY MANAGEMENT DEPARTMENT

Responses Yes No Total Units

11 23 34 Auto Parts (32.35) (67.65) (100)

4 8 12 Cycle Parts (33.33) (66.67) (100)

Machinery& Machinery 4 13 17 Parts (23.53) (76.47) (100)

3 3 6 Hand Tools (50.00) (50.00) (100)

1 17 18 Rail Components (5.56) (94.44) (100)

7 5 12 Electric goods (58.33) (41.67) (100)

1 4 5 Pipe Fitting (20.00) (80.00) (100)

2 6 8 Motor Vehicles (25) (75) (100)

1 14 15 Machine Tools (6.67) (93.33) (100)

2 19 21 Screw, Valve

(9.52) (90.48) (100)

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2 - 2 Steel furniture (100) - (100)

38 112 150 Total (23.33) (76.00) (100)

2.955 150 F value 0.002 P value (100)

Source: Data Complied from Questionnaire Figures in parentheses denotes percentage

PREPARATION OF INVENTORY REVIEW REPORT

Every organization needs to review its inventory level requirements in order to facilitate uninterrupted production and to guard against the risk of unpredictable changes in demand and supply and to take advantage of price fluctuation. Inventory Reporting which can be prepared on weekly, monthly or quarterly basis is another mode of exercising the control on inventory. Table 5.18 summaries the responses of executives regarding the preparation of inventory reviewing report. Almost two- fifth executives of sample units review their inventory on monthly basis. Monthly reviewing report is mainly followed in auto parts (52.94%), electrical goods (50%), cycle parts (41.67%) and machine & machinery part (41.18%) units. Weekly reviewing report is followed in 35.33 per cent units whereas, 20per cent units follow quarterly reviewing report .Thus, it has been found that majority of the sample units prepare the inventory review report on monthly basis. No significant difference between the mean values of different units has been observed by applying ANOVA.This problem has been found mainly in hand tools (50%), pipefitting (40%), auto parts (35.29%) , machine & machinery parts (35.29%), rail components( 33.33 %) , screw valves( 33.35% )and machine tools (33.35% ).Further, 29.33per cent units face the storage of raw materials and are mainly engaged in cycle parts (58.33%) . One- fourth of the executives are facing delay in delivery of goods and this problem of inventory is mainly found in machine tool (46.67%) ,pipefitting(37.50 %)and hand tools units(33.33%).Thus, it can be concluded that majority of the units are facing storage problem and delay in delivery of inventory while

managing the inventory .

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TABLE 6.PREPARATION OF INVENTORY REVIEW REPORT

Period

Monthly Weekly Quarterly Not at all Total

Units

18 11 3 2 34 Auto (52.94) (32.35) (8.82) (5.88) (100)

5 4 3 - 12 Cycle Parts (41.67) (33.33) (25.00) - (100)

Machine& Machinery 7 6 3 1 17 Parts (41.18) (35.29) (17.65) (5.88) (100)

1 2 3 - 6 Hand Tools (16.67) (33.33) (50.00) - (100)

5 9 3 1 18 Rail Components (27.78) (50.00) (16.67) (5.56) (100)

6 3 3 - 12 Electrical goods (50.00) (25.00) (25.00) - (100)

2 1 2 - 5 Pipe Fitting (40.00) (20.00) (40.00) - (100)

2 2 3 1 8

Motor Vehicles (25.00) (25.00) (37.50) (12.50) (100)

5 7 3 - 15 Machine tools (33.33) (46.67) (20.00) - (100)

8 7 4 2 21 Screw, Valves

(38.10) (33.33) (19.05) (9.52) (100) www.zenithresearch.org.in

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- - 2 2 Steel furniture - - - (100) (100)

59 52 30 9 150 Total (39.33) (34.67) (20.00) (6) (100)

F value 0.482 P value 0.9

Source: Data Compiled from Questionnaire. Figures in parentheses denotes percentage

AVERAGE INVENTORY AND SALES: REGRESSION ANALYSIS

To find the effect of sale on the inventory, regression test is applied by taking inventory as dependent variable and sales as independent variable. Significant effect of sale on the inventory at 99 per cent confidence level has been observed. Value of R2 shows that there is 68 per cent dependency of inventory on the sale. Thus ,there is a moderate correlation between inventory and sales. So, null hypothesis is rejected as there is no significant relationship between sales and inventory. It has been observed that the sales has increased proportionally at faster rate as compared to inventory(Table 7)

TABLE7. AVERAGE INVENTORY AND SALES: REGRESSION ANALYSIS

Variables Average Inventory Average Sale Units

Auto Parts 3.5 32.1

Cycle Parts 1.9 20.1

Machine & Machinery Parts 1.2 4.73

Hand Tools 2 11

Rail Components 0.8 6.86

Electrical Goods 3.2 16.2

Pipe Fittings 0.4 2.83

Motor Vehicles 0.8 5.04

Machine Tools 1.8 10.5

Screw Valves 2.3 7.05

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Steel Furniture 0.2 3.42

Linear Regression Equation R R2 T value Sig.value

Y=1.156-2.45 .824a 0.680 4.369 0.002

CONCLUSION

The analysis of inventory management of engineering goods industry in Punjab reveals that size of inventory has increased marginally over the period under study as compared to its proportionate growth against current assets, and net working capital. Half of the gross working capital has been used for inventory. Such a huge investment in the inventory has resulted into overstocking of inventory in the study units due to low velocity/circulation of inventory and high holding period, particularly of finished goods and raw material. Primary reason for shortage of inventory has been found shortage of inventory followed by price fluctuation. It has been found during the study that selected units do not pay much attention to modern techniques of inventory i.e. economic order quantity and safely stock.

Primary method used by majority of units for inventory is ;UED (Undesirable, Essential, Desirable) followed by ABC (high value medium value low value) HML (high, medium, low) VED (vital essential desirable FSNM (fast slow non-moving). Majority of the units face storage problem and delay in delivery of inventory Major part of inventory has been found in the form of raw material followed by work in progress, stores & spare parts and semi finished goods.

Inventory holding period shows that though the holding periods of all the components has shown a declining trend due to increase in demand and production yet, on the basis of analysis it may be held that there is ample scope for improvement to reduce the holding period of inventory from its present level, accelerating the velocity/ circulation of inventory and adjusting the growth in inventory with relative change in sales. Regression analysis between inventory and sale shows that there is a significant effect of sale on the inventory at 99% confidence level. It has been observed that the sales have increased proportionally at faster rate as compared to inventory.

SUGGESTIONS

Inventory level should be fixed up scientifically and introduction of JIT is prescribed so that inventory carrying cost can be reduced to the minimum extent. No inventory should be allowed to accumulate, as the inventory is the graveyard of business. Practising JIT reduces inventories at all stages of purchasing just in time to produce and producing just in time to sell. Traditional practices call for infrequent orders of large lots of materials and supplies, well in, advance of when the same is needed for production. Such practices intend to minimize ordering and transportation costs and allows time for late delivery and inspection of goods upon arrival. In contrast, JIT purchasing calls for frequent orders of small lots of

materials and supplies just in time to produce. Upon delivery, material and supplies are made www.zenithresearch.org.in

available directly onto assembly line. The firm under study should produce goods

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To deal with high holding period of inventory which indicates locking up excessive investment in inventory, the engineering industry should concentrate on production and raw materials which constitute two third of total holding inventory of the industry , has high holding period as compared to other components. Reduction in holding period of finished goods is possible by achieving the marketing function of industry. It is suggested that to overcome the marketing problem, an effective sales promotion strategy has to be reviewed.

To bring down the properties of unnecessarily locking up of fund investment in raw material inventory, there is a need to fix norms on scientific basis for stocking various raw material items by introducing immediately cost audit/ management audit/quality review board.

 Further, it is suggested that the engineering goods units should pay much attention to modern methods of inventory level like economic order quantity and safely stock, which they have not been found following. There are many steps to solve the problem of shortage of inventory as taking loan from institutions, retained earnings, or placing order in time, planned reorder level and maintain safety stock.

REFERENCES

1. Sri Nivasan N.P (1979), “Inventory Management in Cooperative Sugar Mills in Tamilnadu” The Tamilnadu Journal of Cooperation vol.70 no 3 Sep .

2. James A. Gentry, Dileep R. Mehta, S. K. Bhattacharya, Robert Cobbaut, Jean-Louis Scaringella (1979),“An International Study of Management Perceptions of the Working Capital Process”, Journal of International Business Studies, Vol. No.1 Spring-Summer, ,pp.28-38.

3. Hawawini, G., C. Viallet, and A. Vora, (1986), “Industry Influence on Corporation Working Capital Decisions,” Sloan Management Review 27, pp.15-24

4. Balu (1991),”Financing of Small scale Industries” A Sample Survey Including Notified Backward Areas, Indian Journal of Economics Vol.72 Oct, pp.151-159.

5. Justus, J (1996),”Financial Management of Small Scale Industries in Kerala”. PhD. Thesis, University of Kerala,

6. Manickawal S. and Neelamegam (1997),“Inventory Management in Small Scale Industrial Industries of Tamil nadu” Abhigyan, Vol XV No, 3, ,pp. 47-52.

7. Rajan (1999), “Financial Practices in Small Scale Industries,Study of Textiles Industry of Punjab” thesis submitted to faculty of economics & Business GNDU Amritsar,.

8. Farragher, E., R. Kleiman, and A. Sahu, (1999) “Current Capital Investment Practices” www.zenithresearch.org.in

Engineering Economist 44 (2):, , pp. 137-150.

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9. Jain, P.K., & Yadav, Surendra S. , “Current Liability Management Practices in Select Corporate Firms of India and Southeast Asia : A Comparative Study" Business Analyst, January- June1999.pp., 1-13.

10. Meenakshisundram N (2002),“Financial Management in Small Enterprises” Kanishka Publishers, Distributors ,New Delhi .

11.Dr. Sukhdev Singh , (2006) “Inventory Control Practices in IFFCO” in, Journal of Management Accountant, , July, , pp.577-582.

12. Amalendu Bhunia (2007),“Liquidity Management of Public Sector Iron and Steel Enterprises in India” Vidyasagar University Journal of Commerce Vol. 12, March ,.

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DIMENSIONALITY OF FINANCIAL REFORMS USING XBRL IN AN ORGANIZATION

ABHISHEK PANDE*

*Faculty, Orange School of Business, Nagpur, Maharashtra.

ABSTRACT

XBRL is a language for the electronic communication of business and financial data which is revolutionizing business reporting around the world.It provides major benefits in the preparation,analysis and communication of business information.It offers cost savings,greater efficiency and improved accuracy and reliability to all those involved in supplying or using financial data.XBRL stands for extensible business reporting language.It is already being put to practical use in a number of countries and implementations of XBRL are growing rapidly around the world.

KEYWORDS: Automation,Business reporting,Electronic format,Taxonomy.

INTRODUCTION

XBRL is an open,royalty-free software specification developed through a process of collaboration between accountants and technologists from all over the world.Together,they formed XBRL international which is now made up of over 650 members,which includes global companies,accounting,technology,government and financial services bodies.XBRL is and will remain an open specification based on XML that is being incorporated into many accounting and analytical software tools and applications.XBRL offers major benefits at all stages of business reporting and analysis.The benefits are seen in automation,cost saving,faster more reliable and more accurate handling of data,improved analysis and in better quality of information and decision making.XBRL enables producers and consumers of financial data to switch resources away from costly manual processes,typically involving time-consuming comparison,assembly and re-entry of data.

They are able to concentrate effort on analysis,aided by software which can validate and process XBRL information.XBRL is a flexible language,which is intended to support all current aspects of reporting in different countries and industries.It's extensible nature means that it can be adjusted to meet particular business requirements,even at the individual organization level.All types of organizations can use XBRL to save costs and improve efficiency in handling business and financial information.Because XBRL is extensible and flexible,it can be adapted to a wide variety of different requirements.

REVIEW OF LITERATURE

All participants in the financial information supply chain can benefit,whether they are

preparers,transmitters or users of business data.XBRL is set to become the standard way of www.zenithresearch.org.in

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This will improve business relations and lead to a range of benefits.With full adoption of XBRL,companies can automate data collection.For example,data from different company divisions with different accounting systems can be assembled quickly,cheaply and efficiently.Once data is gathered in XBRL,different types of reports using varying subsets of the data can be produced with minimum effort.A company's finance division,for example,could quickly and reliably generate internal management reports,financial statements for publication,tax and other regulatory fillings,as well as credit reports for lenders.Not only can data handling be automated,removing time-consuming,error-prone processes,but the data can be checked by software for accuracy.XBRL makes the data readable,with the help of two documents-Taxonomy and instance document.

Taxonomy defines the elements and their relationships based on the regulatory requirements.Using the taxonomy prescribed by the regulators,companies need to map their reports and generate a valid XBRL instance document.The process of mapping means matching the concepts as reported by the company to the corresponding element in the taxonomy.In addition to assigning XBRL tag from taxonomy,information like unit of measurement,period of data,scale of reporting etc,needs to be included in the instance document.

Taxonomy can be referred as an electronic dictionary of the reporting concepts.Taxonomy consists of all the data definitions,the basic XBRL properties and the interrelationships amongst the concepts.It includes terms such as net income,EPS,cash, etc.Each term has specific attributes that help define it,including label and definition and potentially references.Taxonomies may represent hundreds or even thousands of individual business

reporting concepts,mathematical and definitional relationships among them,along with text labels in multiple languages,references to authoritative literature,and information about how to display each concept.

OBJECTIVES

The primary objectives of the study is to create financial statements in XBRL :

 XBRL aware accounting software products are becoming available which will support the export of data in XBRL form.These tools allow users to map charts of accounts

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 Statements can be mapped into XBRL using XBRL software tools designed for this purpose.

 Data from accounting databases can be extracted in XBRL format.It is not strictly necessary for an accounting software vendor to use XBRL : third party products can achieve the transformation of the data to XBRL.

 Applications can transform data in particular formats into XBRL.The route which an individual company may take will depend on its requirements and the accounting software and systems it currently uses.

Taxonomies for Indian companies are developed based on the requirements of

 Schedule VI of Companies Act

 Accounting Standards issued by ICAI

 SEBI listing requirements

An XBRL instance document is a business report in an electronic format created according to the rules of XBRL.It contains facts that are defined by the elements in the taxonomy it refers to,together with their values and an explanation of the context in which they are placed.XBRL instances contain the reported data with their values and "contexts".Instance document must be linked to at least one taxonomy,which defines the contexts,labels or references.Thus,in order to concluded the usage and explain the XBRL technology which leads to more information exchanges that can be effectively automated by use.This one standard approach leads to the best interest of the company or more so for the international business interests globally that warrant the accuracy of all the financial data for the end users and early collaborative decisions by the companies or those whose interest is involved for acquisition rights etc.

FIGURE 1: INFORMATION FLOWS IN XBRL

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CASE STUDY - PRICEWATERHOUSECOOPERS LLP BENCHMARKING AND ANALYSIS OF GLOBAL FINANCIAL DATA

PricewaterhouseCoopers (PwC) is one of the world's largest accounting and business services firms.It provides industry-focused services to both public and private clients in the areas of audit and assurance,crisis management,human resources,performance improvement,tax and transactions (such as financial due diligence,project finance and accounting valuations).

PwC wanted to develop a platform that served the needs of its audit and advisory groups for risk management analysis and reporting that was based on the existing third-party financial data source it has purchased.PwC analysts were spending an enormous amount of time on the unproductive tasks of data retrieval and error correction.Although analysts had an existing inventory of analytic models developed in Microsoft Excel,they had to copy and paste data from the data source to use them.

The HITACHI XBRL SOLUTION : HITACHI XBRL REPORTER

Hitachi implemented an open platform based on XBRL and web services that interoperates with the customers existing system infrastructure.

Taxonomy design and development using its XiRUTE Taxonomy Editor (TE) and Instance Creator (IC).

An automated XBRL conversion engine on its Hitachi Business Reporting Processor (HBRP)

A customized version which allows users to import,validate and analyze XBRL documents easily,accurately and correctly,as well as templates for data analysis.

Training to teach staff how to use the system and how to maintain templates and taxonomies.

FIGURE 1 : MAPPING OF XBRL REPOSITORY

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RESULTS

The new system has dramatically reduced the time required to prepare financial data for analysis-it took less than one minute to compile data for five companies spanning 10 years.

XBRL instance documents can now be created in real time by invoking the conversion and validation engine via the use of web services.The financial data of some 43,000 companies are now available in XBRL 2.1-compliant format on an annual and quaterly basis,and are offered for risk management analysis and reporting on a real-time basis.

The system offers complete data inter-operability with other XBRL data sources,and the flexibility to create new templates via the customization by users.

CONCLUSIONS

XBRL is an open standard that facilitates the flow of business information from information providers to information consumers in a consistent and reliable manner.XBRL allows metadata- data about data- to travel with the underlying facts in electronic business reports.XBRL is not a solution to all information transfer problems.XBRL is designed explicitly to support business reporting and as a result,it's enhanced functionality associated with XBRL is recent.This paper has emphasized the opportunities for organizations to adapt and integrate XBRL internally since this brings the most benefit and reduces the risks and impacts highlighted.Many organizations send their data to external providers of XBRL-the outsourced strategy.While the outsourced scenario is one of the quicker strategies in the short term,this approach will not allow organizations to leverage the benefits of integrating it into the wider internal reporting processes and systems of the organizations.

MANAGERIAL IMPLICATIONS

The application of XBRL to business reporting around the world involves a wide range of information providers.Some implementations encompass small and medium-sized organisations-others take in large,publicly listed corporations.Information consumers can reside within an organization or,more typically,are external to the organization.Information consumers can be managers,regulators,information intermediaries and stakeholders such as shareholders,analysts and financial institutions.Some implementations of XBRL have been entirely within organizations.In these cases,XBRL is used to bind together disparate information systems.XBRL provides a means for units within organizations to transfer transactional data and management information from system to system using a common

internal taxonomy.Here XBRL is the glue that binds very different systems together.

REFERENCES

ARTICLES

Government of India Ministry of Corporate Affairs (MCA) general circlar no .09/2011.

XBRL developments in India 2011 article by Vinod Kashyap.

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ASSOCIATIONS

American Institute of Certified Public Accontants.

Commonwealth Association for Corporate Governance Inc.

IFAC international federation of Accountants.

Institute of Management Accountants Inc.

ISACA chapters.

BOOKS AND JOURNALS

"Essentials of XBRL:Financial Reporting in the 21st Century" written by Bryan Bergeron.

"XBRL for Dummies "written by Charles Hoffman.

"XBRL for Indian CA"written by XBRL community in india.

Peter Mayne,(2008) "Reporting language XBRL looks as thoughit is in the right place at the right time "Balance Sheet,Vol 10,iss 3

Robert Pinsker, (2003) "XBRL awareness in auditing: a sleeping giant?", Managerial Auditing Journal, Vol. 18 Iss: 9, pp.732 – 736

Sayther Cunningham,(2005) " XBRL : A Multitalented tool XBRL can save time and money and facilitate information analysis,"article "Journal of Accountancy,Vol.199

COLLEGES AND UNIVERSITIES

Orange School of Business.Nagpur,Maharashtra

Solvay Brussels School of Economics and Management,Belgium

Sikkim Manipal University,Gangtok,Sikkim

CORPORATES

ASIS International.

Hewlett-Packard.

Hitachi Consulting.

IBM.

PriceHousewatercooper(PwC).

SOA Projects Inc. www.zenithresearch.org.in

Symantec Corp.

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SEMINARS

National Seminar by CPEC with Madurai Branch – 6th August, 2011.

National Seminar on XBRL - Extensible Business Reporting Language at Hotel Lalit Ashok Bangalore on 27th May, 2011 .

National Seminar on XBRL – Extensible Business Reporting Language at P. Brahmayya Memorial Hall, ICAI Bhawan, Chennai on 1st May, 2011 .

WEBSITES http://www.bseindia.com. http://www.hitachiconsulting.com/xbrl/case_studies.cfm?id=case_studies. http://www.icai.org. http://www.ifac.org. http://www.irda.gov.in. http://www.isaca.org. http://www.mca.gov.in. http://www.nse.com. http://www.rbi.org.

http://xbrlforindianca.blogspot.com/2011/09/xbrl-taxonomy-creation-complete-guide.html.

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FLOURISHING BANCASSURANCE BUSINESS: AN INDIAN PERSPECTIVE

S SARVANAKUMAR*; U.PUNITHA**; S. GUNASEKARAN***; S SANKAR

*Research Scholar & Associate Professor, Department of Management Studies, JKK Nattraja College of Engineering & Technology, Komarapalayam, Namakkal, Tamilnadu. ** Assistant Professor, Department of Business Administration, SSM Arts & Science College, Komarapalayam, Namakkal, Tamilnadu. *** Research Scholar & Assistant Professor, Department of Management Studies, King College of Technology, Komarapalayam, Namakkal, Tamilnadu. **** Assistant Professor, Department of Management Studies, JKK Nattraja College of Engineering & Technology, Komarapalayam, Namakkal, Tamilnadu.

ABSTRACT

Bancassurance simply means selling of insurance products by banks. In this arrangement, insurance companies and banks undergo a tie-up, thereby allowing banks to sell the insurance products to its customers. This is a system in which a bank has a corporate agency with one insurance company to sell its products. By selling insurance policies bank earns a revenue stream apart from interest. It is called as fee-based income. This income is purely risk free for the bank since the bank simply plays the role of an intermediary for sourcing business to the insurance company. The business of banking around the globe is changing due to integration of global financial markets, development of new technologies, universalization of banking operations and diversification in non-banking activities. Due to all these movements, the boundaries that have kept various financial services separate from each other have vanished. The coming together of different financial services has provided synergies in operations and development of new concepts. Insurance companies require immense distribution strength and tremendous manpower to reach out to such a huge customer base. This distribution will undergo a sea change as various insurance companies are proposing to bring insurance products into the lives of the common man by making them available at the most basic financial point, the local bank branch, through Bancassurance. Simply put, bancassurance is the process through which insurance products are sold to customers at their local banks.

KEYWORDS: Bancassurance, Life Insurance, Referral Model, Corporate Agency, Stand-alone products, Tied products.

______

1. INTRODUCTION

The business of banking around the globe is changing due to integration of global financial markets, development of new technologies, universalization of banking operations and diversification in non-banking activities. Due to all these movements, the boundaries that have kept various financial services separate from each other have vanished. The coming together of different financial services has provided synergies in operations and development

of new concepts. One of these is bancassurance. It simply means selling of insurance www.zenithresearch.org.in

products by banks to its customers. In this arrangement, insurance companies and banks

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 undergo a tie-up, thereby allowing banks to sell the insurance products. This is a system in which a bank has a corporate agency with one insurance company to sell its products. By selling insurance policies bank earns a revenue stream apart from their banking business. It is called as fee-based income. This income is purely risk free for the bank since the bank simply plays the role of an intermediary for sourcing business to the insurance company. Bancassurance has grown at different places and taken shapes and forms in different countries depending upon demography, economic and legislative prescriptions in that country. Bancassurance, the sale of life insurance and pensions products through a bank, has proved to be an effective distribution channel in a number of countries. In a broad sense, bancassurance is the distribution of insurance products to a bank‟s client base. However, beyond this definition, bancassurance business models vary widely from country to country.

Bancassurance is a new buzzword in India. It originated in India in the year 2000 when the Government issued notification under Banking Regulation Act which allowed Indian Banks to do insurance distribution. It started picking up after Insurance Regulatory and Development Authority (IRDA) passed a notification in October 2002 on 'Corporate Agency' regulations. As per the concept of Corporate Agency, banks can act as an agent of one life and one non-life insurer. Currently bancassurance accounts for a share of almost 25 to 30% of the premium income amongst the private players in India.

2. STATEMENT OF THE PROBLEM

The Indian insurance sector has undergone a big change in the last decade, ever since the sector was opened up for private players. Traditionally, insurance products are sold only through individual agents and they account for a major chunk of the business in retail segment. With the opening up of this sector to private players, competition has become more intense and the public sector major LIC has been challenged with a flood of new products and new means of marketing. Insurance industry in India has been progressing at a rapid pace since opening up of the sector to the entry of private companies in 2000. The size of the country, a diverse set of people combined with problems of connectivity in rural areas, makes insurance selling in India a very difficult proposition. Insurance companies require immense distribution strength and tremendous manpower to reach out to such a huge customer base. This distribution will undergo a sea change as various insurance companies are proposing to bring insurance products into the lives of the common man by making them available at the most basic financial point, the local bank branch, through Bancassurance. Simply put, bancassurance is the process through which insurance products are sold to customers at their local banks. With banking network of 65,000 branches serving more than 400 million retail banking customers, insurance can be available at affordable prices to people even in remote

corners of the country. The relationship is symbiotic; but there are challenges. The most common challenges to success are poor manpower management, lack of a sales culture within the bank, no involvement by the branch manager, insufficient product promotions, failure to integrate marketing plans, marginal database expertise, poor sales channel linkages, inadequate incentives, resistance to change, negative attitudes toward insurance and unwieldy marketing strategy. Even insurers and banks that seem ideally suited for a bancassurance partnership can run into problems during implementation. Before targeting the market, it is essential to do a SWOT analysis. One more important obstacle in development of bancassurance in India has been a set of regulatory barriers. Some of these have recently been

cleared with the passage of the Insurance (Amendment) Act, 2002. Looking at the west where www.zenithresearch.org.in

sales through the banking network have been a roaring success, the Indian banking sector has

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2.1. GROWTH OF LIFE INSURANCE BUSINESS IN INDIA

In India life insurance business is growing day by day. The FYP including Single premium is shown below:

LIFE INSURANCE PREMIUM (FYP)

(Rs. Crore)

Insurer 2008-09 2007-08 2006-07 2005-06 2004-05 2003-04 2002-03 2001-02

53179.0 59996.5 56223.5 28515.8 20653.0 17347.6 15976.7 19588.7 LIC 8 7 6 7 6 2 6 7

(Growth) (-11.36) (6.71) (97.17) (38.07) (19.05) (8.58) (-18.44) (101.93)

Aegon 31.21 Religare ------

Aviva 724.56 1053.98 721.35 407.12 192.29 76.96 13.47 -

Bajaj Allianz 4491.43 6674.48 4302.74 2716.77 857.45 179.55 63.39 7.14

Bharti Axa 292.93 113.24 7.78 - - - - -

Birla Sunlife 2823.91 1965.01 882.72 678.12 621.31 449.86 129.57 28.11

Canara HSBC 296.41 ------

DLF Pramerica 3.37 ------

Future Generali 149.97 2.49 ------

HDFC Standard 2651.11 2685.37 1648.85 1042.65 486.15 209.33 129.31 32.78

ICICI Prudential 6483.92 8034.75 5162.13 2602.50 1584.34 750.84 364.11 113.33

IDBI Fortis 316.78 11.90 ------

ING Vysya 688.95 704.44 467.66 283.98 282.42 72.10 17.66 4.19

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Kotak Mahindra 1343.03 1106.62 614.94 396.06 373.99 125.51 35.21 7.58

Met Life 1144.7 825.35 340.44 148.53 57.52 23.41 7.70 0.48

Max NewYork 1842.91 1597.83 912.11 471.36 233.63 137.28 67.31 38.80

Reliance Life 3513.98 2751.05 932.11 193.56 91.33 27.21 6.32 0.28

Sahara 134.01 122.12 43.00 26.34 1.74 - - -

SBI Life 5386.64 4792.82 2563.84 827.82 484.85 207.05 71.88 14.69

Shriram 314.47 309.99 181.17 10.33 - - - -

Star Union 50.19 ------

Tata AIG 1142.67 964.51 644.82 464.53 297.55 181.59 59.77 21.14

33827.1 33715.9 19425.6 10269.6 Private Total 5 5 5 7 5564.57 2440.71 965.69 268.51

(127.99 (152.74 (259.65 (4061.7 (Growth) (0.33) (73.56) (88.84) (84.55) ) ) ) 0)

Industry 87006.2 93712.5 75649.2 38785.5 26217.6 19788.3 16942.4 19857.2 Total 3 2 1 4 4 2 5 8

(Growth) (-7.16) (23.88) (94.96) (47.94) (32.49) (16.80) (-14.68) (104.56)

Source: IRDA

FYP – Stands for First Year Premium

3. OBJECTIVES OF THE STUDY

This study makes an attempt in this direction with the following objectives.

1. To examine the recent trends of bancassurance business in India.

2. To analyze the different bancassurance verticals offered by Indian banks.

3. To find about the multi-face of bancassurance business.

4. To know the issues regarding marketing of insurance products through bancassurance mode.

4. RECENT TRENDS OF BANCASSURANCE IN INDIA

Bancassurance is quiet embryonic in South Asia and this is still in infancy in India

and it is too early to assess the exact position. However, a quick survey revealed that a large www.zenithresearch.org.in

number of banks cutting across public and private and including foreign banks have made use

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 of the bancassurance channel in one form or the other in India. Banks by and large are resorting to either „referral models‟ or „corporate agency‟ to begin with. Banks even offer space in their own premises to accommodate the insurance staff for selling the insurance products or giving access to their client‟s database for the use of the insurance companies. As number of banks in India have begun to act as „corporate agents‟ to one or the other insurance company, it is a common sight that banks canvassing and marketing the insurance products across the counters.

The present Insurance Regulatory body‟s regulation, however, restricts bankers to act as a corporate agent on behalf of only one life and general insurance company. In the case of ICICI Prudential Life Insurance Company, within two years of its operations, it could reach more than 25 major cities in India and as much as 20 per cent of the life insurance sales are through the bancassurance channel. In the case of ICICI bank, SBI and HDFC bank insurance companies are subscribers of their respective holding companies. ICICI bank sells its insurance products practically at all its major branches, besides it has bancassurance partnership arrangements with 19 other banks as also as many as 200 corporate tie-up arrangements. Thus, among the private insurance companies, ICICI Prudential seems to exploit the bancassurance potential to the maximum. ICICI stated that Bank of India has steadily grown the life insurance segment of its business since its inception. ICICI prudential had also reported to have entered into similar tie-ups with a number of Regional Rural Banks, to reap the potential of rural and semi-urban. In fact, it is a step in the right direction to tap the vast potential of rural and semi-urban market. It will not be surprising if other insurance companies too follow this direction. Aviva Insurance had reported that it has tie-ups with as many as 22 banking companies, which includes private, public sector and foreign banks to market its products. Similarly, Birla Sun Life Insurance Company reported to have tie-up arrangements with 10 leading banks in the country.

A distinct feature of the recent trend in tie-up arrangements was that a number of cooperative banks have roped in with bancassurance arrangement. This has added advantage for insurer as well as the cooperative banks, such as the banks can increase the non-fund based income without the risk participation and for the insurers the vast rural and semi-urban market could be tapped without its own presence. Bancassurance alone has contributed richly to as much as 45 per cent of the premium income in individual life segment of Birla Sun Life Insurance. Incidentally even the public sector major Life Insurance Corporation reported to have tie-up with 34 banks in the country, it is likely that this could be the largest number of banks selling single insurance company‟s products. Ironically, Life Insurance Corporation also has the distinction of being the oldest and the largest presence of its own in the country. SBI Life Insurance for instance, is uniquely placed as a pioneer to usher bancassurance into

India. The company has been extensively utilizing the SBI Group as a platform for cross- selling insurance products along with its numerous banking product packages such as housing loans, personal loans and credit cards. SBI has distinct advantage of having access to over 100 million accounts and which provides it a vibrant and largest customer base to build insurance selling across every region and economic strata in the country. In 2004, the company reported to have become the first company amongst private insurance players to cover 30 lakh lives. Interestingly, in respect of new life insurance business bancassurance business channel is even greater than the size of direct business by the insurers at 2.17 per cent. Even in respect of LIC around 1.25 per cent of the new business is through

bancassurance. Considering the large base, even this constitutes quite sizeable to begin with www.zenithresearch.org.in

in the case of LIC. This speaks for itself the rate at which the bancassurance becoming an

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 important channel of distribution of insurance products in India. It is significant to note that the public sector giant LIC which has branches all over India, too moving towards making use of bancassurance channel.

5. BANCASSURANCE MODELS

At present in India, the entire bancassurance business models can be classified into two types, on the basis of structural classification and on the basis of product based classification. This can be explained in detail below.

5.1. ON THE BASIS OF STRUCTURAL CLASSIFICATION

A) REFERRAL MODEL

At the outset banks anticipating not to take risk could adopt „referral model‟ wherein they merely part with their client data base for business lead for commission. The actual transaction with the prospective client in referral model is done by the employees of the insurance company either at the premise of the bank or elsewhere. Referral model is nothing but a simple arrangement, wherein the bank, while controlling access to the client‟s data base, parts with only the business leads to the agents or sales staff of insurance company for a referral fee or commission for every business lead that was passed on. In fact a number of banks in India have already resorted to this strategy to begin with. This model would be suitable for almost all types of banks including the Regional Rural Banks, cooperative banks and even cooperative societies both in rural and urban. There is greater scope in the medium term for this model. For, banks to begin with resorts to this model and then move on to the other models.

B) CORPORATE AGENCY

The further arrangement of non-risk participatory distribution channel is that of corporate agency, wherein the bank employee are especially a staff and branch manager, trained to appraise and sell the products to the customers. Here the bank as an institution acts as corporate agent for the insurance products for a fee or commission. This seems to be more viable and appropriate for most of the mid-sized banks in India as also the rate of commission would be relatively higher than the referral arrangement. This, however, is prone to reputation risk of the marketing bank. Here are also practical difficulties in the form of professional knowledge about the insurance products. Besides, resistance from staff to handle totally new service could not be ruled out. This could, however, be overcome by intensive training to chosen staff packaged with proper incentives in the banks coupled with selling of simple insurance products in the initial stage. This model is best suited for majority of banks including some major urban cooperative banks because neither there is sharing of risk nor does it require huge investment in the form of infrastructure and yet could be a good source of income. Bajaj Allianz stated to have established a growth of 325 per cent during April- September 2004, mainly due to bancassurance strategy and around 40% of its new premiums business. Interestingly, even in a developed country like US, banks stated to have preferred to focus on the distribution channel akin to corporate agency rather than underwriting business. Several major United States banks including Wells Fargo, Wachovia and BB & T built a large distribution network by acquiring insurance brokerage business. This model of

bancassurance worked well in the United States, because consumers generally prefer to www.zenithresearch.org.in

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 purchase policies through broker banks that offer a wide range of products from competing insurers.

C) FULLY INTEGRATED FINANCIAL SERVICE

Apart from the above two, the fully integrated financial service involves much more comprehensive and intricate relationship between insurer and bank, where the bank functions as fully universal in its operation and selling of insurance products is just one more function within. Banks are equipped with a counter within to sell the insurance products as an internal part of its activities. This includes banks having a wholly owned insurance subsidiary with or without foreign participation. In Indian case, ICICI bank and HDFC banks in private sector and State Bank of India in the public sector, have already taken a lead in resorting to this type of bancassurance model and have acquired sizeable share in the insurance market, also made a big stride within a short span of time. The great advantage of this strategy being that the bank could make use of its full potential to reap the benefit of synergy and therefore the economies of scope. This may be suitable to relatively larger banks with sound financials and has better infrastructure. Internationally, the fully integrated bancassurance have demonstrated superior performance. Even if the banking company forms as a subsidiary and insurance company being a holding company, this could be classified under this category, so long as the bank is selling the insurance products along side the usual banking services. As per the extant regulation of insurance sector the foreign insurance company could enter the Indian insurance market only in the form of joint venture, therefore, this type of bancassurance seems to have emerged out of necessity in India to an extent. There is great scope for further growth both in life and non-life insurance segments as Government of India is reported have been actively considering to increase the Foreign Direct Investment‟s participation to the up to 49 per cent.

5.2. PRODUCT-BASED CLASSIFICATION

A. STAND-ALONE PLANS

In this case bancassurance involves marketing of the insurance products through either referral arrangement or corporate agency without mixing the insurance products with any of the banks‟ own products. Insurance is sold as one more item in the menu of products offered to the bank‟s customer, however, the products of banks and insurance will have their respective brands too, e.g., Karur Vysya Bank Ltd selling of life insurance products of Birla

Sun Insurance or non-life insurance products of Bajaj Allianz General Insurance Company.

B) BLENDED WITH BANK PRODUCTS

With the financial integration both within the country and globally, insurance is increasingly being viewed not just as a stand alone product but as an important item on a menu of financial products that helps consumers to blend and create a portfolio of financial assets, manage their financial risks and plan for their financial security and well being. This strategy aims at blending of insurance products as a value addition while promoting its own products. Thus, banks could sell the insurance products without any additional efforts. In most times, giving insurance cover at a nominal premium or sometimes without explicit www.zenithresearch.org.in

premium does act as an added attraction to sell the bank‟s own products, for example credit

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 card, housing loans, education loans, etc. Many banks in India, in recent years, has been aggressively marketing credit and debit card business, whereas the cardholders get the insurance cover for a nominal fee or free from explicit premium. Similarly the home loans, vehicle loans, etc., have also been packaged with the insurance cover as an additional incentive.

6. BANCASSURANCE IN INDIA – SOME ISSUES

The difference in working style and culture of the banks and insurance sector needs greater appreciation. Insurance is a business of solicitation unlike a typical banking service; it requires great drive to market the insurance products. It should, however, be recognized that bancassurance is not simply about selling insurance but about changing the mindset of a bank. Moreover, in India since the majority of the banking sector is in public sector and which has been widely disparaged for the lethargic attitude and poor quality of customer service, it needs to refurbish the blemished image. Else, the bancassurance would be difficult to succeed in these banks. Studies have revealed that the basic attitudinal incompatibility on the part of employees of banks and insurance companies and the perception of customers about the poor quality of banks had led to failures of bancassurance even in some of the Latin American countries.

There are also glitches in the system of bancassurance strategy in the form of conflict of interests, as some of the products offered by the banks, viz., term deposits and other products which are mainly aimed at long term savings and/or investments can be very similar to that of the insurance products. Banks could as well feel apprehension about the possibility of substitution effect between its own products and insurance products and more so, as a number of insurance products in India come with an added attraction of tax incentives. In case the Bancassurance is fully integrated with that of the banking institution, it is suitable only for larger banks; however, it has other allied issues such as putting in place proper risk management techniques relating to the insurance business, etc.

As there is a great deal of difference in the approaches of selling of insurance products and the usual banking services thorough understanding of the insurance products by the bank staff coupled with extra devotion of time on each customer explaining in detail of each product‟s intricacies is a prerequisite. Moreover, insurance products have become increasingly complex over a period of time, due to improvisation over the existing products as well as due to constant innovation of new products, emanating from the excessive competition adding to even more difficulties in comprehension of the products and marketing by the bank staff. These can result in resistance to change and leading to problems relating to industrial relations. Unlike, the banking service, there is no guarantee for insurance products that all efforts that a bank staff spends in explaining to a customer would clinch the deal due to the very nature of the insurance products. This frustration of the bank staff has the danger of spill over effect even on their regular banking business.

Bankers in India are extremely naïve in insurance products as there were no occasions in the past for the bankers to deal in insurance products; therefore they require strong motivation of both monetary and non monetary incentives. This would be more so in the emerging scenario due to complex innovations in the field of insurance or pension products at a rapid pace with the entry of a number of foreign insurance companies with vast experience

in the developed countries‟ framework. In view of the above, reorientation of staff in the www.zenithresearch.org.in

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 public sector banks in particular, to be less bureaucratic and more customers friendlier would indeed be a challenging task, albeit it is a prerequisite for the success of bancassurance. With the financial reforms and technological revolution embracing the financial system, there has been a great deal of flexibility in the mind set of people to accept change. The above outlined problems need not, however, deter the banking sector to embark on bancassurance as any form of resistance from the bank employees could be tackled by devising an appropriate incentive system commensurate with intensive training to the frontline bank staff.

7. BANCASSURANCE AND ITS MULTI-FACE

Bancassurance is a win-win model for insurance companies and banks. Insurance companies, with their relatively limited infrastructure, were able to sell their products throughout the country by using the distribution channel of bank branches. At the same time, banks, without investing in additional resources or infrastructure, were able to earn a fee- based income, to supplement their core lending activities. Bancassurance simply means selling of insurance products by banks. The Insurance Regulatory and Development Authority notification in 2002 saw the banks begin to act as agents for one life and general insurer, each. In this alliance between insurance companies and banks, banks were allowed to sell insurance products to their customers. Under this arrangement, banks are appointed as corporate agents, empanelled with one insurance company to sell its products. Banks, with their existing customer base, can leverage on their existing relationships, to convert customers into policyholders. The bank usually earns a high commission on the first premium paid by each customer and marginal trailing commissions on renewal premiums till the maturity of the policy, for regular premium plans. And a one-time commission is paid in case of the single premium policies.

7.1. STRENGTHS OF BANKS

In the insurance market, there are currently 20 private players along with the public sector giant Life Insurance Corporation. Out of these companies, the early birds had the advantage of entering into a tie-up with commercial banks and cooperative banks for exclusive bancassurance arrangements. In India, the bank branch network encompasses nearly 75,000 branches inclusive of Public Sector Undertaking and private banks. Close to 1,00,000 branches of co-operative, district co-operative and regional rural banks also exist. Normally, commercial banks act as a corporate agent and tie-up with one insurance company. Co-operative banks act as corporate agents or as referral agents. The fee-based income for the bank varies based on whether they operate as a corporate agent these will earn higher commissions than for referral agents, where selling is executed by the insurance companies

themselves.

7.2. REWARDS FOR THE INSURANCE COMPANY

Through this new distribution network, the insurance company significantly extends its customer base and enjoys access to customers who were previously difficult to reach. This is obviously a fundamental advantage; it is itself enough to convince an insurance company to ally itself with a bank. The insurance company has the opportunity to vary its distribution methods, in order to avoid excessive dependence on a single network. Diversification reduces risk of the investments. The insurance company often benefits from the trustworthy image

and reliability that people are more likely to attribute to banks. The insurance company also www.zenithresearch.org.in

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 benefits from the reduction in distribution costs relative to the costs inherent in traditional sales representatives, since the sales network is generally the same for banking products and insurance products. These cost savings have been recognized by many bancassurance operators around the world and are therefore carried over into the costs included in contracts. This means that products can be sold more cheaply. An insurance company can establish itself more quickly in a new market, using a local bank‟s existing network.

7.3. ADVANTAGES FOR THE BANK

First of all, the bank sees bancassurance as a way of creating a new revenue flow and diversifying its business activities. This advantage was all the greater in the early 1990s, a period characterized by increased competition between financial institutions and a reduction in the banks‟ profit margins and, therefore, the need to look for new business. The bank becomes a sort of supermarket, a one-stop shop for financial services, where all customers‟ needs whether financial or insurance related can be met. The broadening of its product range makes the bank more attractive and can reinforce customer satisfaction and therefore customer loyalty. The distribution costs can be seen as marginal since, in most cases, it is the bank‟s existing employees who sell the insurance products. Amongst other things, the one- stop shop model optimizes the use of the network and increases the profitability of the existing branch network.

7.4. ADVANTAGES FOR THE CONSUMER

As mentioned among the advantages for the bank, the consumer enjoys greater access to all financial services from a bank that offers both banking and insurance products. Since the distribution costs are lower than in a traditional distribution network, the consumer can usually get cheaper insurance products than through traditional channels. In addition, premium payment methods are simplified, since premiums are collected directly from bank accounts. The special relationship between the customer and the bank means that there is a better match between what the customer needs and the solutions provided by the bank. In summary, we would say that customers benefit from the opportunity to get simple, often inexpensive insurance products with a premium payment system adapted to their needs - usually monthly installments - and with easy access, since the branch network is usually denser than the network of insurance outlets.

7.5. DISADVANTAGE

One disadvantage that has come up in this model is that banks, after allying with one insurance company may discontinue it to set up their own venture. Changing insurance partners due to attractive benefits offered by a competing insurer is also not ruled out. Mergers and takeover situations may also lead to a rejoin in bancassurance partners. The bancassurance channel accounts for about 25 per cent of the total new premium collected by the industry as of today. For insurers, based on the business strategy and the number of tie- ups, the contribution of bancassurance varies.

