Volume 9 July - December 2014 ISSN: 2229 - 4651 Contents

Papers Factors Determining Indian Banking Consumer’s Perception on 01 Internet Banking Patel Akash, Kiri Rajeshkumar & Patel Kiran

Evaluating the Role of Online Review for Bollywood Films on 15 Box Office Performance Patel Naresh & Frince Thomas

Impact of Operating Leverage on Profitability: A Study on Indian 24 Automobile Industry D. Silambarasan & Azhagaiah Ramachandran

Empowering Women through Microfinance: Fundamentally 32 Interesting but Pragmatically Irrelevant Rajdev Amit

Study the Trend of Private Label Brands around the Globe with 38 Special Reference to India Dharamdasani Deepesh & Bhojak Nimesh

Management Best Foods Corporations: How Sustainable a Growth Rate is? 48 Cases Shah Mayur & Shah Avani

Being No. 1, To be No. 1 53 Vasavada Maurvi, Joshi Tejas, Thakkar Pooja, Bhatt Kedar & Gadhiya Palak

Book Review Financial Services and Markets 59 Jariwala Harsha

Editor-in-Chief ISSN: 2229 -4651 Dr. Mahendra Sharma

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July-December 2014 Editorial Advisory Board

Dr. B. A. Prajapati Published by Dean, Management Studies, Hemchandracharya North Gujarat University, Patan Ganpat University Faculty of Management Studies Dr. I. V. Trivedi Mehsana-Gozaria Highway, Vice-Chancellor, Mohan Lal Sukhadia University, Udaipur Ganpat Vidyanagar- 384012 Prof. Vijay Paul Sharma Dist.: Mehsana, Gujarat, India Chairman, CMA, IIM-Ahmedabad Ph: +91-2762-286 896, 289 094

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GFJMR Vol. 9 July – December, 2014

Factors Determining the Indian Banking Consumer’s Perception on Internet Banking: An Empirical Study

Patel Akash Assistant Professor, School of Petroleum Management, Pandit Deendayal Petroleum This research paper investigates the factors which are University, Gujarat. important from the customer point of view when they does [email protected] online transactions so analysis of such factor may be useful to Kiri Rajeshkumar Indian Banking Industry for crafting their strategy for the Assistant Professor, V. M. Patel Institute of expansion of business. The researchers have found three factor Management, Ganpat underlying consumer perception towards online banking University, Gujarat. transaction (1) Security Mechanism (2) Service Quality rajesh.kiri@ganpatuniversity .ac.in Satisfaction and (3) Regulatory Issues.

Patel Kiran Key words: Consumer‘s Perception, Internet Banking, e – Assistant Professor, V. M. Patel College security, Trust of Management Studies, Ganpat University, Gujarat. kjp01@ ganpatuniversity .ac.in

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INTRODUCTION

The reform initiative which was taken by government of India in the year 1990 had major impact on the banking sector in terms of diversification, efficiency and competitive environment. Indian banks were forced to offer service at par with global benchmark so, Indian banks started to offers banking products and services through internet. The usage of technology in service industry is increasing day by day (Durkin et al., 2008). Internet banking is extension of PC banking. The internet as a delivery channel is used in Internet banking though which banking activity is accomplished. With the help of online banking, customers can perform their banking transaction for different kinds of needs like balance inquiry, request for cheque book, utility bills payment, inter account transfers etc., without visiting the bank branch personally (Mols, 1998; Sathye, 1999; Daniel, 1999; Shah and Siddiqui, 2006). Internet banking is new age banking system. Due to the internet revolution, e-commerce has provided an opportunity to the business to interact more effectively with their customers and other organizations. In this booming information age, banking industry has been using this new communication channel to serve its different types of customers. During Information Technology (IT) era, drastic