7.6. UNTAPPED MARKET POTENTIAL

The penetration of life insurance as a whole is abysmally low at 4.1 per cent of Gross

Domestic Product. Bancassurance currently accounts for one fourth of the total new premium www.zenithresearch.org.in

collected. Going by the number of the branches selling insurance products, it appears that it is

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 yet to attain critical mass. Out of the over 1.75 lakh branches of commercial and co-operative banks, hardly one-fourth are engaged in selling insurance products. If more and more branches start to sell insurance products, particularly the cooperative banks, the penetration of insurance may increase substantially.

7.7. MICRO INSURANCE

Micro insurance which is at a miniscule level to the overall businesses may also undergo dramatic change. Insurance companies may have to prepare for more investments in technology to allow processing and issue of policies at the respective towns, to make the process cost-effective. There is also scope for banks to explore other models of bancassurance. The major part of business in bancassurance still happens only at the branch. The other streams such “out of branch model” and “private banking and wealth management” is yet to pick up to a large extent. One possibility suggested by some insurers is that banks can approach the insurance regulator to change the regulations, so that banks can upgrade themselves from a corporate agent setup to broker model. This would allow them to sell a wider range of products. In urban areas, there can be specialized branches where instead of selling one life product, they can offer a menu of options within life insurance. The customer will have the option to select a product that is more suitable to him, rather than buying products merely by virtue of a relationship with the bank.

8. CONCLUSION

The success of bancassurance greatly hinges on banks ensuring excellent customers relationship; therefore banks need to strive towards that direction. The changing mindset is cascading through the banking sector in India and this would be a right time for banks to resorting to bancassurance, especially in the context of proactive policy environment of regulatory authorities and the Government. Regulators could explore the possibility of allowing banks having tie-up arrangements with more than one insurance company, giving wider choice for the customers. In addition to acting as distributors, banks have recognized the potential of bancassurance in India and will take equity stakes in insurance companies, in the long run. This is somewhat similar a trend observed in the United Kingdom and elsewhere where banks started off as distributors of insurance but then moved on to the fully owned insurance subsidiaries. Going by the present pace, bancassurance would turn out to be a norm rather than an exception in future in India. Supervisory concerns as pointed out earlier could best be tackled by way of closer and systematized coordination between the respective supervisory authorities. There needs to be a clear cut identification of activities between banking and insurance at the institution‟s level as also at the level of regulators. Adequate training coupled with sufficient incentive system could avert the banks‟ staff resistance if any. In sum, bancassurance strategy would be a win-win situation for all the parties involved - the customer, the insurance companies and the banks.

9. REFERENCES

[1] Abheek Barua, (2004), “Bancassurance - New concept Catching up Fast in India”, The Chartered Accountant, Vol.23, No 8, pp.56-67.

[2] Dr. R. Neelamegam and K. Pushpa Veni, (2008), “Bancassurance – Am emerging

concept in India”, Journal of Insurance and Risk Management, Vol. 12, pp.78-91. www.zenithresearch.org.in

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[3] Government of India (1994), “Report of the Committee on Reforms in the Insurance sector” Malhotra Committee Report, New Delhi.

[4] Karunagaran A (2005), “Towards Universal Banking in India – Some Regulatory and Supervisory Issues”, IBA Bulletin, January, Vol. XXVII, No 1, pp.146-159.

[5] Karunakaran. A (2006), “Bancassurance: A Feasible Strategy for Banks in India”, Reserve Bank of India, Occasional Papers, Vol. 27, No. 3, pp.34-45.

[6] Krishnamurthy R (2003), “Blueprint for Success – Bringing bancassurance to India”, IRDA Journal, pp.20-23.

[7] Krishnapani Kesiraj (2003), “Bancassurance an Introduction”, ICFAI Press, Hyderabad.

[8] Olson W Mark (2004), “Regulatory update in Banking industry, Insurance and Securities activities”, Remarks at the Bank Insurance and Securities Association Legislative, Regulatory and Compliance Seminar, Washington.

[9] Ranade Ajit and Ahuja Rajeev (1999), “Life Insurance in India: Emerging Issues”, Economic and Political Weekly, January 16-22/ 23-29, Vol. XXXIV, No 3 and 4.

Mumbai.

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THE TECHNIQUES AND RATIONALE OF E- SURVEILLANCE PRACTICES IN ORGANIZATIONS

DR.AISHA M.SHERIFF*; MRS. GEETHA RAVISHANKAR**

*Professor, Department of Studies in Business Administration, University Mysore. **Faculty, MBA Department, RJS Institute of Management Studies, Koramangala, Bangalore.

ABSTRACT

The conceptual paper entitled –“The Techniques and Rationale of e-Surveillance Practices in Organizations” elucidates some of the key ethical issues arising out of the use of surveillance technology in the workplace. Information age is steering the organizations towards increased use of online workforce. This has led to the extensive dependence on internet in the organizations. The advent of Web 2.0 applications have acted as facilitating factors for cyber loafing of online workforce. Since Web 2.0 applications induce interactive information sharing, interoperability and collaboration on the World Wide Web, employees are provoked to indulge in mailing, chatting, entering virtual world, social networking blogging, podcasting, Net-surfing, online trading and the like. This leads to loss of productivity and loss of work-time in organizations. To regulate such unethical practices of using organizational technology for employees‟ personal indulgences, most of the organizations across the globe have adopted work place surveillance systems to monitor erring employees with the help of surveillance devices and gadgets. Employees consider surveillance or monitoring system as intrusion into their privacy and unethical. They also claim that it is an indication of lack of trust in them. This paper discusses about some of the e-techniques used for employee surveillance in organizations and the rationale behind e-monitoring it.

KERWORDS: Cyber bludging, Cyber loafing, Cyber slacking, e-Surveillance, Rich Internet Applications (RIA)., Web 2.0 applications ,Workplace Surveillance techniques. ______

INTRODUCTION

The recent strides in information technology has enabled use of several web 2.0 applications which are luring ,employees to indulge in Cyber slacking activities like sending personal emails, podcasting, blogging, chatting on Social Networking Sites(SNS) like face book, LinkedIn ,twitter orkut and others. Besides these, they also involve in unofficial browsing, online trading, shopping, gamming, checking stock prices, gambling, moonlighting and a host of other e-loafing activities. As a consequence, organizations are facing a slump in the productivity of their workforce. In order to enhance productivity and to discourage cyber loafing, most of the business organizations have instituted systematic and continuous scrutinizing in the workplace through

electronic surveillance system. www.zenithresearch.org.in

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FIGURE-1: CYBER SLACKING ACTIVITIES OF EMPLOYEES IN WORKPLACE

Checking stock Gamming and Prices Gambling

Uploading and Sending personal downloading content Cyber slacking mails activities In workplace Unofficial Social Browsing Networking

Online Blogging Trading/Shopping &Podcasting

OPERATIONAL DEFINITIONS

1.’CYBER SLACKING,’ „CYBER LOAFING,’ AND ‘CYBER BLUDGING’ are terms used to describe the activities involved in wasting time on the internet while people are supposedly at work. Cyber slacking is recreational web surfing on the job or using the internet at work for one's own purposes. This often leads to productivity loss, bandwidth degradation and exhaustive use of organizational resources. It may also result in legal liability to the employers and might expose to viruses spyware and malware .Posting defamatory content in chat rooms and news groups and sending emails under employer‟s domain can lead to legal liability to the employer.

2. WORKPLACE SURVEILLANCE is a means by which organizations monitor the activities of the employees with the help of Information technology (IT) enabled tools and devices. When IT applications are used in workplace monitoring it is known as e-surveillance. (Refer figure-2 for e-surveillance techniques).

3. E-Surveillance Techniques

E-surveillance techniques refer to all those IT enabled surveillance techniques used in business establishments‟, shopping malls and Government organizations for the purpose of facilitating effective monitoring and surveillance. These techniques are mostly used- to avoid misuse of enterprise resources, to secure organizations against legal liability, to enhance productivity and to

avoid loss of work time due to e-loafing practices.

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FIGURE-2: E-SURVEILLANCE TECHNIQUES

 Packet Sniffers  Desktop monitors  Log Files System Administrator  CCTVs  Telephone tapping or monitoring  E-mail filters

 Surf Controllers  Activity Monitors

The surveillance tools are generally called as web sleuths, spy agents, shadows or silent watchers. Some of the e-surveillance techniques used in organizations to monitor employees include –

 Packet Sniffers, a diagnostic software programme that is used to scrutinize all the information that passes through the network to which it is connected. Packet sniffers can be setup with or without filters. They can monitor online activities like the sites visited, mails sent and received internet telephony and audio, video or textual downloads. They help in determining the work time lost due to cyber slacking.

 Desktop Monitoring Devices are installed on the computer at the assembly level. They can intercept the signals and can replicate what the user is seeing or typing on the employer‟s desktop. Desktop monitoring software can be physically installed by someone or can be remotely installed by sending Trojan horse through email attachment. Hackers also use desktop monitors to record keystrokes and to steal personal data.

 Log Files System Administrator will help to track and determine the websites visited by the employees‟ .It also detects emails sent and received and files downloaded. The log files can be retrieved even after deleting them. They can be found in operating systems, emails, web browsers and applications as back ups.

 Closed Circuit Cameras are used in the workplace to monitor employees‟ activities. They are mainly used for security, training and monitoring purposes. More than 78% of US companies use CCTVs to monitor their workers. CCTVs will combat personal uses of office technology and devices. It saves time and money and enhances productivity of the organization.

 Telephone tapping or Recording is done for quality assessment and for enhancing the telephonic skills of the employees. Telephone tapping helps the companies to prevent personal use of telephones.

 Email filters Email filters are used as monitoring tools to filter and process both incoming

and outgoing mails of employees in the workplace

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 Surf controllers will monitor, inspect and control billions of Web sites visited by employees‟ everyday in the workplace. It will also inspect their emails and other Internet- based communications periodically and provides web security against malware, spyware and viruses.

 Activity Monitors are powerful employee monitoring tools that consist of server and client parts. Server can be installed on any computers in the entire Local Area Network (LAN) and the activities of employees on such computers can be spied and monitored

4. WEB 2.0 APPLICATIONS/RICH INTERNET APPLICATIONS (RIA)

Web 2.0 applications or Rich Internet Applications refer to all those web applications that facilitate participatory information sharing, interoperability, and collaboration on the World Wide Web. A Web 2.0 site allows users to interact and collaborate with each other in a social media dialogue as creators (prosumers) of user-generated content in a virtual community, in contrast to websites where users (consumers) are limited to the passive viewing of content that was created for them. Examples of Web 2.0 include social networking sites, blogs, wikis, video sharing sites, hosted services, web applications, podcasts, micro blogs, tags ,social bookmarks, RSS feeds, mashups and folksonomies.

Web 2.0 can be used for socialization, information sharing or distribution and for application purposes. There are so many online communities like HR forum, Wiz IQ,Authorstream,MTC ,etc. which provide a platform for sharing knowledge and information among like minded people or people belonging to same profession.

Social Networking Sites like Face book, Twitter, Orkut, Skype, LinkedIn and similar other sites link people together irrespective of their interests and professions. On these sites people can post widgets, blog, micro blog, Upload or download content in the form of documents, photos, music and videos .Registered members can even tag photos, express their likes or dislikes about any postings, give RSS feeds ,book mark pages and do many more things.

Apart from all these it also has many technical applications like working virtually without

physical presence, grid housing, content replication and the like.

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FIGURE-3 INDICATES SOME OF THE APPLICATIONS OF WEB 2.0 FACILITATING CYBER SLACKING IN ORGANIZATIONS-

WEB 2.0 APPLICATIONS FACILITATING CYBER BLUDGING

FIGURE-3: WEB 2.0 APPLICATIONS FACILITATING CYBER SLACKING IN ORGANIZATIONS

Socialization

Community Social Networking Participation Sites (SNS)  Forums  Open Add-ons  Blogs  Face book  Content contribution  Wikis  Orkut   Gestures  Q&A Twitter   Collaboration  IM/Chat Skype  Linked In

Distribution

Open Aplications Widgets Syndication  REST  Badges  RSS  SOAP  Web  ATOM  Book  JSON widgets  RSS  Gadgets marking  Galleries  Others  Net Vibes  SNS  Market places

Application

Database Application Tier Miscellaneous

 MY SQL  Gralls  Virtual Works  Postgre SQL Content  Grid housing

 Oracle  Python  PaaS  Others  Java-J2EE  Content

 Others Replication  Mobile

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Employees‟ perspective of e-monitoring.

 Employees find e-surveillance as an intrusion into their privacy at workplace. They feel that surfing net during free time shouldn‟t be treated as cyber loafing. It leads to relaxation and rejuvenation.

 Monitoring leads to stress and increased blood pressure since employees feel that every action of theirs is continuously monitored

 E-monitoring injects suspicion and hostility in the workplace which may in turn lead to employee resentment and Counter Productive Behaviour.

 Employers should seek prior consent of the employees to monitor them as per the Electronic Communications Privacy Act(ECPA) of 1986

 E-surveillance can strain the relationship between an employee and an employer.

 It demoralizes the employees and this may lead to a decline in their productivity

FIGURE 4: IMPLICATIONS OF E-SURVEILLANCE

Positive Negative

Productivity enhancement Privacy Intrusion

Security leads to stress

Legal Liability Hostility and resentment

To prevent data loss and theft Employee Turnover

Performance Review Loss of Trust

THE RATIONALE OF E-SURVEILLANCE

Despite the employees‟ concerns and some setbacks, more than 75 percent of the companies in USA are adopting e- surveillance techniques to monitor their employees in order to discourage them from using internet, telephone and other workplace tools for personal works. The employers quote some valid reasons for e-monitoring in workplace. Some of them include-

 To ensure that employees will not divulge with company trade secrets and intellectual property during their communication with others.

 To prevent employees from making any defamatory or derogatory remarks against the www.zenithresearch.org.in

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 To stop employees from using their work time and technology for personal use.

 To prevent criminal activities in workplace

 The Electronic Communications Privacy Act (ECPA) passed in 1986 as an extension of the wiretap laws, permits employers to monitor electronic communications, such as e- mails, in two situations: where the employee has consented to the monitoring, and where the employer can show a legitimate business purpose for monitoring the employee e- mails. Not surprisingly, it is this second instance that garners the most legal attention.

 It can be used as a proactive measure to head off problematic employee behaviour before it gets to a point where the company‟s business interests are affected.

 To ensure data security while employees are engaged in social networking and while using web 2.0 applications.

 To prevent workplace inefficiencies, malware, data loss and viruses as the main threats caused by insecure use of Web 2.0 applications like social networking, blogs and wikis.

 Since the company owns the equipment and the office space, it has a right to monitor its employees to prevent misuse of that equipment and space.

 To have total control over the networked computers. Start or terminate remote processes, run commands, copy files from remote systems or to even turn the computer off or restart it, not to mention logging off the current user

 To track possible file thefts by employees on their flash drives.

 The employees should not expect privacy while using company email/internet facilities.

 The employer‟s ownership of resources naturally entitles them to monitor the way they want.

Considering all the above factors, e-surveillance system has become indispensible for successful functioning of business organizations. It should become inherent policy in all companies across the globe since the benefits or outcomes of workplace monitoring are

innumerable. Though initial resistance to monitoring is most likely to pop up, employees must be sensitized about the increasing need for it in greater interest of the organization.

PERCEIVED BENEFITS OF E-SURVEILLANCE TO EMPLOYERS

 It increases personnel productivity by eliminating personal use of internet, email, social networks and by preventing employees wasting work time

 It protects the company from intellectual property and trade secret theft. www.zenithresearch.org.in

 Protects the company from indulging in fraudulent activities

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 Useful to maintain a record of organizations electronic communication to meet the regulatory compliance requirements

 E-surveillance facilitates the performance review of the employees based on their telephone skills and communication skills

 It also helps to determine the deficiencies of the employees and helps to identify their training needs

 It is useful for legal compliance and to meet the legal liability

 Useful for quality control and improvement in the delivery of services

CONCLUSION

Both employees and employers have valid reasons to justify their claims but Firms should be prudent while electronically monitoring employee e-mails and Internet activities. They should be mindful of the delicate issues of trust and loyalty that should be addressed for smooth functioning of the organization. E-surveillance requires proper planning; clear policies, and detailed procedures.

Both opponents and proponents of monitoring agree that organizations need clear and definitive policies on electronic surveillance, and that these policies should be frequently and clearly communicated to employees. They also agree that employees should undergo formal training on e-mail and Internet policies, proper usage, and conduct. Given the potential liability facing organizations as a result of the misuse of technology and resources of the organization by the employees, steps must be taken by managers and IT departments alike to mitigate the risks involved in allowing employees unfettered access to the Internet and company email systems. e- Surveillance system is indispensible in organizations since it secures the resources of the organization against any external legal liability and also enhances productivity by avoiding wastage of time through cyber bludging. Each and every organization in today‟s globalized era has to implement e-surveillance for effective monitoring and control of their workforce.

References

1. Adams, H., S. Scheuing, & S. Feeley, (2000)” E-Mail Monitoring in the Workplace: The Good, the Bad and the Ugly.” Defense Counsel Journal. 1, pg (32-46).

2. Agarwal, R., & F. Rodhain, (2002).” Mine or Ours: Email Privacy Expectations, Employee Attitudes, and Perceived Work Environment Characteristics”. Proceedings of the 35th Hawaii International Conference on System Sciences, Hawaii.

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4. Arendt, L. (2004). Keeping an Eye on Employees. Corporate Report Wisconsin, 19,

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5. August, R., G. Ferrera, S. Lichtenstein, Reder, M., & W. Schiano, (2001). Cyber law Cincinnati, OH: South-Western College Publishing

6. Armstrong, Larry," Someone to Watch 0ver You," Business Week, ro, 689, July 10,2000, pp. I 9-190,

7. Blakey v. Continental Airlines, Inc. (1998). 2 F. Supp. 2d 598, 603 (D.N.J. 1998).

8. Bouke v. Nissan Motor Co. (1993).No. B068705 (Cal. Court of App., 2nd Dist., July 26, 1993)

9. Chieh, C., & B. Kleiner, (2003). How Organizations Manage the Issue of Employee Privacy

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11. CIO Magazine. (1997). Pushing It. May 1, Retrieved April 10, 2005, from:

12. Evers, J. (2005). Panel paints grim picture of cybercrime battle. News.com, June 1.

13. Greenlaw, Paul S., and Prudeanu, Cornelia. "The Impact of Federal Legislation to Limit Electronic Monitoring." Public Personnel Management 26, 2 (June 22, 1997) p. 227.

14. Hodson, T., F. Englander, & V. Englander, (1999). Ethical, Legal, and Economic Aspects of Employee Monitoring of Employee Email. Journal of Business Ethics, 1, 99-108.

15. Information Week Online. (2000). Push Technology Matures – And Makes A Comeback. July 10, Retrieved April 10, 2005, from: http://www.informationweek.com/794/portal.htm

16. Juline E.Miles & Bo Hu & Srikanth Beldona & Joan Clay “Cyberslacking! A Liability issue for Wired Workplaces:The Internet has brought more than distraction to the workplace.Employee”,Cornell Hotel & Restaurant Administration Quarterly, Oct- Nov,2001

17. Kovach, K., J. Jordon, K. Tansey, & E. Framinan, (2000). The Balance Between

Employee Privacy and Employer Interests. Business and Society Review, 2, 289-298.

18. Lichtash, A., (2004). Inappropriate Use of E-mail and the Internet in the Workplace: The Arbitration Picture. Dispute Resolution Journal, 59, 26-36.

19. Liebert, M., (2004). Development of a Measure of Personal Web Usage in the Workplace CyberPsychology & Behavior, 7, 93-104.

20. Manning, Rita C. "Liberal and Communitarian Defenses of Workplace Privacy." Journal

of Business Ethics 6, 8 (June 1997) p. 817. www.zenithresearch.org.in

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21. Martin, K., & R. Freeman, (2003). Some Problems with Employee Monitoring. Journal of Business Ethics. 4, 353 –361.

22. Miller, S., & J. Weckert, (2000). Privacy, the Workplace and the Internet Journal of Business Ethics, 28, 255-265

23. Morris, F., (2003). The Electronic Platform: Email and Other Privacy Issues in the Workplace Computer and Internet Lawyer, 20, 1-9.

24. Muhl, C., (2003). Workplace e-mail and Internet use: employees and employers beware. Monthly Labor Review. 2, 36-45.

25. Patton, S. (2004). Privacy is Your Business. CIO, June 1.

26. Policy, S., (2000). Employer monitoring of employee Internet and email use: An Effective Litigation Avoidance Tool. Computer and Internet Law, 17, 21-23.

27. Richman, D (2005). E-mails sent at work anything but private. (March 9) The Seattle Post-Intellgencerhttp://seattlepi.nwsource.com/business/215147_email09.html

28. Segarnick, K. (2002). Courts Say It‟s Ok: Peep away. CIO, June 1.

29. Smith, A., & R. Faley, (2001). Email Workplace Privacy Issues in an Information-and Knowledge-based Environment Southern Business Review, 27, 8-22.

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QUALITY OF WORK LIFE, EMPLOYEE PERFORMANCE AND CAREER GROWTH OPPORTUNITIES: A LITERATURE REVIEW

SHALINI SHEEL*; DR BHAWNA KHOSLA SINDHWANI**; SHASHANK GOEL***; SUNIL PATHAK****

*Lecturer, Centre for Management Development, Modinagar, Ghaziabad, UP, India **HOD Management, Mahadevi Institute of Technology, Dehradun, Uttarakhand, India. ***Lecturer, Centre for Management Development, Modinagar, Ghaziabad, UP, India. ****Lecturer, Centre for Management Development, Modinagar, Ghaziabad, UP, India.

ABSTRACT

Quality of work life is being used these days by organizations as a strategic tool to attract and retain the talent. QWL policies are increasingly becoming part of the business strategies and focus is on the potential of these policies to influence employees‟ quality of working life and more importantly to help them maintain work-life balance with equal attention on performance and commitment at work. One of the most important determinants of Quality of Work Life (QWL) is the career growth opportunities as supported by various researches done in past. Studies also predict that employee performance is also correlated with QWL. The present paper is an attempt to review the literature and the studies done in past to establish a relationship between QWL, employee performance and career growth opportunities.

KEYWORDS: Career growth, Compensation, Job satisfaction, Performance, Quality of Work Life (QWL), Work Life balance. ______

INTRODUCTION

The term QWL gained importance in the late 1960s as a way of concerns about effects of job/work on health and general well-being and ways to positively influence the quality of a person‟s work experience. Up until the mid 1970s, employer‟s concern was on work design and working conditions improvement. However, in the next decade of 1980s, the concept of QWL included other aspects that affect employees' job satisfaction and productivity and these aspects are, reward systems, physical work environment, employee involvement, rights and esteem needs (Cummings and Worley, 2005).

However the radical changes in the world of business, like factors such as globalization, information technology, world business competitiveness, and scarcity of natural resources have

changed employee's outlook of how a good company is defined. The trend in past was to include, www.zenithresearch.org.in

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Bagnara, Mariani and Parlangeli (2001) found in their survey that people working in high technology enabled and uncertain working environment are more vulnerable to stress than others. Martinsons and Cheung (2001) concluded from their research that frequent changes in work environment directly or indirectly influence the performance and productivity of IT professionals. Indeed the changes in working conditions result in stressful conditions and the employees are still expected to perform under stress. Now the organization needs to have effective coping strategies in place; to handle the after effects of performance under stress.

QUALITY OF WORK LIFE DEFINED: THE VARIOUS FACETS OF QWL

Recently Serey (2006), observed in his research on QWL, that career growth opportunity is a crucial factor determining constructs of QWL. He concluded that QWL includes (i) an opportunity to realize one‟s potential and utilize one‟s talents, to excel in challenging situations that require decision making, taking initiative and self-direction; (ii) a meaningful activity perceived worthwhile by the individuals involved; (iii) an activity in which one has clarity of role necessary for the achievement of some overall goals; and (iv) a feeling of belongingness and pride associated with what one is doing and moreover doing it well. This aspect of meaningful and satisfying work is generally integrated with aspects of career related variables, and assumed to be more favorable to QWL.

Beukema (1987) suggested QWL is the extent to which employees are able to shape their jobs actively, in accordance with their options, interests and needs. It is the measure of power given by management to its employees to reshape their work. In other words, an employee has the full freedom to design his job functions commensurate with his personal needs and interests. This definition focuses upon the individual‟s choice of interest in carrying out the task.

However, this definition reflects a slightly different approach than the former which stresses on the organizational efforts to reshape the job to meet employees‟ interest. An organization may not be able to fulfill the personal needs and meet expectations of each employee. However if the organization is flexible where employees can exercise appropriate authority to redesign work activities to their satisfaction, then the probability is that the work activities are able to fulfill

employees‟ needs resulting in enhanced organizational performance.

Similarly Heskett, Sasser and Schlesinger (1997) suggested QWL as the feelings that employees have about their jobs, co-workers and organization in general that act as a catalyst resulting in the organizations‟ growth and profitability. A positive feeling towards their job reflects that the employees are happy doing work and a satisfying work environment increases productivity. This definition indicates that the satisfying work environment is one of the factors responsible for better QWL.

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Proceeding further, Lau, Wong, Chan and Law (2001) defined QWL as the favorable working conditions that support and enhance satisfaction by providing employees with rewards, job security and career growth opportunities. Indirectly the definition reflects that an employee who is not satisfied with reward may be satisfied with the job security and may be possibly enjoying the career growth opportunity available in the organization for personal as well as professional growth.

It can be concluded from the above discussions about QWL definition, that QWL is a multi- dimensional construct that inculcates variety of interrelated factors. It includes job satisfaction, job involvement, motivation, productivity, health, safety and well-being, job security, competence development and balance between professional and personal life as described by European Foundation for the Improvement of Living Conditions (2002).

Past scholars have suggested definitions of QWL from various dimensions and concluded different constructs of QWL. For instance, QWL is a philosophy, a set of principles, which states that employees are the most meaningful resource in the organization and they should be dealt with dignity and respect [30]. The elements important to an individual‟s quality of work life include the job, the physical work conditions, social arena within the organization, administrative policies and relationship between life on and off the job [8].

QWL CONSTRUCTS: LITERATURE REVIEW

People generally have a perception of QWL as a systematic approach including autonomous work groups, job enrichment and active-involvement with a focus on improving the satisfaction and productivity of employees [12]. It requires employee commitment to the organization and an environment in which this commitment can flourish [32]. Thus, QWL is a holistic approach that includes an individual‟s job related well-being and the extent to which he is satisfied with the rewards, fulfillment at job and enjoys the absence of stress and other negative personal consequences [28].

As per the model given by Walton (1996), following factors are the basic determinants and

parameters of QWL (Table 1 below).

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Accordingly, the increasing number of couple working aggravates the concern for employees‟ quality of work life. With the growing women participation at work, it is necessary that males

and females independently will need to share the both work and home responsibilities. Therefore, quality of work experience rather than work per se gained attention [20] and workplace wellness is indispensable in making work stress free to balance work and home. [25].

Various authors and researchers have proposed models of Quality of working life which include a wide range of factors. Selected models are reviewed below.

1. Hackman and Oldham (1976) [14] observed psychological growth needs as crucial determinant of Quality of working life. Several such needs were identified; Skill variety,

Task Identity, Task significance, Autonomy and Feedback. They concluded that www.zenithresearch.org.in

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fulfillment of these needs plays an important role if employees are to experience high quality of working life.

2. Taylor (1979) [31] suggested Quality of working life as an holistic approach that includes; basic extrinsic job factors of wages, hours and working conditions, and the intrinsic job notions of the nature of the work itself. He also viewed other aspects to be equally important such as; authority exercised by employees, employee participation in decision making, fair and equal approach at work, social support, utilizing one‟s present skills, self growth, a relevant scope of future at work, social relevance of the work or product, effect on extra work activities. Taylor concluded that Quality of working life policies may vary as per the size of organization and employee group.

3. Warr and colleagues (1979) [33], in their survey for Quality of working life, considered a variety of factors resulting in QWL, including work involvement, intrinsic job motivation, higher order need strength, perceived intrinsic job characteristics, job satisfaction, life satisfaction, happiness, and self-rated anxiety. They studied different correlations in their research, such as those between work involvement and job satisfaction, intrinsic job motivation and job satisfaction, and perceived intrinsic job characteristics and job satisfaction. In particular, Warr et al. concluded that there exists a moderate association between total job satisfaction and total life satisfaction and happiness, with a less strong, but significant association with self-rated anxiety.

4. Mirvis and Lawler (1984) [22] found in their study that Quality of working life was related with satisfaction with wages, hours and working conditions, describing the “essentials of a good quality of work life” as; safe work environment, equitable wages, equal employment opportunities and opportunities for advancement.

5. Baba and Jamal (1991) [2] suggested a list of the determinants of quality of working life, including: job satisfaction, job involvement, work role ambiguity, work role conflict, work role overload, job stress, organizational commitment and turn-over intentions. Baba and Jamal also suggested that monotony in job due to routine work activities can affect quality of working life negatively.

6. Ellis and Pompli (2002) [11] in their study on nurses identified a numerous factors resulting in job dissatisfaction and quality of working life, including: Poor working

environments, Resident aggression, Workload, Unable to deliver quality of care expected, Balance of work and family, Shift work, no involvement in decision making, Professional isolation, non recognition of work, unhealthy relationships with supervisor/peers, Role conflict, absence opportunity to learn new skills.

7. Sirgy et al.; (2001) [29] listed various factors affecting quality of working life as: Need satisfaction based on job requirements, Work environment, Supervisory behavior, Ancillary programmes, Organizational commitment. They observed quality of working life as fulfillment of these key needs through resources, activities, and outcomes resulting

from participation in the workplace. This model is based at Maslow‟s needs theory, www.zenithresearch.org.in

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covering Health & safety, Economic and family, Social, Esteem, Actualization, Knowledge and Aesthetics.

8. Bearfield, (2003) [3] adopted an all together different approach while examining quality of working life with the help of 16 questions, and the findings were surprising when he observed that causes of dissatisfaction in professionals, intermediate clerical, sales and service workers, vary for different groups and suggested that different concerns might have to be addressed based on different parameters.

9. The differences studied between job satisfaction and dissatisfaction in quality of working life predicts the influence of job satisfaction theories. Herzberg at al., (1959) [16] used “Hygiene factors” and “Motivator factors” to differentiate between job satisfaction and job dissatisfaction.

10. Worrall and Cooper (2006) [34] found in their recent survey that a low level of well-being at work may cost dear to an organization resulting in a loss of about 5-10% of Gross National Product per annum.

11. However a general conception is that Quality of Working Life fundamentally relates to well-being of employees but it is differentiated from job satisfaction which solely represents the workplace domain (Lawler, 1982) [19].

12. Quality of Working Life is a holistic concept, which not only considers work-based factors such as job satisfaction, satisfaction with pay and relationships with work colleagues, but also includes factors that predict life satisfaction and general feelings of well-being (Danna & Griffin, 1999) [9].

13. However recent researchers have also observed that, work-related stress and balancing work and non-work life domains (Loscocco & Roschelle, 1991) [21] affect QWL significantly and should conceptually is considered as determinant of Quality of Working Life.

14. An individual‟s feelings of satisfaction or dissatisfaction might be an outcome of their perception, rather than predicting their “real world”. Further, an individual‟s perception may be influenced by relative comparison –I am paid higher/lesser than that person - and

comparisons of internalized ideals, ambitions, and expectations, for example, with the

individual‟s present state (Lawler and Porter, 1966) [18].

15. LooSee Beh, (Department of Administrative Studies and Politics, Faculty of Economics and Administration, University of Malaya, Kuala Lumpur, 1996), in his study on “Linking QWL and job performance: Implications for organizations” found a positive link between QWL and employee performance.

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16. As per the definitions given by (Morrison & Holzbach, 1980) [23] Careers can be understood as a „series of work roles or a step by step sequence of a person‟s job experiences over a definite tenure (Arthur, Hall, & Lawrence, 1989).Researchers have proved that career tenure and total work tenure in one‟s professional life are positively related to career attainment (Judge & Bretz, 1994) [17].which significantly predicts the feeling of accomplishment in their work life. Findings are also favorable to the assumption that there exists a relationship between the number of hours worked per week and salary and ascendancy (Cox & Cooper, 1989; Judge & Bretz, 1994) [7].

17. The feeling of career achievement is reflected in the willingness to spend extra time at job. It was observed that positive QWL acts as a motivation behind willingly working for long hours that was enjoyed by the executives. It was concluded from the study of managers that the ambition or the desire to excel acts as a catalyst for advancement in career. Researchers in their study on managers and executives have concluded a definite relationship between ambition and career achievement (Cannings & Montmarquette, 1991; Cox & Cooper, 1989) [5].

18. Career satisfaction is an outcome of the fulfillment of career growth needs of individuals that depends upon intrinsic and extrinsic aspects of their career, including pay, advancement, and developmental opportunities (Greenhaus, Parasuraman, & Worley, 1990 [13]; Rice, Phillips, & McFarlin, 1990; Berry, 1998) [4]. This is contrary to the job satisfaction which is termed as a positive emotional well being and a feeling of happiness derived from appraisal of one‟s job or work experiences. Career satisfaction is actually subject to the comparison made by a person, of his/her career and life expectations with those being offered. There are several factors that affect these expectations to get fulfilled, like economic considerations (e.g. compensation and retirement benefits) and occupational and family considerations (e.g. professional satisfaction, job satisfaction, advancement opportunities, relocation, etc) (Hill, Wilson, & Sanders, 1998).

19. The time and energy consumed at work must be commensurate to the time and energy devoted to life, thus maintaining family and career balance. As Cascio (2003) [6] analyzed, the efforts must be aimed at enhancing the overall quality of life and shifting the focus from work to life and from balance to quality. As far as the career balance is concerned, Herriot (1992) [15] suggests that many a times people find themselves in conflict between family life and work, and what actually they perceive as success in life

as compared to what success they get. Family and work are two most important domains of life and a balance is crucial. Nevertheless, one can hardly find any compatibility between the role demands of these two domains, thereby resulting in conflicts between work and non work life (Netemeyer, Boles, & McMurrian, 1996) [24]. It is observed that because of the conflicting role demands between job and family, and commitment, QWL is inversely proportional to the work conflict meaning thereby that the higher the work role conflict, the lower will be the quality of family life, and vice versa.

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20. Rapoport and Rapoport [26] concluded that the family‟s psychological support and the diversion that it entails make it a crucial factor affecting QWL. Studies also support the facts that a happy family life has a positive impact on the greater job satisfaction and objective career achievement with a directly proportional relationship [27].

CONCLUSION

The world economies have recently recovered from recession blues and the continued restructuring, downsizing and reorganization in the post recession scenario have created havoc for HR managers as they have to struggle with preserving staff morale and job satisfaction . In this scenario, high quality of work life is essential for organizations to continue to attract and retain employees. This is the reason QWL concept has gained momentum recently and researches are going on worldwide to find out inputs for framing effective QWL strategies. Moreover the literature review discussed above also supports the relationship between QWL, employee performance and career growth aspects. Still many facets of QWL need to be unexplored through further studies.

REFERENCES

1) Arthur, M.B., Hall, D.T., & Lawrence, B.S.(Eds.). 1989. Handbook of Career Theory. Cambridge: Cambridge University Press.

2) Baba, VV and Jamal, M (1991) Routinisation of job context and job content as related to employee‟s quality of working life: a study of psychiatric nurses. Journal of organizational behavior. 12. 379-386.

3) Bearfield, S (2003) Quality of Working Life. Aciirt Working paper 86. University of Sydney. www.acirrt.com

4) Berry, L. M. 1998. Psychology at work: An introduction to industrial and organizational psychology. San Francisco:McGraw-Hill.

5) Cannings, K. & Montmarquette, C. 1991. Managerial momentum: a simultaneous model of the career progress of male and female managers. Industrial and Labor Relations Review, 44, 212-228.

6) Cascio, W.F. 2003. Managing Human Resources: Productivity, Quality of Work Life, Profits. (6th ed). New York: McGraw-Hill.

7) Cox, C.J. & Cooper, C.L. 1989. The making of the British CEO: Childhood, work experience, personality, and management style. Academy of Management Executive, 3, 241- 245

8) Cunningham, J.B. and T. Eberle, 1990. A guide to job enrichment and redesign. Personnel,

67: 56-61.

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9) Danna, K. & Griffin, R. W. (1999). Health and well-being in the workplace: A review and synthesis of the literature. Journal of Management, 25, 357-384.

10) Edwards, J., Van Laar, D.L. & Easton, S. (2009). The Work-Related Quality of Life (WRQoL) scale for Higher Education Employees. Quality in Higher Education. 15: 3, 207- 219.

11) Ellis N & Pompli A 2002 Quality of working life for nurses. Commonwealth Dept of Health and Ageing. Canberra.

12) Feuer, D., 1989. Quality of work life: a cure for all ills? Training: The Magazine of Human Resources Development, 26: 65-66.

13) Greenhaus, J.H., Parasuraman, S.& Wormley, W.M. 1990. Effects of race on organizational experience, job performance evaluations, and career outcomes. Academy of Management Journal, 16, 129-137.

14) Hackman J & Oldham G (1974) The Job Diagnostic Survey. New Haven: Yale University

15) Herriot, P. 1992. The Career Management Challenge. London: Sage.

16) Herzberg F, Mausner B, & Snyderman B., (1959) The Motivation to Work. New York:Wiley.

17) Judge, T.A., Cable, D., Boudreau, J. & Bretz, R. 1995. An empirical investigation of the predictors of executive career success. Personnel Psychology, 48, 485-519.

18) Lawler E and Porter L, (1966). Managers pay and their satisfaction with their pay. Personnel Psychology. XIX 363-73

19) Lawler, E. E. (1982). Strategies for improving the quality of work life. American Psychologist, 37, 2005, 486-493.

20) Lewis, S. and C.L. Cooper, 1999. The work-family research agenda in changing contexts. J. Occupat. Health Psychol., 4: 382-393.

21) Loscocco, K. A. & Roschelle, A. N. (1991). Influences on the Quality of Work and Nonwork Life: Two Decades in Review. Journal of Vocational Behavior, 39, 182-225.

22) Mirvis, P.H. and Lawler, E.E. (1984) Accounting for the Quality of Work Life. Journal of Occupational Behavior. 5. 197-212.

23) Morrison, R.F. & Holzbach, R.L. 1980. The career manager role. In C.B. Derr (Ed.), Work, Family, and the Career. New York: Praeger

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24) Netemeyer, R.G., Boles, J.S., & McMurrian R. 1996. Development and validation of work- family conflict and family-work conflict scales. Journal of Applied Psychology, 81(4), 400- 410.

25) Offerman, L.R. and M.K. Gowing, 1990. Organizations of the future: Changes and challenges. Am. Psychologist, 45: 95-108.

26) Rapoport, R. and R.N. Rapoport, 1980. Balancing work, family and leisure: a triple helix model. In C.B. Derr (Ed.). Work, family and the career. New York: Praeger.

27) Shaffer, G.S., 1987. Patterns of work and non-work satisfaction. J. Appl. Psychol., 72: 115- 124.

28) Shamir, B. and I. Salomon, 1985. Work-at-home and the quality of working life. Acad. Manag., 10: 455-64.

29) Sirgy, M. J., Efraty,, D., Siegel, P & Lee, D. (2001). A new measure of quality of work life (QoWL) based on need satisfaction and spillover theories. Social Indicators Research, 55, 241-302.

30) Straw, R.J. and C.C. Heckscher, 1984. QWL: New working relationships in the communication industry. Labor Studies J., 9: 261-74.

31) Taylor J C in Cooper, CL and Mumford, E (1979) The quality of working life in Western and Eastern Europe. ABP

32) Walton, R.E., 1975. Criteria for Quality of Working Life. In Davis, L.E., Cherns, A.B. and Associates (Eds.) The Quality of Working Life, The Free Press, New York, NY, 1: 91-104.

33) Warr, P, Cook, J and Wall, T (1979) Scales for the measurement of some work attitudes and aspects of psychological well being. Journal of Occupational Psychology. 52, 129-148.

34) Worrall, L. & Cooper, C. L. (2006). The Quality of Working Life: Managers‟ health and well-being. Executive Report, Chartered Management Institute.

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E – CORPORATE GOVERNANCE: A PROTOTYPE SHIFT IN PUBLIC SECTOR

PROF. SARIKA. R. LOHANA*

*Assistant Director, Matoshri Pratishthan Group of Institutions.

ABSTRACT

There is strong need of E-corporate governance in public sector as weak internal corporate governance mechanism, the lack of transparency in the procedures, for corporate acquisitions and control, reveal the information punctually, adequately, clearly, accurately and comparably, should be easy for the stakeholders to access.

E-Governance is the public sector‟s use of information and communication technologies with the aim of improving information and service delivery, encouraging citizen participation in the decision-making process and making government more accountable, transparent and effective. The paper focused on the A Paradigm Shift of the E- Corporate Governance for the failure to success in the practical aspects.

KEYWORDS: paradigm, E- corporate Governance. ______

INTRODUCTION

E- Governance: In the 21st century is considered to be the age of information. Internet seems to have shrunk the globe into a small village almost akin to the concept, “vasudhaiva kutumbakam” (the world is one family). The Government of India initiated National e- Governance Plan keeping in mind this ability to shrink distances especially for service of the rural people - through the internet.

The prime objective of e-Governance was to provide information to people at their doorstep.

With this in mind, the Government has initiated the Mission Mode Project. Computerization of various departments of the State and Central government and setting up of government websites in regional languages are part of this project. India Development Gateway would like to see itself as a value addition to this Mission of the government of India, in a sense, by providing useful information on the Mission Mode Project to the people in rural areas.

Through this portal the scientific advances in terms of information technology will be accessed by rural communities and utilized by them. The schemes and policies of the Government for the people is now made available in many Indian languages. This would reduce the wastages of time

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However according to an oft quoted survey, done in 2003, on e-government initiatives in developing transitional countries only 15 percent of e government projects can be termed as successful with 35 percent as total failures and 55 percent as partial.

ARCHITECTURE OF E- GOVERNANCE

Citizens, Business, Public servants, NGOs, etc RECIPIEN T Intermediarie s

Mobile Digital Call PCs Tele- Data Phones TV centers conferencing Communication Devices

CHANNEL

Web Email Data Intranet Extranet Communication Applications

PROCESSING

Network-Enabled Management Office Data Support System Automation Processing Basic Data System Applications

SOURCE

Government Data

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FAILURES WHERE THE OUTCOME IS CLASSIFIED AS FOLLOWS

• Total failure: the initiative was never implemented or was implemented but immediately abandoned.

• Partial failure: major goals for the initiative were not attained and/or there were significant undesirable outcomes.

• Success: most stakeholder groups attained their major goals and did not experience significant undesirable outcomes.

Though this survey was on e government and not e governance but a very large number of e governance projects have, over the years, belied the promise that they once showed.

Over the last four years, has conducted numerous audits of e governance projects with the scope ranging from evaluating the system development methodology to the overall performance in terms of the achievement of objectives. The results brought into focus the fact that the issue of e governance is much more than a technological initiative but is made of a complex set of relationships between the stakeholder‟s commitment, structured developmental processes and adequate infrastructural resources. There were a number of reasons for e governance projects not doing well or falling short of expectations. Many should be applicable across national boundaries and could serve as guiding points for the auditors. Some of the more important ones are shared below:

1) Lack of Business process modification , in many well meaning projects, and duplication of the manual processes in the IT environment was seen as major reasons for the end users/citizens not associating any value addition with the projects and looked upon e governance as an unwelcome addition to the hurdles to be crossed before getting „the work done‟. For example in departments which maintain land records especially in rural areas the details regarding land ownership, cropping patterns etc were computerized but no legal sanctity was given to the output generated by such systems in absence of a commensurate change in the statutes.

Similarly lack of horizontal integration also means that e governance projects would continue to deliver services in a fragmented and unsatisfactory fashion resulting in the end users having to approach a multitude of government agencies thus defeating the promise of „less government in

your life‟.

Moreover an ambiguity about the very concept of e governance results in many government entities categorizing e government projects such as office automation and inventory management as e governance projects. Thus vast sums of money are spent on computerization activities without giving the e governance related benefits to the end users.

2) Vendor driven initiatives: Currently e governance is the buzzword in the corridors of power in governments and the international donor agencies. Vast sums of monies are being promised and

given to implement such schemes. • However a close scrutiny reveals, startlingly, that the www.zenithresearch.org.in

preference for IT components such as the hardware and software such as operating systems and

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RDBMS change dramatically for similar projects within the same country in the same period of time. This is sometimes reflected in a kind of a secular trend resulting from an unstated agenda or a conscious shift. While there may be only limited objections to choosing one technology over the other but auditors need to monitor and examine the trends.

• It is also seen that often the Acquisition and implementation processes are not monitored in an effective fashion and deliverables are often less than the specifications. However due to a hurry to „get things going‟ the projects may be opertionalised even when they are not fully ready.

• Moreover it is not only in the Acquisition and Implementation but also in the Delivery and Support areas that excessive dependence on the developer(s)/vendors is seen resulting in large outgo on revenue expenditure while the untrained work force of the government entities sit idle.

• Additionally there is often poor control over outsourcing. The benchmarks for evaluating performance of the service provider are not set out in a transparent fashion and are often biased towards it. For example a penalty clause for deficient services and extended liability is often absent or extremely poorly drafted to be legally enforceable.

This completes the chain which started from lack of transparency in selection of technology/vendor then goes through to less than adequate receipt of deliverables and continues to large payments for services which are not monitored for performance; the citizen or the governed being the only loser.

3) Individual led initiatives: In many projects at the system development stages, especially when the user requirements were being made, there was no effective communication between the users to share the domain knowledge with the system developer(s). This was particularly true of projects which were being implemented as a result of individual initiatives emanating from the top of the management hierarchy. In such cases the developers also felt answerable to none except the management at the very top. This soon caused even the enthusiasts at the operational level to loose interest and the projects were implemented by „going though the motions‟. This led to the development of systems which were inherently deficient and soon ran to the ground after the change of guard at the top management level. Even where the systems become operational and were hailed as success stories poor change management controls meant that over a period of time they completely stopped doing what they had set out to achieve .

4) Vested Interests: It was often seen that there was clearly stated commitment from the Political establishment but continuous resistance by a section of the executive and other stakeholders adversely affected by transparency brought in by e Governance. E governance is a catchy slogan which translates into „power to the people‟ and paints a picture where the omnipotent computer(s) would take over all those functions of the state which entail an „unnecessary‟ interaction of the common man with a government official. This immediately attracts the fancy of the citizens who are also potential voters, and look forward to a corruption and discretion free system where each individual is treated according to transparent rules. This enthusiasm for IT enabled e governance allows the governments to announce and lunch mega e governance schemes which often translate e into large scale expenditure on hardware and software. These are www.zenithresearch.org.in

often associated with lack of transparency in acquisition and creation of technological and

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However there are also strong vested lobbies which feel threatened by this transparent governance and many a times they were seen to do anything to either discredit a new project or not allow it to take off at all. Though the bogey of unemployment resulting form computerization is long dead but the resistance continues as it has been realized that automation of backend procedures would eventually result in e governance. During audit the government functionaries were often found painting a worse picture of the e governance projects than the actual situation. The expectation was that a very critical audit report would help in derailing the process of e governance.

5) Confidentiality issues: A major concern is the lack of attention to issues relating to the Confidentiality of the data such as in e tendering systems or regarding personal details of citizens etc. For example if an e tendering systems does not store the data regarding the bids before the opening date in unencrypted fashion, PKI is not mandatory for submission of bids, logical time locks to disable access to the bid details before the bid opening date are absent and there is inadequate provision of activity logs for system and data administrator activities then the system can be labeled as extremely risk prone to manipulation and does more harm to the cause of IT in improving governance. One may be surprised to find such cases where large contracts have been decided on the basis of such a system. Information Technology indeed cuts both ways!

Similarly if personal details such as social security number or taxation details, in an e tax return filing system, are not kept in a secure environment it would ultimately undermine the confidence of the users in the use of such systems.

6) The digital divide: There is always the risk of the implementation of e governance projects being so prioritized as to benefit only a certain section(s) of the society. Additionally e governance delivery mechanism may not account for the existing digital divide. This would cause even the most well intentioned initiatives not achieving the objectives. Though innovative methods were seen, especially such as e governance kiosks manned by paid non government facilitators to help citizens, the fact remains that without bridging the digital divide e governance projects may not gain critical mass to be effective. Successful e governance implementation is about four main components End users need identification, Business Process Modification, Use of Information Technology and most importantly committed government intent. Deficiencies in any of these would result in e governance projects failing to achieve their objectives.

Identifiable and measurable parameters to assess the success of e governance projects are not easy to formulate. This is especially true regarding the intangible/soft benefits which are in the forms of increased transparency, sense of economic and social empowerment by access to information and better efficiencies in delivery of public services. In the absence of benchmarking, due to the uniqueness of some of the projects, making a quick judgment about their being successes or failures is a risk that must be guarded about by all auditors .

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SUCCESS

E-governance is beyond the scope of e-government. While e-government is defined as a mere delivery of government services and information to the public using electronic means, e- governance allows direct participation of constituents in government activities. Blake Harris summarizes the e-governance as the following; E-governance is not just about government web site and e-mail. It is not just about service delivery over the Internet. It is not just about digital access to government information or electronic payments. It will change how citizens relate to governments as much as it changes how citizens relate to each other. It will bring forth new concepts of citizenship, both in terms of needs and responsibilities. E-governance will allow citizens to communicate with government, participate in the governments' policy-making and citizens to communicate each other. The e-governance will truly allow citizens to participate in the government decision-making process, reflect their true needs and welfare by utilizing e- government as a tool.

Introduction of e-governance is a key to make information technology (IT) relevant to ordinary citizens in Latin America and Caribbean countries where a large numbers of population are poor and a digital divide is a significant problem. E-governance will allow ordinary people to constantly interface with the government in both local and central level on various matters.

The Bank's involvement in modernization of the government thus is not limited to provide the most advanced Information Communication and Technology to the government so that government can provide its information and service more effectively and efficiently to the citizens. The Bank makes sure that the government will allow all the citizens to access to information or services (any citizens should not be excluded), to articulate their needs and to participate in formulating policy and regulation that will improve their social welfare and well being.

CONCLUSION

The ability of Central government is to understand all needs from ordinary local citizens is limited. Therefore, the participation of citizens in local level is extremely important (link with creative community initiative). The true e-governance should be attained by interface of citizens both with central and local government. This can shift the paradigm of the E- Governance in to

success.

REFERENCES

[1] Bestle, L.H. 2005, Pro-poor E-Governance in Asia and the Pasific, World Development Report 2004: Making Services Work for Poor People, World Bank and Oxford University Press

[2] Cameron & Trivedi, 2005, “Microeconometrics”, Method and Applications, Cambridge University Press

[3] Cheng, S., 2008, Board Size and The Variability of Corporate Performance, Journal of www.zenithresearch.org.in

Financial Economics, Vol. 87, p. 157-176, Oxford: Elsevier

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[4] Greene, W.H.,2003. “Econometric Analysis”, Fifth Edition, Prentice Hall

[5] Harijadi & Satriya, 2003, Indonesia‟s Road Map to E-Government: Opportunities and Challenges, APEC High-Level Symposium on E-Government, Seoul

[6] Indonesia Stock Exchange Website: www.idx.co.id

[7] Kanungo, V., 2003, Citizen Centric E-Governance in India, Strategies for Today, Vision for Future

[8] Mittal, et all, 2004, A Framework for e-Governance Solution, IBM Journal of Research and Development, Vol.48, No.5/6, IBM Research in Asia

[9] Sachdeva, S, 2002, E-Governance Strategy in India, White Paper on E-Governance Strategy in India

[10] Wooldridge, J.M., 2000, “Introductory Econometrics”, South Western College

[11] Yaffe, R, 2006, “A Primer for Panel Data Analysis”, Fifth Edition, Prentice Hall

[12] Zulkafli, A.H., & Samad, F.A. 2007, Corporate Governance and Performance of Banking Firms: Evidence from Asian Emerging Markets, Advances in Financial Economics, Vol. 12, p. 49-74, Oxford: Elsevier

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FINANCIAL REPORTING AND CORPORATE GOVERNANCE - AN EMPIRICAL STUDY

D.HEMA*

*Assistant professor, Welingkar Institute of Management, Bangalore-560100.

ABSTRACT

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The Corporate governance of business organizations is said to be of high quality when they possess certain features like income derived from core business operations, recognized, measured, and presented in accordance with GAAP, close to reality, accounting policies chosen, where GAAPs allow choice, consistently followed etc. But there are few limitations with reference to preparation of financial statements even though the preparers are adhered to GAAP norms. Such limitations are leverage provided by GAAPs in the choice of accounting policies and changes there in, window dressing in accounts and financial statements. It is clear from the above discussion that even within the framework of GAAPs it is possible for the management to fabricate the bottom-line thus affecting the quality of earnings and the quality of corporate governance and making it difficult for the analyst to predict the future profitability of the company. There are many examples where best Indian companies have adopted faulty accounting practices. This study will be conducted to check whether the good or bad accounting practices will have similar effects on the corporate governance of an entity or not. An analysis will also be conducted how the companies can commit financial shenanigans in their financial statements within the frame work of accounting standards. Few Indian companies will be selected to make this particular study. Based on the study appropriate findings, suggestions and conclusions will be offered.

KEYWORDS: Accounting practices, Accounting policies, Accounting standards, GAAP norms, corporate governance, Quality of earnings, Window dressing, and financial statements, financial

shenanigans. ______

INTRODUCTION

1. Forms of Business organization: There are primarily three important types of business organizations. Firstly, a sole proprietorship is a business owned by one person. It is simple to set up, and the owner has control over the business. Because they are so simple to organize, there are many thousands of sole proprietorships operating in the business

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A partnership is a business owned by more than one person. Although it is not a separate legal entity, it is a separate accounting entity and has to complete a partnership tax return every year. It provides strength in numbers — each partner may bring economic resources or unique talents or skills to the combination.

A company is a separate legal entity owned by shareholders. Advantages include the fact that investors can invest small amounts of money, shares are easy to sell, and the raising of funds is relatively easy. In addition, the shareholders have no personal liability for the debts of the company. Although there are many more sole proprietorships and partnerships than there are companies, companies producing far more revenue.

1.1 Financial reporting: Financial reporting is the process of preparing and distributing financial information to users of such information in various forms. The most common format of formal financial reporting is financial statements. Financial statements are prepared in accordance with rigorously applied standards defined by professional accounting bodies developed according to the legal and professional framework of a specific locale. In India, the company‟s Act of 1956 and the Accounting standards issued by the ICAI guards the preparation of financial statements in India. Financial statements is very important for public limited companies as it has diversified set of users like shareholders( retail and institutional), creditors, government, competitors, customers, employees, research scholars and general public. So it becomes duty of the companies keep its users well informed about the activities of the business (both qualitative and quantitative) through quality financial reporting.

1.2 Corporate governance: It is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled. Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed. The principal stakeholders are the shareholders/members, management, and the board of directors. Other stakeholders include labor (employees), customers, creditors (e.g., banks, bond holders), suppliers, regulators, and the community at large. For Not-For-Profit Corporations or other membership Organizations the "shareholders" means "member. An important theme of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem. In A Board Culture of Corporate Governance, business author Gabrielle O'Donovan defines corporate governance as “an internal system encompassing policies, processes and people, which serves the needs of shareholders and other stakeholders, by directing and controlling management activities with good business savvy, objectivity, accountability and integrity. Sound corporate governance is reliant on external marketplace commitment and legislation, plus a healthy board culture which safeguards policies and processes”. Parties involved in corporate governance include the regulatory body (e.g. the Chief Executive Officer, the board of directors, management and shareholders). Other stakeholders who take part include suppliers, employees, creditors, customers and the community at large.

1.3 Corporate Governance and financial reporting: Rekha Sethi, director general, All India

Management Association (AIMA), says "The whole idea behind corporate governance is www.zenithresearch.org.in

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ensuring the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate unfair practices within the corporate system. So, corporate governance is all about transparency” Poor corporate governance and lack of transparency of corporate financial reporting have frequently been identified as some of the root causes of major financial crisis across the globe. These crises sent a clear message of the importance of good corporate governance and improved disclosure for individual corporations to tap into international capital markets as well as for an economy to achieve sustainable economic growth. The need for a major improvement in transparency, including both accounting and public disclosures, becomes imperative. Communication via corporate disclosure is self evidently a very important aspect of corporate governance in the sense that meaningful and adequate disclosure enhances good corporate governance. The enhancement of corporate governance structure as well as the other regulatory reforms is very essential for voluntary disclosure in annual reports. This implies that the effect of regulations to enhance corporate transparency has a strong parallel effect on firms towards more voluntary information disclosure in their annual reports. To achieve orderly capital markets around the world, corporations must provide investors and creditors with relevant, reliable, and timely information. Accounting, auditing, and the structure of corporate governance that they operate within are essential components in the flow of information to capital market participants. So there is a huge impact of corporate governance on financial reporting and disclosure norms and vice versa. Effective financial disclosure norms will enhance the quality of corporate governance since it improves the quality of financial reporting. The effectiveness of corporate governance can be evaluated by the quality of financial reporting of a firm as financial reporting is an important component of good corporate governance.

1.4 Accounting standards and GAAP norms in India: The accounting standards suggest the rules for recognition, measurement, treatment, presentation and disclosure of accounting transactions in the financial statements of an organization. It facilitates the disclosure of financial information that is important to the various stake holders of the business. The council of the institute of Chartered Accountants of India (ICAI) constituted the Accounting Standard Board (ASB) in April 1977, which performs the functions of preparation of the accounting standards in India .The ASB comprises of representatives from industries, the Central Board of Direct taxes, the Company Law Board, the Controller and Auditor General and other parties such as Practicing Chartered Accountants, who are concerned with the

accounting standards. . Presently there are 32 Accounting standards issued by ASB.

1.5 Transparency in Financial statements: The basic purpose of preparing financial statements is to make them available to the shareholders, so as to inform them of the correct and true financial performance and health of their company. But do financial statements really serve this purpose? Unfortunately, the ground reality in most of the cases is far from it. In fact, it has been found that in many developed countries of North America, Asia, Europe etc the financial reports of the companies are fudged. In India, with its ancient history and civilization and with a very high cultural heritage, the record of fudging of annual financial reports by the corporate are surprisingly no better than the US, UK and other developed

countries. As per a study conducted by CRISIL, the largest credit rating agency of India, in www.zenithresearch.org.in

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July 2002, out of total of 639 companies studied, 139 had inflated their profit and as many as 87 had reduced profits through clever, though legal, accounting practices. Most analysts agree that the balance sheets of Indian firms are generally opaque. Most investors of stocks/shares in India rarely have any idea about the true value of what they are buying. In this regard, ground reality in India is no different than that in the western countries. Financial shenanigans, therefore, are a worldwide phenomenon.

1.6 Financial shenanigans: (FS). Any deliberate action or omission with a view to conceal or distort the actual financial performance or financial position of a firm is known as financial shenanigan. This is generally done by accountants with a view to achieving certain beneficial objectives. There are generally three reasons for doing this:

It pays to do it: It is a known fact that actions of managers are affected by rewards and punishments. For e.g., payment of bonus is linked with the manager‟s performance. This encourages managers to post higher sales and profits. This urge to report better results may induce managers to be more „creative‟ in their interpretation of GAAP.

It‟s easy to do it: It is quite easy for managers to use accounting gimmicks to inflate or deflate profits. The reasons include: adequate scope in interpreting GAAP, applying GAAP to boost a company‟s reported profits etc.

It‟s unlikely that perpetrators will get caught: Firms believe that they may not get caught when they use accounting tricks. They may be right in view of following reasons. Investors and bankers who rely on quarterly financial statements may believe that those reports are certified by the auditor. But the fact is annual financial statements of publicly held companies must be audited; quarterly statements need not be. Thus investors must be careful about this point.

1.7. Types of Financial shenanigans: According to Professor Howard M. Schlitt, who is leading authority on detecting accounting tricks that cause misleading financial statements, there are at least seven financial shenanigans.

 Recording revenue too soon: Revenue recognition can be on the basis of accrual or the actual receipt. Sometimes, earnings may be recognized too early, either

before the earnings process has been completed or before an exchange has occurred. This shenanigan has 3 techniques: Shipping the goods before a sale is finalized, recording revenue when important uncertainty exists, and recording revenue when future services are still due.

 Recording Bogus revenue: A second shenanigan related to revenue recognition occurs when a company receives cash or other assets in non-sales transactions but still records it as sales revenue. The guiding principle is that revenue should be recorded after the earnings process has been completed and an exchange has

occurred. There are at least three techniques under this shenanigan: Recording www.zenithresearch.org.in

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income on the exchange of the property, recording funds from suppliers as revenues, using bogus estimates on interim financial reports

 Boosting income with one time gain: Companies that sense troubled times ahead boost their income with one-time gains. They resort to this shenanigan by using the following four techniques: Boosting income with one-time gains, boosting profits by retiring debt, failing to segregate unusual and nonrecurring gains or losses from recurring income, burying losses under non-continuing operations. Investors and lenders should be concerned when a company writes-off fixed assets too slowly, especially in industries experiencing rapid technological advances.

 Shifting current expenses to a later period: This is one of the common ways of boosting current year profits. There are 3 major techniques that are used to shift expenses from the current period to the later one: Improperly capitalizing costs, depreciating of amortizing costs too slowly, failing to write-off worthless assets. The most troublesome decision is how to account for the transition costs-the difference between the obligations to which the company has committed and the fair market value of assets that they have to set aside to pay this obligation.

 Failing to record or disclose all liabilities: Companies use four major techniques to keep debt off the books: Reporting revenue rather than a liability when cash is received, failing to accrue expected or contingent liabilities, failing to disclose commitments and contingencies, engaging in transactions to keep debt off the books.

 Shifting current income to a later period: An accounting trick used when a company wants to defer some sales revenue until later is to record a liability and to wait the following year to transfer the liability to revenue. This trick is known as “setting up reserves”, shifts income from a year in which a company has a large profit to a later year where profits are expected to be weaker. Although income smoothing (using reserves) arguably is not as common as shenanigans that over state profits, investors, lenders, and auditors should be equally vigilant in searching for it.

 Shifting future expenses to the current period: A company can smoothen its income levels by adopting the following two techniques: Accelerating discretionary expenses into the current period, writing off future years depreciation or amortization.

2. INDICATORS OF QUALITY OF EARNINGS OF A BUSINESS: Cash flow of a firm is less prone to manipulation than the accounting profit, as the latter is prepared according to accrual accounting rules and therefore might be subject to manipulation; cash flow on the other hand, is not subject to the intricacies of accrual accounting. The

statement of the cash flows shows the net inflow (or outflow) of cash during the period www.zenithresearch.org.in

covered by the statement. An important part in cash flow statements is the statement of

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cash flows from operations. The best way to determine a company‟s quality of earnings is by comparing CFFO with reported net income. If a healthy net income figure can be validated by a similarly high CFFO, chances are that the net income was truly earned rather than financially engineered. If on the other hand, CFFO is negative for several periods while net income is positive, or if the net income is consistently higher than CFFO over a longer time frame, a company might have a poor quality of earnings. Besides comparing CFFO to net income, the other numbers on the statement of income and balance sheet can also be compared. Examples of such ratios are:

 Quality of Income- CFFO/Operating income

 Interest coverage-CFFO Before tax and interest/Interest

 Return on assets-CFFO Before taxes and interest/assets

3. PREVENTING FINANCIAL SHENANIGANS: Due to potential disasters for investors and lenders who rely on misleading financial statements, actions should be undertaken to prevent shenanigans. The following four measures will help in preventing the financial shenanigans

 Improving auditor‟s ability to audit

 Improving training for users of financial reports

 Improving the control environment within the organization, and

 Restructuring manager‟s incentives

4. FACULTY ACCOUNTING PRACTICES BY BEST PERFORMING COMPANIES ACROSS THE WORLD:

Accounting scandals, or corporate accounting scandals, are political and business scandals which arise with the disclosure of misdeeds by trusted executives of large public corporations. Such misdeeds typically involve complex methods for misusing or misdirecting funds, overstating revenues, understating expenses, overstating the value of corporate assets or underreporting the existence of liabilities, sometimes with the cooperation of officials in other corporations or affiliates. In public companies, this type of "creative accounting" can amount to fraud and investigations are typically launched by government oversight agencies, such as the Securities and Exchange Commission (SEC) in the United States or Securities exchange board of India(SEBI) in India.

Notable Accounting Scandals since 2000 across the globe: It is difficult to expect such scandals prior to the exposure as these involve complex methods for misusing funds, overstating

revenues, understating expenses etc.

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 Bank of Credit and Commerce International (BCCI): Bank of Credit and Commerce International (BCCI) was founded in Karachi, Pakistan in 1972 and registered in Luxembourg, London by Aga Hasan Abedi. It was a major international bank with 30,000 employees and had operations in 78 countries. It was the seventh largest private bank up to 1991 until it was closed.

ALLEGATIONS

This is one of the largest scandals in the financial history with $ 20-billion-plus-heist. More than $13 billion funds are unaccounted. Other allegations include bribery, support of terrorism, money laundering, smuggling, the sale of nuclear technologies etc.

 ENRON CORPORATION

Enron Corporation was founded in Houston, Texas in 1985. It was one of the world‟s leading electricity, natural gas, pulp and paper and communications company which employed 22,000 people. This America‟s Most Innovative Company lost its fame in 2001 with its accounting fraud. It is quite common for corporate scandals to be called as an Enron scandal.

ALLEGATIONS

The debts of the company were hidden and profits were inflated by more than $1 billion. It offered bribes to foreign governments to win contracts abroad.

 WORLDCOM

WorldCom was the United States‟ second largest long distance phone company that was founded in the year 1983 as LDDS. Bernard Ebbers is its CEO and it became LDDS WorldCom in 1995. After 19 years of establishments i.e. in 2002 the company‟s accounting scandal came into exposure.

Allegations: Underreporting interconnection expenses by capitalizing on the balance sheet and $3.8 billion cash is overstated as capital expenses rather than operating expenses.

 TYCO INTERNATIONAL

Tyco international was a global manufacturing company founded in 1960. Its operational headquarters is in Princeton, New Jersey. With 118,000 employees it is composed of security services, safety products, fire protection services, flow control, electrical and metal products.

Allegations: CEO Dennis Kozlowski and former CFO Mark H. Swartz were accused of the theft of $600 million from the company in 2002.

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 KANEBO LIMITED

Kanebo Limited was a textiles and cosmetics group giant in Japan. It was originally established in 1887. It has 13,580 employees. In 2003 a major accounting fraud was revealed which was considered as the largest fraud in Japan.

Allegations: Inflated profits by $2 billion over a five-year period.

 WASTE MANAGEMENT, INC

Waste Management, Inc is founded 1894 based on the headquarters in Houston, Texas. It is a waste management and environmental services company with 50,000 employees and a network of 413 collection operations.

Allegations: Earnings were inflated by $1.7 billion by increasing the depreciation time length for their property and equipment in 2002.

 PARMALAT

Parmalat was founded in 1961 in Italy by Calisto Tanzi. It is a multinational Italian dairy and food corporation with more than 15,000 employees. This leading company collapsed in 2003 with an accounting scandal of $ 20 billion which is considered as the biggest bankruptcy.

Allegations: Company‟s total debt was more than doubled on the balance sheet. Forgery and bankruptcy are some other allegations.

 HEALTH SOUTH CORPORATION

Health South Corporation was founded by Richard M. Scrushy in 1984 in Birmingham, Alabama, USA to offer healthcare services. The company has 22,000 employees and operates 100 Inpatient Rehabilitation Hospitals. Though the company‟s accounts are falsified since 1996, the scandal came into exposure in 2003.

Allegations: The company‟s income was overstated by as much as 4700 percent and $1.4 billion

was inflated to meet the expectations of investors.

 AMERICAN INTERNATIONAL GROUP (AIG)

Though AIG was founded in 1919 in Shanghai, China by Cornelius Vander Starr, it went to public in 1969. It is a major American Insurance Corporation based in New York City with 116,000 employees.

Allegations: The company maintained lucrative payoff agreements, soliciting rigged bids for

insurance contracts and inflated financial position by $2.7 billion in 2005. www.zenithresearch.org.in

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 SATYAM COMPUTER SERVICES

Satyam Computer Services was founded in 1987 in Hyderabad, India by Ramalinga Raju to offer information technology services. The company has a network in 67 countries with 53,000 employees. Very recently i.e. on 7th January, 2009 the accounting scandal came into exposure.

Allegations: Inflated cash and bank balances of more than $1.5 billion (INR 7,000 crore), overstated debtors‟ position of $100 million and understated liability of $250 million was arranged for CEO Raju.

5. FAULTY ACCOUNTING PRACTICES BY SOME OF THE BEST INDIAN COMPANIES:

Even though Sathyam is the only major accounting scandal that has India seen, one of the released by the credit rating agency CRISIL seems to have sounded an alarm signal. The study is based on the analysis of 639 companies. Of these, as many as 226 companies forming 33.33% of the universe were found to be inflated their profit and 21.91% deflated their position through clever though legal accounting practices. Even though banks and financial institutions are unhappy with the existing accounting practices followed by their corporate borrowers, they are helpless in taking any legal action.

 TELCO: Capitalized RS 1.178 crore dinner party expenses instead of writing it off in the year 2001-02, showed only a modest loss of 53 crores instead of actual loss which was very huge

 MAHINDRA AND MAHINDRA: While developing and launching their new SUV passenger vehicle „Scorpio‟, Mahindra and Mahindra picked-up the hint and repeated the practices of TELCO in the year 2002-03. On questioning the Telco spokespersons said that they have done no wrong legally. However CRISIL remarks says” ideally, we should have written off the amount against the profit and loss account over a period of time rather than against the reserves at one go”

 BIG BATH ACCOUNTING BY ICICI IN FY 2001: The ICICI wrote off Rs 813 crore of bad loans against its profit and loss account in 2001, as a result profit fell by 55%. As against this, ICICI wrote-off only Rs 701crore in the three years 1997 to 1999 and that too against reserves. The one time write off in FY 2001, prior to the ICICI-ICICI Bank ,

 RELIANCE PETROLEUM LTD (RPL): RPL showed the income earned from deferred sales tax as part of income. This practice is however, within the current accounting laws.

 ROLTA INDIA: Rolta India was accused off propping-up its sales in the late 1990s and early years of 20th century by adopting some creative method of accounting. The company has been accused of inflating its sales by asking one of its divisions to sell

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 HDFC bank gas been showing profits from sale of investments as part of operating profit. During FY 2002, about 4% of such profits came from sale of securities.

Most of the examples cited above are from the cream of Indian companies. And even they hide expenses and prop-up incomes with a view to posting better profits and inflating their „profitability‟, without violating accounting rules and conventions.

6. FINANCIAL REPORTING AND CORPORATE GOVERNANCE

If a corporation is to be a viable attraction for capital, its board must ensure disclosure and transparency concerning the company‟s concerning the company‟s true financial performance as well as its governance practices. Accounting games may be short-term fixes, but they are not long-term bases for financial credibility

Rekha Sethi, director general, All India Management Association (AIMA), says "The whole idea behind corporate governance is ensuring the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate unfair practices within the corporate system. So, corporate governance is all about transparency”

Poor corporate governance and lack of transparency of corporate financial reporting have frequently been identified as some of the root causes of major financial crisis across the globe. These crises sent a clear message of the importance of good corporate governance and improved disclosure for individual corporations to tap into international capital markets as well as for an economy to achieve sustainable economic growth. The need for a major improvement in transparency, including both accounting and public disclosures, becomes imperative. Communication via corporate disclosure is self evidently a very important aspect of corporate governance in the sense that meaningful and adequate disclosure enhances good corporate governance. The enhancement of corporate governance structure as well as the other regulatory reforms is very essential for voluntary disclosure in annual reports. This implies that the effect of regulations to enhance corporate transparency has a strong parallel effect on firms towards more voluntary information disclosure in their annual reports. To achieve orderly capital markets around the world, corporations must provide investors and creditors with

relevant, reliable, and timely information. Accounting, auditing, and the structure of

corporate governance that they operate within are essential components in the flow of information to capital market participants. So there is a huge impact of corporate governance on financial reporting and disclosure norms and vice versa. Effective financial disclosure norms will enhance the quality of corporate governance since it improves the quality of financial reporting. The effectiveness of corporate governance can be evaluated by the quality of financial reporting of a firm as financial reporting is an important component of good corporate governance.

7. CONCLUSION: Since there are alternate treatments available for various components in www.zenithresearch.org.in

the Accounting standards, the companies tend to fabricate the financial statements as it is

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difficult to get caught. By this the different stake holders of a firm get deceived and they continue to use and believe the accounting information provided by the company. The only way this can be avoided is the investors and other stake holders of the business should try to improve their knowledge with reference to financial statements. The regulatory bodies like SEBI, RBI and ICAI must try to educate the investors. Convergence of Indian accounting standards to IFRS will also reduce the fabrication of accounts to a large extent as the treatments should be uniform in different countries.

8. REFERENCES

Ramachandran.N, Kakani Kumar Ram; (2005), “Financial Accounting for Management”, The McGraw-Hill companies, 1st edition, page no 399 to 402

Hanif Mohammed, Mukherjee Amitabha; (2008) “Advance Accounting”, The McGraw-Hill companies, 1st edition, page no 1.1 to 1.8

The ICFAI University;(2005), “Financial Accounting and Financial statement analysis”, Page no 23-24

Dr. Singh S (2005), “Corporate governance-Global concepts and practices”, Excel books, 1st edition, page no page no 67 to 167

ICAI Task force, ”concept paper on convergence with IFRSs in India”(2007)

Das Bhagaban, Shil Chandra Shil, Pramanik Kumar Alok, “convergence of Accounting standards: Internationalization of Accounting”(2009), International Journal of Business and Management, Volume 4, No 1, page number 79-84.

Parker D Lee(2007) “Financial and external reporting research: the broadening corporate governance challenge”, Accounting and business research, vol 37, page No 39 to 54

Tom on Kit(2000) “Models of corporate governance for Chinese companies”, Empirical research based and theory building papers, Vol 8, page No 52 to 64

Gupta Ambarish(2007) “Financial Accounting for Managers-An analytical perspective”, Pearson Education, second impression, page No 359 to374, 376 to 390

Ho Ling Poh, Tower Greg, Barako Dulacha (2008) “Improving governance leads to improved corporate communication” corporate ownership and control, Vol 5, issue 4, page No 26 to 39

Uzun Hatice, Szewczyk Samuel.H, Varma Raj(2004) “Board composition and

corporate fraud” Financial analyst journal, Vol 5 page No 33 to 44

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Imhoff. A. Eugene (2003), “Accounting quality, auditing and corporate governance”, Accounting horizons supplement, page No 117 to 128

www.icai.org

www.pwc.com/ifrs

www.deloitte.com

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A COMPARATIVE STUDY OF CORPORATE GOVERNANCE DISCLOSURE BY PRIVATE AND PUBLIC SECTOR BANKS IN INDIA

DR. HARMEET KAUR*

*Assistant Professor, GNIMT, Ludhiana.

ABSTRACT

The present study attempts to find the difference in the corporate governance disclosures of private and public sector banks in India. A Disclosure Index of 8 broad parameters has been prepared according to the clause 49 of the SEBI using content analysis. The population for the study is private and public banks in India. On the basis of convenience sampling, 5 private sector banks and 5 public sector banks have been taken as samples. The private sector banks included in sample are Axis Bank, HDFC Bank, ICICI, Karur Vyasa Bank, Indus Ind Bank and Oriental Bank of Commerce, State Bank of India, Bank of Baroda, Syndicate Bank and Central Bank of India are the sample public sector banks for the study. It has been found that all the banks whether public or private have incorporated their vision and philosophy on Corporate Governance in their annual reports. All banks have disclosed information regarding the board of directors, their experience and directorship in other companies but Axis, ICICI and Bank of Baroda does not disclose the experience of their directors. All banks are disclosing information relating to Audit Committee but Axis, HDFC & Indusind bank fail to disclose the role of Audit Committee. All banks are providing detail regarding means of communication but some banks fail to disclose their half yearly declarations. Only Indus ind bank shows the information regarding Finance Committee. None of the selected banks shows any information regarding Health, Safety & Environment Committee, Corporate Governance & Stakeholders Interface Committee and Functional Committee. From the combined disclosure score of all banks, Central Bank of India has the highest percentage i.e. 60.26 and Oriental Bank of Commerce is having least percentage for disclosure. ______

INTRODUCTION

Corporate governance is a regulatory way to ensure that organisations are fair to the shareholders. In this information era, the shareholders are vigilant and are aware about their rights. This has made it more important for the companies to disclose the various parameters in their annual general reports depending upon the model of corporate disclosure being followed by the legal authority. In developing economies, banks are ignition for the financial system of the country. There is considerable divergence in practices of corporate governance being followed by the banks in India. An attempt has been made in this study to find the difference in the Corporate Governance Disclosures being made in the Annual General Report of the public and

private sector banks in Indian Banking Industry.

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Researchers in finance have thoroughly investigated the corporate governance reporting in developing economies has become more important. Linnea and Ferraro (2007) found that corporate frauds are increasing and it is the board of directors that have been adversely affected. Its role had been transformed from being spectator to evaluating and monitoring the performance of management. The recent fall of big American companies on account of corporate misdemeanors had put members of board under critical scrutiny of the regulatory bodies and investing community. Talwar (2007) defined ‘Corporate Governance’ both in narrow sense and broad sense. In narrow sense, it concerns the relationships between corporate managers, directors and shareholders. It can also encompass the relationship of the corporation to stakeholders and society. Barghva and Singh (2008) reported the disclosures of financial and non financial information in the annual reports of 40 public sector enterprises on the basis of index of disclosure card that consisted of 35 items and indicated that there were differences in quality of disclosure made by sample companies. Caroline (2008) reported that one good thing that may in fact come out of all the recent corporate governance scandals was that at last governance came to be seen differently. Ubha (2008) stated that the investor’s requirement in the light of present reporting practices of companies pointed that there exist wide variation in the reporting of statutory and non-statutory items of information. The companies under study disclosed the statutory information like Profit and Loss account, Balance sheet, Directors report, Auditors report etc and there were only a small number of companies disclosed non voluntary disclosure.

RESEARCH METHODOLOGY

Content analysis is a research technique widely used in social sciences which objectively and quantitatively examines written or oral communication in order to make inferences about values, meanings or understandings being conveyed. A disclosure index has been developed after studying the annual reports of various banks. This technique is called as content analysis. In the first stage of content analysis, the annual report was analyzed and the disclosure index was prepared. A score of 1 was awarded if an item was reported; otherwise a score of 0 was awarded. A bank can score a maximum of points and a minimum of 0.

The population for the study is private and public banks in India. On the basis of convenience sampling, 5 private sector banks and 5 public sector banks have been taken as samples. The private sector banks included in sample are Axis Bank, HDFC Bank, ICICI, Karur Vyasa Bank, Indus Ind Bank and Oriental Bank of Commerce, State Bank of India, Bank of Baroda, Syndicate

Bank and Central Bank of India are the sample public sector banks for the study.

A Disclosure Index of 8 broad parameters has been prepared according to the clause 49 of the SEBI. The disclosure index is attached in the appendix. Further to this, in order to understand the substance of reporting, seventy seven statements related to each of these dimensions have been drawn as a framework to calculate disclosure score and to understand the efficacy and quality of disclosures. For the presence of the information related to statement a score of ‘1’ has been given and in case of absence a score of ‘0’ is given. The maximum score that could be achieved was 77. These statements, which formed the part of disclosure index score, included both mandatory and non-mandatory stipulations of the regulation. Every item has been given equal weight

because each item in the index is equally important. Thus a total weight of 77 is given in index of www.zenithresearch.org.in

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The hypothesis is framed and tested with z-test.

H0: There is no difference in public sector and private sector banks in reporting corporate governance disclosures in their annual reports.

H1: There is difference in public sector and private sector banks in reporting corporate governance disclosures in their annual reports.

Z test has been used to test the hypothesis

DATA ANALYSIS AND INTERPRETATION

The first statement is regarding information related to Philosophy on Corporate Governance. As per SEBI code for Corporate Governance, Bank’s philosophy on corporate governance should form an integral part of annual reports. Hence all annual reports were and the table below presents the score for the parameter.

TABLE 1: INFORMATION RELATED TO PHILOSOPHY ON CORPORATE GOVERNANCE

PRIVATE BANKS SCORE PUBLIC BANKS SCORE

Axis Bank 1 OBC 1

HDFC Bank 1 SBI 1

ICICI 1 Bank of Baroda 1

Karur Vysya 1 Syndicate Bank 1

Indus ind Bank 1 CBI 1

Total Score 5 Total Score 5

Table 1 shows that all banks have incorporated their vision and philosophy on corporate governance in their annual reports. There is no sub dimension in this parameter.

The second parameter is information related to Board of Directors. The details were studied with

respect to 5 sub-dimensions and the score for this parameter is presented below. www.zenithresearch.org.in

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TABLE 2: INFORMATION RELATED TO BOARD OF DIRECTORS

PRIVATE BANKS PUBLIC BANKS

Board of Axi Kar Tota Tota HDF Indusi Directors s ICI ur l OB SB Bo Syndica CB l C nd ban CI vsyy Scor C I B te bank I Scor bank k bank a e e

Executive 1 1 1 1 1 5 1 1 1 1 1 5

Non- 5 5 1 1 1 1 1 1 1 1 1 1 Executive

Name & 5 5 resume of 1 1 1 1 1 1 1 1 1 1 directors

Experienc 3 3 e of 0 1 0 1 1 0 1 0 1 1 directors

Directors 5 5 hip in other 1 1 1 1 1 1 1 1 1 1 companie s

Total 23 23 4 5 4 5 5 4 5 4 5 5 score

From the above table 2, it is clear that mostly all the banks are disclosing their information regarding board of directors, their directorship in other companies. 2 private sector banks; Axis

Bank and ICICI and 2 public sector banks; OBC and Bank of Baroda have not disclosed the experience of their directors in the annual reports.

The next parameter is regarding the information related to board meetings. There are 14 sub- dimensions and their scores are given as follows:

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TABLE 3: INFORMATION RELATED TO BOARD MEETINGS

PRIVATE BANKS PUBLIC BANKS Board Axi Kar Tota Tota Meetings HDF Indusi s ICI ur l OB SB BO Syndica CB l C nd ban CI vsay Scor C I B te bank I Scor bank k bank a e e

Board committe 0 0 0 1 0 1 0 0 0 1 1 2 e

Procedur 0 0 0 1 0 1 0 0 0 0 0 0 es

Institutio nal decision 0 0 0 0 0 0 0 0 0 0 0 0 making process

Schedulin g & selection 0 0 0 0 0 0 0 0 0 0 0 0 of agenda item in BM

Number of BM 1 1 1 1 1 5 1 1 1 1 1 5 held

Location 1 0 0 0 0 1 0 0 0 0 0 0

Dates on which 1 1 1 0 1 4 1 1 1 1 1 5 BM held

Informati on placed 0 0 0 0 0 0 0 0 0 0 0 0 before board

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material

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Minutes of 0 0 0 0 0 0 0 0 0 0 0 0 proceedin gs of BM

Post meeting 0 0 0 0 0 0 0 0 0 0 0 0 follow-up

Complian 0 0 0 0 0 0 0 0 0 0 1 1 ce

Attendan ce of 1 1 1 1 1 5 1 1 1 1 1 5 directors at BM

Last AGM 1 1 1 1 1 5 1 0 1 1 1 4 attendanc e

Total 5 4 4 5 4 22 4 3 4 5 6 22 score

It can be concluded from the above table that all banks are disclosing information regarding no. of board meetings, attendance of directors at board meetings but not regarding the procedures, scheduling & selection of agenda item in BM, information placed before board, minutes etc. This

area needs to be improve its reporting in both public sector and private sector.

The next parameter is regarding information related to audit committee. The constitution, functions and procedures of audit committee were viewed in light of recommendations of the Kumar Manglam Birla Committee. As per SEBI Code on Audit Committee following sub- dimensions were analyzed to give the score to Banks.

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TABLE 4: INFORMATION RELATED TO AUDIT COMMITTEE

PRIVATE BANKS PUBLIC BANKS Audit Axi HDF Kar Tota Tota Committ Indusi s C ICI ur l OB SB BO Syndica CB l ee nd ban CI vsay Scor C I B te bank I Scor bank k bank a e e

Members 1 1 1 1 1 5 1 1 1 1 1 5

Powers 1 1 1 1 1 5 1 1 1 1 1 5

Role 0 0 1 1 0 2 1 1 1 1 1 5

Attendan ce of 1 1 1 1 1 5 1 1 1 1 1 5 each member

Total 3 3 4 4 3 17 4 4 4 4 4 20 Score

From the above table it is clear that mostly all banks are providing information about audit committee but Axis, HDFC and Indusind bank does not show their role in audit committee.

Kumar Manglam Birla Committee on Corporate Governance has put forward non-mandatory recommendations w.r.t. setting up of remuneration committee to determine on the behalf of the shareholders the agreed terms of reference, company’s policy on specific remuneration packages for executive directors including pension rights and any compensation payment. The next parameter is regarding disclosure of information relating to Remuneration. There are 4 sub-

parameters.

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TABLE 5: INFORMATION RELATES TO REMUNERATION COMMITTEE

PRIVATE BANKS PUBLIC BANKS Remunerat Axi HDF Kar Tot Tot ion Indusi s C ICI ur al OB SB BO Syndica CB al Committee nd ban CI vsay Scor C I B te bank I Scor bank k bank a e e

Members 1 1 1 1 1 5 1 1 1 0 1 4

Remunerat 1 0 1 0 0 2 0 0 1 0 0 1 ion Policy

Details of remunerati 1 1 1 1 1 5 1 1 1 0 1 4 on

Attendance of each 1 1 1 0 0 3 0 0 0 0 0 0 member

Total 4 3 4 2 2 15 2 2 3 0 2 9 Score

It can be concluded from table 5 that Axis bank and ICICI have shown complete details of the remuneration committee. Public sector banks need to improve their reporting in this parameter.

As per the SEBI code for Corporate Governance practices, banks have to set up Shareholders/Investors grievance Committee with the objective of look into the redressal of Shareholders/Investors grievance relating non receipt of dividend, refund order, non-receipt of balance sheet. There are 7 sub-parameters in this committee. The scores regarding the shareholders/investors committee is as follows:

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TABLE 6: INFORMATION RELATED TO SHAREHOLDERS/INVESTORS GRIEVANCE COMMITTEE

PRIVATE BANKS PUBLIC BANKS Shareholders/In vestors Ax Kar Tot Tot HD Indusi Syndic Grievance is ICI ur al OB S BO C al FC nd ate Committee ban CI vsa Sco C BI B BI Sco bank bank k bank ya re re

Members 1 1 1 1 1 5 1 1 1 1 1 5

Powers 1 1 1 1 1 5 0 0 1 0 0 1

Compliance 1 0 1 0 1 3 1 1 1 1 1 5 Officer

Investors Grievance 0 1 0 0 1 2 1 1 1 0 1 4 Redressal

Types of 0 0 0 0 0 0 0 0 0 0 0 0 complaints

No. of 1 1 1 1 0 4 0 1 1 0 1 3 complaints

Attendance of 1 1 1 0 0 3 0 1 1 1 1 4 each member

Total Score 5 5 5 3 4 19 3 5 6 3 5 22

The public sector banks have scored better than the private sector banks in this area. The above

table shows that public sector has more disclosure than private sector.

The next parameter is related to finance committee and the scores are as follows:

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TABLE 7: INFORMATION RELATED TO FINANCE COMMITTEE

PRIVATE BANKS PUBLIC BANKS Finance Axi HDF Kar Tota Tota Committ Indusi s C ICI ur l OB SB BO Syndica CB l ee nd ban CI vsay Scor C I B te bank I Scor bank k bank a e e

Member 0 0 0 0 1 1 0 0 0 0 0 0 s

Role 0 0 0 0 0 0 0 0 0 0 0 0

Total 0 0 0 0 1 1 0 0 0 0 0 0 Score

The above table shows that all the selected banks do not disclose any information regarding Finance Committee except Indus ind Bank but that bank has not shown all parameters.

The eight parameter is related to Health, Safety & Environment Committee and the scores regarding this committee are as follows:

TABLE 8: INFORMATION RELATED TO HEALTH, SAFETY & ENVIRONMENT COMMITTEE

Health, PRIVATE BANKS PUBLIC BANKS Safety & Environm Axi Kar Tot Tot HDF Indusi ent s ICI ur al OB SB BO Syndica CB al C nd Committe ban CI vsay Scor C I B te bank I Scor bank e k bank a e e

Members 0 0 0 0 0 0 0 0 0 0 0 0

Role 0 0 0 0 0 0 0 0 0 0 0 0

No. of meetings 0 0 0 0 0 0 0 0 0 0 0 0 held

Total 0 0 0 0 0 0 0 0 0 0 0 0

Score

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None of the selected banks are disclosing the information regarding the Health, Safety and Environment Committee in their annual reports. Emphasis should be made by both the sectors to constitute different committees and start their execution.

The next parameter is related to Information Related to Corporate Governance & Stakeholders Interface Committee and the scores are as follows:

TABLE 9: INFORMATION RELATED TO CORPORATE GOVERNANCE & STAKEHOLDERS INTERFACE COMMITTEE

Corporate PRIVATE BANKS PUBLIC BANKS Governan ce & stakehold Axi Kar Tot Tot Indusi ers s HDF ICI ur al OB SB BO Syndica CB al nd Interface ban C CI vsay scor C I B te bank I scor bank Committe k a e e e

Members 0 0 0 0 0 0 0 0 0 0 0 0

Role 0 0 0 0 0 0 0 0 0 0 0 0

No. of meetings 0 0 0 0 0 0 0 0 0 0 0 0 held

Review of work 0 0 0 0 0 0 0 0 0 0 0 0 done

Total 0 0 0 0 0 0 0 0 0 0 0 0 Score

None of the selected banks are disclosing the information regarding the Corporate Governance & Stakeholders Interface Committee.

The parameter is regarding Information related to Functional Committee and the scores are as follows:

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TABLE 10: INFORMATION RELATED TO FUNCTIONAL COMMITTEE

PRIVATE BANKS PUBLIC BANKS

Function CB al Axi Kar Tot Tot Indusi I Committ s HDF ICI ur al OB SB BO Syndica al nd ee ban C CI vsay scor C I B te bank scor bank k a e e

No. of meetings 0 0 0 0 0 0 0 0 0 0 0 0 held

Types of 0 0 0 0 0 0 0 0 0 0 0 0 FC

Total 0 0 0 0 0 0 0 0 0 0 0 0 Score

None of the selected banks are disclosing the information regarding the Functional Committee. The next parameter is related to General Body Meetings on the basis of following sub- dimensions and scores were summed up:

TABLE 11: INFORMATION RELATED TO GENERAL BODY MEETINGS

PRIVATE BANKS PUBLIC BANKS

General CB Body Axi Karu Tot I Tot Meetin s HDF ICIC r Indusin al OB SB BO Syndica al gs ban C I vsay d bank scor C I B te bank scor k a e e

Locatio n ,time & date 1 1 1 1 0 4 1 0 1 1 1 4 of meeting s

Review 1 1 1 1 1 5 1 0 1 1 1 4 www.zenithresearch.org.in

of work

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Total 2 2 2 2 1 9 2 0 2 2 2 8 Score

The State bank of India does not disclose any information regarding general body meetings.

The scores regarding disclosures on materially significant related party transactions are as follows:

TABLE 12: DISCLOSURES ON MATERIALLY SIGNIFICANT RELATED PARTY TRANSACTIONS

PRIVATE BANKS PUBLIC BANKS

CB Axi Kar Tot Tot Disclosur Indusi I s HDF ICI ur al OB SB BO Syndica al es nd ban C CI vsay scor C I B te bank scor bank k a e e

Details of non- 1 1 1 1 1 1 0 1 1 1 1 1 complian ce

Total 1 1 1 1 1 1 0 1 1 1 1 1 Score

All banks are disclosing information regarding disclosures on materially significant related party

transactions except the Oriental Bank of Commerce.

As per SEBI code on Corporate Governance, Banks are required to disclose their means of communication to meet information needs of interested parties. Thus, various means of

communication used by banks were analyzed and score was allotted as follows:

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TABLE 13: INFORMATION RELATED TO MEANS OF COMMUNICATION

PRIVATE BANKS PUBLIC BANKS

Means of Tot CB Tot Axi Kar communicat Indusi al Syndic I al s HDF ICI ur OB SB BO ion nd scor ate scor ban C CI vsay C I B bank e bank e k a

Half-yearly 3 3 1 1 0 1 0 0 1 1 1 0 reports

Quarterly 5 5 1 1 1 1 1 1 1 1 1 1 reports

News 5 5 releases & 1 1 1 1 1 1 1 1 1 1 presentation s

Website 1 1 1 1 1 5 1 1 1 1 1 5

Annual 5 5 1 1 1 1 1 1 1 1 1 1 report

Total Score 5 5 4 5 4 23 4 5 5 5 4 23

The above table shows that mostly all banks are disclosing information regarding the means of communication.

As per SEBI code General Shareholder Information should be given in Corporate Governance section of annual reports of banks. The scores regarding General Shareholder Information are as

follow:

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TABLE 14: INFORMATION RELATED TO GENERAL SHAREHOLDER INFORMATION

PRIVATE BANKS PUBLIC BANKS

General C Tot Axi Kar Tot Shareholder Indusi Syndic BI al s HDF ICI ur al OB S BO Information nd ate Sco ban C CI vys Sco C BI B bank bank re k ya re

AGM-time 5 1 1 1 1 1 5 1 1 1 1 1 ,venue & date

Financial 5 1 1 1 1 1 5 1 1 1 1 1 calendar

Book Closure 5 1 1 1 1 1 5 1 1 1 1 1 period

Dividend 4 1 1 1 1 1 5 0 1 1 1 1 payment date

Listing of 5 shares on SE 1 1 1 1 1 5 1 1 1 1 1 & payment of listing fees

Listing & 4 trading of 1 1 1 0 1 4 0 1 1 1 1 GDR

Debenture 2 0 0 0 0 0 0 0 1 0 1 0 Trustees

Stock Code 1 0 1 1 0 3 1 1 0 1 1 4

Demat ISIN 5 in NSDL & 1 1 0 1 0 3 1 1 1 1 1 CDSL

Stock market 3 for listed 0 1 1 1 1 4 0 1 0 1 1

companies

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Registrar & 5 Transfer 1 1 1 1 1 5 1 1 1 1 1 agents

Shareholding 5 1 1 1 1 1 5 1 1 1 1 1 pattern

Share transfer 4 1 1 1 1 1 5 1 1 0 1 1 system

Dematerializa 4 1 1 1 1 1 5 1 0 1 1 1 tion of shares

Buyback of 0 0 0 0 0 0 0 0 0 0 0 0 shares by co.

Location of 1 manufacturin 1 0 1 1 0 3 1 0 0 0 0 g facilities

Address for 5 corresponden 1 1 1 1 0 4 1 1 1 1 1 ce

Investor 1 corresponden 0 0 0 0 0 0 0 0 0 0 1 ce address

Shares/debent 0 ures 0 0 0 0 0 0 0 0 0 0 0 corresponden ce address

Transfer of 1 unclaimed 1 0 0 0 1 2 0 0 0 1 0

dividend

Compliance 3 certificate of 1 1 1 1 1 5 0 0 1 1 1 auditors

Adoption of 2 non- 0 0 0 0 0 0 0 0 1 0 1 mandatory

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Secretarial 1 0 0 0 0 0 0 0 0 0 1 0 audit

Fees to 0 statutory 0 0 0 0 0 0 0 0 0 0 0 auditors

Total score 16 14 15 15 13 73 12 14 13 18 17 74

The above table clearly shows that every bank is disclosing its general shareholder’s information.

Taking all the scores, percentage of disclosure reporting has been shown below.

TABLE 15: PERCENTAGE OF CORPORATE GOVERNANCE DISCLOSURE

Private Banks Percentage Public Banks Percentage (%) (%)

Axis Bank 58.97 Oriental Bank of Commerce 46.15

HDFC 55.12 State Bank of India 51.28

ICICI 56.41 Bank of Baroda 55.13

Karur Vysya Bank 55.12 Syndicate Bank 56.41

Indusind Bank 51.28 Central Bank of India 60.26

Mean Score 55.38 Mean Score 53.85

From the above table 15, it can be interpreted that private banks have disclosure of 55.38% whereas public banks have a disclosure of 53.85% in corporate governance. Though on the whole there exists very little difference in the reporting of the public sector and the private sector

banks. A summary of both the sectors of banks is prepared to see the result in table 16.

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TABLE 16: MEAN SCORES OF THE PARAMETERS OF CORPORATE GOVERNANCE REPORTING

Sr no. Main dimensions public private

1 Statement on company’s philosophy on code of governance 5 5

2 Board of Directors 4.6 4.6

3 Board Meeting 1.57 1.57

4 Board Committees 2.11 1.96

5 General Body Meetings 4.5 4

6 Disclosures on materially significant related party transactions 1 1

7 Means of Communication 4.6 4.6

8 Shareholder information 3.04 3.08

Total Mean Score 26.42 25.81

After testing with Z test, the null hypothesis that there is no difference in public sector and private sector banks in reporting corporate governance disclosures in their annual reports in all the 8 parameters of the Corporate Governance.

CONCLUSION

As per SEBI Clause-49, listed companies are required to disclose Corporate Governance information in their annual reports. All the banks whether public or private have incorporated their vision and philosophy on Corporate Governance in their annual reports. All banks have disclose information regarding the board of directors, their experience and directorship in other companies but Axis, ICICI and Bank of Baroda does not disclose the experience of their directors. All banks are disclosing information relating to Audit Committee but Axis, HDFC & Indusind bank fail to disclose their role in Audit Committee. All banks are providing detail regarding means of communication but some banks fail to disclose their half yearly declarations. Only Indus ind bank shows the information regarding Finance Committee. None of the selected banks shows any information regarding Health, Safety & Environment Committee, Corporate Governance & Stakeholders Interface Committee and Functional Committee. From the

combined disclosure score of all banks, Central Bank of India has the highest percentage i.e. www.zenithresearch.org.in

60.26 and Oriental Bank of Commerce is having least percentage i.e. for disclosure.

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BIBLIOGRAPHY

Bhargava, S.K and Singh, D.R. (2008). Quality of Disclosure in Public Sector Enterprises, Indian Journal of Accounting, 7, pp., 17-19.

Caroline, O. (2008). Corporate Governance- Beyond Patchwork Reform, Chartered Financial Analyst, 2008, pp., 40-42.

Linnea, Mcord and Steven, Ferraro. (2007). Government & Ethics- Who’s Driving American Firms? Directors Facing New Responsibilities, The Accounting World, Sep, pp., 36-40

Talwar, S.P. (2007) Banking Regulation and Corporate Governance, RBI Bulletin, July, LIII 7), pp: 937-943.

Ubha, Dharminder (2008). Corporate Disclosure Practices, New Delhi: Deep & Deep Publications, pp. 35-36

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ANNEXTURE

DISCLOSURE INDEX OF CORPORATE GOVERNANCE

Sr Main dimensions Sub-dimensions no.

1 Statement on company’s philosophy on code of governance

2 Board of Directors Executive

Non-Executive

Name and Resume of directors

Experience of directors

Directorship in other companies

3 Board Meeting Board Committee

Procedure

Institutional decision making process

Scheduling & selection of agenda item in BM

No. of BM held

Location

Dates on which BM held

Information Placed before Board

Board material distributed in advance

Minutes of proceedings of BM

Post Meeting Follow up

Compliance

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meetings

4 Board Committees

Audit Committee Members

Powers

Role

Attendance of each member

Remuneration Committee Members

Remuneration Policy

Details of remuneration policy

Attendance of each member

Shareholders/Investors’ Grievance Members Committee

Powers

Compliance Officer

Investor Grievance Redressal

Types of complaints

No. of complaints

Attendance of each member

Finance Committee Members

Role

Health, Safety & Environment Committee Members

Role

No. of meetings held

Corporate Governance & Stakeholders Members www.zenithresearch.org.in

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Interface Committee

Role

No. of meetings held

Review of work done in year

Functional Committee No. of meetings held

Types of FC

5 General Body Meetings Location, time & date of meetings

Review of work done in year

6 Disclosures on materially significant related Details of non-compliance by company party transactions

7 Means of Communication Half-yearly reports

Quarterly reports

News releases, presentations

Website

Annual report

8 Shareholder information AGM-time, venue & date

Financial calendar

Book closure period

Dividend payment date

Listing of shares on SE & payment of listing fees

Listing & trading of GDR

Debenture Trustees

Stock Code

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Demat ISIN in NSDL & CDSL

Stock market data for listed companies

Registrar & Transfer Agents

Shareholding Pattern

Share transfer system

Dematerialisation of shares

Buyback of shares by co.

Location of manufacturing facilities

Address of correspondence

Investor correspondence address

Share/debentures correspondence address

Transfer of unclaimed dividend to investor education and protection fund

Compliance certificate of auditors

Adoption of non-mandatory requirements of Clause 49

Secretarial audit

Fee to statutory auditors

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A RELATIVE ANALYSIS ON CUSTOMERS’ SATISFACTION OF MICROWAVE OVEN: STUDY ON SELECT COMPANIES

MR RAJENDRAPRASAD.K.HANAGANDI*; DR. FILIPE RODUGUESE MELO**; DR. SHRINIVAS PATIL***

*Assistant Professor, KLE Institute Management Studies & Research, Hubli, Karnataka. **Reader in Commerce, St Xavier’s College, Mapusa, Goa. ***Associate Professor, KLE Institute Management Studies & Research, Hubli, Karnataka.

ABSTRACT

Customer satisfaction is the key for company’s boom and sustainability of today’s competitive marketing world. A company ought to know their customers’ sense towards products and services. The study enables firms to scrutinize the changes in customer satisfaction, so that company can act swiftly to satisfy them.

Appraisal of customer satisfaction for unrelenting perfection is a prerequisite for any company. Customer retention is also money-spinning; companies will amplify profits by having better customer loyalty and satisfaction. Customers who are discontented tell twice as many people about it as compared to contented ones.

The Indian microwave oven manufacturing companies like Videocon, Onida are having convincingly good products and also they are priced comparatively less with foreign players. The market statistics in India indicate that foreign companies LG, Samsung, IFB have achieved greater heights. The Indian key players Onida and Videocon are not able to get a bigger pie. The study aims to analyze the satisfaction level of customers towards microwave oven products of LG, Onida & Videocon. The sample size of 300 respondents is taken from three major cities like Hubli, Dharwad and Belgaum of North Karnataka. Thus it is analyzed with statistical tools like standard deviation, arithmetic mean and testing hypothesis with chi-square test.

INTRODUCTION

Customer satisfaction the key for company’s boom and sustainability today’s competitive ch.org.in marketing world. A company ought to know how their customers sense the products and services. This study enables a firm to scrutinize the changes in customer satisfaction so company can act swiftly to satisfy them. Appraisal of customer satisfaction for unrelenting perfection is a prerequisite for any company. In a spirited market where businesses combat for a single customer the customer satisfaction tactics is seen as a solution. Customer point of reference for

satisfaction of consumer the products or services and whole cluster of parameters are associated www.zenithresear

with them like service quality, Brand, good product etc. Customer satisfaction in business terms

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One of the most vital goals of all companies is to enchant its customers. As a result, customer satisfaction research should be firm's largest expenditure. Customer satisfaction can also be articulated as an overall evaluation of performance based on all prior experiences with a firm and has been linked to a firm's overall performance and health of a company.

The level of satisfaction is untiring not only by the quality and type of customer experience but also by the customer’s expectations. The business without a crucial point on customer satisfaction is at the clemency of the market. The companies with paucity of loyal customers are at a big menace as their customer’s desires are not met. Ultimately a competitor will blissfully satisfy those desires and customer retention rate will dwindle and customer attrition rate will augment.

The rationale of a business is to generate and keep a customer. The business has to fruitfully create and retain customers in a cost-effective way. This healthy practice will make a profit and aid for survival. If, for any reason, a business fails to exert a pull on or sustain ample number of customers, it will experience losses. Too many fatalities in customer strength will lead to the demise of the enterprise.

Today, it would be tricky to unearth a company that doesn't candidly claim to be a customer-oriented, customer-focused or even-customer driven enterprise. But a look closer on how these companies put their assertions into practice reveals that they are superficial, inadequate and incomplete. Only by conducting market surveys and customer interviews the organizations will not know about their customers better. The companies have to genuinely understand the customers and listen to them vigilantly, even the simplest query put forth by the customers.

Customer retention is also money-spinning; companies will amplify profits by having better customer loyalty and satisfaction. Customers who are discontented tell twice as many people about it as compared to contented ones. The dissatisfied customer will pose a serious threat for the firm as they discontinue the use of the company products. Another staid issue is that not many dissatisfied customers will complain to top management; instead they spread a

huge downbeat remark in the market spoiling the firm’s image.

LITERATURE REVIEW

Choudry Pran K (1995) in his study on sales promotion opined that the sales promotion ch.org.in has become one of the most important marketing tools. He carried out survey on select consumer durables and non durables. For promotion can be – and has been used in a wide variety of roles. These included he stated, a consumer to buy your brand for the first time. This encourages the consumer to buy more than usual on a single shopping visit, giving the consumer an extra reason to stay loyal to the brand over a series of repeated purchase and improve the reputation of the

brand. He concluded that many marketing executive in Indian companies’ sales promotion is www.zenithresear

now emerging as one of the most stimulating and fulfilling of their responsibilities.

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Majumadar Nanda (1998) conducted a study to assess the value perception of Videocon. She revealed that assuming the company retains their manufacturing capabilities, their brands and their distribution network would be attractive for many a transitional. The author found that despite the initial enthusiasm the companies gamble could back fire. It is also highlighted that the benchmark even of it is more than double the existing price remains artificial.

Sachitanand N (1999) studied the Indian brands of consumer durables and underlined that since the start of this decade, the consumer durables in India has been on a roller coaster ride. He put forth that not only are the major Indian players confident of meeting the multinational challenge but they are also gearing up to become a global players themselves.

Sanjay K Khan and Kavitha Sharma (2002) Vikalpa Management Journal Vol. 25, No. 1, Jan – Feb 2002, article titled “Product Related Antecedents of Consumer Involvement: An Empirical Investigation”. The authors in this article have found that differences in consumer involvement with the products have been stated to be dependent on various product and brand related factors, viz., consumers risk perceptions, product's hedonistic value, product familiarity and brand awareness. The paper investigates the relationship between product related antecedent conditions and consumer involvement for the products. It is found that the purchase of durable products were more involving than frequently purchased non-involving products.

RESEARCH METHODOLOGY

OBJECTIVES OF THE STUDY

a) To identify customer satisfaction level for select microwave companies with regard to product features, sales promotion strategies and effectiveness of sales promotion campaigns, prices, brand, after sales service, customer feedback systems and grievance handling of the customers’.

b) To make a comparative study of the customer satisfaction with regard to select microwave companies.

c) To study the existing customer satisfaction strategies adopted by the select microwave companies (Indian MNC Companies Videocon, Onida and Foreign MNC LG).

d) To suggest plans to enhance the customer satisfaction for select Indian companies.

ch.org.in

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HYPOTHESIS OF THE STUDY

1. H0= There is no significant difference in overall customer satisfaction among the select microwave companies product.

HA= There is significant difference in overall customer satisfaction among the select microwave companies products.

2. H0= There is no significant difference in customer redressal mechanism among the select microwave companies products.

HA= There is significant difference in customer redressal mechanism among the select microwave companies products.

3. H0= There is no significant difference in brand preference among the select microwave companies product.

HA= There is significant difference in brand preference among the select microwave companies product.

SAMPLE FRAME

A sampling frame is a means of representing the elements of population. A sampling frame can be telephone directory, city directory, listing of customers’ etc. In this study sample frame is taken from the list of existing customers’ and from various retailers of select cities.

SAMPLE UNIT

It is the basic unit containing the elements of population to be sampled. In this study the sample unit is the household who has purchased the products of select companies.

SAMPLING METHOD

The sampling method is the way the sample units are to be selected. In order to achieve the objectives of research the following sampling method is used: Non probability, simple

random sampling.

SAMPLE SIZE

The population, refers to all the users of the products of the LG, Videocon and Onida companies. ch.org.in The sample in this study is select on simple random sampling method. The sample size is 300 in

total.

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COMPARATIVE ANALYSIS AND FINDINGS OF CUSTOMER SATISFACTION

CHART 1: COOKING QUALITY OF SELECT MICROWAVE OVEN COMPANIES

Source Primary Data

Above visual aid shows the ranking on cooking eminence of select company microwave oven users. The chart indicates that 45 percent of LG microwave oven users opined that they were highly satisfied with cooking quality and 30 percent said they were satisfied. Among the Onida users only 40 percent of users showed highest satisfaction for its cooking quality and

another 19 percent showed their satisfaction level. A higher percentage of Videocon users were ch.org.in dissatisfied with cooking quality. The higher satisfaction for LG is because of its excellent technology and it is known for efficient cooking. Few users of Onida and many users of Videocon complained about un-evenness in cooking. Very few customers’ of LG expressed dissatisfaction about cooking quality. The chart also reveals that there is very low percentage of dissatisfaction among the LG users and higher in case of domestic companies. This again

indicates the technological mastery of Korean giant LG. www.zenithresear

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CHART 2: EASE OF OPERATIONS AND USAGE OF SELECT MICROWAVE OVEN COMPANIES

Source Primary Data

The chart obviously shows that majority of LG users are satisfied with the usage and ch.org.in handling of their microwave oven. The users of LG opined that the menu was very simple, user friendly and cooking food was effortless. The customers’ were glad with programs in their microwave ovens. A negligible number of LG users were despondent with the usage. The users of Onida and Videocon felt the operations are not so user friendly as compared to users of LG microwave oven. Some customers’ of Videocon and Onida opined that the menus were confusing and not so gracious. Customers’ were unable to judge the timing, resulting in improper www.zenithresear

cooking; at times the food was over cooked or under cooked.

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CHART 3: CONSUMER BRAND SATISFACTION OF SELECT MICROWAVE OVEN COMPANIES

Source Primary Data

The above visual aid shows the customer reaction for the brand satisfaction of select microwave companies. From the chart it is clear that LG brand users are more satisfied than Onida or Videocon. Among the LG users 45 percent were highly satisfied with the brand. The satisfaction for the domestic brand users was 37 percent and 25 percent for Videocon and Onida respectively. The domestic brands are well known and they have got good image, but in the case of microwave oven these brands have not carved a niche in customers’ mind. This can be a ch.org.in reason for dissatisfaction with domestic brands. The chart indicates that even the dissatisfaction

level is much higher compared to LG.

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CHART 4: CUSTOMER BRAND ESTEEM FEELINGS OF SELECT MICROWAVE OVEN COMPANIES

Source Primary Data

When microwave oven users were requested about the sense of pride or esteem feeling of owning their brands LG got a positive response of 45 percent, followed by Onida at 32 percent ch.org.in and Videocon at 30 percent. Onida is trying hard to make its presence felt as a high quality and innovative company; it has recently agreed for alliance with international vendors for microwave oven components. The higher dissatisfaction for brand esteem may also be because of the social class. The buyers of such products usually belong to high income group, occupation and

educated people. This category of people may be skeptical about the Indian brands.

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CHART 5: CONSUMER EXPECTED PERFORMANCE OF SELECT MICROWAVE OVEN COMPANIES

Source Primary Data

When the customers’ were told to compare their product performance with their expectations the following results evolved. The users of LG (39 percent) again ranked their microwave oven high for its superior performance. They said the product’s performance matches their professed expectations. The satisfaction level came down in case of Onida and lowest ch.org.in satisfaction was found in Videocon. On the other end the chart reveals a low magnitude of dissatisfaction by the LG users, whereas the users of Indian firms show a high magnitude of

dissatisfaction, owing to their low performance.

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CHART 6: OVERALL SATISFACTION OF SELECT MICROWAVE OVEN COMPANIES

Source Primary Data

The chart 6 educates the customer satisfaction level on overall parameters for select consumer durable companies of microwave. Again LG users have ranked their microwave oven high on overall performance parameters. 45 percent were highly satisfied and 25 percent are satisfied. In case of Onida 39 percent were highly satisfied and in case of Videocon around 35 percent are highly satisfied. The higher satisfaction in LG is quite obvious in the study as LG was ranked high based on the parameters of products and services. The chart indicates that low percentage (9 percent) of LG users was dissatisfied. Even Onida has been ranked well and it is observed in the chart that only 10 percent of users were highly dissatisfied. It is a healthy sign for Onida. The Videocon microwave oven segment has been ranked the lowest; even the dissatisfaction level is high i.e. 14 percent. ch.org.in

HYPOTHESIS TESTING

HYPOTHESIS 1

H0= There is no significant difference in overall customer satisfaction among the select www.zenithresear

companies microwave oven product.

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HA= There is significant difference in overall customer satisfaction among the select companies microwave oven product.

To test this above hypothesis all the major parameters on product features, brand parameters and service parameters were shown in chi square table. To test the hypothesis the following eleven parameters were taken, cooking quality, cooking menus, operations and usage, variety of microwave ovens, expected performance, brand satisfaction, technical service, price satisfaction, product recommendation level, call centre effectiveness and effective complaint handling. All these parameters were asked to the respondents through Likert scale questions. The eleven parameters and three select microwave oven company’s values are plotted into a table using chi square formula with a degree of freedom 20 at 95 percent confidence level.

The following result was observed in overall satisfaction for microwave oven product of select company’s

Chi - square Value 149.46

Table Value 31.41

The table value is found less than the chi-square value so null hypothesis is rejected and alternative hypothesis is accepted, therefore it can be inferred that overall satisfaction is not same in select microwave companies.

HYPOTHESIS 2

H0= There is no significant difference in customer redressal mechanism among the select companies microwave oven product.

HA= There is significant difference in customer redressal mechanism among the select companies microwave oven product.

To test the above hypothesis the following parameters concerned to customer redressal

system are taken, technical service effectiveness, customers’ complaint handling, relationship with company sales people, responsiveness of call centre and call center effectiveness. In this case the five variables and three select companies observed data is plotted into a table and chi-

square formula is being applied with degree of freedom 8 at 95 percent confidence level. ch.org.in

The following result was observed in customer redressal mechanism for microwave oven product of select companies.

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Chi - square Value 58.15

Table Value 15.51

The table value is found to be less than the chi-square values so null hypothesis is rejected, therefore it can be inferred that customer redressal mechanism is not same in select companies.

HYPOTHESIS 3

H0= There is no significant difference in brand preference among the select companies microwave oven product.

HA= There is significant difference in brand preference among the select companies microwave oven product.

To test the above hypothesis the following three parameters concerned to brand image are taken, brand preference and satisfaction, esteem feelings for the brand and product recommendation. the three parameters and three select companies observed data is plotted into a table and chi-square formula is being applied with degree of freedom 4 at 95 percent confidence level.

The following result was observed in brand preference for microwave oven product of select companies.

Chi - square Value 26.27

Table Value 9.49

The table value is found less than the chi-square value so null hypothesis is rejected and alternative hypothesis is accepted, therefore it can be inferred that there is significant difference

in brand preference among the select companies microwave oven product. ch.org.in MAJOR FINDINGS

Approximately 75 percent of LG microwave oven users were glad as they have experienced efficient cooking. In regard to Videocon microwave oven users 50 percent were happy. The users of Videocon 35 percent and Onida 32 percent have experienced poor cooking

quality and they were dissatisfied as the cooking was uneven. In LG the dissatisfaction rate was

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 at 20 percent. Around 62 percent of LG users are happy with cooking menus; where as 52 percent are happy in case of Videocon.

The LG products are good is aesthetics. In case of displeasure the LG users are very low in numbers i.e. 9 percent only, whereas in case of Onida and Videocon it is 19 percent and 18 percent respectively. The LG microwave oven also ranked high for its aesthetics (50 percent). Again the Onida 42 percent and Videocon 32 percent of users have been rated less than LG microwave oven.

The users (39 percent) of LG microwave oven opined that the menu was very simple and user friendly and cooking was effortless. The users of Onida and Videocon felt the operations are not user friendly as compared to users of LG microwave oven. This led for higher dissatisfaction among the Onida (14 percent) & Videocon (15 percent) customers’. In LG hardly 6 percent of customers’ are dissatisfied.

In regard to variety of microwave ovens offered during their purchase showed the following result, 45 percent of LG users confirmed that they are highly satisfied and 25 percent said they are satisfied. Diminishing trend of satisfaction is found for domestic companies, Onida (35 percent) and Videocon (25 percent).

The LG microwave oven users are highly satisfied with the technical service provided by the company. Majority of user’s i.e. around 60 percent showed satisfaction for their prompt technical services and assistance. Microwave oven users of Indian companies are not happy as compared to LG. The dissatisfaction level is high among the domestic company microwave users Onida (15 percent) and Videocon (11 percent).

The customers’ of LG (39 percent) again ranked high their microwave oven for its superior performance. They said the product’s performance is meeting their professed expectations. The satisfaction level came down in case of Onida (35 percent) and lowest satisfaction was found in Videocon (28 percent). This indicates the customers’ of Onida and Videocon are not happy with their products and they are not meeting their perceived expectations.

In case of LG microwave oven users around 44 percent were willing to recommend the brand and another 26 percent also showed interest in recommending the brand to their friends,

colleagues and relatives. In case of Onida around 36 percent showed highest willingness and another 24 percent were willing to recommend the microwave oven brand.

CONCLUSION ch.org.in

Customers’ of select companies were critically interviewed on multiple parameters for customer satisfaction. Each parameter is logically identified and then administered to the customers’ through appropriate questions. More than 300 customers’ are interviewed for this

study. The sample is select from three cities Hubli, Dharwad and Belgaum.

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The overall observation from the study reveals that the users of LG microwave are satisfied at a higher enormity that the domestic firms Videocon and Onida. On many parameters LG was privileged than domestic companies. The study also reveals that the LG firm is highly customer oriented and known for making customer driven innovative and superior quality products. The domestic firms must take initiatives, be proactive and provide good products and conquer higher customer satisfaction.

LG products have proved themselves about their advanced technology, be it television, microwave oven or washing machine and all these have outperformed domestic company products. LG superiority is not only with products, they are equally ahead even in customer services like grievance handling, speedy, effective technical support and service.

BIBLIOGRAPHY

1) Armstrong and Kotler (1999), Principles of Marketing, Prentice Hall India Private Ltd, New Delhi. 2) Anderson R- E, F Joseph and Bas Alan J. (1995), Professional Sales Management by Tata McGraw Hill Publishing Company. International Student Edition, New Delhi. 3) Bose Biplab S (2003), Hand book of Marketing, Himalaya Publication House, New Delhi. 4) Beri G C (1989), Marketing Research, Tata McGraw Hill Publishing Company, New Delhi. 5) Chaston Ian (1999), New Marketing Strategies, Response Books, Sage Publications Private Ltd, New Delhi. 6) Garikaparthi Madhavi (2006), Customer Relationship Management, ICFAI Press, Hyderabad. 7) Guinn O, Allen & Semenik (2009), Advertising Management with Integrated Brand Promotion, Cengage Learning, New Delhi. 8) Graham Roberts and Phelps (2003), Customer Relationship Management, Viva Books

Private Ltd, New Delhi.

9) Kumar Sharad (2001), A text book of Marketing Management, Himalaya Publication

House, New Delhi. ch.org.in 10) Kumar Alok, Sinha Chhabi & Sharma Rakesh (2009), Customer Relationship Management, Biztantra, New Delhi. 11) Kotler Philip (1999) Marketing Management-Analysis, Planning and Control, Prentice Hall India Private Ltd, New Delhi.

12) Lane Kevin, Keller (2004), Strategic Brand Management, Pearson Education, New Delhi. www.zenithresear

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AN INVESTIGATION INTO THE EFFECTIVENESS OF OPEN BOOK EXAMINATION AND TRADITIONAL EXAMINATION METHOD IN SECONDARY SCHOOLS

DR. DIVYA SHARMA*

*Assistant Professor, Department of Education, Ganpat University, Kherva, Mehasana Gujarat, India.

ABSTRACT

Reliability and validity of the examinations are generally considered as the controversial aspect in the whole education system. They are generally considered as responsible for promoting rote learning and providing stress. Open Book Examination has emerged as an innovative option to curb these menaces. An empirical study was carried out to find the effectiveness of the open book examination in the objective questions and the short questions. The study was carried out through randomised two groups post test true experimental design. Examination methods having two levels viz. open book and traditional examination method were taken as the independent variables and achievement was the dependent variable. The study was carried on the sample of sixty seven students. Achievement test was developed as a tool to measure achievement. Hypothesis were tested and analysed. The result of the experimental group was found to be higher then that of the control group. In objective questions the result of the experimental group was higher while both the achievement of both the groups was same in case of short answer questions. The behavioural significance of the study was found to be significant and the behavioural effectiveness was found to be 0.72. Thus open book examination is more effective then traditional examination method.

KEYWORDS: Achievement, behavioural effectiveness, behavioural significance effectiveness, experimental study, open book examination, traditional examination. ______

INTRODUCTION

Examinations are considered as the weakest link of the Education System. There has been an increasing demand for improving the examination system and among the various suggestions open book examination has emerged as a feasible option. It should be remembered that examinations are artificial situations created for the convenience of the system and not the individual learner. They are relied on because more holistic assessment is usually unviable due to cost and manpower constraints. Given their artificiality and time-bound and ‘one shot’ nature, it is not surprising that exams in their current form will induce anxiety. Even so, the recent increases in news reports of students getting seriously affected by pre-board or board examination anxiety and committing injury to themselves or others is disturbing. We see this

stress as a symptom of the malaise afflicting exams rather than the disease itself. www.zenithresearch.org.in

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As suggested above, adoption of more comprehensive and credible system of internal assessment would reduce some of the stress felt during external exams. The choice the student would have of taking two or three of his more anxiety-inducing subjects at the easier standard level, and at a time of his convenience, would also help. In addition, we recommend the following measures for reducing exam anxiety and its often-morbid consequences…..A shift in emphasis to testing competencies and away from memory would certainly reduce stress, in addition to aiding the validity of exams. A long-term move toward open-book exams can be envisaged and is one of the pilot programs mentioned at the end of this report. Meanwhile, candidates doing Chemistry paper should be given the periodic table and bond angle values; examinees in Math and Physics should be given some trigonometric identities and other formulae which otherwise have to be learnt by rote. The focus of questions should, likewise, move to genuine applications from mere ‘plug-in’-type problems. In history, questions which test whether students know where each of the Indian National Congresses met (pure rote) be replaced with questions on the significance of key Congress sessions. Questions such as Mention eight causes of the events of 1857 (4 marks) set panic bells ringing (with the student worried that she cannot remember more than five, and then bungling even these in her anxiety) and should be replaced with questions eliciting open- ended data response and analysis. For instance, in this case, three key paragraphs from the 1857 Azamgarh Proclamation could be provided and students asked an open-ended question: ‘Based on this extract and your own knowledge, discuss whether the events of 1857 can best be described as the Great Revolt, the First War of Indian independence, or the Sepoy Mutiny.’ This would not only be more humane and less stress-inducing, it would also call upon students to organize their thoughts into an argument and demonstrate higher-order interpretive skills. (Position Paper on National Focus Group on Examination Reforms, NCERT, 2006).

With this background an experimental study was carried out to find the effectiveness of the examination systems.

STATEMENT OF THE PROBLEM

The problem in hand studied the effectiveness of the open book examination in comparison to that of traditional examination for the secondary school students in two units of Sanskrit subject. Examination method having two variables viz. open book and traditional examination method was taken as the independent variable and achievement was the dependent variable.

OVERVIEW OF THE LITERATURE

Lots of researches have been done trying to assess the need and aim of Open Book Examination. This is going to be a challenge for lecturers. It is not easy to set open-book examinations—you can’t just ask simple questions which require bits of knowledge (Pin, 2000) reflects the necessity of transformation in the education system.

A suitably constructed set of questions could be used to discriminate student abilities in either an open or closed book environment (Brightwell & et all) provides the need of rethinking in the matter of establishing the effectiveness of OBE. The behavior of the students can change

dramatically and it was found that the students preparing for a closed book examination tend to www.zenithresearch.org.in

postpone their study at the end of the semester, focus on the assigned texts and memorize

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 information (Christos & Mary). Students preparing for an open-book examination tend to consult various sources and inter relate the information acquired; when taking the exam, they work creatively while, at the same time, they probe deeply into the knowledge gained. This work can be an eye opener for those who argue in favor of OBE for the sole reason of de -stressing the examinations.

Learning outcomes are found to be improved in the whole class, with no failures and an improvement in performance when the assessment task was an open book test with a choice of questions based on situations from real life The divergent nature of the questions meant that each student constructed a unique, personal view of the problem. Thus here the capacity of the examiner as a framer of question has been argued (Taylor R.)

Before discussing some of the arguments that might prompt at least a trial of the open book examination, we should note that the term encompasses a range of styles. This range encompasses degrees of openness. At the low end is the format where a "cheat sheet" (Dorsel & Cundiff. 1979) is allowed into the examination. Such a sheet contains a limited number of concepts, code words, dates, or formulae, and serves primarily as a memory aid. A little further along the continuum is the format that allows a page or two of notes in the exam room. At this stage the material allowed are merely memory aids, and it is likely that the nature of the questions asked will not differ from that where no aids at all are permitted.

What students learn in a course would ultimately be determined by the goals implicit in the system of assessment. We are at liberty to set these target "hoops" where we want them: rote memorization, exposition of knowledge content, mechanical application, critical thinking or creative thinking, at easy, medium or difficult levels. Our students are intelligent and efficient: they will jump through whatever hoops we set (Walter Woon)

If we try to asses the possible methods of evaluation in the closed book exams then we generally tend to see the previous years paper to start with. These action points tend to reveal the major loop hole in the system which just tends to measure the memory on certain sets of recycled questions. Implementation phase without an adequate research in pre pilot and pilot phase and fundamental changes in the traditional system may prove detrimental and will result in further dilution of the quality. The researches carried out have discussed the content for the exam to the conduct of the exam. Students can be allowed to take a variety of material ranging from a single page note to any or every reference material available the whole system will need to be

transformed radically right from the teaching learning environment to the teaching learning material, the examination system to the assessment system.

Most of the researchers agree upon the changes needed in the teaching right from designing of new books to teaching by relating with real life situations and the examination system. Open Book Examination has emerged as the mean of de stressing the examination system. But researches point out that there are chances that a new form of memory will develop wherein they will tend to recall the names of the books instead of page numbers a simple example being the phone and the computer memory. So the major purpose of Open book examination of distressing

the students stands a failure. Besides this, when the student come in the stressed professional www.zenithresearch.org.in

environment, they would need to exhibit their expertise instantly without referring in any book.

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More importantly different subjects tend to develop a different set of skills and the assessment for the same tends to measure the objective for that particular purpose. There is a need to review the present system. Open Book Exam can be taken in few subjects where the understanding of the concept is required. Subjects which need to memorize the concept and tend to develop skill needed to be assessed through traditional method.

Is there any reason to think that an open book exam format would serve most university courses better than the more traditional and common styles? Although various forms of open book exams have been around for decades, the research on this issue is still very thin and scattered. Thus, a lot of research has to pour in before the system can actually work with perfection only to realize that no system can be for ever perfect.

The review of the related literature reveals a need for experimenting on the open book examination. There exists a wide gap for the experimental studies at the secondary level. Sanskrit is a scoring subject where rote learning is often promoted. If an understanding of the subject is promoted by changing the methodology of evaluation then a positive step could be taken towards the preserving this ancient language.

CONCEPTUAL FRAMEWORK

The terms used in the study have to be made clear. This section defines the theoretical as well as the operational definitions of the terms to be used in the study.

THEORETICAL DEFINITION OF OPEN BOOK EXAMINATION

Open Book exams allow you to take notes, texts or resource materials into an exam situation. Open Book exams test your ability to find and apply information and knowledge. They are often used in subjects requiring direct reference to written materials, like law statutes, statistics or acts of parliament.

OPERATIONAL DEFINITION OF OPEN BOOK EXAMINATION

The examination given by the students under the supervision of teachers in a definite time period by allowing opening and writing from their school textbooks were operationalised as the open book examination.

THEORETICAL DEFINITION OF TRADITIONAL EXAMINATION

Traditional examination is taken in a fixed time period under the supervision of the teacher and does not allow any written material at the place of examination.

OPERATIONAL EXAMINATION OF TRADITIONAL EXAMINATION

The examination given by the students in a fixed time period under the supervision of the

teachers without the use of their textbooks were operationalised as the traditional examination.

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OBJECTIVES OF THE RESEARCH STUDY

1. To develop a teaching program for a unit of Sanskrit subject for the students of standard ninth.

2. To frame a post test on the selected unit for the selected class.

3. To compare the result of the objective question obtained by the students in the open book and traditional examination method.

4. To compare the result of the short question obtained by the students in the open book and traditional examination method.

5. To find the more effective examination method on the basis of the achievement in the post test.

6. To find the behavioral significance and behavioral effectiveness of the research study.

IMPORTANCE OF THE STUDY

The importance of the study was based on the fact that it was able to ascertain the more effective examination method. It also established the effectiveness of the study in reference to the type of questions.

HYPOTHESIS OF THE RESEARCH STUDY

Ho1 There shall be no significant difference in the pre test scores of experimental and the control group.

Ho2 There shall be no significant difference in the post test scores of experimental and the control group.

Ho3 There shall be no significant difference in the post test scores of objective questions of experimental and the control group.

Ho4 There shall be no significant difference in the post test scores of short questions of

experimental and the control group.

RESEARCH QUESTION OF THE RESEARCH STUDY

Q1 What shall be the behavioral significance and behavioral effectiveness of the research study?

VARIABLES OF THE OF THE RESEARCH STUDY

The study was carried out by selecting examination Method having two levels viz. open book

examination and traditional examination method as the independent variable and educational www.zenithresearch.org.in

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TABLE 1: VARIABLES INVOLVED IN THE RESEARCH STUDY

S.No. Variable Levels Measurement Tool

1. Independent Variable Open Book Examination -

Traditional Examination

2. Dependent Variable Achievement Achievement Test

3. Controlled Variable Class, Subject,Unit.

AREA AND TYPE OF THE RESEARCH STUDY

The study in hand evaluated the effectiveness of two methods of measuring and evaluating students therefore the study belonged to the area of Measurement and Evaluation.

Since the results of the study can be applied in practice so it was a behavioral Research.

RESEARCH METHODOLOGY OF THE RESEARCH STUDY

The aim of the research was to study the effectiveness of two examination method and to ascertain the more effective examination method therefore the study in hand was undertaken by the experimental method. Two groups randomized subjects post test design was selected out of the true experimental research designs.

UNIVERSE AND SAMPLE OF THE RESEARCH STUDY

The universe of the study comprised of the secondary school students of North Gujarat. From the universe one district viz. Panchmahal was randomly selected. From eleven Talukas of Panchmahal district one one taluka viz Lunavada was randomly selected. From the secondary

schools of Lunvada one school viz. Bright Secondary and Higher Secondary School was randomly selected. Ninety six students comprising of thirty four boys and thirty three girls and belonging to two sections of standard nine of this school were selected as the sample by paired sampling technique. Thus the sample was selected by stratified random sampling technique.

DEVELOPMENT AND ADMINISTRATION OF THE TEACHING PROGRAM OF THE RESEARCH STUDY

A teaching program for teaching two units of Sanskrit subject were developed as per the steps of

lesson planning for traditional method. The program was distributed in seven teaching periods. www.zenithresearch.org.in

On the first day of the program two homogenous groups to form experimental and the control

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 group were formed. From the second till sixth day the students of both the groups were taught. Two periods were taken daily one in the experimental and one in the control group. On the eighth day achievement test was administered and scores of the student were obtained.

DEVELOPMENT OF THE POST TEST OF THE RESEARCH STUDY

A post test was developed for collecting the scores of the students. The post test comprised of two sections. Section A had objective questions. Section B had short questions. Each section was scored separately. The post test was prepared on the basis of the blue print keeping in mind the objectives, type of questions and marks.

DATA COLLECTION AND ANALYSIS

The data will be collected by first forming two homogenous groups on the basis of the marks obtained in the first test. Both the groups were taught by the same teaching program developed specifically for the study. At the end of the teaching program post test was administered. In the experimental group the students were allowed to keep and refer their school textbook. In the controlled group no text book were allowed and the students were supposed to write the examination on their own. The post test was checked and the marks obtained were statistically analyzed by t test.

TESTING OF THE HYPOTHESIS

Ho1 There shall be no significant difference in the pre test scores of experimental and the control group

TABLE2

T VALUE OF THE SCORES OBTAINED IN THE FIRST TEST OF EXPERIMENTAL AND THE CONTROL GROUP

Group N M SD SED t value significance

1 34 29.79 9.55 2.22 0.461 N.S.

2 33 30.81 8.64

The t value obtained in Table 2 indicates that it is less then 1.96 so it is not significant at the 0.05 level. Thus it could be said that both the groups are homogenous.

Ho2 There shall be no significant difference in the post test scores of experimental and the

control group

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TABLE 3

T VALUE OF THE SCORES OBTAINED IN THE POST TEST OF EXPERIMENTAL AND THE CONTROL GROUP

Group N M SD SED t value significance

1 34 21.97 3.88 0.99 2.98 S.

2 33 19.03 4.09

The t value obtained in Table 3 indicates that it is more then 1.96 so it is significant at the 0.05 level and the hypothesis is not accepted. Thus it could be said that there is a significant difference between the scores obtained in the post test of experimental and the control group. Further the achievement of the experimental group is more then that of the controlled group so it can be said that open book examination is more effective.

Ho3 There shall be no significant difference in the post test scores of objective questions of experimental and the control group

TABLE 4

T VALUE OF THE SCORES OBTAINED IN THE POST TEST SCORES OF OBJECTIVE QUESTIONS OF EXPERIMENTAL AND THE CONTROL GROUP

Group N M SD SED t value significance

1 34 16.91 2.34 0.62 4.94 S.

2 33 10.85 2.72

The t value obtained in Table 4 indicates that it is more then 1.96 so it is significant at the 0.05

level and the hypothesis is not accepted. Thus it could be said that there is a significant difference between the scores obtained in the post test scores of objective questions of experimental and the control group. Further the achievement of the experimental group is more then that of the controlled group so it can be said that open book examination is more effective.

Ho4 There shall be no significant difference in the post test scores of short questions of

experimental and the control group

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TABLE 5

T VALUE OF THE SCORES OBTAINED IN THE POST TEST SCORES OF SHORT QUESTIONS OF EXPERIMENTAL AND THE CONTROL GROUP

Group N M SD SED t value significance

1 34 8.21 2.91 0.64 0.47 N.S.

2 33 8.18 2.26

The t value obtained in Table 5 indicates that it is less then 1.96 so it is not significant at the 0.05 level and the hypothesis is not rejected. Thus it could be said that there is no significant difference between the scores obtained in the post test scores of short questions of experimental and the control group. Further the achievement of the experimental group is equal to that of the controlled group so it can be said that open book examination and traditional examination are equally effective in case of short questions.

BEHAVIORAL EFFECTIVENESS AND SIGNIFICANCE OF THE EXPERIMENT

Behavioral significance (Heldoy & Thomas, 1979) was calculated on the basis of the following equation:

Mean of Experimental Groups – Mean of Control Group ≥ 1/3 standard deviation of the control group [1]

(921.97-19.03) ≥ 1/3 4.09

2.94 ≥ 1.36

The standard deviation of the control group was 1.36 which was less then the one third of the difference of the mean of experimental and the control group which was found to be 2.94. Thus it could be said that the obtained result is not only statistically effective but also behaviorally effective.

Behavioral Effectiveness was calculated by Borg & Gole, 1983 formula.

Effectiveness = Mean of Experimental Groups – Mean of Control Group [2]

Standard Deviation of Control Group

= 21.97 – 19.03 = 2.94

4.09 4.09

= 0.72

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Thus the effectiveness obtained is 0.72 that is equal to 1 therefore it can be said that open book examination was found to be effective on the experimental group and this effectiveness was in the direction of experimental group.

CONCLUSIONS

1. The achievement of the students was found to be higher with the open book examination in the post test.

2. The achievement the students in the objective question was found to be higher with the open book examination in the post test.

3. The achievement the students in the short question were found to be equal in open book examination and traditional examination in the post test.

4. Open book examination was found to be behaviorally effective and significant.

IMPLICATION OF THE STUDY

Study reveals that open book examination is an effective method therefore the results of this study can prove useful in adopting measures for reforming the examination. Moreover it has also been proved that the examination is more effective for objective type of questions therefore policy measures could be adopted where a place for both the type of examination could be assured. Thus the implication of the study lies in effectiveness which helps in increasing the achievement of the students. The results of the students can be significantly increased if the open book examination is adopted in the schools. It will help in reducing the stress of the students and ill discourage rote learning.

REFERENCES

Acharya M, 2009, Methodology of Research in Education, Akshar Publication, Ahmedabad.

Class 9, Sanskrit Text Book, Gujarat State Text Book Association, Gandhinagar.

Gupta A.K., Education Reforms: Direction, Research and implications, Sterling

Publishers,1975.

Patel R.S., Fundamantal Concepts of Research, Jay Publication, Ahmedabad.

Uttchat D.A., 2009, Methodology of Research in Education and Social Science, Saurashtra University, Rajkot.

http://www.bioscience.heacademy.ac.uk/journal/vol3/Beej-3-3.pdf

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http://www.ncert.nic.in/new_ncert/ncert/rightside/links/pdf/focus_group/examination_ref orms.pdf

http://www.expressindia.com/latest-news/open-book-exam-format-put-on-hold/359979/

http://www.indianexpress.com/news/indias-first-gujarat-to-go-for-open-book/359141/

http://www.eric.ed.gov/ERICWebPortal/search/detailmini.jsp?_nfpb=true&_&ERICExtS earch_SearchValue_0=EJ625804&ERICExtSearch_SearchType_0=no&accno=EJ62580 4

http://www.enhancementthemes.ac.uk/documents/integrativeassessment/ia%20blending %20assignments.pdf

http://www.docstoc.com/docs/18734221/open-book-examinations-not-an-open-and-shut- case-but-worth

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RESTRUCTURING MANAGEMENT EDUCATION TODAY, FOR BETTER TOMORROW

NEELAM SHEOLIHA*; SUDEEP KUMAR**

**Assistant Professor in Marketing, Accurate Institute of Management and Technology, KP-3 Greater Noida, Delhi NCR, India **Sales Manager, Tanishi Enterprises, Noida.

ABSTRACT

Intense Global competition has catapulted Management Education into playing a pivotal role in the success of Business and Corporations. Given the fact, that the changing face of Global Business has created a greater need for Management Executives to deal with rapidly changing equations of trade and commerce. Management Education is available to all & sundry through Management Institutions ,with all of them churning out Graduates at an amazing rate . But the bigger question is how far & which Institutes are training the students to implement their academic knowledge to find practical solutions to real life situations -A Big Gap!!!!!!!! ______

INTRODUCTION

A GAP between the Management Education provided by the Institutes & the actual expectation from the Corporate can be bridged. Management Education has become big business across the world today .Global Management Education market is estimated to be around USD 22 billion. This gives an overview of the changing scenario of the Management Education. Management Education has become a Business and almost all the Marketing strategies are being applied .Branding has made inroads into Management Education. A major change which can be observed today is that the learning these days is student centric. They are treated as Customers.

Management education has to be a combination of knowledge, Inspiration and Ethical Strength to every Individual, which would enable him or her to lead a proper professional and cultural life in Society. But Today, it has been noticed that our Management Education has been successful in producing Graduates and Post Graduates in quantity rather than in Quality. Quality of knowledge is hardly taken care of in many Business Schools and Management Institutions.

1. CURRENT MARKET SCENARIO

Management Education is a huge Industry across the World(USD 22 Billion) as mentioned earlier & is rapidly growing at a pace of 10-12% p.a. The biggest market for Management Education lies in America with around 900 Universities offering courses related to it. Now, with

the increase in Competition, the reputed Schools are now globalizing and branding their

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Products(Courses), Whereas the Product values of these B-Schools has remained relatively unchanged over the past 50 years .

After the introduction of Ranking System of B-Schools by Media in 1998,the Business Schools appeared to be more proactive in making changes, although they focused primarily on the Ranking, Interface, New Learning Methodology and focus on the Marketing Strategy as a result the popularity of the Management Education rose. Global presence, Emergence of the Internet based Learning, changed the Product offerings in Management Education .The trend of the evolution of the Management Education indicate that knowledge creation is becoming a crux for students. This will usher in a variety of changes including, an emerging trend towards closer interaction among Corporate, Students and Faculty..E-Learning & Audio Visual techniques are making inroads slowly. A recent study has revealed that although, the creation of knowledge is an important mission for B-Schools, Corporate are also developing more formal Training programs and creating knowledge .This may cause a shift in strategy as B-Schools become more focused on gathering and sharing Knowledge .It’s important to recognize that knowledge creation is being welcomed both by the Bestower as well as the Receipient.It is therefore clear that Management Education would emerge as one of the main focus for higher learning, as Service Industry takes precedence over other segments .

If we take an approximate look at the number of applicants for MBA admissions ,it is over half a million students who write the various National admission tests to get into B-Schools. More than 50% of them are Engineering graduates. The maximum aspire to get into the Indian Institutes of Management (IIMs). The six IIM’s in the country together, have a limited number of seats, but they attract maximum number of applications which are five to six times more against the number of seats available. Look at the great mad rush!!!!!!!!(SIGNIFICANCE- Quality Management Education is gaining Popularity day by day)

Getting admission into an IIM is like being “Born with a silver spoon in mouth” – Everything then falls in place, including a DREAM JOB at the end of the program .Corporates almost queue up for recruitment at these Institutions. This wouldl be true for at least 100 other B- Schools. In a slightly lesser magnitude, it holds true with B-Schools in the 2nd rung too. For the others, the placement performance could range from very good to poor. But all of them get sufficient placements over a period of time. But the time frame depends upon the quality of the Business Schools.

Knowledge creation & Sharing will change the face of the Management Education further. With the sustained emphasis on it, one can say that B-Schools ,if they have to survive ,then , they would have to focus on Research to solve problems enduring practical importance and to build such curriculum that can actually prepare students to be effective in practising the profession.

2. ISSUES AND CHALLENGES

Management Education should not only meet the needs of the students but also it should match the expectations of the Corporate world.. To fulfill the same the B-Schools should focus on

Educational programs as well as the holistic development of the students. One of the biggest www.zenithresearch.org.in

challenges is , how to develop ethical behavior, human values and international understanding of

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Management concepts without prejudice. The other challenging issues and the factors responsible for the quality of the Management Education system in today’s competitive environment are as follows:

1. Quality of the institutes engaged in imparting management education

2. Availability and retention of the qualified teaching staff

3. Innovation and creativity to Enhance the program

4. Ratio of students per Teacher.

5. Fluctuation in students admissions.

In addition to the above mentioned issues there are other related issues

Firstly, as appointment of teaching and non teaching staff in many institutions is made at the lowest possible cost, the faculty members tend to detest from creativity in teaching & not making the students abreast with the latest trends .Hence, the quality of the students remains undernourished , which in turn results in poor placements. In ONE MAN SHOW business, the salary packages for the faculty are being manipulated so as to make them appear attractive even if they are not actually so in real terms. Imparting Education is a noble job but unfortunately some B-Schools have made Management education a channel for earning huge profits, Also, the qualification of Management Education that it provides a lucrative job, is being encashed by various B-schools as a goldmine for themselves..WHAT A CHANGE IN IDEOLOGY- MINTING MONEY OR IMPARTING QUALITY EDUCATION.

Secondly, If we consider the Industry Institute interface & if the Product(Management Graduate) does not meet the requirement of the Customer(Corporate) ,the purpose is defeated. Even if there are thousands of the management graduates who graduate from various B-schools , many of them could not meet the requirements of the industry. Most of them have to be re-trained by the companies which induct them, thus leading to wastage of time and resources and above all giving negative impressions to the employers. There is a dearth of students today who may possess the knowledge of concepts but are unable to implement the theories to real life situations of demand forecasting, market dynamics,

human resources, competitive and strategic approaches, negotiations etc. The requirement

here is to focus more on the practice oriented methods.

Thirdly, Is the system of testing student’s caliber , the cotemporary system of examination which involves a lot of subjective answers. This emphasizes more on testing of memory rather than knowledge. The current system focuses more on conceptual and theoretical knowledge .The concern here is that management students become good at cramming but do not develop an understanding of the subjects. Hence, there should be more focus on getting sufficient number of case studies to be solved to let the students get more insight into

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Last but not the least the issue to be focused on , is the problem related to B-school administration .Many of the so called Management institutes lack Management in terms of governing bodies or Board of Directors .Generally, it is a ONE MAN SHOW in them .Orientation towards providing SERVICE is highly lacking in the objectives of B-schools these days. The name and fame obtained by them is being used by them for their further or future expansions of their businesses.

There are other factors also which are responsible for the performance of the Management education today which cannot be ignored or neglected. The most important among them are the skills which the students are tested for while their Admission for the course. They are enumerated below:

FIG;1

S Creativity

K General Awareness I Communication L

Soft skills L Problem Solving S Solving SSSSSSolving Technicalskillssolving

3. EXCELLENCE IN BUSINESS EDUCATION OF INDIA

Management education in India holds a great diversity and it may not be possible or meaningful to consider all types of institutions in terms of excellence. Till date the top business schools have been looked upon as idol for the other Institutes and however B-Grade Institutes are motivated towards building up of their own local Pioneering positioning or slot.

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For the recognition of the best management Institute one require a lot many parameters . None of the college or business school has complete benefits in all the spheres. hence it become necessary to support the development of relational benefits of each business schools by looking up at their Entrepreneurial ship skills.

The quality of students entering B-schools is very important to consider. Currently, getting accepted into a well regarded B-school is seen as very attractive career. IIMs have been ranked at the top in several surveys of b-schools in Asia-Pacific region, and admission to any IIM is seen by most as a passport to a fast track career at the national and international levels.

A number of the management Aspiring candidate took a common Admission test. Out of which only few get success near about 1/10 thus the entrance standards are very high for all the IIM’s and have been identified as a Numero Uno for their selection process.

In 2008-2009 there were over 102000 students studying for Masters in Business Administration or its equivalent in India. Of 450000 Indian students abroad, over 20% went for Management courses. Many among the best and brightest Indian students want to pursue Management from best B-schools as , it provides one of the best launching pads for a high triggered career. Many of the B –schools do not have well trained faculty which is also not encouraged in terms of research work or publication. Many schools are being founded by Influential people or their accomplices and are run to make substantial surplus for the promoters. Most of them have very few resources. As a result of which the quality of Education is deteriorating and such B-schools are unable to meet the requirements of the corporate world and hence the ratio or % of the well Placed management graduate has diminished. Now , here the GAP arises between the two the Business Schools and the Corporate This inefficiency of the Business Schools have built a Gap between the two. The question is what do the corporate look for in a Management graduate and what do the Business schools offer ------A BIG

Gap!

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6. CORPORATE REQUIREMENTS- WHAT CORPORATES LOOK FOR?

FIG ;2

Adoption to micro- Functional knowledge of macro environment In-depth Knowledge of Business environment the management functions

Corporate

Requirements Conceptual application to Self Confidence the real world. Real world

Drive to succeed

Management skills

Interpersonal skills

Institutes of higher education, through their curriculum, are expected to provide knowledge, know-how, wisdom, and character to the students. “Knowledge” enables them to understand what they learn in relation to what they already know, and creates an ability to generalize from their experiences. “Know-how” takes them beyond merely understanding and enables them to put their knowledge to work. “. However, some of the educational institutions hardly pay any attention to the development of students and their ability to apply their knowledge to the real world. The nature of technology has changed and so has the nature of learning, but these

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college is different from the real life situations. They miss in inculcating the ability to apply conceptual knowledge to the real world. They come as graduates , leave the college with a degree of Management, but does their mind get developed so that they can become future business leaders who meet the requirements of the Industry??????????.

7. A GAP BETWEEN ACTUAL AND EXPECTED MANAGEMENT GRADUATES

FIG 4

MG Actual today Expected by the corporate

Functional knowledge of Incomplete conceptual Skills S Business environment

K Adoption to micro- Lack of Business awareness macro environment

I In-depth Knowledge of Conceptual skills L the management functions Conceptual Application L Application to real world to the real world. rerEareaworld S Drive to succeed Technical skills

Self Confidence

GAP

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The gap arising today has to be filled to make the Management Education better for a Better tomorrow.

REASON FOR GAP

The Gap arising Today in a Management Education or which has arise, the question goes here as to how and why the gap arise? Why the Management graduates or Management Education is unable to meet the requirements of the corporate. ? This gap is very much wide and compromises many factors responsible for it. A few of them has been listed so as to give an idea. If we look at the same closely students alone cannot be set responsible, the responsibility goes to the complete system socially with everybody involved in it. Parents, Government, and our Education system .Education system is not taken care off from the very beginning form their first step to schools, Education is not focused rather its scattered its conceptual since begning , A sense of responsibility is not been inculcated among the students from their parents and at last there are many flaws in our education system which need to be taken care off.

8. FILLING THE GAP!

Management Education has failed to meet the vast business needs for Managers in Indian business organizations. It was grafted at the post graduate program with no underpinning of related and relevant undergraduate work. It has inculcated a culture of greed among bright young people. The monitoring of these schools is inadequate at their own level or by the Government .The faculty is either in short supply or poorly integrated into management education. The number of the MBA’s churned out is unable to meet the needs of the current and potential users. The question here arises is how to change the situation? To answer this if we focus on the below mentioned point we will somehow or to a major extent will be in a better position to reconstruct the management education better for a better tomorrow.

1. The content of the teaching should get changed and so must the evaluation of business schools by the media employers, students and the various firms.

2. Management is an applied subject rather than a conceptual one , this image should be changed . Students should be given an exposure , so as to simulate the reality by giving the case methods in class and examinations.

3. Admission standards criterion for the management graduates need to change . As IIMs

carry high reputation because of their high admission standards that ensure only bright and best students to join. Its not everybody’s cup of tea. There should not be any bias towards quantitative testing but should emphasize on nurturing skills .Also institutional governance must ensure objectivity in selection.

4. Integrating Post management program with that of the under graduate ones. It should take them through related topics and subjects that feed into subsequent post graduate diploma

or degree in management.

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5. Focus on the development of the Faculties and on integrating the different disciplines they come from , so that they all have a common focus. Various motivating techniques can also be used.

6. Faculties should be given facilities for case development , research and publication to enhance their skills to impart their knowledge better.

7. Governing body for the management Education (AICTE) should come up or improve their norms so as that the Business schools are forced to maintain the transparency regarding the faculty strength, their qualification ,research publications and infrastructure details which could include library, computer access to online journals etc.

8. Business schools must respond to self regulation according to the corporate governance rules prescribed for listed companies by the securities &exchange board of India .

9. If followed , the report of VK Rao committee on commerce education (1961) focus on Management education as the apex of the Pyramid in which the base consists of diploma and degree in commerce .BCOM starting as lower level executives or sales officers and MBA,s as managers at the entry level. If this structure is followed , we would be able to reduce the mad rush for management graduates for all types of Jobs.

10. Last but not the least , to give management education a quality that has to be taken care off right from the scratch, that the students selected for the course should carry an aim & a fire in the belly rather than just coming for a degree to enhance their Bio data.

9. CONCLUSION

Management education in India has taken a global face in a highly competitive market. Globalization of business has forced the B-schools to develop the executives with the global orientation. We need to recognize that in 21st century knowledge is going to be key driver and we need to prepare to respond to the global competitive landscape.

10. REFERENCES

1. Timesascent.inarticle-The-nature-of-learning-has-changed-but-our’s-education.

2. WWW.google.com

3. Indian management –AIMA Journal-school report card- October 2009,

4. Prof. Varun arya, Director Aravali Institute of management, Jodhpur: - "Sustaining Quality in Management Education" article appeared in IndianMBA.com.

5. Redefining Business education- Business Daily from THE HINDU group of

publications Monday, Nov 08, 2010 e Paper

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6. . Reported opinions expressed by academicians at the Roundtable discussion that appeared on BUSINESS WEEK Online,

7. Prof. Krishna Chaitanya.V, Dhruv College of Management, Kachiguda, Hyderabad:- "Critical Issues of Indian Management Education" article appeared in IndianMBA.com.

8. Article;- Implementing quality in higher education-Dean academics Lal Bhadur shastri Institute of management education.

9. Concept of Business school management education. Preapared by Dr A. Charavarthy.

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AN APPROACH TO PROJECT MANAGEMENT— A BUSINESS NEED OF TODAY

PROF. MRS. NANDINI M. DESHPANDE*

*H.O.D, Department of Commerce, Sinhgad College of Arts & Commerce, Narhe, Pune.

ABSTRACT

“We live in a world where change and the rate of change is constantly increasing. In order to service and prosper , organizations need to continually modify their products, and services. Projects are the means by which these innovations are effected. Thus Greater Change = More Innovations = More Projects.”

By Eric Verzah

In the beginning, the word Project was associated primarily with engineering, in particular with developments at the forefront of technology. The next place it cropped up was in Information Technology where software programming required sophisticated project methodology. Today, though, a project mentally is essential in our topsy turvey world of the millennium. The organizations that will remain healthy are the ones that have an effective & widely understood approach to managing projects as a way of implementing change. There is a close connection between a given project and change, and the embarking on a project with a group of employees in the organization without clarifying their roles is like rounding up thugs from the street and call them security guards who will look after diamonds at night. This may sound far-fetched, but in reality all that is being said is that without a roadmap of who does what, why, when, and towards what end chances of failure are predictable.

Thus Project Management is very vital for it is the discipline of planning, organizing, securing and managing resources to bring about the successful completion of specific goals and objectives. It also includes managing the implementation of the project plan, along with operating regular „controls‟ to ensure that there is accurate objective information on performance

relative to the plan, and the mechanisms, to implement recovery actions where necessary.

KEYWORDS: Change, Project, Project Management, Information Technology. ______

INTRODUCTION

Project management is not a new management fad; it is a professional practice that has reached wide acceptance in many industries from government to technology. Organizations that have adopted project management as a key competency have benefited from improved project www.zenithresearch.org.in

outcomes to significant competitive advantage. Unfortunately there is very little material on

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 project management written exclusively for the development and humanitarian assistance sector. Most of the information available to development organizations focus on the funding and monitoring and evaluation process; but there is little information about all the management competencies, methodologies and practices required to manage a project from beginning to end. Development organizations are facing increasing demands to do more with less, from becoming catalysts of change in the communities they serve to deliver the project on time, under budget and in the quality not only expected but demanded by donors and beneficiaries. To face these challenges development and humanitarian assistance organizations are in urgent need of the tools, practices methodologies that a well established project management methodology can provide, one that has been quite successful in other industries. Donors are requiring better controls and more professional managerial competences in the staff responsible for managing projects, it will not be a surprise that in the near future this competence is not only required but demanded.

The importance of project management has become more and more significant today especially in today's market situation. The current economy and downturn as well as highly competitive market have made our market changed totally. For example, if you look at the mobile phone market comparing the market 10 years ago with today, how many different models that you have 10 years ago comparing to now? How many colors did we have 10 years ago comparing to now? Of course, the answer is that we have only one or a few color and a few models to so many different models today that we lose count of them. Thus, it shows that we have moved from a low mix market environment to a high mix environment. When I mention mix is means mixture of models or products.

When we are in a high mix market, it means that we have to introduce more and more products to be competitive. If we need to introduce more products, it means that we need to have more research and development or more innovation to develop and design new products or models for the market. And, all these innovations require project teams. Therefore, you can see that importance of project management has become more critical to the business.

. Project management is the discipline of planning, organizing and managing resources to bring about the successful completion of specific project goals and objectives . A project is a temporary endeavor, having a defined beginning and end (usually constrained by date, but can be by funding or deliverables), undertaken to meet particular goals and objectives, usually to bring

about beneficial change or added value. The temporary nature of projects stands in contrast to business as usual (or operations), which are repetitive, permanent or semi-permanent functional work to produce products or services. In practice, the management of these two systems is often found to be quite different, and as such requires the development of distinct technical skills and the adoption of separate management.

With today's highly competitive market, the life cycle of a product is also getting shorter and shorter. It sometimes or more often now is so short that it is considered a project by itself. Some product complete life cycle is so short that it may only be a few months. In this type of

environment, managing the whole product life cycle from product development to launching to www.zenithresearch.org.in

end of life is just like managing a project because the time frame involved is so short. Therefore,

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 now we can feel the importance of project management especially to the managers, supervisors and engineers in operations. If we would like to excel in the market, we must equip our personnel with the right project management skills and also aware the importance of project management in their work.

REVIEW LITERATURE

The study conducted by Patrick Hofmeister; Matthias Kadner; [2011] on Performance Impacts through Intelligent Transport Systems : An Assessment of how to Measure and Evaluate assesses how to measure and evaluate performance impacts of Intelligent Transport Systems (ITS) in the transport chain. The importance of transportation in global trade has increased significantly in the last decades. Cost pressure, rising customer demand for sophisticated logistics services, sustainability and security as well as safety issues have boosted the need for more efficient, effective and differentiated transport operations. Intelligent Transport Systems were found to have the potential to address these challenges in the transport chain. However, due to the novelty of the technology both ITS developers and users face huge uncertainty about the performance impacts of ITS. Evaluating ITS in the transport chain before the rollout based on concrete measures is likely to reduce the uncertainty involved in ITS developments and enhance the adoption rate of the new technology. The increasing number of ITS projects, like the Secure Interposal Transport Systems at Volvo Technology, create a need for a structured approach to measure and evaluate ITS.A literature review concerning the characteristics of the transport industry, technology adoption, ITS and performance measurements served as a basis for the empirical studying which 8 semi-structured interviews with different stakeholders in the transport industry were conducted in order to find out how the performance impacts of ITS are perceived in the industry and how they could possibly be assessed. The focus group method was used to validate and apply the findings from the interview study to a GeofencingITS-service.The study has confirmed that the concept of ITS is still an emerging phenomenon in the transportation industry. There is no common understanding of ITS among researchers and practitioners in the transport industry and still a lack of knowledge regarding the performance impacts of ITS. Even though it could be found that ITS leverages mainly the service level that can be offered to the customer and that they increase the efficiency in the back office, the great variety of ITS-services calls for an individual assessment. Structuring the assessment into the phases of measurement design, implementation and use of the measures facilitates this process. For the different phases a set of activities critical for a successful assessment of ITS have been identified. Despite its usefulness for mitigating the uncertainty related to the new technology, the focus group validation uncovered that a comprehensive measurement for ITS is not appropriate from the outset, but should be assessed based on the cost of the measurement, the ITS project priority, the customer relations as well as the hierarchical structure in the provider firm.

This study reviews the Critical Chain approach to project management as proposed by Dr Eliyahu Goldratt (1997). The approach is based on the Theory of Constraints (TOC).It found out that Conventional techniques (Critical Path Method, PERT) often fall short of delivering projects on time and within budget. The Critical Chain approach has stated advantages over the conventional approaches: Safety time is eliminated and replaced with project buffers. The

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„feeding buffers‟. Total duration does not change as the project proceeds. Total project duration is reduced. The Approach has been criticized on the following basis: Not a revolutionary approach. Lack of clarity with regard to managing multiple-projects. Constraint may be in management capacity and not within project plans. o Lack of empirical evidence of success.

OBJECTIVES OF THE STUDY

1. To identify the motives involved in project management in an organization.

2. To find out the factors affecting the objectives of project management.

METHODOLOGY OF THE STUDY

This paper is totally based on secondary data‟s such as

Reference books,

Research articles,

Published thesis.

Websites

IMPORTANCE OF PROJECT MANAGEMENT

Project management has emerged as a crucial factor that determines the success of an organization. Whether it is a question of facing an economic crisis or generating large turnover, project management plays a pivotal role in the growth of a firm.

Since time immemorial, man has incorporated the idea of project management in the construction of monuments and various other architecture. However, since the early 1950s, project management started to be pursued as a major discipline in the corporate companies.

Companies recruit project managers that lead the team in order to timely achieve the targets set by the clients and customers. In management terminology, the duration in which an entire project is carried out, from its inception till the end, is called the project life cycle. The project life cycle can consist of one or multiple project management approaches. The management approaches are the various project management methodologies that the team can decide to follow so that the target is achieved in allotted time.

Some of the prime advantages of having a good project management team for a company are as follows -

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EXCELLENT PRODUCT QUALITY

Consumers generally look for low cost and high quality, while purchasing a product. Maintaining a high standard of excellence in developing quality products earns the company goodwill amongst its customers. The project management plans the allocated budget, resources and testing methods that keep the pace of production high, both qualitatively and quantitatively. The project management team can also undertake six sigma training programs that enhance the quality of the products.

REDUCING RISKS

The probability of getting hit by an unwanted or unexpected event has increased manifold in today's competitive business environment. The project management team can identify the potential risks, take their time to rectify them and help the company save valuable resources. In case of worst crisis, the project management team can opt for change management method to attain the desired goals. Team work is a must, when it comes to visualizing the dangers ahead. Risk management principles can be applied by the project managers to eliminate risks to a larger extent.

STRATEGIC OBJECTIVES AND GOALS

Strategic goals are the blueprint of the task undertaken by a company. For instance, a software company aims to prepare software and related programming codes, whereas an infrastructure company has a target of constructing dams, bridges and other construction works. A project management team helps the company in achieving the strategic goals, as it streamlines the task of a company in taking many important decisions. Strategic planning and strategic thinking are vital management tools for a project management team.

Once the task is allotted, the project team is responsible for the goal to be finished in the dedicated time. Innovation is an area in which the project team can invest more and come out with new ideas that can increase the sale and reputation of the firm. Human resource, financial planning, corporate social responsibility and physical resources are other facets of strategic goals.

Project management is an essential segment in every organization. Be it, the small scale enterprises or corporate giants, project management has the power to transform the market standing of a company and help it soar high in the sky.

THE METHODOLOGIES FOLLOWED BY PROJECT MANAGEMENT

Plans

Organizing

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Staffing – employing right people who can do justice to the job

Guiding – Guiding people to do follow things

Monitoring – Monitoring the flow of project at each step

Innovation – Introducing new ideas to add uniqueness to project

Completion – Setting deadlines for the completion of project

FIGURE NO.1 – STEPS INVOLVED IN PROJECT MANAGEMENT

Thus any project which lacks to identify its objective can be compared to going on a fishing trip in a dry river. An objective goal will always give direction and lead to the project. The objectives should always be concrete, not something vague as improving customer satisfaction or improving the popularity etc. Such objectives are immeasurable whereas we can set objectives like easing out the process by introducing some value addition etc. Often project management teams proceed to work towards achieving some selected objectives because setting many

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FACTORS AFFECTING THE OBJECTIVES OF PROJECT MANAGEMENT

DESIRED END RESULTS: Desired end results should match with the purpose of the project. Quality and performance of the application also plays important role in project management. Every one involved in project is responsible to ensure its completion by keeping into account its quality and desired performance.

EXPENDITURE: Other than the objectives expenditure also plays important role in ensuring successful completion of project. Even a small increase in expenditure may hamper the quality of the project.

TIME OF COMPLETION: The objective also involves completion on time. If the time factor lags behind then it means slogging of the project, added expenditure and wastage of the

time.

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FIGURE NO.2 – PROJECT MANAGEMENT AFFECTED BY OTHER MANAGEMENT

Therefore project management should be taken seriously because the desired outcome expected from the project will keep the business going. If you are still thinking about managing the big project easily then it is not that easy. First try to analyze the pros and cons when things will go wrong. Then employ the services of best management consulting firm which can handle your project management very efficiently.

REASONS TO BE THOUGHT

All organizations use projects as the way to translate strategies into actions and objectives into realities. Many companies are project-intensive – they live and breathe project management because they are in that kind of business, such as construction, aerospace, engineering design, engineer-procure-construct (EPC), general contractors, consulting, software, and so on. For them, organizing around projects is a natural way of life as almost all senior staff have "come up through the ranks", and top management understands what it takes to be successful in project work. On the other hand are less project-intensive organizations such as food, retailing and textiles. But even such companies have projects, e.g., setting up a new distribution depot or a new plant. Even in public sector, it is effective project management that translates politicians' visions of new roads, schools and hospitals into gleaming new constructions that improve everyday life.

Realization of objectives is not easy, though; especially in today‟s increasingly complex and high-stake world – richer technology, distributed / global / outsourced workgroups, culture differences due to inorganic growth, cost pressures, new services and products, mass customization needs for demanding customers, compressed time-to-market, increasing market volumes and stricter regulatory requirements. Numerous studies and observations have shown that strong business growth or other ambitious endeavors frequently bring the following risks in deployment of strategies to manage the endeavors:

Thus, the key for most organizations to remain competitive in a high-growth and fast-changing environment is strong delivery capability made possible by uniform and effective processes, structure, and discipline of planning and monitoring initiatives that translate strategy into reality.

Project Management is a competency that leaders can use in their organizations to handle increasing complexity with higher success rates and acceptance, and lower uncertainty and costs. Following are just a few examples of the organizational inefficiencies that pose the above- mentioned risks, but can be effectively handled through use of the Project Management.

- Schedules managed in silos and dependencies are not integrated.

- Delays in one area not communicated to a dependent area, so resources not allocated

efficiently.

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- Schedules having short-term forecast range. Long-term planning at the activity-level non- existent.

- Many communication channels informal, and therefore information not documented and communicated to all appropriate stakeholders in a timely manner.

- Lack of proactive risk identification and management.

- Inadequate reporting - lack of visibility / insight into the true status of the projects.

CONCLUSION

Thus project management as a management discipline underpins much economic activity. In industries as diverse as pharmaceuticals, software and aerospace, projects drive business. In the public sector, it is effective project management that translates politicians promises of new roads, schools and hospitals into gleaming new constructions that improve everyday life. Project management is the application of knowledge, skills, tools and techniques to project activities in order to meet project requirements.

Project management is therefore the discipline of planning, organizing, securing and managing resources to bring about the successful completion of specific project goals and objectives.

REFERENCES

1. David I. Cleland, Roland Garies (2006). Global project management handbook. “Chapter 1 : “ The evolution of project management”. McGraw- Hill Professional, 2006. ISBN 0- 07-146045-4. 2. Dennis Lock (2007) Project Management Gower Publishing Ltd., 2007. ISBN 0-566- 08772-3. 3. Lewis R. Ireland (2006) Project Management, McGraw- Hill Professional, 2006. ISBN 0- 07-147160- X 4. Joseph Phillips (2003), PMP Project Management Professional Study Guide, McGraw- Hill Professional, 2003. ISBN 0-07-223062-2.

5. Bjarne Kousholt (2007), Project Management – Theory and practice. ISBN 87-571- 2603-8. 6. Harold Kerzner (2003), Project Management: A systems Approach to Planning, Scheduling, and Controlling, (8th Ed.ed.). Wiley, ISBN 0-471-225770-0. 7. James P.Lewis (2000), The Project manager‟s desk reference: a comprehensive guide to project planning, scheduling, evaluation, and systems. 8. F.L. Harrison, Dennis Lock (2004). Advanced project management: a structured

approach. Grower Publishing, Ltd., 2004. ISBN 0-566-07822-8. www.zenithresearch.org.in

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FINANCIAL VIABILITY OF SUGAR FACTORIES IN SOUTH GUJARAT- A CASE STUDY

DR. MARTINA. R. NORONHA*; PROF. DILIPSINH THAKOR**

*Vice-Principal, P.G.In-Charge, Head, Department of Accountancy, S.P.B. English Medium College of Commerce, Surat, Gujarat. **Assistant Professor, Shree Rang Navchetan Science& Computer Institute, Valia, Bharuch, Gujarat.

ABSTRACT

The Indian Sugar Industry is marked by co-existence of different ownership and management structures. At one extreme, there are privately owned sugar mills in Uttar Pradesh that procure sugarcane from nearby cane growers. At the other extreme are cooperative factories owned and managed jointly by farmer.

This article attempts to find the financial viability of sugar factories located in South Gujarat in India. It uses ratio analysis and discriminant analysis to give the actual prediction equation to classify new cases.

There is tremendous scope for India to emerge as a significant player in the world sugar trade [milling and overheads] improvement. If we can make a fair degree of progress on agricultural efficiency [per hectare output of sugar and cost of production] as well as conversion efficiency, India will surely become a major exporter which will stabilize the industry and reduce its cyclicality significantly, as well as open up new vistas of growth for the Indian Sugar Industry. An efficient and well managed future trading mechanism needs to be put in place to facilitate price discovering both for farmers and millers both in the domestic and global markets

KEYWORDS: co-operatives, discriminant function, viability. ______

INTRODUCTION

India is known as the original home of sugar and sugarcane. In global sugar economy, the Indian Sugar Industry has achieved a number of milestones. It is the second largest producer of sugar in the world. This industry is the second largest agro processing industry in India after textile. More than 45 million people in the rural population of India depend on Sugar Industry for their livelihood. The Indian Sugar Industry accounts for around 1% of GDP of the country in the

recent past.

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TABLE I

STATE-WISE DISTRIBUTION OF COOPERATIVES AND OTHER SUGAR MILLS

Cooperatives Other Total

State Number Installed Number Installed Number Installed of capacity of capacity of capacity factories factories factories

AP 8 192 26 716 34 908

Gujarat 17 1071 0 0 17 1071

Haryana 10 353 3 198 13 551

Karnataka 16 551 21 908 37 1459

Maharashtra 82 6,468 20 511 102 6,978

TN 14 546 20 979 34 1542

UP 28 784 78 3753 106 4537

Uttaranchal 4 133 6 279 10 412

Punjab 12 405 8 279 20 684

Other 12 182 15 678 27 861

Total 203 10,684 197 8,302 400 18,985

Source: United Sugar Development Association

Sugar is India‟s second largest agro-processing industry with around 400 operating mills. The 203 cooperatives are a dominant component of the Industry accounting for over 56% of the total capacity of around 19 mt per annual of sugar. Of the 203 cooperatives nearly 83 (or 41% of total cooperatives) are concentrated in Maharashtra, followed by Uttar Pradesh with 28 mills of the 197 non cooperative and/or private sugar mills nearly 78 (or 40%) are located in Uttar Pradesh, followed by Tamil Nadu, Andhra Pradesh and Karnataka.

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TABLE II

SUGAR INDUSTRY IN GUJARAT

Year No. of working Daily Crushing of Production Recovery mills Crushing Sugarcane (lakh of Sugar % Capacity mts) (lakh mts) (T.C.D)

2006-07 17 65000 133.12 14.11 10.646

2005-06 17 65000 108.87 11.67 10.823

2004-05 17 65000 74.05 07.96 10.760

2003-04 15 65000 97.53 11.66 10.933

2002-03 15 65000 118.27 12.51 10.581

Source: United Sugar Development Association

During the year 2006-07, area for cultivation for sugar was 1.72 hectares, from which 133.12 lakh mts crushing was done while during 2007-08, area for cultivation was 1.84 lakh hectares. The sugar mills in Gujarat are located at Vadodara, Bharuch, Surat, Valsad, Navsari, Tapi and Narmada District. 24 sugar factories of Gujarat are members of the Gujarat State Federation of Co-operative Sugar Factories Limited out of which only 17 are operational. 13 mills are located in South Gujarat, 2 in Saurashtra region and 2 are in the Central region.

OBJECTIVE OF THE STUDY

The objective of the study is to measure the viability of the sugar cooperative mills in the South Gujarat Region.

SAMPLE SIZE

All thirteen sugar factories of South Gujarat are taken for the present study-Shree Khedut

Sahakari Khand Udyog Mandli Ltd., Bardoli, Sahakari Khand Udyog Mandal Ltd., Gandevi, Madhi Vibhag Khand Udyog Sahakari Mandli Ltd.,Madhi , Shree Chalthan Vibhag Khand Udyog Sahakari Mandli Ltd. Chalthan , Shri Maroli Vibhag Khand Udyog Sahakari Mandli Ltd., Navsari, Shree Valsad Sahakari Khand Udyog Mandli Ltd., Valsad, Shree SayanVibhag Sahakari Khand Udyog Mandli Ltd.,Sayan , Shree Mahuva Pradesh Sahakari Khand Udyog Mandali Ltd.,Bamania , Shree Ukai Pradesh Sahakari Khand Udyog Mandli Ltd.,Khushalpura , Shree Ganesh Khand Udyog Sahakari Mandli Ltd., Harising Mahida Bhavan, Vataria, Bharuch, Shree Kamrej Vibhag, Sahakari Khand Udyog Mandli Ltd.,Navi – Pardi, Shree Khedut Sahakari Khand Udyog Mandli Ltd., Hansot, Bharuch, Shree Narmada Khand Udyog Sahakari Mandli

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PERIOD OF STUDY

The period of study is six years i.e. 2001-02, 2002-03, 2003-04, 2004-05, 2005-06, 2006-07.

TOOLS FOR ANALYSIS

Ratio Analysis and Discriminant Analysis is used in the present study.

REVIEW OF LITERATURE

Indian Sugar Industry – A Comparative Study by Dr. G. A. Nikam (2006) is an attempt to find out cost trend, profitability and operational efficiency of the sugar mills of two states, Uttar Pradesh and Maharashtra. The study also attempts to compare the working of the sugar mills of different regions of Uttar Pradesh and Maharashtra. Labour Problems and Welfare by M. Mustafa (1990) is a systematic, comprehensive and analytical study of the problems related to mill workers and welfare measures introduced especially in the sugar industry. Practical Hints on Sugar Factory Control by Dr. O. P. Talwar (1968) deals with measures to remedy unknown losses in sugar industry, raise clarification efficiency, minimize losses by various pan boiling schemes, as well as lower the final molasses purity by high speed electrical centrifugation. Sugar Cane in India by S. V. Parthaswathy (1972) discusses soil, climate, botany of sugarcane, land preparation, seed, planting and Inter-culture, pests and diseases. Sugar from scarcity to surplus by Hubert (1958) gives factual information on many facets of sugar cane cultivation, irrigation system, construction of factories, old and new equipment, trouble shooting, comparative value of different labour forces, role of chemists in scientific quality control and production efficiency. Sugar Industry in India by Prof. Ram Vichar Sinha (1988) analyses the historical background of Indian Sugar Industry, agricultural economics of sugarcane, problems of cane marketing and transport, technical performances, utilization of byproducts, labour and relations, policies on sugar economy, fiscal and financial aspects of the industry .Government and Co-operative Sugar Factories by N. R. Inamdar, (1964) is a study of Government and Co-operative Sugar factories in Maharashtra and contains measures for the promotion of co-operative enterprises.

TABLE III

ANALYSIS CASE PROCESSING SUMMARY

Unweighted Cases N Percent

Valid 78 100.0

Excluded Missing or out-of-range group codes 0 .0

At least one missing discriminating variable 0 .0

Both missing or out-of-range group codes and at 0 .0

least one missing discriminating variable

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Total 0 .0

Total 78 100.0

TABLE IV

GROUP STATISTICS

Performance of the sugar factories Mean Std. Valid N (list- Deviation wise)

Performing well Return on capital 1.11227 .572754 22 22.000 employed

Gross profit ratio .07150 .055484 22 22.000

Net profit ratio .00004 .006230 22 22.000

Expenses to sale ratio .05312 .030626 22 22.000

Interest coverage ratio 1.10682 .215260 22 22.000

Debt – equity ratio 1.97205E1 37.331018 22 22.000

Current ratio .92545 .110399 22 22.000

Fixed asset turnover 2.41318 .541219 22 22.000 ratio

Operating profit ratio .06551 .037624 22 22.000

Not performing Return on capital .15787 .129036 56 56.000 well employed

Gross profit ratio .43800 2.662777 56 56.000

Net profit ratio -.03458 .114775 56 56.000

Expenses to sale ratio .04387 .041489 56 56.000

Interest coverage ratio .84182 .760763 56 56.000

Debt – equity ratio 1.50878E1 50.243862 56 56.000

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Current ratio 1.16232 .767124 56 56.000

Fixed asset turnover 1.53232 .617161 56 56.000 ratio

Operating profit ratio 0.6962 .082492 56 56.000

Total Return on capital .42706 .536850 78 78.000 employed

Gross profit ratio .33463 2.256757 78 78.000

Net profit ratio -.02482 .098316 78 78.000

Expenses to sale ratio .04648 .038767 78 78.000

Interest coverage ratio .91656 .663659 78 78.000

Debt – equity ratio 1.63944E1 46.772343 78 78.000

Current ratio 1.09551 .659678 78 78.000

Fixed asset turnover 1.78077 .714920 78 78.000 ratio

Operating profit ratio 0.6846 .072458 78 78.000

TABLE V

TESTS OF EQUITY OF GROUP MEANS

Wilk’s F df1 df2 Sig.

Lambda

Return on capital employed .352 140.098 1 76 .000

Gross profit ratio .995 .413 1 76 .522

Net profit ratio .975 1.984 1 76 .163

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Expenses to sale ratio .988 .898 1 76 .346

Interest coverage ratio .967 2.570 1 76 .113

Debt – equity ratio .998 .153 1 76 697

Current ratio .974 2.065 1 76 .155

Fixed asset turnover ratio .689 34.370 1 76 .000

Operating profit ratio .999 .050 1 76 .823

TABLE VI

WILKS’ LAMBDA

Test of function (s) Wilks‟ Lambda Chi-square Df Sig.

1 .314 82.739 9 .000

TABLE VII

STANDARDIZED CANONICAL DISCRIMINANT FUNCTION COEFFICIENTS

Function

1

Return on capital employed .902

Gross profit ratio .026

Net profit ratio -.147

Expenses to sale ratio -.066

Interest coverage ratio -.215

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Debt – equity ratio .021

Current ratio -.296

Fixed asset turnover ratio .415

Operating profit ratio .188

TABLE VIII

CANONICAL DISCRIMINANT FUNCTION COEFFICIENTS

(UNSTANDARDIZED COEFFICIENTS)

Function

1

Return on capital employed 2.816

Gross profit ratio .012

Net profit ratio -1.503

Expenses to sale ratio -1.706

Interest coverage ratio -.327

Debt – equity ratio .000

Current ratio -.452

Fixed asset turnover ratio .695

Operating profit ratio 2.576

(Constant) -1.790

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TABLE IX

FUNCTIONS AT GROUP CENTROIDS

Performance of the sugar Function

Factories 1

Performing well 2.326

Not performing well -.914

Unstandardized canonical discriminant functions evaluated at group means.

TABLE X

CLASSIFICATION RESULTS

Performance of the sugar factories Predicted Group Membership Total

(1) (2)

Performing Not performing well well

Original Count Performing well 18 4 22

Not performing well 0 56 56

% Performing well 81.8 18.2 100.0

Not performing well .0 100.0 100.0

94.9% of original grouped cases correctly classified.

The output in Table X is called the classification matrix (also known as confusion matrix). It indicates the Discriminant Function. 94.9% of the 78 objects have been correctly classified. It is a pointer towards the model being a good one.

The value of Wilk‟s Lambda presented in Table VI judges the Discriminant power of the model. The low value (closer to 0) indicates better discriminating power of the model. Here, the value is 0.314 which is an indicator of the model being good. The probability value 0.0000 indicates that the discrimination between the groups is highly significant.

Nine independent (predictor) variables – return on capital employed, gross profit ratio, net profit www.zenithresearch.org.in

ratio, expenses to sales ratio, interest coverage ratio, debt – equity ratio, current ratio, fixed asset

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1. Return on Capital Employed

2. Gross Profit Ratio

3. Expenses to Sales Ratio

4. Debt Equity Ratio

5. Fixed Assets Turnover Ratio

6. Operating Profit Ratio

Negative results indicate favourable to group 2 (Not performing well)

1. Net Profit Ratio 2.Interest Coverage 3.Current Ratio

The tests of equality of group means (Table V) measures each independent variable‟s potential before the model is created. According to the results in this table, variables return on capital employed and fixed asset turnover ratio in the discriminant model are significant.

The table VIII contains the unstandardized discriminant function coefficients which are used to construct the actual prediction equation and can be used to classify new cases. The unstandardized discriminant function for the table is presented below:

Y = -1.790 + roce (2.816) + gross profit ratio (0.012) – npr (-1.503) + rxp to sales (-1.706) – icr

(0.327) + debt to equity (0.000) – current ratio (0.452) + ftor (0.695) + opr (2.576)

Table IX is used to establish the cutting point for classifying cases. Cases which evaluate on the function above the cutting point will be classified as “performing well” while those evaluating below the cutting point will be classified as “not performing well”.

2.326*22 -.914*56 = -0.012/78 = -0.0001538.

SUGGESTIONS

The Indian Sugar Industry will have a bright future, if its potential is fully developed and is www.zenithresearch.org.in

allowed to bloom.

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The state governments should take a pragmatic view in regard to feeding the power produced by the sugar factories to the state grids. This will not only enhance the financial viability of sugar factories but it would also enhance the cane price paying capacity of the factory which would ultimately benefit the farmers.

Another area of concern which significantly impacts the viability of Indian Sugar Industry is the high cost of cane. A contributory factor for this is the low sugarcane fields in India and relatively low overall recovery rates. These inhibiting factors combine to make the per hectare output of sugar in India much below than obtaining in other developing countries like Brazil which is one of our main competitor in sugarcane production.

There is tremendous scope for India to emerge as a significant player in the world sugar trade [milling and overheads] improvement. If we can make a fair degree of progress on agricultural efficiency [per hectare output of sugar and cost of production] as well as conversion efficiency, India will surely become a major exporter which will stabilize the industry and reduce its cyclicality significantly, as well as open up new vistas of growth for the Indian Sugar Industry.

The industry has to be free from its shackles to enable investment and pricing decisions to be taken based upon economic viability. The government needs to restrict its presence to the few areas which cannot do without its intervention. These include the need for a fairly derived SMP for sugarcane to be announced on an annual, all India basis. As in other countries like Brazil, the farmer‟s return on cane should ultimately be linked to the market price of sugar rather than the cost of production for a low sugar price which will lead to reduced cane cultivation and consequent shortage of sugar production market availability as also higher sugar and cane prices. Similarly, a high sugar price will lead to increased cane cultivation, surplus sugar production and a drop in sugar/cane prices, reversing the increase in cane cultivation.

An efficient and well managed future trading mechanism needs to be put in place to facilitate price discovering both for farmers and millers both in the domestic and global markets. It should also have a stable relatively long term exim policy supportive of the industry, which will help the industry to establish its credibility in the global market.

In spite of having the benefit of lowest field production cost, the total cost of sugar production in India is not lowest in the world. It is also due to higher factory cost. Now, India is facing the stiff competition from Thailand and Australia in world sugar trade due to their lower factory

production cost. Therefore, there is an urgent need to take recourse on top priority to reduce the factory production cost of Indian Sugar.

The cost of production in Indian sugar industry is higher because it is labour extensive. Many sugar mills are shifting to mechanization and automation but the change is very slow. The pace of mechanization and automation will have to be accelerated.

India has now attained the status of the largest sugar producing country in the world and has contributed around 18% to 20% of world‟s cane sugar production. In spite of this, the average

cane productivity (i.e. 68.00 M.tonnes per/ha) is much lower than the countries like Kenya 100.2 www.zenithresearch.org.in

M.tonnes/ha, Egypt 100.3 tonnes/ha, Columbia 83.5 tonnes/ha, Australia 74.5 tonnes/ha and

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Hawai 150 tonnes/ha for a crop of 24 months. Therefore, now the time has come for the sugarcane grower and the sugar industry to concentrate more on high yielding varieties so as to get required sugarcane from the same area under sugarcane crop.

The Indian sugarcane research centre should also develop such varieties which would help to increase the recovery at least by 1 to 1.5%. Naturally it would yield additional sugar to the tune of 10 to 15 lakh tonnes of per year.

Modernization of plant and machinery is overdue. Therefore, higher percentage share of lost hours to available hours automatically leads to under utilization of plant capacity which leads to higher cost of sugar production. Therefore, the mills should concentrate more on efficient utilization of plant capacity.

The reluctance of the financial institutions and the banks to provide term loans as well as working capital has crippled the Indian sugar Industry. These institutions have started looking at the sugar industry as a very high-risk industry. The scheduled commercial banks having developed high risk perception of the sugar industry have become extremely weary in enhancing the cash credit limits to the mills to the requisite levels year after year the arrears of sugarcane farmers are increasing which has affected the well being of sugarcane farmers. Therefore, Government should ensure easier and cheaper credit facilities to the sugar industry which is primarily required by it for timely disbursement of sugarcane prices of millions of sugarcane farmers.

Soft term loan should also be considered for sugar mills to those who are going for diversification like cogeneration as well as ethanol production.

Sugarcane is the most versatile crop which provides tremendous potential to the sugar mills to diversify into various products based on its byproducts i.e. Molasses, Bagasse and Pressmud. Advances in the knowledge of technologies have opened up potentials for multiple uses of sugarcane and it can now be looked at as raw material for many more products than „Sugar‟ alone like renewable resources of energy and liquid fuels, power generation or cogeneration, paper and paper boards, protein foods and cattle feeds, organic chemicals, bio-manures and sugar.

It is observed that the state advised sugarcane prices are always higher than the statutory

minimum prices, fixed by the Central Govt. For the natural growth of the sugar industry the sugarcane prices should be fixed on the basis of recovery percent they have achieved i.e. this would help to reduce cost of sugarcane. This will also help to improve the quality of sugarcane supply to the mills. Ultimately this will increase the sugar production with the help of same quantity of sugarcane crushed during the season. Therefore it is necessary to stop the system of state advised sugarcane prices scheme here after for the natural as well as qualitative growth of the Indian Sugar Industry.

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REFERENCES

Ajit Narde (2000-2001) Sugar India Year Book Anekant Prakashan, Jaisingpur, Kolhapur.

Choudhary B. Roy(1977 ) Working Capital Management Eastern Law House, Calcutta.

Cooperative Sugar Directory and Year Book (2007) New Delhi

D.G. Haspte(1996) Progressive Sugarcane Farming in Maharashtra, Gyanshil Prakashan, Pune.

Darda Rajendra (1996) Four Decades of Cooperative Sugar Industry (1950-1990) Jai Datta Prakashan, Kolhapur.

G.A. Nikam, (1993) Future of Sugar Co-operatives in India‟, Vol. 24 No.10 New Delhi.

Govt. of India(2000) Report of the High Power Committee on Sugar Industry

Gundurao S.N( 1965) Rehabilitation and Modernization of Sugar Factories in India: Part I & II

Inamdar N.R.(1964) Government and Cooperative Sugar Popular Prakashan, Bombay.

I.S.O. Year Book (September 2003) Indian Sugar Vol. VIII No. 6

Kuchal S.C( 2008) Financial Management: An Analytical and Conceptual Approach Chaitanya Publishing House, Allahabad.

Mangal Singh (1994) Efficient Management of Sugar Factories Somaiya Publication, New Delhi.

Mishra K.K.(1985) Sickness of Sugar Industry Suneja Publishing Corporation, New Delhi.

Mohite Y.J (1974) Sugar Industry of Maharashtra: A Blue Print for Progress Government of Maharashtra, Bombay.

Mohsin M (1977) Financial Planning and Control Vikas Publishing House, Delhi.

Nikam G.A(1991) Financial & Cost Analysis of Sugar Cooperatives‟ Indu Prakashan, Bombay.

Sen S.R.(1968-69) Report of the Agricultural Price Commission on Price Policy for Sugarcane.

Shivajirao G. Patil, Sugar Cooperatives‟ tryst with destiny Cooperative Sugar, Nov. 1997 Vol. 29, No. 3, p.167.

V.B. Jugale (2000) Sugarcane Pricing Policy, Procedure and Operations Atalantic Publishers & Distributors, New Delhi.

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A STUDY ON CAPITAL GAINS TAX FROM INTERNATIONAL PERSPECTIVE: A COMPARATIVE OVERVIEW

DR.D.MAHESHWARA REDDY*; K.V.N.PRASAD**

*Assistant Professor, ITM Business School, Warangal, Andhra Pradesh, India. **Assistant Professor, ITM Business School, Warangal, Andhra Pradesh, India.

ABSTRACT

In the globalised investment scenario and special tax treaties like DTAA, investors have been investing in variety forms of investments and in different countries. Therefore, the investors have to be equipped with sufficient knowledge about the capital gains tax (CGT) and implications of cost inflation index (CII) in determining the actual (real) capital gains/loss otherwise their investment decisions might be deterrent in optimizing their own portfolios. As FII and FDI are the major routes through which the investors channelizing their incomes and gains in the globalised markets, it is high time to make a comparative study on tax implications in the investment environment between India and USA. In connection with DTAA, India has been receiving 42 percent of FDIs and 40 percent of FIIs approximately every year. Till the end of May 2011, India has bagged $4.66 billion (Rs.21,000 crores) though it was $2.11 billions (Rs.10000 crores) in the year 2010. The low FDIs in 2010 are due to economic recession in the US. In the light of these circumstances the present study will provide a complete picture about the tax and its implications on investment decisions of globalised investing community.

KEYWORDS: Capital Gains Tax (CGT), Cost Inflation Index (CII), Double Tax Avoidance Agreement (DTAA), Consumer Price Index (CPI), Independent Retirement Account (IRA) and Self Employee Pension Plan (SEP). ______

INTRODUCTION

Levying tax on various sources of incomes of individual/corporations is not at uniform tax rates.

Determining tax rate for various streams of incomes has been differed case to case. In other words, while determining the tax rates the central government has been considering several governing factors like income and its nature, age and sex etc. Except few countries (Mauritius), all countries in the world have been levying tax on capital gains with varying tax rates. It’s a time to take a view at FDIs and FIIs. In connection with DTAA, India has been receiving 42per cent of FDIs and 40 per cent of FIIs approximately every year. Till the end of May, 2011it has bagged $4.66 billion (Rs.21000 crores) though it was $2.11 billions (Rs.10000 crores) in the year 2010. The low FDIs in 2010 are due to economic recession in the US. Hence the present study

will continue with the following objectives: www.zenithresearch.org.in

 To understand the concept of capital gains/losses and its computation in India and USA

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 To know the treatment of capital gains on agricultural land

 To examine the tax rates with respect to capital gains in India and USA

REVIEW OF LITERATURE: Like a nagging housewife who does not want to let go of her husband’s wallet, the government does not want to let go of its share in people’s monetary happiness – it wants people to share their capital gain in the form of capital gain tax which it levies. So, the tax who pays on his capital gains is called capital gains tax.1

RESEARCH METHODOLOGY: The study is based on intensive desk research and extensive reading on the concept.

DISCUSSION: Almost all assets held for personal use or investment purposes including home, jewelry, stocks and bonds are classified as capital assets and any gain on their sale is subjected to capital gains tax. Just as income taxes are required to be paid on the total taxable income, similarly taxes have to be paid on the total capital gains made by an individual or a corporation in a year. The profit which is earned on sale of properties like real estates, stocks, mutual funds and jewelry is known as “capital gains”. Capital gains are classified as short term or long term based on the length of time the investor holds the asset prior to selling it. Capital gains are generally taxed at a rate lower than ordinary income and vary depending upon the length of time the investor has held the asset. Further, this can be classified as long-term and short-term capital gains/loss. The profit which is earned on the sale of property after the holding period of three years (i.e. 36 months) is known as long-term capital gain while the profit which is earned on the sale of property within a year of its purchase is termed as short-term capital gain/loss. Levying tax on capital gains and how much are ever changing ones as inflation fluctuates from one financial year to next financial year. That’s why, unless knowing the actual gains on the sale of capital assets levying tax according to a thumb rule on the same is funny and pinching the monetary happiness of the investors. It is necessary to know the real gains on the capital assets by taking into cost inflation of acquired asset. The Central government of India has been notifying the cost inflation index (CII) in the income tax department gazette every year. The following formula can be applied to know the actual capital gains on the sale of capital assets.

X*z/y=a; then b-a=c ………………………………………………..1

Let x be the cost of acquisition

Let y be the index for the year of acquisition

Let z be the index for the year of sale

Let a be the cost of acquisition for capital gains purposes

Let b be the sale price of the asset

Let c be the capital gain for tax purposes. www.zenithresearch.org.in

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The other form of equation;

Capital Gains = Full Value of Sale – Indexed Cost of Acquisition – Indexed Cost of Improvement (in case of shares, etc. the broker’s commission and transfer costs) – Any exemptions ………………………………………………..……...... 2

Where;

Full value of sale is the actual cost at which the asset is sold.

Indexed Cost of Acquisition = Cost of acquisition * Cost Inflation Index (CII)

The cost of acquisition is nothing but the cost of purchase.

Indexed Cost of Improvement means the cost incurred for any further improvement of the asset during the period

Any exemption means the gain on the sale of agricultural property and allowed deductions as per Income tax and

Cost Inflation Index (CII) means which is notified by the Government of India every

Year (for the year in which asset is sold and was acquired or bought)

Let’s know what is cost inflation index? How will it computes? By whom it is notified in the Income tax department gazette and how does CII help in capital gains computation?

COST INFLATION INDEX (CII): It is a measure of inflation that erodes the value of capital gains. According to this index the present value of acquisition should be taken into consideration rather than its historical value. According to section 48 of the Income-Tax Act 1961, the index having regard to 75 per cent of average rise in the consumer price index (CPI) immediately preceding in the previous year. The cut-off date is taken as 1981-82, indexed at 100.Then onwards the index has been increasing year after year as soon as the government notifying it. The computation and increasing pattern of cost inflation index from 1981-82 to 2011-12 is given in the Annexure 1.

According to this cost inflation index (CII) the price of a capital asset has risen in tandem with base price rise, then if one want to sell an asset and replace it, the cost allowed even after indexation will be lesser than the price payable for new asset. However, in case of many capital assets the price rise is lesser than market price and in many cases it is higher. When the net sale proceeds of a capital asset is more than the cost. Since “cost of acquisition” is historical, the concept of indexed cost allows the taxpayer to factor in the impact of inflation on cost.

Consequently, a lower amount of capital gains gets to be taxed than if historical cost had been www.zenithresearch.org.in

considered in the computations. Formula for computing indexed cost is;

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X*z/y=a ………………………………………………………….…..3

This can be explained with the following example. If a property purchased in 1991-92 for Rs 20 lakh were to be sold in A.Y. 2009 -10 for Rs 80 lakh, the indexed cost = (582/199) x 20 = Rs 58.49 lakh. And the long-term capital gains would be Rs 21.51 i.e. Rs 80 lakh minus Rs 58.49 lakh.

CAPITAL GAINS TAX TREATMENT IN THE INDIAN TAX SYSTEM:

India has a well-developed tax structure with clearly demarcated authority between Central and State Governments and local bodies. Central Government levies taxes on income (except tax on agricultural income, which the State Governments can levy), customs duties, central excise and service tax.

In last 10-15 years, Indian taxation system has undergone tremendous reforms. The tax rates have been rationalized and tax laws have been simplified resulting in better compliance, ease of tax payment and better enforcement. The process of rationalization of tax administration is ongoing phenomenon in India.

Taxes Levied by Central Government are of two types namely direct taxes and indirect taxes. The direct taxes include tax on corporate income, capital gains tax and personal income tax where as indirect taxes include excise duty, customs duty, service tax and securities transaction tax. Taxes levied by State Governments and Local Bodies are sales tax/VAT and other taxes.

CAPITAL GAINS TAX: Tax is payable on capital gains which derived out of sale proceeds of assets. Long-term capital gains tax is charged if capital assets are held for more than three years and in case of shares, securities listed on a recognized stock exchange in India, units of specified mutual funds, the period for holding is one year. Long-term capital gains are taxed at a basic rate of 20 per cent prior to 2003. However, long-term capital gain from sale of equity shares or units of mutual funds is exempt from tax. Short-term capital gains are taxed at the normal corporate income tax rates. Short-term capital gains arising on the transfer of equity shares or units of mutual funds are taxed at a rate of 10 per cent.

Capital loss and Tax Calculation: As mentioned short term capital gains and long term capital

gains for calculating the taxable income, it is straight forward while asessee receives capital gains. It is little tricky when you receive the capital loss and it is not directly deducted from the taxable income. Now it is required to explore with more details on how to calculate taxable income when there is capital loss. The capital loss is of two types namely short-term capital loss and long-term capital loss. Generally the following thumb rules are kept in mind while computing the capital losses which needs to be set off out of total capital gains:

Capital loss cannot be adjusted with any other source of income. For example, you incurred capital loss of Rs.100000 the same time you got the income of Rs.200000 from

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Long term capital loss can be adjusted only with the long term capital gains.

Short term capital loss can be adjusted with both short term capital gains and long term capital gains. Note that short term capital gain is considered as the normal income and will be added to the taxable income. But, in the case of short term capital loss it will be adjusted only with the capital gains.

If the capital loss cannot be adjusted in the current years because there is no such capital gain, it can be carry forward to the next eight years and adjust if there is any capital gain.

This can be explained with the following example. Mr. X bought a house worth Rs.800000 in 2008-09. He sells the house by 2012-13 for Rs.1500000. Also he met short term capital loss by selling the shares Rs.150000. In the above case Mr. X can carry forward the loss if he doesn’t have any other capital gains on the particular year when he incurred the capital loss. Then he can adjust that capital loss Rs.150000 while selling the house on 2012-13. He can show the capital gains as Rs.700000 – Rs.150000 = Rs.550000.

CAPITAL GAINS TAX (CGT) TREATMENT IN THE US TAX SYSTEM

Despite certain policies are set out to reduce the tax burden on people, US is one of those countries that have high ratio of tax revenue to its GDP. Currently the income tax revenues have been stable at 8 per cent of its GDP, regardless of tax rates. The way to increase revenue is to grow the economy. To understand the USA tax system in lucid manner it is desirable to know the basic elements of its tax system. Taxable income means your adjusted gross income (AGI) minus deductions, exemptions and tax credits. This derived figure can be used to calculate one’s own taxes.

CAPITAL ASSETS: In the context of comparative study, the assets which cannot be capitalized by the business are called as capital assets. The USA tax code furnished the list of capitalized assets which include business inventory (assets bought and sold in the regular course of business), business supplies, accounts, depreciable trade or business assets held for one year or less (including business real estate), copyrights and creative works created by or gifted to the taxpayer, government publications, hedging transactions and commodities derivatives held by brokers.

CALCULATING CAPITAL GAINS AND LOSSES

NET CAPITAL GAIN: Most capital gains and losses are taxed as net capital gain. Net capital gain is taxed at 15 per cent for taxpayers in the 25 per cent tax bracket or above and 5 per cent for other taxpayers (unless they are below the minimum tax bracket, in which case they are not taxed). The Code defines net capital gain as the excess of net long-term capital gain over net short-term capital loss. These two figures are reached by adding up the various long-term and short-term capital gains and losses realized in the taxable year. Gains and losses from assets held

for over one year are considered long-term capital gains and losses, while gains and losses from

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TABLE 1

Long-term Short-term

Gains 2,000 2,000

Losses 10,000 4,000

Net gains 0 0

Net losses 8,000 2,000

Source: Assumed data

It is observed from the table that there is no excess of gains over the losses in both ways and will result into a net loss of $10,000

TABLE 2

Long-term Short-term

Gains 15,000 2,500

Losses 4,000 6,000

Net gains 11,000 0

Net losses 0 3,500

Source: Assumed data

It is observed from the table 2 that there is an excess of net long-term capital gain over net short- term capital loss, the excess ($7,500) is taxable at the 5 per cent or 15 per cent rate. Further which rate is used depends on which bracket the taxpayer is in.

NET CAPITAL LOSSES: In USA the net capital losses are used for offsetting the incomes so that the individuals can be benefitted. Individuals can use up to $3,000 of capital losses to offset their income ($1,500 for a married person filing separately). In the above example, the taxpayer would be able to apply $3,000 of his or her net capital loss to reduce his or her taxable income by $3,000, leaving $7,000 in unused net capital loss. Capital losses can also be carried over. If net

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 loss in the following year. If net short-term capital loss exceeds net long-term capital gain, the excess becomes short-term capital loss in the following year. Unlike individuals, the corporations followed different rules with respect to capital losses. Their capital losses must first be carried back to each of the three preceding years, if possible. Any capital losses that cannot be applied against capital gains from the three (3) previous years can then be applied against capital gains in the five (5) succeeding tax years. This can be well understood from the following illustration.

For example, assume that X Corporation has $50,000 in net capital losses in 2005. Their capital gains for the last three years are furnished in the table 3.

TABLE 3

Year 2002 2003 2004

Capital gains 0 23000 11000

Source: Assumed data

It is observed from the table 3 that the net capital losses cannot be carried back to 2002 because there is no sufficient net capital gain to offset the entire capital loss. $23,000 of capital gains in 2003 can be used to offset the capital loss, leaving $27,000 of capital loss. Another $11,000 of capital gains in2004 can be used to offset the capital loss, leaving $16,000 of capital loss. This $16,000 of capital loss can also be set-off from any net capital gains that arise in the next five years i.e. from 2006 to 2010.

Capital Gains on Agricultural Land: Agricultural land denotes the land which is suitable for agricultural production, both crops and livestock. It is one of the main resources in agriculture. It is important to note that the available agricultural land is only 38 per cent in the world’s land. Depending on the use of artificial irrigation, agricultural land is divided into irrigated and non- irrigated land. The former one gives high yield and later one also gives good yield but subject to the timely monsoons and proper production management practices etc.

IS AGRICULTURE LAND A CAPITAL ASSET?

It is quite often that the people getting confusion while they were dealing with agricultural land i.e. whether it is capital asset or not. To decide it normally two demographic parameters are kept in mind which includes population and distance from the municipality. In simple words if the land is situated under municipality area where the population is above 10,000 or the distance from the municipality to the specified land is less than 8 KM, then the land is not agricultural land. It is said to be known as capital asset which is attracted capital gain tax if any sale takes place in connection with it. If the above conditions met, and decided that the land is agricultural land, then there is no need to pay any tax for the sale on agricultural land. The profit from the agricultural land is completely tax free. Because the land is not falling under the capital assets as

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DIFFERENCES BETWEEN INDIAN AND USA TAX SYSTEM PERTAINING TO CGT

In India the tax payers have to file Form 16 soon-after every financial year. But recently the income tax department made it clear that no need to file Form 16 whose income is up to Rs.500000 where as in USA the tax payers have to file W4 and W2 Forms for filing returns after end of the every financial year.

Deductions: In India the deductions from income are standard deduction, donations etc where as in USA the following are the deductions to be deducted from the income like personal expenses, standard deduction and IRA, SEP or other valid donations and alimony payments.

In India current rates for with holding tax for payment to non-residents are: (i) Interest 20 per cent, (ii) Dividends paid by domestic companies: Nil, (iii) Royalties 10 per cent, (iv) Technical Services 10 per cent and (v) Any other services Individuals: 30 per cent of the income, Companies: 40 per cent of the net income. In the case of US, dividends are taxed at 20 per cent, interest income at 15 per cent and royalties at 15 per cent.

In India the current capital gains tax rate is 15 per cent. In USA most of the states will tax capital gains as ordinary income subject to the state income taxes rates. The tax rate on short-term capital gains ranging from 10 per cent to 35 per cent where as it is taxed at special rates on long-term capital gains. The special tax rates depend on which ordinary income tax bracket the tax payer fall under. Zero percent tax rate is applied if the tax payer’s income (including capital gain income) places him in the ten to fifteen per cent tax bracket. It is 15 per cent if the tax payer’s income (including capital gain income) places him in the twenty-five per cent tax bracket or higher.

SUMMARY & CONCLUSION

The current paper explained about capital gains and loss but specifically touched upon how to utilize the capital loss to adjust from other income. Since this subject is tricky, the detailed explanation would help the investing community to understand the topic very well and making prudential decisions with respect to their portfolios. Having aware of updates pertaining to capital gains tax and current tax rates, the investors are enabled to take prudent investment decisions in day to day transactions of capital assets and learn how to benefit from the unexpected loss.

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ANNEXURE 1

Increase in CII and 75% of Real inflation % of Financial Year Cost Inflation Index percentage of real inflation CII Increase allowed allowed / 3 X 4

1981-1982 100 - -

1982-1983 109 9 = 9% 12%

1983-1984 116 7= 6.422% 8.56%

1984-1985 125 9=7.7586% 10.34%

1985-1986 133 8=6.4% 8.53%

1986-1987 140 7=5.263% 7.02%

1987-1988 150 10=7.1428% 9.52%

1988-1989 161 11=7.333% 9.78%

1989-1990 172 11=6.8323% 9.11%

1990-1991 182 10=5.8139% 7.75%

1991-1992 199 17=9.340% 12.45%

1992-1993 223 24=12.060% 16.08%

1993-1994 244 21=9.4170% 12.56%

1994-1995 259 15=6.1475% 8.20%

1995-1996 281 22=8.494% 11.33%

1996-1997 305 24=8.5409% 11.39%

1997-1998 331 26=7.8549% 10.47%

1998-1999 351 20=6.0423% 8.06%

1999-2000 389 38=10.826% 14.44%

2000-2001 406 17=4.370% 5.83%

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2001-2002 426 20=4.926% 6.57%

2002-2003 447 21=4.929% 6.57%

2003-2004 463 16=3.579% 4.77%

2004-2005 480 17=3.6717% 4.90%

2005-2006 497 17=3.5416% 4.72%

2006-2007 519 22=4.4265% 5.90%

2007-2008 551 32=6.1657% 8.22%

2008-2009 582 31=5.6213% 7.50%

2009-2010 632 50=8.591% 11.46%

2010-2011 711 79=12.36% 16.49%

2011-2012 785 74=10.407% 13.88%

Source: Central government official gazette.

REFERENCES

1. taxguru.in/.../cost-inflation-index-meaning-and-index-for-all-the-years.html 2. Praveen N Shroff, The stock market dictionary, pp.49-50. 3. http://www.thinkplaninvest.com/2009/03/capital-gains-on-agricultural-land/ 4. http://www.tiddee.com/finance/taxation 5. http://www.sethassociates.com/

6. http://www.thewealthwisher.com/about/

7. http://en.wikipedia.org/wiki/Capital_gains_tax 8. http://en.wikibooks.org/wiki/US_Income_Tax/Capital_Gains_and_Losses 9. http://www.usataxrebate.com/?gclid=CKjO8Juv36kCFQ976wodTkHZZQ 10. http://topics.wsj.com/subject/C/capital-gains-tax/2139 11. The Wall Street Journal, Digital Network April 14th, 2011.

12. William Perez, Capital Gains Tax Rates, pp3. www.zenithresearch.org.in

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CASH MANAGEMENT OF MILK COOPERATIVES: A COMPARATIVE STUDY OF MILKFED AND HDDCF

MANVIR KAUR*

*Lecturer, P.G Department of Commerce, Mata Gujri College, Fatehgarh Sahib.

ABSTRACT

A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. The dairy cooperatives are one of the largest and most important of food industries. Modern dairy industry plays a vital role in maintaining and promoting the health of the people. The main purpose of dairy industry is to provide milk and milk products at reasonable cost that satisfy the consumer’s needs and fulfills consumer’s nutritional requirements. The objective of this research paper is to study the dairy cooperatives in Punjab and Haryana and also study the cash management of MILKFED and HDDCF. ______

INTRODUCTION

A cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled enterprise. A cooperative is based on certain values and principles of its own, which distinguish it from other forms of organizations. Cooperation has three dimensions, that is, economic, social and moral, which are equally crucial for its success. The very motto of cooperation, 'each for all and all for each', signifies loyalty, trust, faith and fellowship. A cooperative is a perfect democratic institution of the members, for the members, and by the members, and is based on the 'one member, one vote' system of decision making.

Cooperative as formal associations came to be set up in India from 1904 mainly as credit societies, followed by non – credit societies from 1912. The royal commission on Agriculture in 1928 underlined the importance of cooperatives. Cooperatives are based on the cooperative

values of “self – help, self – responsibility, democracy and equality, equity and solidarity”. The basic principles of cooperative must be:

Voluntary and open membership;

Democratic member control;

Members’ economic participation;

Autonomy and independence;

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Education, training and information;

Cooperation among cooperatives;

Concern for community.

DAIRY COOPERATIVES IN INDIA

The dairy cooperatives are one of the largest and most important of food industries. Modern dairy industry plays a vital role in maintaining and promoting the health of the people. The main purpose of dairy industry is to provide milk and milk products at reasonable cost that satisfy the consumer’s needs and fulfills consumer’s nutritional requirements. Earlier, the dairy farming was basically a domestic economic unit. It was carried out at the household level for producing milk for home consumption.

The dairy industry has an important place among the agriculture industries of most countries. It has a strategic role in ensuring food and nutritional security, income and employment generation and in balancing in rural inequity. A Rural household depend heavily on dairy business.

OBJECTIVES OF THE STUDY

 To review the Dairy Cooperatives in Punjab and Haryana.

 To study the cash management of MILKFED and HDDCF.

MILKFED-PUNJAB

The Punjab State Cooperative Milk Producers’ Federation Limited popularly known as MILKFED Punjab came into existence in 1973 and organization was registered on 01.12.1973 by the Assistant Registrar, Cooperative Societies, Ropar of Punjab State under with the objective of providing remunerative milk market to the Milk Producers in the State by value addition and marketing of produce, and also to provide technical inputs to the milk producers for enhancement of milk production. Although the federation was registered much earlier, but it came to real self in the year 1983 when all the milk plants of the erstwhile Punjab Dairy Development Corporation Limited were handed over to co-operative sector and the entire State was covered under Operation Flood to give the farmers a better deal and our valued customers better products.

Thus, the MILKFED is involved in procurement and processing milk and making various kinds of milk products and then selling it. MILKFED, in order to fulfill its aim has set up milk plants and it has also marketed its milk products under the brand name Verka. It has 10 dairy plants which are situated in Punjab and the total handling capacity of these plants is around 7,82,000 liters per day. The various kinds of products produced by MILKFED are ghee, milk

cake, paneer, table butter, dahi, flavored milk, and lassi.

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THE SETUP OF THE ORGANIZATION IS A THREE TIER SYSTEM

Milk Producers Cooperative Societies at the village

Milk Unions at District level

Milk Unions at State level

Milk Unions in Haryana are:

 Hoshiarpur Dist Coop Milk Producers' Union Ltd, Hoshiarpur

 Ferozepur Dist Coop Milk Producers' Union Ltd, Ferozepur

 Gurdaspur Dist Coop Milk Producers' Union Ltd, Gurdaspur

 Ludhiana Dist Coop Milk Producers' Union Ltd, Ludhiana

 Bathinda Dist Coop Milk Producers' Union Ltd, Bathinda

 Amritsar Dist Coop Milk Producers' Union Ltd, Amritsar

 Doaba Coop Milk Producers' Union Ltd, Jalandhar

 Patiala Dist Coop Milk Producers' Union Ltd, Patiala

 Faridkot Dist Coop Milk Producers' Union Ltd, Faridkot

 Ropar Dist Coop Milk Producers' Union Ltd, Mohali

 Sangrur Dist Coop Milk Producers' Union Ltd, Sangrur

HARYANA DAIRY DEVELOPMENT COOPERATIVE FEDRATION (HDDCF)

The Haryana Dairy Development Cooperative Federation Ltd was established on April 1st, 1977. It is registered under the Haryana Co-operative Societies Act. The organization was registered on 15-01-1974 with the Registrar Cooperative Societies Haryana. The main object of the Federation is to promote economic interest of the Milk Producers of the Haryana State, particularly those belonging to the economically weaker sections of society. The Federation is involved in purchasing and processing of milk into milk products and marketing the same by itself and/or through Milk Unions in the State, and by way of undertaking allied activities as are conducive for the promotion of Dairy Industry in the State such as improvement of milch cattle breed and productivity, promotion of milk production in the villages and towns of the State. Three tier system of HDDCF

Milk Producers Cooperative Societies at the village

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Milk Unions at District level

Milk Unions at State level

At present, there are six milk unions, namely

 Ambala Dist Coop Milk Producers’ Union Ltd, Ambala

 Gurgaon & Rohtak Coop Milk Producers’ Union Ltd, Rohtak

 Hisar & Jind Coop Milk Producers’ Union Ltd, Jind

 Kurukshetra & Karnal Coop Milk Producers’ Union Ltd, Kurukshetra

 Sirsa Dist Coop Milk Producers’ Union Ltd, Sirsa

 Ballabgarh Dist coop Milk producer’s union Ltd, Ballabgarh

Thus, the MILKFED assists, encourages, advises and renders technical, administrative, financial help to Milk Unions in furtherance of the main objectives. It may undertake such other activities as are conducive or incidental to attainment of the main objectives. Thus, the Haryana Dairy Development Cooperative Federation Ltd. is involved in buying and processing milk making various kinds of milk products and then selling it. The Haryana Dairy Development Cooperative Federation Ltd., in order to fulfill its aim has set up milk plants and it markets its milk products under the brand name Vita. It has five dairy plants which are situated in Sirsa, Ambala, Ballabgarh, Jind and Rohtak and the total handling capacity of these plants is around 470,000 liters per day. The various kinds of products produced by Haryana Dairy Development Cooperative Federation Ltd are ghee, milk cake, paneer, table butter, dahi, flavored milk, and lassi. The organization of the dairy co-operative in Haryana is based on the three tier system. Societies at Village level: Milk producers in a village level join together to form village Dairy cooperatives societies. The society is managed by producers themselves. It buys milk from producers and then sells it to Milk Unions. The profit earned by the societies is distributed amongst producer members.

REVIEW OF LITERATURE

Carley and Ling (1991) in their research paper evaluated the perception of southern dairy farmers perception regarding their cooperative or proprietary handlers performance, level of satisfaction with the milk handlers and reasons for staying with the current milk handlers. For the purpose of study, the data was collected from a 1989 mail survey of southern dairy farmers. The study showed that the dairy farmers were concerned about price, deductions, assessments and price farmers received appeared to be a significant factor which affected farmer’s satisfactions level. The study also found a trade-off between price and deductions versus service and market and payment assurance. The study suggested that the dairy farmers needed a cooperative which

provides an assured market for the members.

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Misra and Fletcher (1993) in their study analyzed the factors influencing farmer’s degree of satisfaction with the overall performance of milk marketing corporative. The data for the study were obtained from dairy farmers located in 12 southern states. They took a random sample of grade A dairy farmers and mail survey was conducted among 5,660 dairy farmers. An ordered probit model was formulated and used to estimate the probabilities of southern dairy farmer’s degree of satisfaction with the overall performance of their milk marketing cooperative. The analysis suggested that the southern dairy farmer’s perceived cooperative ability to hold down operating and marketing costs to provide higher prices and competent field service. The study found that there were significant differences in the degree of satisfaction with the cooperatives among the dairy farmer’s located in the 12 southern states.

CASH MANAGEMENT OF MILKFED AND HDDCF

Cash is one of the current assets of a business. It is needed at all times to keep the business going. A business concern should always keep sufficient cash for meeting its obligations. Any shortage of cash will hamper the operations of a concern and any excess of it will be unproductive so cash management is the most important function and significant contribution in the dynamic management of business affairs. Cash management is also important because it is difficult to predict cash flows accurately, particularly the inflows, and there is no perfect coincidence between the inflows and outflows of cash. The cash management aims at the optimum utilization of funds.

CASH AND BANK BALANCES TO CURRENT ASSETS: the ratio of cash and bank balances to current assets is an important indicator of utilization of cash balances as it directly affects the profitability of an undertaking. As a rule, the lower the proportion of cash balances to current assets, the greater is the profitability of the undertaking. A high balance in current assets also indicates better liquidity position of a firm. The ratio of cash and bank balances to current assets of MILKFED and HDDCF is studied an shows in the table.

TABLE 1.1

PERCENTAGE OF CASH & BANK BALANCES TO CURRENT ASSETS IN MILKFED & HDDCF

Year MILKFED HDDCF

2005-06 89.51 72.03

2006-07 82.89 87.95

2007-08 75.21 73.65

2008-09 91.26 88.60

2009-10 85.69 61.39

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Average 84.91 76.72

(Source: calculated from the Annual Reports of the institutions for the period 2005-06 to 2009- 10)

The table reveals the average percentage of cash and bank balances to current assets of MILKFED was higher (84.91) as compared to (76.72) HDDCF. The percentage of cash and bank balances of MILKFED was varied between 89.51 to 85.69 per cent during the period 2005-06 to 2009-10. MILKFED maintained a large proportion of cash and bank balances as compared to HDDCF. The percentage of cash and bank balances of HDDCF was varied between 72.03 to 61.39 per cent during the period 2005-06 to 2009-10.

LIQUID RATIO: liquidity ratio is a ratio of quick assets to current liabilities it is also known as quick ratio or acid test ratio it shows ability of firm to meet its immediate financial commitments. Liquid ratio of MILKFED and HDDCF shows in the table

TABLE – 1.2

LIQUID RATIO

Year MILKFED HDDCF

2005-06 10.82 0.02

2006-07 0.55 0.05

2007-08 10.82 0.01

2008-09 10.20 0.03

2009-10 5.99 0.02

Average 7.67 0.026

(Source: calculated from the Annual Reports of the institutions for the period 2005-06 to 2009- 10)

The table 1.2 depicts the average liquid ratio of MILKFED was higher (7.67) as compared to (0.026) HDDCF. Liquid ratio of MILKFED was varied between 10.82 to 5.99 during the period 2005-06 to 2009-10. This shows that the MILKFED had more liquid assets to meet its emergency requirements as compared to HDDCF. The liquid ratio of HDDCF ranged between 0.02 to 0.03 during the period 2005-06 to 2009-10.

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ability to make interest and principal payments as they become due. The net cash flow coverage

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TABLE – 1.3

NET CASH FLOW COVERAGE RATIO

(IN PERCENT)

Year MILKFED HDDCF

2005-06 44.33 7.90

2006-07 53.57 8.22

2007-08 23.43 10.33

2008-09 41.65 10.01

2009-10 79.59 30.64

Mean 48.51 13.42

(Source: calculated from the Annual Reports of the institutions for the period 2005-06 to 2009- 10)

The table 1.3 depicts that the average net cash flow coverage ratio of MILKFED was higher (48.51) as compared to (13.42) HDDCF. The net cash flow coverage ratio of MILKFED increased from 44.33 per cent to 79.59 per cent during the period 2005-06 to 2009-10 but net cash flow coverage ratio of HDDCF comparatively increased at lower rate from 7.90 per cent to 30.64 per cent. This shows that the net cash flow coverage ratio of MILKFED was strongly meet its cash obligations with current income as compared to HDDCF.

CURRENT RATIO

In order to study the short term liquidity position of dairy cooperatives, the relationship between current assets and current liabilities is studied.

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TABLE 1.4

CURRENT RATIO

(IN PERCENT)

YEAR Milkfed HDDCF

2005-06 11.65 0.02

2006-07 13.69 0.05

2007-08 11.52 0.02

2008-09 10.95 0.04

2009-10 6.76 0.04

(Source: calculated from the Annual Reports of the institutions for the period 2005-06 to 2009- 10)

The table 1.4 reveals that the current ratio of Milkfed was increased from 11.65 percent in 2005- 06 to 13.69 percent in 2006-07. It then decreased to 11.52 percent in 2007-08 and become 10.95 percent in 2008-09. The ratio further decreased to 6.76 percent in 2009-10. The current ratio in HDDCF shows an increasing trend through out the period of study. Current ratio increases from 0.02 percent to 0.04 percent during the period 2005-06 to 2009 10.

Z – SCORE MODEL: The Z – Score Model is a measure of a company’s health and utilizes several key ratios for its formulations. The model was developed in the late 1960s by Edward Altman, Professor of Finance. The model is based on five weighted ratios in the calculation of the Z- score.

Variable of this model is given below:

X1 = working capital/total assets.

X2 = retained earnings/total assets.

X3 = EBIT/Total asset.

X4 = market value of equity/total debt.

X5 = net sales/total assets.

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TABLE 1.5

Z - SCORE OF MILKFED

Year X1 X2 X3 X4 X5 Total

2005-06 .88 .08 0.09 2.62 1.45 5.12

2006-07 1.16 .11 0.10 2.85 1.85 6.07

2007-08 1.12 .08 0.05 1.99 2.29 5.53

2008-09 1.65 .10 0.13 1.95 2.62 6.45

2009-10 .44 .19 0.15 1.21 3.30 5.29

Average 5.25 .56 .52 10.62 11.51 28.46

(Source: calculated from the Annual Reports of the institutions for the period 2005-06 to 2009-10)

The table 1.5 depicts the financial position of the sample firm during the period of study. The Z – Score of MILKFED was low in 2005-06, but later the situation improved and there was an increasing trend. The highest Z – Score of the firm was 6.45 in the year 2008-09 and lowest was 5.12 in the year 2005-06. It is clear from the Z – Score of MILKFED was above 1.8. The average score of the HDDCF was 28.46 which show that the financial position of the cooperative is very sound.

TABLE 1.6

Z – SCORE OF HDDCF

Year X1 X2 X3 X4 X5 Total

2005-06 0.94 0.12 0.02 0.37 0.005 1.45

2006-07 0.94 0.12 0.03 0.30 0.005 1.39

2007-08 0.95 0.13 0.03 0.35 0.006 1.46

2008-09 0.95 0.14 0.04 0.49 0.009 1.62

2009-10 0.90 0.14 0.035 1.8 0.005 2.88

Average 4.68 0.65 0.155 3.31 0.03 8.82

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(Source: calculated from the Annual Reports of the institutions for the period 2005-06 to 2009- 10)

The table 1.6 depicts the financial position of the sample firm during the period of study. The Z – Score of HDDCF was low in 2006-07, but later the situation improved and there was an increasing trend. The highest Z – Score of the firm was 2.88 in the year 2009-10 and lowest was 1.39 in the year 2006-07. It is clear that the Z – Score of HDDCF was above 1.8. This means that the company is financially sound. The average score of the HDDCF was 8.82 which show that the financial position of the cooperative is very sound.

MAJOR FINDINGS

The average net cash flow coverage ratio of MILKFED was higher (48.51) as compared to that of HDDCF (13.42) during the period. This shows that the MILKFED is operating more efficiently as far as the cash solvency position is concerned.

The liquidity analysis has been done on the basis of current ratio, liquid ratio, ratio of cash and bank balances to total current assets. The average percentage of cash and bank balances to current assets of MILKFED was higher (84.91) as compared to that in HDDCF (76.72). MILKFED maintained a large proportion of cash and bank balances as compared to HDDCF. The average liquid ratio of MILKFED was also higher (7.67%) as compared to that in HDDCF (0.026%). This shows that the MILKFED had more liquid assets to meet its emergency requirements as compared to HDDCF. Further, the current ratio in MILKFED was also relatively lower as compared to that in HDDCF during the period of study. Thus, the analysis revealed that the liquidity position of MILKFED was better as compared to that of HDDCF.

The Z score analysis revealed that the value of Z-Score of MILKFED and HDDCF improved during the period of study. However, the average value of Z score was higher (5.69) in MILKFED as compared to that in HDDCF (1.76). Thus, the analysis shows that the financial position of MILKFED was sound when compared with HDDCF during the study period.

CONCLUSION

Thus, the MILKFED and the HDDCF are involved in procurement and processing milk

and making various kinds of milk products and then selling it in the states of Punjab and Haryana respectively. The main products manufactured and marketed include milk, butter, ghee, sweets, ice-cream, dahi, paneer, drinking delights etc. The alternative quantities available for various products were large for MILKFED products as compared to that of HDDCF products. The products of MILKFED were also made available in relatively small quantities and thus enabling the people with small means to afford them. The prices of the MILKFED (Verka) products were found to be relatively lower as compared to that of HDDCF (Vita) products. Both, the MILKFED and the HDDCF have launched various schemes for the development and promotion of dairy industry in their respective states. The return on assets was found to be higher in case of

HDDCF as compared to that of MILKFED. To conclude, both the MILKFED and the HDDCF www.zenithresearch.org.in

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SUGGESTIONS

It has been observed that the MIKFED and HDDCF have set up their milk booths in urban and semi-urban areas but they have no milk booth in the rural areas. Both the cooperatives should set up Milk Booths/milk bars in rural areas to increase their business. The reason being that some of the products manufactured by them like sweets, ice cream and drinking delights may get high sale in rural areas.

The MILKFED should utilize its assets more efficiently so to earn higher return on its assets.

It was found that societies of HDDCF were reduced in the year 2009-10. So, the HDDCF should set up more societies at village level for expansion of dairy business in rural areas.

The HDDCF need to improve the overall growth of its business by establishing more unions, plants and societies for the expansion and development of dairy business in Haryana.

BIBLIOGRAPHY

BOOKS

1. Goel B.B., “Reinventing co-operatives’’ Deep & Deep Publications Pvt. Ltd., New Delhi, 2001 pp- 32

THESIS

2. Kaushik, Amit Kumar (2005), Management of Human Resources: A Study of Punjab State Cooperative Supply and Marketing Federation Limited (MARKFED) Sources Ph.D thesis submitted to Panjab University Chandigarh, pp-263

3. Singh, Raghbir (1984), A Study of Consumer Behavior and Demand for milk products in

Chandigarh, Sources Ph.D thesis submitted to Punjab University Chandigarh, pp12 to pp20.

4. Benjamin, Thomas P Ratnam, N V (1983), Management of dairy development factors for increasing milk production under co-operative: A study in Karnataka” sources Ph.D thesis submitted to Indian Institute of Management, Bangalore pp1.

5. Kalyani, Arvindkumar V Koli, U R (1978), A study of the emerging problems about marketing of farm and dairy products in the city of Bombay (with special reference to rice, wheat, gram, tur milk and ghee) source Ph.D thesis submitted to University of Bombay pp1

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JOURNAL

Carley, Dale M and ling, K.Charles (1991), ʻʻSouthern dairy farmers’ evaluation of milk handlers.”ACS research report No.97, sept.

Misra, Sukant k. Carley, Dale H. Stanley, M .Fletcher(1993),ʻʻDairy farmer’s evaluation of dairy cooperatives”, Agribusiness, Vol.9,No.4, 351-361(1993)by john Wiley & sons.inc.

REPORTS

Annual Reports of MILKFED and HDDCF.

WEBSITES

1. http://milkfed.nic.in

2. http://www.milkfed.org

3 http://www.verka.coop

4. http://india.gov.in/sectors/agriculture/dairy_development.Php

5. http://www.tn.gov.in/SPC/tenthplan/CH99: Pdf

6. http://www.rurdev.usda.gov/rbs/Pub/Cir55rpt.htm

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WHETHER MOBILE MARKETING INCREASES THE BRAND VALUE OF A CAR

MS.R.SUGANYA*; MRS.S.SHANKARI**

*Faculty Member , R L Institute of Management Studies, Madurai,Tamilnadu. **Faculty Member, R L Institute of Management Studies, Madurai,Tamilnadu.

ABSTRACT

Direct and sales representative communication in Marketing are beyond Company’s brand communication budget, perhaps One should invest in Mobile marketing because it’s quick, direct, and affordable a fast response .Furthermore, to target a small group ,companies should go for less cost of communication mode . Read on ….. ______

1.INTRODUCTION

Technological innovations have changed for the better lives because of the introduction of various technologies. The first revolution was brought in by the computers and now, the mobile phones and the mobile based applications are all set to make a major impact on our lives. Although the economic slowdown is doing its best to retard auto sales, tech savvy auto dealers are turning to mobile marketing and mobile advertising to liven things up a bit. As the consumers always have their cell phones handy, they are always within the auto dealers' reach to receive their text promotion.

1.1 BRAND

A brand is the symbol, logo, design, or the name that is the unique identity of a particular product or service

and differentiates it from the competitor’s offerings. Intense promotional and marketing effort over time is required to build and establish a brand. Strong brands require strong positioning platform. The paper examines the

management of brands.

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1.2BRAND VALUE

The brand Value also known as Brand Equity.

BRAND AWARENESS - Brand awareness is the degree of familiarity that the consumers have with the brand.

BRAND IDENTITY - Brand identity is the associations that the consumers have with the brand.

PERCEIVED QUALITY- Perceived quality is the degree of quality as seen by the consumers in the brand.

BRAND LOYALTY- Brand loyalty is the degree of repeat value that the brand has.

2.MOBILE MARKETING

As per the chambers English dictionary , the word “ Mobile”means“able to move about. Philip Kotler defines “Marketing ” as “ a Social and managerial process by which individuals and groups obtain what they need and want though creating and exchanging products and value with others .”

“Marketing Management is the process of Planning and executing the conception, pricing , promotion and distribution of goods ,services , and ideas to create exchanges that satisfy individual and organizational goals .” (American Marketing Association ) With this definition is defined in the following ways: Mobile Marketing Association (2009) defines mobile marketing as “Mobile Marketing is a set of practices that enables organizations to communicate and engage with their audience in an interactive and relevant manner through any mobile device or network.”

2.1TYPES & KEY TOOLS

Some of the methods that are used in Mobile marketing are:

SMS (SHORT MESSAGE SERVICE ) : This is generally referred to as a text message that can be sent from person to person (P2P) ; from person to Application (P2A) , as in a voting application in a television realty show etc., or application to person, usually tagged with an acknowledgement or information (A2P)

PSMS (PREMIUM SMS): Here the service user is not charged for individual message, has to pay an incremental fee. This is effective in participating in a programme , purchase of a ring tone , caller tune or wallpaper and others that the service offers.

WAP: Is an abbreviation of wireless application protocol . WAP is the Wireless connection to

the Web. Access of internet on your mobile device is possible via a WAP session. www.zenithresearch.org.in

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MMS (MULTIMEDIA MESSAGING SERVICE): Picture, Video, audio can be taken using mobile phone and can be sent to friends or email. This is enabled by MMS or Multimedia messaging Service.

MOBILE VIDEO: Wherein the gadgets are fitted with a cameras for Video and Photography. It is possible to Watch TV, music videos and commercials on the Mobile device,

MOBILE ADVERTISING: Is much akin to the initiatives of internet or TV advertising ,this is a facility to intimate ,call to action or very simple present a brand banner using any of the above mentioned mobile applications-WAP,SMS,MMS.

2.2CHARACTERISTICS OF MOBILE MARKETING

Mobile marketing is no less than an exotic marketing solution . It has become a core channel for the marketers .According to a report published by first Partner Ltd.,(a Research and Marketing firm ) , the term “Mobile marketing ” refers to a broad range of formats in which target audience interacts with the campaign launched by a company with the help of their mobile phones .According to this report,mobile marketing has the following four types of broad formats:

1. MESSAGING –BASED: Mobile marketing is based on SMS and MMS (Multimedia Messaging ).

2.BROWSER –BASED : In this case the marketing is done with the help of internet on mobile for advertisements.

3.VOICE –BASED : Here the voice mail is used being supplemented with the messaging .

4.LOCATION – BASED : Some of the companies are using this as a convenient way of

reaching the customer on a one-to-one basis .

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2.3 THE 4 P’S OF THE MOBILE MARKETING MIX FOR BRAND VALUE

PERSONALIZATION: It is here referred customization of Products and services .eg: Enhance customer loyalty , Generating more sales , Launching a product , Building Brand Awareness .

PARTICIPATION : This is to allow the customer to participate in what the brand should stand for ; what should be the product directions and even which ads to run .e.g.: Branding/positioning , Customer Research .

PEER–TO-PEER : This refers to customer networks and communities where advocacy happens .The historical problem with marketing is that it is “interruptive” in nature ,trying to impose a brand on the customer .P2P is now being referred as social computing and is likely to be the most disruptive force in the future of Marketing .e.g.: Creating a Viral Element ,Generating Hype.

PREDICTIVE MODELING: This refers to algorithms that are being successfully applied in marketing problems. e.g.: Reaching the Right People.

3. IMPACT OF MOBILE MARKETING ON CAR SALES

When it comes to the auto industry, mobile marketing is playing a tremendous role in its resurgence. In fact, some of the best success stories in mobile have come in the auto industry. Advanced Mobile Solutions Cars2Go product is one such example. With Cars2Go, an auto dealer’s entire inventory is search-enabled and available on the convenience of the mobile phone. When you consider that 23% of all auto shoppers use the mobile phone during the car buying process, it is apparent that auto dealers, dealer groups, and OEMs need to embrace mobile marketing.

Auto dealers do a lot of advertising. And, adding an interactive text message promotion to that advertising is a great way to build a database of prospects for the auto dealership. Once a prospect participates in an interactive text message promotion, he or she has supplied a viable opt-in and can be contacted in the future when you have sales or special events.

3.1MOBILE MARKETING & SMS TEXT MESSAGING SOFTWARE FOR CAR DEALERSHIPS

Text message marketing for auto dealers enhances its staid advertising, especially newspaper advertising, and helps it come alive with interactivity. Mobile helps overcome the din of advertising in the crowded auto advertising space to make auto dealer stand out from the rest.With Club Texting, Car Dealerships can reach out to clients directly to keep them involved in your brand. Whether targeting a potential buyer or an existing client, Club Texting will enhance customer relationships to a more personal level via text messaging.

By using Club Texting, they can generate leads according to specific car models and

reach out to potential buyers about great deals and availabilities using SMS messages. The www.zenithresearch.org.in

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3.2BUILD BRAND LOYALTY

Mobile Marketing solution not only provides your customers convenient, on-demand access to inventory 24/7/365, but also gives you:

A fully branded site on 100% of phones.

More sales and service opportunities through new outbound campaign opportunities.

Mobile codes like “text WMX to 274447” to track spending and monitor leads from traditional advertising.

The ability to create custom landing pages to reach every target.

Strong lead management tools, including instant alerts and customer relationship management (CRM) integration.

3.3BENEFITS OF MOBILE MARKETING TO AUTO DEALERS

Mobile advertising such as text message sweepstakes, text message voting, premium SMS, bulk SMS, etc. puts a dealer's brand in the hands of their potential consumers. Research shows that over 90% of consumers that get text messages read them. A simple SMS or bulk SMS help auto dealers get into a one-to-one relationship with the consumer. No other form of advertising receives a response as high as mobile marketing. A recent study has indicated that the response to mobile advertising is as high as 50%.

Mobile advertising can be tracked very easily and therefore, allows auto dealers to evaluate results and check return on investment for every advertising promotion. Mobile advertising is a perfect solution for:

Recording the phone numbers of consumers for future promotions

Promoting new dealership campaigns

Real-time response to gauge the effectiveness of promotions

Targeting the younger generation

Building a database for future campaigns

Advertising additional services www.zenithresearch.org.in

Increasing the overall sales of cars, and service return.

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3.3 BENEFITS OF MOBILE ADVERTISING TO CONSUMERS

With mobile advertising, consumers can reply to the advertisement the moment they see it. Consumers sign up for a particular auto dealer's program because they want to receive their promotion

They can get information on the vehicles even after the working hours of the dealership and also on weekends and Sundays when the dealership is not open.

It's very convenient for the consumers as they do not have to cut out coupons from the newspaper. To redeem the offer, they just need to show the message to the dealer or provide the short code that the dealership included in his promotion.

Consumers can get access to used as well as new vehicle listings, complete with the vehicle pictures, rates, and vehicle condition report.

By entering a keyword and a short code, consumers can get complete information about the dealership contact details and directions to the showroom.

The present economic slowdown is the perfect opportunity for mobile marketing to shine, and indeed mobile marketing is driving the car sales for auto dealers.

4. RESEARCH METHODOLOGY

4.1 STATEMENT OF THE PROBLEM:

The penetration of Mobile phone and increase in the number of mobile phone subscribes had made it possible for the marketers to apply mobile technologies in marketing .Consumer acceptance of mobile marketing is one of the major challenges in mobile marketing .This is because, the mobile phone is a personalized medium for communication where they are reluctant towards receiving message related to marketing. Due to competition, car dealers have taken initiatives by adopting technology to improve their services to the customers in achieving lower turnaround time for customers servicing, complaint redressal and customer education. With this background, a study is going to be carried out to analyse the scope of Mobile phone in increasing

the brand value of the car.

4.2 OBJECTIVE OF THE STUDY

The primary objective of this research study is to gain an insight into the perception of mobile users, towards mobile advertising and their utility value in terms of impact on the purchase decision of car and maintain brand value. Hence we are attempting to explore consumers’ responsiveness to mobile marketing, taking into cognizance the impact of demographic factors like age, gender, occupation, etc. From the marketer’s perspective it is crucial to know the utility of mobile advertising, as far as having an impact on purchase decision

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4.3 LITERATURE REVIEW

A study done by Sanjit Kumar Roy (2009) showed that mobile channels are perceived to be more personal than traditional and e mail channels. This creates high expectations for the relevance of marketing communication messages. A consumer expects messages to be personal and of high interest and this makes the disappointment greater when they get undesired messages. Mobile advertising may even step over the line of discretion and invade consumers’ privacy because of the personal nature of the mobile device. Sumathi Shivkumar (2008) discusses how negative reactions like irritation arise through intrusion advertising.

4.4 METHODOLOGY

Research Design Descriptive type

Sample size 50

Sampling type Purposive or convenience sampling.

Tools used Percentage, pie chart, bar chart, rank correlation, K-S test, Chi-square test, tables etc.,

An attempt has been made to keep the sample fairly representative across the demographic variables by constructing convenience sampling according to these factors e.g. age, gender, occupation, and level and purpose of mobile usage. Almost 54% of the respondents belonged to the age group of 25 to 35 years and 30% of the respondents were professional, 27% were in business, 14% were government employee and 29% were in Private Employee. 88.7% were males and 12.3% were females. Almost 85% of the respondents rated their usage of mobile in the range of medium to high income. 75% of the respondents used their mobiles primarily for personal communication. The area of our sampling is the city of Madurai. The time frame of the study was October 2010 to December 2010. Primary- stage sampling units were the mobile user’s opinion for car sales, while the secondary stage sampling units were Car dealers view on mobile phone effect on sales.

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4.5 DATA ANALYSIS & INTERPREATION

1. PERCENTAGE ANALYSIS

FIGURE 1&2 : The chart shows Mobile marketing choice heavily influenced on the basis of respondent’s employment and age .

Age group

Source: primary data

FIGURE3: IT SHOWS THAT EDUCATION GREAT IMPACT ON MOBILE

MARKETING www.zenithresearch.org.in

It shows that education great impact on Mobile Marketing.

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Source: primary data

FIGURE4: THE CHART SHOWS THAT 66% OF THE RESPONDENTS SAID THAT THEY WERE SATISFIED WITH SMS MARKETING, BECAUSE OF CONVENIENCE AND RECORD FOR FUTURE USE

4.2. CHI-SQUARE TEST

Null Hypothesis: There is significant impact of educational level in Usage level of Mobile Marketing among the respondents.

TABLE NO: A) RELATIONSHIP BETWEEN EDUCATIONAL LEVEL AND USAGE OF MOBILE MARKETING OF THE RESPONDENTS

Category Usage No Usage Total

PG 9 2 11

UG 18 10 28

Schooling/Diploma 5 4 9

Uneducated 0 2 2

Total 32 18 50

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Here the calculated value of 6.05 is less than the tabulated value of 7.815 and the null hypothesis is accepted. Hence, there is significant impact of educational level in Usage of Mobile Marketing among the respondents.

4.3.KOLMOGOROV SMIRNOV ONE –SAMPLE TEST

NULL HYPOTHESIS Ho: There is no difference in the consumer brand awareness of car sales after the implementation of Mobile Marketing.

ALTERNATIVE HYPOTHESIS H1: There is difference in the consumer brand awareness of

car sales after the implementation of Mobile Marketing.

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From table 2.1 one finds that the largest absolute differences are darken ,which is known as the Kolomogorov-smrinov D value .As sample size is 50,the table value=1.36/ =0.192 .Here the calculated D value exceeds the critical value of 0.192.Hence the null hypothesis reject .

So, there is a significant difference in the consumer awareness of car sales after the implementation of Mobile Marketing among the respondent.

5.1 FINDINGS

Many companies are still underestimating the attentiveness of consumers for mobile marketing. Mobile marketing usage greatly influences by education and age of respondents, 55% of all surveyed consumers was able to remember the name of the company contacting them after the execution of a mobile marketing campaign. Consumers are particularly interested in availability and special discounts. 32.6% of all consumers think of companies as "forward oriented" that are using mobile marketing.26.3% associate them with being "innovative".80% of the respondents agree that mobile marketing increase CRM & Kolomogorov-smrinov shows mobile marketing increase brand value of car. Companies and experts agree on the potential of mobile marketing with certain limitations. The areas of getting attention, brand popularity and client attachment are considered most promising.

5.2 SUGGESTIONS

Companies generally desire more information in the areas of acceptance within target groups and avoiding spam in Mobile Marketing. So far marketers are allocating only 5% of their budgets into mobile marketing , because of demand the Company should increase the proportion ( This number is clearly bound to grow in the future).Mobile phones are becoming more important as "response channel" for TV or banner campaigns due to this the car manufacture can arrange some promotional program through Mobile . Mobile marketing is being established as successful interactive marketing channel, to increase car sales and CRM. "Mobile viral marketing" (word of mouth) has the potential to become a very successful branch of viral marketing: Mobile users don't depend on Internet access via Cable, DSL or Wlan. They usually carry their devices with them and are "always on".

Auto dealers do a lot of advertising. And, adding an interactive text message promotion to that advertising is a great way to build a database of prospects for the auto dealership. Once a prospect participates in an interactive text message promotion, he or she has supplied a viable opt-in and can be contacted in the future when Company have sales or special events.

5.3 CONCLUSION

Automotive marketers are also not new to mobile marketing. Brands like Chevrolet, Ford, Jeep, Jaguar and Toyota are all investing in mobile-marketing strategies to create awareness, drive leads to dealers and/or enable “in-your-pocket” exploration and interaction with Company products. SMS campaigns that include click2call, which enables consumers to call a dealer

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REFERENCES

Mobile Marketing: Achieving Competitive Advantage through Wireless technology by Alex Michael and Ben Salter, Butterworth –Heinemann Publication, 2006.

Airwide Backs Messaging Blog Mobile Marketing Magazine .May23,2006

Jayaram Anoop and Rajawat Yatish K., “On the Go”, Business World, October 29th 2007, page3.

www.articlesbase.com

www.datacommresearch.com

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A STUDY ON PSYCHOLOGICAL STRESS OF WORKING WOMEN

PROF. PARUL TRIPATHI*; PROF. SANDEEP BHATTACHARJEE**

*Faculty, Usha Martin Academy, Ranchi - 834009 **Faculty, Usha Martin Academy, Ranchi - 834009.

ABSTRACT

Women in India have proved there mettle in the work domain. Behind such success lies a big story of struggle and freedom in the traditional social arena. Besides, changing roles of working women, they have maintained the traditional work ethos of household. This research is devoted towards finding the root causes of the existing problems faced by the working women. It also aims at finding feasible solutions that have been practiced elsewhere and needs to be adopted at other social fronts.

KEYWORDS: Working Women,Stress, Workplace, Social Status,Working mothers. ______

I. INTRODUCTION

I.1 WORKING WOMEN

The Industrial Revolution in part was fuelled by the economic necessity of many women, single and married, to find waged work outside their home. Women mostly found jobs in domestic service, textile factories, and piece workshops. They also worked in the coal mines. For some, the Industrial Revolution provided independent wages, mobility and a better standard of living. For the majority, however, factory work in the early years of the 19th century resulted in a life of hardship.[1]

Women in India have come a long way after independence. From just a skilled homemaker, women today have acquired skills and capabilities of not just being a homemaker but being at par with their male counterparts. This is the new generation of women, who wants to pursue their dream career. But this life is not a bed of roses for all.

More conflict arises with the working mother. One has to fulfil the demand at work followed by various demands at home. In today’s scenario the husband and wife both work towards creating a balance with their work life as well as at home with their children. But it is still difficult for women as she has to play multiple roles of a cook, a family maid, a tutor, a nurse as well as cater

to the demands of office work. This can leave a working woman stressed and anxious; more so if www.zenithresearch.org.in

the family is not supportive. “My office is quite far from my home. By the time I get home my

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 husband takes care of my children’s studies and sometimes also prepares food. He gets time as his office is nearby and he reaches home early. If it was not for his support I would have left my job long time back”, says a working professional.[2]

I.2 WHAT IS STRESS

We live in stressful times. We are holding down two or more jobs. We are putting up with heavy job loads and unreasonable demands. We are swallowing outrage and frustration with unfair situations and irrational superiors because we cannot afford to be laid off or fired. Or we have already been laid off and we are struggling to find another job. Or we have given up and are coping with unemployment. Outside strains like these are called stressors. Stressors are the barely-tolerable pressures that bring us unhappiness and, eventually, disease.

Some people hardly seem to be affected by stressors. They maintain a sense of perspective and a sense of humour. They remain calm in the midst of adversity and catastrophe. Other people are overwhelmed by a lesser number and intensity of stressors and slide downhill, losing relationships, jobs, and eventually their mental and physical health. The physiological and psychological responses to situations or events that disturb the equilibrium of an organism constitute stress.

While there is little consensus among psychologists about the exact definition of stress, it is agreed that stress results when demands placed on an organism cause unusual physical, psychological, or emotional responses. In humans, stress originates from a multitude of sources and causes a wide variety of responses, both positive and negative. Despite its negative connotation, many experts believe some level of stress is essential for well-being and mental health.

I.3 PRESENT STATUS

The present status of women in the current working environment can be illustrated using some

recent data on the working women culture.

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FIG 1.PSYCHOLOGICAL WELL BEING

( Source : www.bbc.co.uk)

I.4 RELATIVE DIFFERENCE BETWEEN MEN AND WOMEN STRESS

It seems to be common knowledge that women are generally busier and more stressed than men, and that they juggle more roles and are constantly rushing towards goal fulfilment.

Researchers from The University of Arizona's School of Family and Consumer Resources decided to find out. They took a sample of 166 married couples and had each participant maintain a daily diary over the course of 42 days, where they recorded their daily stressors. The results indeed showed that women reported a greater amount of "high distress" days and fewer distress-free days than men. Interestingly, the differences in levels of stressful days were due to women experiencing more onsets of "distress episodes" (having stress response triggered), rather than being more likely to continue in a distressed state from one day to the next. In other words, women didn't hold onto their stress more; they just experienced more episodes of being stressed.[3]

II . HYPOTHESIS

H0: Working Women feel more stress than working men. (Null Hypothesis)

H2: Working Women do not feel more stress than working men ( Alternate Hypothesis)

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III. RESEARCH METHODOLOGY

Our study includes exploratory research on the concerned areas relating to working women and the stress levels that are constantly being felt by them. We have tried to use the latest concepts in management to highlight the situation in context of such problem and tried to suggest some of them for correcting the situation.

IV. DATA COLLECTION

Data was collected mainly using secondary sources such as newspapers, magazines and online sources such as websites and blogs. Some analytical graphs were also collected to support the research objectives and the hypothesis.

V. RESEARCH ANALYSIS

V.1 SURVEYS

CASE 1

In a survey conducted by Kenexa Research Institute, an HR advisory firm based in the US, 56% of the women surveyed said their stress level was reasonable, while 26% felt they were under unreasonable stress. Across roles, more women experienced unreasonable amount of stress than men did. While doing front-line supervisory jobs, women experienced 10% more stress than their male counterparts who carried out the same kind of functions. In service and production jobs, women felt 8% additional stress while at middle and upper manager level, the stress levels were up by 6% for them, compared to men.[4]

Factors including work-life balance, doing exciting work, having a respectful manager, being paid fairly, having a clear career path etc had a direct impact on the work stress among women, said the study. Looking at the difference between genders, results show that women work stress is more related to managerial support and equal opportunity, whereas men's stress drivers focus more on product quality and trust in senior leadership. It included some 29,338 men and women from India, China, Brazil, Russia, America, Britain, Australia, Canada, Denmark, Finland,

France, Germany, Italy, Japan, Mexico, the Netherlands, Spain, Sweden and Switzerland.

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FIG.2 AGE WISE STRESS LEVELS

(Source: www.ibankcoin.com)

CASE 2

In another study conducted in Bangalore, It was seen that while women at work deliver the same results as men, across occupations, women experience "unreasonable" stress than men do, says a global survey. Payment parity, equal opportunities, career growth, fair performance assessment

etc are some of the key concerns that kept working women under unreasonable stress.

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FIG. 3 JOB WISE INVOLVEMENT OF WOMEN IN VARIOUS INDIAN INDUSTRIES.

( Source:www.frautech.blogspot.com)

This research may partially explain why there are fewer women in the management roles. The media and academia have substantiated the existence of the glass ceiling. “Women fight the commonly held perception that they may lack the motivation to climb the corporate ladder, and our data indicate that fewer women feel that achieving career goals are likely while maintaining a balance between personal and professional lives. All these factors increase stress levels for women workers. Again, women are more open to report their stress conditions, compared to men," said Brenda Kowske, research consultant, Kenexa Research Institute.

V.2 CHILD'S PROSPECTS

Some researchers have revealed that mothers who return to work after their baby is born risk causing serious damage to the child's prospects in later life. Such children are more likely to do worse at school, become unemployed and to suffer mental stress than youngsters whose mothers stay at home to bring them up. The findings from the Institute for Social and Economic Research are a severe blow to the Government, which has used the tax and benefit system to encourage mothers to work while stripping away tax breaks such as the Married Couple's Allowance. They are an endorsement of the instincts of thousands of women who either give up work or

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According to the study, the impact of having a full-time working mother on a child's education is similar to growing up in a single-parent family. If a mother returns to work, say the researchers, the child is 20 per-cent less likely to get an A-level. They also reject the idea that a child is helped if the father stays at home, showing that his absence has little effect on the child's educational success. The research, published yesterday by the Joseph Rowntree Foundation, followed the lives of 1,263 young people across all social groups who were born in the 1970s.[5]

Researchers attempted to allow for other factors such as income, the parents' education and family break-up, and made comparisons of the performance of brothers and sisters. It found that the children between one and five whose mothers worked for the longest periods tended to have lower educational attainment, greater risk of unemployment as a young adult, and a greater risk of psychological distress. In only one field were the children better off than most others: Daughters of working mothers were less likely to become teenage mothers themselves. The findings showed that the average mother during the 1970s and early 1980s worked for 18 months full-time before her child was five. Nearly two thirds of their children, 64 per cent, achieved at least one A-level or equivalent qualification. However, among mothers who worked for a longer period - 30 months and over before their child was five - only 52 per cent of the children achieved one A-level pass. The likelihood of unemployment rose from seven to nine per cent for those whose mothers had worked full-time, and the chance of psychological stress went up from 23 per cent to 28 per cent.

Part-time work had much less damaging effects on children. The child's chance of passing an A- level fell by six per cent, but there was no evidence of other harm. Fathers who worked full-time had a similar impact on their children's development to mothers who worked part-time. But their children were less likely than others to be unemployed later in life and less likely to show signs of mental distress. Study author Professor John Ermisch said increases in family income were positive for children and could offset the damage of a full-time working mother. 'The large proportion of employed mothers with young children who are in part-time jobs is evidence that many mothers already prefer this option. 'But the Department for Education and Employment dismissed the findings, claiming that the development of childcare improves the educational chances of children of working mothers.

It said a study of more than 2,000 children had 'shown that quality pre-school and child-care has a positive impact on children's education'.'This report is based on children born 30 years ago when there was little quality child-care and nursery education. The Government has changed that by creating the largest ever expansion of childcare. Meanwhile, a U.S. study has found that growing up in a clean home can boost youngsters' exam grades and even the salaries they earn as adults. The study of 3,400 volunteers over 25 years found that the length of time a child stayed in education and their future earnings was directly linked to the hygiene in their homes. [5]

V.3 OTHER COMMON ISSUES

Working mothers still perform most of the household chores, while childcare costs can eat up much of their wages. Even when both parents are working, the responsibility of care for sick children usually falls on the mother. Stress loads are high for working mothers. Women’s access www.zenithresearch.org.in

to jobs may once have been a political issue, but in today’s tough economic climate, working is

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 INCOME DIFFICULTIES IN SOCIAL CONTEXT

If a mother works, then childcare has to be arranged. In some cases, childcare costs can eat up much of the mother’s wage. For low-income families, a second wage may actually leave the family in the same or worse financial position than a single wage, simply because the Parenting Allowance is income-tested.

 STRESS LOADS ARE HIGH FOR WORKING MOTHERS

Recent survey in a health magazine reported that managing the dual roles of mother and worker is extremely hard. Findings include:

Over 60 per cent of working mothers feel they take out their stress on their families.

Close to half of all working mothers would prefer to be full-time mothers, while around one fifth would like to work from home.

Just four per cent of working mothers would elect to work full-time if they had the choice.

Nearly eight out of 10 working mothers would quit their jobs if they could.

 HOUSEWORK IS STILL CONSIDERED AS ‘WOMAN’S WORK’

Various Researches indicates that married women with children are worse off than ever before, which is why they are initiating divorce in higher numbers and having fewer children. Some of the findings include:

Working mothers still perform most of the household chores.

Full-time mothers and women who work full-time have similar working hours.

Working mothers work more hours (paid and unpaid) than working fathers.

Mothers who work part-time have the longest working hours of all.

Most divorces are initiated by women.

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 SICK CHILDREN OF WORKING WOMEN

Many working mothers dread the possibility of their child getting sick and needing care during usual business hours. Most employers only provide paid sick leave for unwell employees. This means that many working mothers have to take annual leave or unpaid leave in order to stay home and care for their sick children. Key findings of a study published in Family Matters in 1991 include:

Even when both parents are working, the responsibility of care for sick children usually falls on the mother.

Some of the reasons for this include that the father earns a higher wage, his job responsibilities are deemed more important, and employers are more likely to accept a mother staying home to care for sick children than a father.

Around one in 10 working mothers feel guilty about their childcare arrangements - whatever those arrangements may be - when their child is sick.

Other common carers of sick children - apart from the mother - include grandmothers, other relatives, the usual child care (such as babysitter or crèche) and, lastly, fathers.

Working mothers want more flexible working hours, parental leave, workplace facilities for unwell children, and more understanding from employers.

 SEX LIVES

The Centre for Labour Research at Adelaide University conducted a study of 150 working women and discovered, through interviews, that lack of sexual intimacy was a major complaint. Some of the findings of the study include:

Most working women are too fatigued or stressed to feel like having sex..

Some working women resent their spouses for not doing their share of housework and other domestic duties (such as looking after children), and this anger spills over into the bedroom.

Most working women feel guilty and sad about their lost sex lives.

One solution to the problem is for men to do their fair share around the home.

More flexible working hours for working mothers would also alleviate the burden.

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VI. MAJOR FINDINGS

VI.1 AT PERSONAL LEVEL

This brings up some important issues regarding women and stress, that women need to be aware of:

 UNDERSTAND GENDER DIFFERENCES IN STRESS

If as a woman is feeling more stressed than their male counterparts, then they shouldn’t take it as a sign that they are not handling stress as well; it might be because they are experiencing more stress. They should uplift themselves for handling what they already are, and should move confidently to next step.

 PRIORITIZE & ELIMINATE WHAT YOU CAN

Women are associated with organising events in home and office. They may fall in situations where saying’ no’ becomes difficult for them especially when the work may seem to be easy and happy mood persists around the environment. They need to encourage themselves to be politely responding negatively to reduce the already existing stress. They must prioritize what’s necessary and what can be avoided.

 ALTER OR CHANGE YOUR PERSPECTIVE

Much of the experience with stress can be eliminated with a change in the way we look at things. This may sound too good to be true, but it isn't! Altering the way to conceptualize the events like finding or viewing them as a "challenge" instead of a "threat," or an "opportunity" instead of a "crisis,". The point is to make them feel less threatening and stressful. When people don't perceive a situation as a threat, then the body's stress response is deactivated more quickly (or doesn't get triggered in the first place), and individual’s may be more capable of avoiding the effects of chronic stress.

 HAVE SOME QUICK STRESS RELIEVERS

Fast stress relievers may be adopted my working women to avoid the monotony of stress . Such may include reading a book of jokes, listening to songs or discussion on general topics with colleagues.

 MAINTAIN REGULAR STRESS-RELIEVING HABITS

One can avoid stress from occurring in the first place by maintaining or practicing regular stress relieving activities. It may include Exercises ,Yoga, meditation etc. This can be inducted in either morning or evening schedule for regular days.It can be stretched further during holidays or

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VI.2 AT WORK LEVEL

There are a variety of ways that both working individuals particularly women and organizations can deal with stress related burnout. In general, simply resting can be very effective. This may include a temporary reduction of regular working hours, slowly rebuilding the endurance of the individual. In his book, Managing stress: Emotion and power at work (1995), Newton argues that many of the remedies related to burnout are motivated not from an employee's perspective, but from the organization's perspective. Despite that, if there are benefits to coping strategies, then it would follow that both organizations and individuals should attempt to adopt some burnout coping strategies. Below are some of the more common strategies for dealing with burnout.

1 ) EMPLOYEE ASSISTANCE PROGRAMS (EAP)

Stemming from Mayo's Hawthorne Studies, Employee Assistance Programs were designed to assist employees in dealing with the basic causes of stress. Some programs included were counselling and psychological services for employees and workers. There are organizations that uses EAPs today, but the popularity has diminished substantially because of the advent of stress management training (SMT).[6]

2 ) STRESS MANAGEMENT TRAINING

Stress Management Training (SMT) is employed by many organizations today as a method to get employees to either work through regular stress or to control their stress levels. The idea is to maintain stress levels below instances of burnout.[7]

3) STRESS INTERVENTIONS

Several Researches has been conducted that links certain interventions, such as narrative writing or topic-specific training to reductions in physiological and psychological stress.[8]

4.) PROBLEM-BASED COPING

On an individual basis, employees can cope with the problems related to burnout and stress by focusing on the causes of their stress. Various therapies, such as Neurofeedback therapy, claim to

assist in cases of burnout. This type of coping has successfully been linked to reductions in individual stress.[9]

5.) APPRAISAL-BASED COPING

Appraisal-based coping strategies deal with individual interpretations of what is and is not a stress inducing activity. There have been mixed findings related to the effectiveness of appraisal-

based coping strategies.

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6.) SOCIAL SUPPORT

Social support has been seen as one of the largest predictors toward a reduction in burnout and stress for workers. It require creating an organizationally-supportive environment as well as ensuring that all the employees have supportive work environments .This may negate some of the severe affects of stress and burnouts.

VII. CONCLUSION

Our findings reveal that our null hypothesis of Working Women feel more stress than working men stands true due to the highlighted facts from different sources. Also, alternate hypothesis H1, Working Women do not feel more stress than working men stands as false.

VIII. FUTURE WORK

We know that the current level of research may not reveal the exact parameters of stress in various industries of the economy. Therefore, intensive research shall be carried out in future research work in this particular field.

REFRENCES

[1] http://www.womeninworldhistory.com/lesson7.html

[2]http://www.paycheck.in/main/work-and-pay/paycheck-articles-archives/paycheck- articles/dilemmas-of-working-women-in-india

[3] Elizabeth Scott, M.S., About.com Guide,May 05, 2010, “How Women's Stress Differs”.

[4] Steve doughty, Daily Mail ,”Working mothers risk damaging their child's prospects”

[5] http://www.jrf.org.uk/work

[6] www.fujixerox.com/eng/company/sr/2010/highlight/03_index.html

[7] www.stresscourse.tripod.com/id106.html

[8]http://www.enwhp.org/news-events/newsletter/nl-july-09-effectiveness-of-workplace- interventions-to-prevent-mental-ill-health.html

[9] www.crpsib.com/userfiles/File/Annotated%20Bib%20Coping.pdf

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METAPHYSICAL POETRY AND JOHN DONNE: AN OVERVIEW

PIU SARKAR*

*Researcher & Part-time Lecturer in English, Guskara Mahavidyalaya, Burdwan, West Bengal, India.

ABSTRACT

John Donne is acknowledged as the master of metaphysical poetry and is admired for his talent and magnificent wit exercised in his writing. Metaphysical poetry is a special branch of poetry that deals with the pedagogic use of intellect and emotion in a harmonic manner. The basic praxis of metaphysical poetry is to highlight the philosophical view of nature and its ambience concerning human life. Despite criticisms from various corners, Donne and his other companions remained busy with their work to concentrate on metaphysical poetry to portray the feelings and sentiments of human beings by dint of their skillful and artful literary accomplishments. This paper is to address the outstanding performance of John Donne in the arena of metaphysical poetry and it endeavours to make a critical assessment of the diverse issues allembracing metaphysical poetry as well as to establish the relevance of metaphysical poetry in the literary realm. ______

INTRODUCTION

―Shine here to us, and thou art everywhere

This bed thy centre is, these walls, thy sphere‖

The Sun Rising: John Donne

The startling conversational lines marvellously enumerate the poet‘s intense appeal to spread the beams of sun on the lovers‘ world as a mark of illuminating the macrocosmic world and beckon the readers to enter into a new realm of poetry with a sense of attachment and belonging between different objects of nature and human sentiments, feeling, passion etc. This philosophical structure of poetic aptitude to associate the different aspects of nature and its constituents in a significant manner constitutes the basics of metaphysical poetry the pioneering contribution of which has been made by John Donne. Metaphysical poetry and John Donne are so inherently interconnected that one without the other becomes a misnomer. Metaphysical poetry symbolizes the splendid and meticulous blending of intellect and emotion, ingenious wit and caustic humour

so as to acquaint the readers with a new pattern of poetic excellence.

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GENESIS AND CONCEPT OF METAPHYSICAL POETRY

The onset of social reforms and Renaissance in particular made a sensational change in socio- political atmosphere in the late 16th and 17th centuries in England. In that era, politics and religion were intrinsically intertwined with each other and religion was at the heart of political controversy. The realm of education was revolutionized with new scientific ideologies, discoveries and inventions, coupled with grand and splendid literary creations. In the midst of such political insecurity, religious controversy, social fragmentation and intellectual ferment, there was the strong and pervasive presence of a spirit of freshness, of vivacity, of enthusiasm, of originality, of individuality, of new learning, of zest and so on. Diverse literary trends emerged in this whirlpool of change and enriched the history of literature.

While Shakespeare lends a unique dimension to poetic drama and Spenser to dramatico-lyrical poetry, this era also witnessed the flourishing of an erudite group of poets whose poetic reputation rested on a powerful mingling of the intellect and the emotion in the form of metaphysical poetry. Chagrined by the much trodden track of Petrarchan sonnets coupled with pompous words and emotional exuberance, this new circle of poets, known as metaphysical poets, set a new fashion of composing poems, which provided intellectual parallels to a spectrum of emotional experience, a sudden transmission from playfulness to high-pitched passion, interplay of levity and sincerity, and a wide range of imagery, both starkly realistic and startlingly cunning. John Donne, the pioneer of this metaphysical school of poetry, and his compeers like Andrew Marvell, Henry Vaughan, George Herbert and Richard Crashaw significantly contributed to this new poetic field to draw the attention as well as animadversion from various corners. A more comprehensive list of metaphysical poets would like to include Abraham Cowley, Traherne and Thomas Carew who were either directly or indirectly influenced by Donne, the lynchpin of this group.

The term ‗metaphysical‘ refers to dealing with the different facets of nature or a philosophical view of the nature of things. Grierson depicts metaphysical poetry as ―poetry inspired by a philosophical concept of the universe and the role assigned to human spirit in the great drama of existence‖. Donne and his associates are designated as metaphysical poets in so far as their poetic works have been enriched by the varied aspects of human life like love, religion, death etc. by way of demonstrating their impact on human life in a lively manner with the help of far- fetched imagery. Metaphysical poetry has sparkling capability to explore and express ideas and feelings about the terrestrial world and its diverse phenomena in a rational way to mesmerize the readers. Making innovative and shocking use of puns, paradoxes and employing subtle logical propositions, the metaphysical poetry has achieved a style that is energetic and vigorous unlike the rich mellifluousness and lilting overtones of the then conventional poetry. Broadly speaking, metaphysical poetry was the result of revolt against the conventional romanticism of Elizabethan love poetry and so, the metaphysical group of poets was inclined towards amalgamation of heterogeneous ideas and disparate images, use of intricate rhythm, realism, obscurity etc. Rightly does Joan Bennet observe that in case of Donne and his circle, the term ―metaphysical‖ actually refers to style rather than subject matter.

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Metaphysical poetry was in its heyday up to mid-17th century until neo-classicism entered to reign the literary realm and in the next two centuries metaphysical poetry went into total eclipse whereby Donne and his successors were discarded for displaying intentional obscurity. But 20th century ushered an unexpected revival of the metaphysical tradition where Donne and his group regained their lost favour and were studied with renewed interest and veneration by virtue of the modernist poet-critic T. S. Eliot‘s celebrated essay ―The Metaphysical Poets‖ in which Eliot vehemently admired their stunning capacity for devouring and merging all kinds of experience: ―When a poet‘s mind is perfectly equipped for its work, it is constantly amalgamating disparate experience; the ordinary man‘s experience is chaotic, irregular, fragmentary. The latter falls in love, or reads Spinoza, and these two experiences have nothing to do with each other, or with the noise of a typewriter or the smell of cooking; in the mind of the poet these experiences are always forming new wholes‖.

CHARACTERISTICS OF METAPHYSICAL POETRY

Metaphysical poem primarily hinges on, to say in Eliotean phrase, ―a unification of sensibility‖— the marvellous fusion of head and heart, of intellect and emotion, of thought and passion. Unlike poets in the Petrarchan and Spenserian tradition, a metaphysical poet attempts to establish a logical connection between his emotional feelings and intellectual concepts so that readers are compelled to think afresh, exercising their wit in lieu of a passive reading of poems. In this regard, metaphysical poets utilize striking images and conceits which are considered the hallmark of any metaphysical poem. For instance, Donne in A Valediction: Forbidding Mourning compares the lovers with a pair of compasses: ―If they be two, they are two so/ As stiff twin compasses are two/ Thy soul the fixed foot, makes no show/ to move, but doth, if th‘other do.‖ Such a far-fetched comparison to show the mutuality and interdependence of the lovers in terms of compasses is indeed astounding for which Samuel Johnson describes ‗metaphysical conceit‘ as ―a kind of discordia concors – a combination of dissimilar images or discovery of occult resemblances in things apparently unlike‖ (Life of Cowley). Again in Twicknam Garden Donne makes another brilliant use of conceit whose ingenuity, Helen Gardner considers, is more striking than its justice: ―The spider Love, which transubstantiates all/ And can convert manna to gall‖. Although Dr. Johnson pejoratively says that in metaphysical poetry heterogeneous ideas are yoked by violence together, it is evinced that such blend of discordant elements is quintessential to prove and persuade the readers about the point, the poet wishes to highlight.

Eschewing hackneyed phrases and worn-out images of conventional Elizabethan lyrics, these metaphysical poets telescope images and draw references from diverse spheres of cosmology, geography, science, philosophy, alchemy, theology, law and even from colonial enterprise so far as Britain was then emerging as the greatest empire through colonial expansion in different countries. The easy equation between lover‘s triumph and territorial conquest is perhaps nowhere so tellingly exemplified than in Andrew Marvell‘s To His Coy Mistress: ―My vegetable Love should grow/ Vaster than Empires. . .‖. In a similar vein, Donne charts love‘s course in tandem with his race‘s charting of the new world: ―Let sea-discoverers to new worlds have gone,/ Let maps to others, worlds on worlds have shown,/ Let us possess one world, each hath one, and is

one‖(The Good Morrow). While the following lines from Donne‘s The Good Morrow: ―Where www.zenithresearch.org.in

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 can we find two better hemispheres/Without sharp north, without declining west?‖ compare the world of the lovers with the geographical world; the concluding couplet of The Sun Rising: ―Shine here to us, and thou art everywhere/ This bed thy centre is, these walls, thy sphere‖ brings forth a cosmic imagery to show how the microcosmic world of the lovers emblematizes the macrocosmic world. Marvell‘s The Definition of Love, which is an abstraction on perfect love, culminates with an astrological allusion: ―Therefore the Love which us doth bind/ But Fate so enviously debarrs/ Is the Conjunction of the Mind/ And Opposition of the Stars‖. In Love‘s Growth Donne draws his imagery from mediaeval science, and scholastic philosophy to illustrate the true nature of love: ―. . . this medicine, love, which cures all sorrow/ With more, not only be no quintessence, / But mixed of all stuffs, paining soul, or sense. . .‖ The speaker in Love‘s Alchemy, on the contrary, derives his imagery from alchemy to suggest that it is not possible to fathom the mystery of love: ―I should not find that hidden mystery/ . . . as no chemic yet the elixir got‖.

Another distinct feature of metaphysical poetry, as practised by Donne and his successors, is a strange coalescence of passionate thinking and subtle ratiocination. For example, The Flea presents a desperate lover, trying to woo his beloved with logical and earnest solicitation for physical consummation: ―And in this flea, our two bloods mingled be/ Confess it ...... / This flea is you and I, and this/ Our marriage bed, and marriage temple is. . .‖. The metaphysical poetry is also characterized by a sudden dramatic beginning and superb utilization of colloquial language in lieu of specific poetic terms, as evinced in the abrupt, conversational opening of The Canonization where the poet-lover admonishes the intruder in a colloquial tone for hampering their privacy: ―For God‘s sake hold your tongue, and let me love, / Or chide my palsy, or my gout/ My five gray hairs, or ruined fortune flout‖.

JOHN DONNE: THE ARCHITECT OF METAPHYSICAL POETRY

John Donne is regarded as both the pioneer and the chief spokesperson of metaphysical poetry. Robert Browning rightly complemented on Donne‘s poetic proliferation by the words: ―Who was the Prince of wits, amongst whom he reign‘d / High as a Prince, and as great State maintain‘d?‖ Donne had a prosperous literary life, garnished with numerous love poems, songs, sonnets, elegies, satires, sermons, religious verse and treatises but a majority of Donne‘s poetical works were published posthumously, barring a few like The Anniversaries (1612) and Devotions Upon

Emergent Occasions (1623).

By his glorious poems, Donne helped the readers to taste the metaphysical flavour of his poetic expressions. In his major love lyrics like The Sun Rising, The Canonization, The Good Morrow, The Anniversary, A Valediction: Forbidding Mourning, The Ecstasy, Lovers‘ Infiniteness, The Flea, The Indifferent, A Nocturnal Upon St. Lucy‘s Day, A Valediction: Of Weeping, The Undertaking, The Relic, The Apparition, Love‘s Growth, The Dream, The Triple Fool, Song: Go And Catch A Falling Star etc., Donne critically sketched human love to differentiate it from the conventional concept of love given by others. Whereas most of the poets through ages contend that love remains beyond the compass of time‘s bending sickle, Donne in his poem The

Canonization has blended love‘s timeless fragrance with love‘s unifying power, through the www.zenithresearch.org.in

symbol of ‗phoenix‘ and here lies Donne‘s ingenious talent as a poet sermoning on love. The line

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―we in us find the eagle and the dove‖ is a powerful expression of the miracle of love to harmonize the antipathetic and opposite sexes – eagle and dove, symbolizing masculine virility and feminine softness respectively. Again in the same poem Donne celebrates love not simply as a holy passion, purging the lovers from baser things; rather as an alternative religion, the reverend love which becomes one another‘s hermitage, a haven of heavenly bliss and spiritual grace and thereby transforming the ordinary lovers to the saints of love to be followed by the posterity who will ―beg from above/A pattern of your love‖.

Through this act of resembling the canonization of priest with the glorification of lovers, Donne has pointed out a peculiar metaphysical flair of connecting the sublime with the commonplace. While the poet-speaker in The Canonization bestows a saintly grace to the earthly lovers, in The Sun Rising he describes the lovers as the monarchs in the realm of love and also claims that in comparison to the lovers‘ dignity and grandeur, ‗all honour‘s mimic; all wealth alchemy‘ i.e. love is the greatest wealth to them. The speaker-lover in The Sun Rising strategically glorifies love‘s perpetuity against the evanescent and ephemeral feature of nature through these lines: ―Love, all alike no season knows, nor clime, / Nor hours, days, months, which are the rags of time‖, in a manner much akin to Shakespeare‘s Sonnet No. 116 where he avows ―Love alters not with his brief hours and weeks, / But bears it out even to the edge of doom‖. The poet-persona in The Good Morrow proclaims how love creates its own perfect world, combined of two better hemispheres: ―For love, all love of other sights controls, / And makes one little room, an everywhere‖.

John Donne also made his remarkable performance by employing sparkling wit and jarring language in his writings. Having been disgruntled with the soft and melting phrases of the followers of Petrarch, Donne devised a language, terse and vigorous —all of which contribute to lend a masculine aura to metaphysical poetry. The strange and uneven opening of Donne‘s Song (Go and Catch a Falling Star) strikes a dissonant tone: ―Go, and catch a falling star,/ Get with child a mandrake root,/ Tell me, where all past years are/ Or who cleft the Devil‘s foot. . .‖. In Song, Donne has critically compared the impossible task of catching a falling star with the impossibility of getting a faithful woman: ―…..And swear / No where / Lives a woman true, and fair‖.

While among the Elizabethan poets, use of wit has been decorative and ornamental, Donne in his writings has employed wit sometimes in the form of satire and hyperbolic statements and often

in a serious and sincere manner. In The Sun Rising Donne has categorically applied satire: ―Thy beams, so reverend, and strong/ Why shouldst thou think? / I could eclipse and cloud them with a wink‖. Again in the same poem Donne‘s witty approach is conveyed by way of hyperbolic expression: ―She is all states, and all princes, I, / Nothing else is‖ to suggest that the lady-love is the empress of the kingdom where the lover is merely the prince. The following lines from Donne‘s The Canonization: ―We can die by it, if not live by love/ And if unfit for tombs and hearse/ Our legend be, it will be fit for verse‖ highlight how the speaker has used poetic wit in a serious and sincere tone to emphasize the immortality of terrestrial lovers through verse even if

after death nothing is mentioned on their tombs.

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CONCLUSION

John Donne is one of the most genius and versatile English poets. He is admired for his colossal contribution in metaphysical poetry. In his numerous writings he has added lots of witty approaches full of satire, passionate feelings, striking conceits etc. to highlight the nature and reality revolving around human lives. The new era of writing in the form of metaphysical poetry starkly attracted the readers through ages although many eminent writers like Dryden, Dr. Johnson strongly discarded his writings on the plea that Donne unnecessarily used metaphysical aspects to perplex the natural phenomena of love, sex etc. Although Andrew Marvell, Henry Vaughan, George Herbert and others have evinced their astuteness and sharpness in representing common subject matters like love, religion etc. with a new-fangled approach, John Donne shines amongst them like a luminous star for his stunning and unrivaled genius in rationalizing his daring imagination. It is Donne who blows the trumpet of change in the clichéd pattern of poetry, teeming with emotion, by inaugurating ‗intellectualized poetry‘— the metaphysical poetry. At the same time, scarcely can one deny how Donne‘s immense contribution to this domain of poetry facilitates and felicitates the meteoric rise and development of metaphysical poetry. Irrespective of time and age, John Donne is highly appraised all over the globe for his fantastic intellectual aptitude in describing the varied states of emotion and action of human beings.

REFERENCES

1. Eliot, T.S., The Metaphysical Poets, Selected Essays, London: Faber, 1932

2. Bennet, Joan., Five Metaphysical Poets: Donne, Herbert, Vaughan, Crashaw, Marvell, Kolkata Radha Publishing House, 1988

3. Reeves, James, Ed., Selected Poems of John Donne, London, Heineman, 1952

4. Redpath, Theodore, Ed., The Songs and Sonnets of John Donne, London, Methuen, 1956

5. Daiches, David, A Critical History of English Literature, Vol. I, Random House, India, 2007

6. Evan, G. Blakemore., Ed., The Sonnets, The New Cambridge Shakespeare, Cambridge

University Press, 2003

7. Sanders, Andrew, The Short Oxford History of English Literature, Oxford University Press, 3rd Edn., 2004.

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INTERNATIONAL HUMANITARIAN LAW AND CONCEPT OF HINDUISM

GAURAV ARORA*; GUNVEER KAUR**; SUPRITHA PRODATURI***; VINAYAK GUPTA****

*Student, Rajiv Gandhi National University of Law, Patiala, Punjab, India **Student, Rajiv Gandhi National University of Law, Patiala, Punjab, India. ***Student, Rajiv Gandhi National University of Law, Patiala, Punjab, India. ****Student, Rajiv Gandhi National University of Law, Patiala, Punjab, India.

ABSTRACT

This piece of writing deals with the investigation of the thread of connection between the concept of International Humanitarian Law and most ancient concept or religion i.e. Hinduism. There are several such evidences like Dharmma Yuddha etc. in Hindu sacred texts which establishes this thread as a golden thread of history. It‟s a general thinking that the ideals of past must be backward .But, this proves wrong when evidence of fiery arrows, Pusphak Vimaan are found. Not only this, but the Hindu sources give regulations for the use and control of such warfare which can be compared to the present day concept of non proliferation of nuclear weapon and disarmament. It is well said that each brighter side has a darker side. Similar condition is also with this “lifestyle” (as said by Swami Vivekananda). The concept of Dharmma Yuddha which is one of the strong pieces of this thread has negative side which is evident from Mahabharata and Ramayana. But, the brighter side can never be negated because it has darker side. Hence, it should be praised for the same.

KEYWORDS: International Humanitarian Law, Indian Religious texts and Hinduism. ______

INTRODUCTION

Swami Vivekananda who is considered to be an authority over Vedas and Hindu texts once stated over the Hinduism that it‟s not only a religion but a way of life. There is big difference between words “religion” and “way of life”. A religion is always meant to be idealistic and individualistic moreover but when it comes to “way of life”, it encompasses each and everything that can make this world idealistic. Further quoting the words of Manoj Kumar Sinha on the above argument,

“Hinduism is a way of life, a dharma. The word dharma is derived from the „dhri‟

which means “to hold together”. Those who profess the Hindu dharma and seek to www.zenithresearch.org.in

follow it are guided by spiritual, social, legal and moral rules, actions, knowledge

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and duties which are responsible for holding the human race together. Dharma does not mean religion: it is the law that governs all actions” (Manoj Kumar Sinha, 2005).

Further Agreeing with the divine idea of Swami Vivekananda and Manoj Kumar Sinha, it can be stated that Hindu religion or Hinduism is not a revealed religion and therefore has neither a founder nor definitive teaching. Moreover, word Hindu is originally a geographic designation, derived from the river Sindhu, the Sanskrit name for Indus. Hence this name is given to the people residing at the coast of this river and Hinduism is their knowledge and manner.

Hinduism has mentioned wars in its various sources. Even, Francois Bugnion has stated of Hinduism having “law of armed forces on the principle of humanity” in the following words,

“The ancient Hindu law of armed conflict, founded on the principle of humanity, had many rules limiting violence. The Upanishads taught that all human beings are one and that all are his children...” (Francois Bugnion, 2007)

The source of the “Hindu law of armed forces” as stated by Francois Bugnion was only Upanishads. But, in real sense, it will not be correct to say so. There are several sources of Hinduism having principles equivalent to the International Humanitarian Law famously known as law of war. If the sources of Hinduism is taken into consideration, it can be surely stated that modern International Humanitarian Law dates back to middle nineteenth century but in reality, it roots in the tradition of Sindhu valley particularly, the issue of Dharma Yuddha and Adharma Yuddha, declaration of war, special privileges to Hanuman as Dhut in Ramayana etc. It‟s not only that the above cited sources of Hinduism are the only source of regulation of wars in the lifestyle of ancient Sindhu valley. Basically, talking about sources of Hinduism there are four Vedas, Smritis (specially, Manusmriti), two great epics (Mahabharata and Ramayana) and the commentaries on Hinduism e.g. Kautilya‟s Arthashasthra. In laconic terms, there are primarily two sources of Hinduism i.e. Srutis and Smritis. Srutis, in real sense, is what is heard. Srutis are four Vedas, the Rig Vedas, Sam Veda, Yajur Veda and Atharva Veda (Manoj Kumar Sinha, 2005). Smritis literally mean what is heard. Basically, there are 18 types of Smritis or dharma sastra.

The question arrives of thread between Hinduism and the International Humanitarian Law.

Primarily, this thread can be found in Rig Veda, Manusmriti, Mahabharata, Ramayana and Kautilya's famous state policy book Arthashastra. The concept of the war is philosophically described in such manner in these sources that it can be said that the oldest religion of this world has regulation for control of war. Not only this, but it also deals with other aspects of regulation of war like distinction between civilian and combatant, declaration of war, nature of war (Dharma Yuddha and Adharma Yuddha), weapons to be used and other important issues.

WAR: A HUMANITARIAN ASPECT OF HINDUISM

Hinduism giving humanitarian touch does not forbid the war but consider it as a last resort for a www.zenithresearch.org.in

state to achieve its motive. Hinduism, like most religions, believes that war is undesirable

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 because it involves the killing of fellow human beings and hence should be avoided as a means of settling disputes (Manoj Kumar Sinha, 2005). However, it does acknowledge that there might be situations when it is better to wage war than to tolerate evil. This view has basically arrived from Manusmriti. Manu, the first person in this world as per Hindu mythology, has propounded the concept of Sam Dam Bhedh Danda. He consulted state for settlement of dispute by these following four stages successively: the first stage is peaceful negotiation of the dispute (sama), second stage after failure of first stage is to offer gifts for resolving dispute to please the enemy state (dama), third is veiled threat (bhedh) and the last stage allows to use the force or to wage war (danda). Moreover, in Manusmriti only, it is also given as a duty of king to fight war if a war is waged upon him. Manusmriti states it for a king as a Kshatra Varta (the religion of warrior class) to not to shrink from battle field if challenged by his enemies, be they equal, superior or inferior to him. Further, this concept of war as a last resort can be also supported by great pious Hindu epic poem Mahabharata where the war between Pandvas and Kaurvas used means of peaceful dispute settlement before the most disastrous war as cited in Hindu Sources. The fact of the matter is that they believed in the principle of settlement of disputes by pacific means and resorted to war as an ultimate means of self group when all other means proved futile (V.S. Mani, 2007)

Hinduism, not only, defines war as a last resort but also set rules for war procedure i.e. how a war ought to be? As per early Dharamsasthras and epics, there are two kind of wars mentioned i.e. Righteous war (Dharama Yuddha) and Unrighteous war (Adharama Yuddha which is also recognised as Kutta Yuddha). The basis of such classification is the cause for the war. If a war is being fought for righteous cause then it is recognized as Dharma Yuddha. The ancient Indian sages and seers supported only righteous war by righteous means is evident from the causes of war listed by them, namely the theft of wife, transgression of territory, or the capital of state, national honour, loss of fortune, the preservation of the balance of the power, death or injury sustained by an ally, the prevention of the oppression by a monarch of his subject. The demonstration of use of prowess through Ashwamedha Yagna and Vajpeya Yagnas was also permissible in ancient India. A war that was waged in the contravention of the rules of warfare or aimed to satisfy greed was not a just war (V.S. Mani, 2005). The example of Adharma Yuddha can be quoted in great Hindu epic poems Ramayana and Mahabharata. In Ramayana when demon king Ravana coveted the lawfully wedded wife of Lord Rama to wage war and hence his war of Ramayana on the side of Ravana was considered as Adharma Yuddha ab initio. This example shows the humanitarianism working at backstage in war phillosphy of Hinduism.

WAR PHILOSPHY OF HINDUISM: A GARB

The limits of a Dharmma Yuddha were not clearly defined at some places and provide a touch of garb. Sukra, a great propounder of policies for king, could advocate a treacherous war (Kutta Yuddha) for the purpose of self preservation. “The foe has to be killed in wars, whether wars are carried on by the principles of morality or not”, he warned his princely disciples. Even, a Dharma Yuddha as per Hindu mythology, should not involve any deception in the methods of warfare. But the exception of this can be found in the Mahabharata where Yudhisthra played a trick by naming an elephant on the name of the Dronacharya's son, Aswathama, killing it and

then shouting that Aswathama had been killed in war. This deception of killing Aswathama led www.zenithresearch.org.in

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ZENITH International Journal of Multidisciplinary Research Vol.2 Issue 2, February 2012, ISSN 2231 5780 to the defeat of heartbroken Dronacharya. This issue has been given the title of righteousness in war. A similar citation of use of Addharma Yuddha can be found in Nitisara written by Sukra. He points out that a weak king always has problem in maintaining the state (Manoj Kumar Sinha, 2005). To cope with this situation, Sukra suggests three possible course of action: a weak king should enter into a peace treaty (sandhi) with his enemy, or resort to Mantra Yuddha (a war of intruges) or Kutta Yuddha (unrighteous war). At the one hand, Kautilya, in his Arthashastra considers the open warfare as most righteous warfare but on the other hand, he also mentions concealed wars and silent wars in the favour of state. He doesn't speak against the waging of any of the three wars. Hence, it would be correct to state that Hinduism has time bearing regulation for war but this particular provision is not clearly defined.

RULES OF WARFIELD

Hinduism not only talks about justness of a war but also deal with method of war, means of war, object to be attacked etc. which we can also be termed as rule of Warfield. War is depicted subsequently in five stages of war in Hindu texts. They were lifting the cattle of the enemy (Vetchi), preparation for a regular invasion (Vanji), the bombarding of the fortress of the enemy (Nocchi), actual fighting (Thumbai) and victory (Vahai) (K.R.R. Sastri, 1966). Cattle lifting in south India constituted notice of an invasion. The notice of declaration of war was given an important place in Hindu texts. In ancient India, no war was started without declaration of the war and due notice of it. This statement can be supported with the example of Mahabharata and Ramayana. In Mahabharata, Lord Krishna went to meet Kaurvas as an envoy on the behalf of Pandava. Similar example is also in Ramayana where Hanuman as an envoy has given the warning of war to Ravana.

RULES OF WARFIELD FOR CIVILIANS

The rules of war which is discussed in Hindu sources covers a wide area. In Mahabharata, the warfare has a specific time. As per great Hindu epic poem Mahabharata, war can only be fought in day time. Not only, the time of war was fixed but it was also given in Hindu sources to whom to attack. The rule of International Humanitarian Law to not to attack civilian in any warfare can be further supported by Manusmriti. Manu Lays down “one who surrenders or is without arms or is sleeping or is naked, or with hair united (i.e. unprepared) or an on-looker (non-combatant) must never be killed,” irrespective of whether the opponent was a believer or an arya or yavana (alien non-believer) or whether he was fighting a just war or not (Nagendra Singh, 1969). From these all symbols depicted in above statement, it is quite evident that the prisoner of war (one who surrenders), Civilians and warriors who are not prepared can be covered under this and will not be killed. A classic example of the observance of the rules is to be had when Lakshmana in the war against Ravana, the demon king, was forbidden by Rama, the king of Ayodhya, to use a weapon of war which would destroy the entire race of enemy including those who did not bear arms, because such destruction en masse was forbidden by the ancient laws of war even though Ravana was fighting an unjust war with an unrighteous objective and was classed as a devil- demon himself and hence could be considered the then world of civilisation. Further, the example of Arjuna refrained from using pasupathastra, a hyper destructive weapon in

Mahabharata can also be taken as a case of same reason. Even Shanti Parva states that a warrior www.zenithresearch.org.in

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RULES OF WARFIELD FOR PRISONERS OF WAR

Hinduism not only talks about the civilians and non- combatants but also the prisoners of war. It is true that Rigveda refers to slave (dasas) and great epics Ramayana and Mahabharata refer to enslavement of war prisoners but it is also equally true that the Smritis condemn slavery and Agni Purana clearly forbids the enslavement of prisoners. The Mahabharata declares that a victorious monarch should express his profound sorrow at the death of the soldiers of enemy prince. Further, Agni Purana states that a soldier who surrenders by laying down his weapons should not be slain and medical assistance should be given to the wounded soldiers of the enemy.

Other than this, it also has clause for Ambassadors. As per Hinduism, a dutta can never be disrespected and killed. This is evident from the example of Hanuman in the Ramayana where Ravana intended to kill Hanuman who was a dutta on the behalf of Rama, the king of Ayodhaya at that time. His brother Vibhishana reminded him that if he did kill the ambassador [dutta], he would act against Raj Dharma (the duty of kings) (C.J. Chako, 1958). Further, there is also a special importance given to the people of place being invaded in war. Fruit, Flower gardens, temples and other paces of public places be left unmolested (Agni Purana 236-22). By this clause, it is also depicted that Hinduism does not want to influence the progress of the state and hurt the feelings of the people living there.

Not only the above cited matter, but Manusmriti also considers the rank and condition of fighting officers in war. A warrior should only fight with the warrior in his rank e.g. a cavalry soldier should not attack a chariot-warrior (K.R.R. Sastri, 1966). Collective attack against a single soldier and the slaying of a warrior who was temporarily at a disadvantage during battle were strictly prohibited (Manoj Kumar Sinha, 2005). By this manner, fairness comes in the methods of war which we need until now and International Humanitarian Law stands for.

WARFARE CONTROL REGULATIONS IN HINDUISM: PARITY TO THE PRESENT CONTEXT

Hinduism also deals with the weapon to be used in the war field. In modern world, when we talk about wars, it‟s always come to the use of nuclear weapons, fiery missiles etc. In the modern

day, the aim to stop war race is being done. Even, the weapons as quoted in Hindu sources are also modernised. The example can be found at several places in epic poem Mahabharata and Ramayana like Pusphak Viman being used by lord Rama in Ramayana. But, “Hindu law of armed forces” has the regulation for control of such weapons at war time. This again establishes the point that International Humanitarian Law were on this earth from the time of Hinduism. This can be again exemplified with Rama‟s stopping his brother Lakashman from using a weapon which can destroy innocent human race in Ramayana and Arjun refrained from the use of Pasupathastra, a hyper destructive weapon in Mahabharata. The code of Manu, dating from the first century B.C., forbade the use of fiery arrows and poisoned spears, as well as the killing of wounded or sleeping man (Geza Herczegh, 1984). Even, modern nuclear weapons are quite www.zenithresearch.org.in

close to Pasupathastra in Mahabaharata and fire tanks of present day is similar to Naliksastra as

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“Our modern strategists who have killed two or three hundred thousand at Hiroshama and Nagasaki are invited to read the following passage from Kautilya(Book XIII. Ch. IV):

When if fort can be captured by other means, no attempts should be made to set fire to it; for fire cannot be trusted; it not only offends the Gods but also destroys the people, grain, cattle, gold, raw materials and the like. Also, the acquisition of a fort with its property all destroyed is the source of further loss”(K.R.R. Sastri, 1966).

We cannot not only get reference on the issue of nuclear weapon but on some other modern issues. The “fiery arrows” mentioned in Manusmriti can also be considered as missiles of the modern warfare. Hence, by this mean, “Hindu law of armed force” made a regulation for control of warfare which is quite advanced and cannot be called backward in present days.

As we have discussed earlier that Hinduism is a lifestyle and hence has a wholistic approach, even toward the war. Until now, the factors of methods, means and other present conditions at wartime are discussed, but Hinduism also includes the condition after the war. A conquering king should reassure defeated person that not much has changed except their ruler. As per Manusmriti, when a king has conquered a state, he shall not destroy the royal race of that state until it is of ignoble birth and made a prince of that country king there. Further he should also honour the gods and grant exemption from taxation. Further, property is also an important part of after war subjects.

CONCLUSION

Hinduism which is recognised as the oldest religion of the world has such evidence proves that the concept of International Humanitarian Law is there. It also indicates toward the forever demand of such regulation for control of armed race. On the other side, it also shows the concern of Hindus, the people of Sindhu valley, and ultimately Indians to control the warfare in the ancient time also. The attitude toward the war found in Hindu texts is still needed from each and every member of this universe. Even, at some places, Hinduism shows advanced steps which are

being thought now. The best example of such step is ban on the use of nuclear weapons which has been thought first time after the Second World War. Even, there is concept of Dharam Yuddha which gives humanitarian touch. But, at the time, we have criticism of it in the forms of exception in several Hindu texts as discussed above. But, its concept being wholistic overcomes this defect in the regulation of war. By these citations, it can be finally deducted that Swami Vivekanada‟s statement of Hinduism as a lifestyle. Further, adding on that, it can be stated that it

is an ideal lifestyle.

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REFERENCES

BOOKS

Herczegh, Geza (1984), Development of International Humanitarian Law, Akademiai Kiado, Geneva, p. 13.

Chekka, Benarji ed. (2008), International Humanitarian Law: A reader from South Asia, International Committee of Red Cross, p. 132.

Singh, Nagendra (1969), India and International Law, S. Chand & Co., New Delhi, p. 4.

Mani, V.S. (2007), Oxford handbook of International Humanitarian Law in South Asia, Oxford Press, New Delhi, p. 28.

Mani, V.S. (2005), Humanitarian Intervention Today, Martinus Nijhoff Publishers, Leiden, p. 37.

ARTICLES

C.J. Chako (1958), International Law in India, Recueil Des Cours Vol. 93, p. 117.

Francois Bugnion (2007), Customary International Humanitarian Law, ISIL Yearbook of International Humanitarian and Refugee Law Vol. 7, p. 1.

K.R.R. Sastri (1966), Hinduism and International Law, Recueil Des Cours Vol. 117, p. 507.

Manoj Kumar Sinha (2005), Hinduism and International Humanitarian Law, International Review Of The Red Cross Vol. 87, p. 285.

Surya P. Subedi (2003), The concept in Hinduism of “Just war”, Journal Of Conflict And Security Law, Vol. 8, p. 339.

V.S. Mani (2000), An Indian Perspective on the Evolution of International Law on the

Threshold of the Third Millennium, Asian Yearbook Of International Law, Vol. 9 p. 31.

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THE IMPACT OF CHANGE ON MANAGERS-ON ACCOUNT OF ACQUISITION

DR. KOMAL*; VISMAY VIBHOL**

*Associate Professor, Sanskriti School of Business, Vadodara, Gujrat. **Final Year PGDM Student, Sanskriti School of Business, Vadodara, Gujrat.

ABSTRACT

Change management is evolving as the business landscape changes in response to changing customer preferences, developments, tastes and new and improved processes and technologies. A change in company operations can challenge and stress people’s values and central core beliefs. Dealing with behavioural and cultural changes is part of the organizational change process and an important consideration for change management professionals. Adopting new company procedures and practices can require the development of new education programs to assist with aligning people to new company operations. This is the study of a particular company through which we studied the change management. ______

INTRODUCTION COMPANY’S HISTORY Areva T&D Limited manufactures and supplies a complete range of equipments and services and systems for transfer of electricity from the generator to the end users. The company’s manufacturing units are located in UP, Tamilnadu, West Bengal and Gujarat. It has 22 sales offices and 3 project offices and employees over 4600 people in India.

NAME OF ORGANIZATION AREVA AGE 125 years(Globally)

50 years(India) GEOGRAPHICAL LOCATION India, China, Italy BRAND EQUITY NUMBER OF EMPLOYEES 40,000(Globally) 4600(India) MANUFACTRING UNITS 8(India)

SALES OFFICES 22(India)

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AREVA’S BUSINESS AS A WHOLE

Front end division

Reactors and service division

Back end division

Transmission and distribution division BACKGROUND OF STUDY

Organizational change can impact the psychological, emotional and physical states of company’s employees. Many people do not experience comfort zones and develop barriers during their daily lives. Handling change at the organization level would be challenging for the company. The challenges encountered by organizational change have a ripple effect on the entire organization. When the business units that comprise a company are fully integrated, a change or restructure in one can have a profound domino effect on another. Effectively managing this process is an art that has created a new area of expertise that has become known as change management.

In the current scenario the company is facing the acquisition of Areva T&D by Alstom and Schneider. The Distribution unit will be headed by Schneider and the Transmission will be headed by Alstom. The agreement allows both acquirers to immediately assume separate operational responsibility of each of these businesses. Alstom and Schneider Electric will also develop cooperation between the Transmission and Distribution businesses, via commercial and license agreements. R&D agreements will be put in place for the development of innovating technologies to the benefit of both companies. The major goal behind this acquisition is to optimize the strategic, industrial and commercial strength which leads to maximization of the value of business.So, it’s likely that Areva T&D will face many changes due to acquisition by Alstom and Schneider. The change is occurring at global level but the area under study would focus on changes brought to Areva T&D India, Vadodara unit.

Companies that are going through extensive organizational changes employ the services of highly specialized personnel who can assist with the integration process. Personnel who operate

in this area are adapted at translating a companies’ vision, communicating, integrating and re- educating individuals to align with the new goals and objectives of the company. This can include advising management where rigid operational structures need to be adapted to better serve the needs of the companies and employees alike.

Organizational change initiatives to realign company objectives, capital and resources become necessary when the company shifts its strategic focus in response to exogenous market forces or events that require it to examine the way it does business and implement a new framework to accommodate changed goals and objectives. Despite this re-orientation, not all companies

experience a smooth transition to the new paradigm. Some of the problems that befall companies www.zenithresearch.org.in

and create barriers to organizational change are outlined below:

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Inadequate Requirements Planning: Unlike machines that automatically respond to new commands, human beings have emotional and psychological needs. Issuing a new company mandate may not be fully embraced unless sufficient justification and education is undertaken to convince and realign individuals with the new company direction. Entrenched attitudes and beliefs and fear of failure create barriers that organizations need to examine. Change agents can assist with this process but not all companies possess the vision to realize the importance of managing people’s attitudes and expectations during the realignment process. This can be particularly evident in cases that involve merging two previously competing entities. The sudden realization that a previous adversary is now an accepted team member can require carefully thought out planning to successfully merge operations.

Mergers and Acquisitions: When companies merge or consolidate operations, significant costs cutting and a re-engineering takes place. Redundancy and restructure to align with management objectives drives organizational change. The integration of two companies creates significant challenges to streamline operations and integrate existing IT operations into a centralized structure. Consider the implications of merging two independent billing systems which use different platforms and infrastructure. The careful dedicated planning required to bring this to fruition is part of the change management process.The research topic is “To study the impact of change (On Account of Acquisition) on managers at Areva”.

RESEARCH METHODOLOGY

Research Design Descriptive in nature

Population Employees at all level working in Areva

Sampling Unit Employees working at managerial level

Sampling Size 100

Sampling Method Non Probabilistic(convenience sampling)

Data collection Method Questionnaire

Instrument Structured Questionnaire

OBJECTIVES OF STUDY 1. To study the impact of change on employees

2. To study the effectiveness of change process DATA SOURCES

Secondary Sources www.zenithresearch.org.in

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The data will be collected from the documents which are maintained by Areva.

Primary Sources

The data will be collected through interaction and questionnaire from the employees of Areva.

DATA COLLECTION The primary data is collected through a questionnaire which is divided into three phases PHASE 1: TO WHAT EXTENT THE EMPLOYEES ARE AWARE ABOUT THE CHANGE  The organization would get to know the perspective and mindset of employees. The change which the company is currently undergoing, how well the employees understand the importance of it and are positive or negative about it. To know whether relevant and important information sharing occurs frequently. As the change is due to acquisition, which is considered to be a big change it is important to know whether all the information is made available to the employees time to time or not.

 To know whether employees understand that the change is in benefit of them or not. It is important to know whether the change is brought in such a way that the employees seek their benefit with the benefit of the company.

 To know whether the employees feel confused and feel loss of identity due to change. As the change is due to acquisition it is possible that the change is on large scale the employees might feel a state of inconsistency.

 To know whether the employees are aware about the objectives of the change. Any change brought in the organization has a strong reason behind it, so it is necessary to know about the main objectives of change.

 To know whether the level of change brought is in the right amount. Change should not be so more that the employees are unable to take so this aspect will help to know whether

the change brought is in right space of time.

PHASE 2: TO WHAT EXTENT THE EMPLOYEES ARE COMFORTABLE WITH THE CHANGE

 To know whether the process of change being adapted is effective or not. If the employees don’t feel or are not kept well informed about the change it would be difficult for them to adjust so this aspect is to know whether change process is comfortable for the employees to adjust or not.

 To know the comfort level between manager and subordinate is maintained after change www.zenithresearch.org.in

or not. The comfort level is matter of concern as if this is maintained then it would be

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easy for them to share their problems and issues in regard to the change and in the process they can also learn a lot.

 To know how adaptable the employees are towards change. Their flexibility towards the change should be known by the Management.

 To know the level of cooperation from employees towards change. If there is low cooperation then the things will not be smooth to be worked upon and there are chances of conflicts.

 To know whether the employees expectations towards change are fulfilled or not.

 To know whether the employees face any situation of uncertainty or not during the change. Uncertainty is bound to be faced by employees to some level in the change but it should not be so high that it hinders the performance of the employees.

 To know whether there exists an environment where employees feel free to express their views and problems faced by them due to change. A learning environment is a must in an organization so that the opinions and suggestations can be shared and considered.

 To know whether the employees face conflicts in setting targets and objectives. If due to the pressure of change there are conflicts in setting goals and objectives then it is a matter of concern and should be addressed.

PHASE 3: TO KNOW THE IMPACT OF CHANGE

 To know whether the impact of change on employees in negative or positive. If there are some doubts and inhibitions in the mind of the employees then it needs to be solved.

 To know the impact of change of change on employees on security issues. To understand whether there exists all the provision where the employees feel security with their jobs.

 To know the impact of change on roles and responsibilities after the change. If there is any change in the hierarchical structure then it would be important to know if their working style or responsibilities to shoulder have changed or not.

 To know whether the conflicts have arisen after the change. Change is one aspect which is bound to change and at the same time it’s difficult to cope with the change so there a quite a lot of chances of conflicts to arise. So the Management should be aware about it.

 To know whether there are any changes in the level of employee engagement during the change. If the change is not acceptable to them or they are not comfortable with it then it will affect their involvement towards their work.

 To diagnose the gaps if any during the process.

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 To know whether the employees are ready to shoulder the extra responsibilities due to change if required.

 To know whether there is any need to reinforce the levels of motivation due to change. Motivation is variable which is necessary and which works as a encouraging factor for the employees to work towards the change.

 To know whether their confidence level ever stumbled feeling the lack of capability to cope with the change.

DATA ANALYSIS

63% strongly agree and 37 % person agree with this question which suggests the employees are completely aware the objective of change (Acquisition), which convinces that the acquisition will add more value to the organization. It also conveys that the important information is communicated well by the company.

60% agree, 20% strongly agree, 20% disagree,. This suggests that the employees feel that the change brought is speedy which probably makes it difficult for them sometimes to cope up with the particular

situation.

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17% Strongly Agree, 67 % Agree, 16% Disagree. This suggests that the employee seek their own growth and prospects along with the organization.

70% agree 3 % strongly agree and 27 % disagree. This suggests that there is a very good communication between the manager and his subordinate. The manager understands the importance of communicating the right thing at the right time and at the right place. This makes their work easy and hence avoids the confusion.

47 % agree, 7 % strongly agree & 47 % disagree. This suggests that the process adopted could have been a lot better. A lot of people still don’t have confidence regarding the process of change adopted by the company. This may lead to doubts in the mind of the employees and it may

affect their performance.

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83% Agree, 10% Strongly Agree, 7% Strongly Disagree. This suggests that the employees feel that there are more fluctuations in the change plans and there are more frequent changes in the change plans.

40% Video Conferencing 40% emails 20% meeting. This suggests that the employees are more comfortable to receive communication regarding change with email and video conferencing.

47% fairly well, 43% to some degree, 10% very well. This suggests that the employees might feel uncertain about setting their goals and objectives due to this environment of change.

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50 % fairly well, 10 % very well & 40 % to some degree. This suggests that the employees do receive necessary and timely trainings. But still there is a lot of scope of improvement i.e. the employees still suggests for more training and especially they need more of the detailed training sessions so that they have proper knowledge regarding the change before they implement.

67% fairly well, 13% very well, 20% to some degree. This suggests that there exists a good working environment where the employees feel quite comfortable in sharing their views and problems. This is also suggests that the comfort level between the manager and the subordinates is well maintained.

67% very well, 33% fairly well. This suggests that the employees are given an environment where they are encouraged

working in teams to give better outputs.

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44% Responsive, 33% Involving, 23% Forward looking. This suggests that the employees feel that their culture is quite involving which accepts versatility and is open to a mixed culture and use to its maximum benefit in their workings and also dealing with the customers.

17% strongly agree 83% agree. This suggests that the employees are willing to shoulder extra responsibilities due to change if required, and also are motivated to support change.

50 % agree, 43 % disagree & 7 % strongly disagree. Half of the population feels that there is a need to reinforce the level of motivation due to change. This implies that employees get

demotivated and disturbed due to frequent changes in the organization.

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60% Disagree, 12% strongly disagree, 20% agree, 8% strongly agree. This suggests that the journey from Areva to Schneider has been filled up with quite a lot of difficulties but they have strongly faced them to live up with to the expectation of management

67% Agree, 17% strongly agree, 16% disagree. This suggests that the employees are given an environment where they can freely express and share their views and opinions. If they feel any difference of opinion with their subordinates they can communicate well and sort out there.

In this question on a scale of 1 to 10 where 10 is highest degree, 67% gave 7 points, 27 % gave 8 points& 6 % gave 9 points. This strongly suggests that the employees would suggest their friends to join this organization. This gives a strong

message that the employees are very happy with the organization and this creates goodwill within and outside the organization.

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FINDINGS FROM THE RESEARCH

The present scenario in Areva suggests that the employees are well aware about the objectives of change (Acquisition). They very well understand that the goal behind the acquisition will lead to the strategic industrial and commercial strength which leads to maximization of the value of the business.

The employees understand that the acquisition will lead to their individual growth along with the organizational growth. This motivates them to give extra effort and shoulder extra responsibilities to help the organization meet its organizational goals.

A very key component in any organizational change is communication. Our research suggests that the communication is very effective and timely, which makes it easier for them to handle changes. According to research the most convenient and suitable modes of communication which the employees suggests is email and video conferencing. Also the working environment which signifies a base for any successful organization has been found to be very comfortable and good in Areva.

Due to change there are expected conflicts and confusions prevailing in the working environment so it is very necessary that they are given a platform where they can smoothly discuss and express their doubts and inhibitions. Research exhibits that the employees of Areva are given ample opportunity to express their doubts and inhibitions at length. Also the change brought due to acquisition brings in lot of extra responsibilities and pressure to give better output, so there is a need of an environment where there can be more teamwork. My research shows that the employees are given encouragement to work in teams and give the desired results.

In the corporate working environment one thing which signifies the norms, relationships (formal and informal) is the Culture of any organization. Especially in an environment of Change there is a need for the establishment of a good culture which helps to further inculcate the strength to believe that the change brought would be in the reach of the employees to handle unitedly. My research comes up with a conclusion that the new culture evolving is quite responsive which suggests that there is more adaptability due to change.

Change brought in any organization cannot be successful unless the employees are well supported and communicated. Training is one aspect which works as a tool for the employees to

learn new things and thus give good outputs. Especially in change where the new practices brought are in detail context and thus training becomes a necessary component for them to cope up with the change. Research exhibits that the employees think that they require more detailed training which will help them to adapt faster to the changes.

In the research conducted the employees were asked to rate whether it is likely or unlikely for them to suggest their friends to join Schneider Electric. The majority of the employees gave 7 as the rating which signifies that it is quite likely that they would suggest their friends to work in

Schneider Electric.

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There are certain gray areas where there is need and scope of improvement. My research shows that the employees suggest that the process of change adopted is not quite effective and there is a need to bring some changes in it. Also when asked to them whether the change plans are often in inconsistent state they mostly agreed with it, which also shows that there are situations that occur causing confusions and difference of opinions. The working procedures have changed quite a lot which signifies that there is a prior need that the management supports them fully to cope up with the change.

Also the employees think that the change brought is a bit speedy which probably makes them difficult for them to adapt to change. If the procedures and prior formalities are rushed towards them then it becomes strenuous for them to cope up with the change.

CONCLUSION

There were two major objectives of research:

1. To study the impact of change on employees.

2. To study the effectiveness of change process.

The finding of the research says that there has been a very positive impact of this change on employees at Areva. They have embraced this change with a positive approach, understood that their individual growth goes hand in hand with the organizational growth. This has brought in a level of motivation to learn new things. Thus it can be concluded that the overall impact due to this change has been very positive.

The success of an organization depends on how effectively the said change has been absorbed and accepted by its employees. Areva has been quite effective in this entire process of change management due to several reasons. The first and the foremost being open culture that prevails within the organization. Employees have the freedom to share their knowledge, opinion and thoughts, good suggestions are not only welcome & being implemented but the concerned employee is also rewarded for contributing in this manner.

As mentioned earlier, communication is of vital importance in order to implement any change effectively. Areva has been successful in effective communication; there is a lot of transparency within departments. All employees are well informed about the new developments, given the requisite training for new learning and development initiatives.

In the end I can conclude that the overall impact and effectiveness of the change has been managed exceptionally well at Areva. The company has not only been successful in implementing this change but also improved upon its goodwill in the minds of its internal as well

as external customers.

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BIBLIOGRAPHY

1. Areva’s Website : http://www.areva-td.in

2. Other Websites :

a. http://en.wikipedia.org

b. http://www.change-management.com

c. www.google.com

3. Areva’s reading material and reports

4. Human resource management by Stephen Robbins

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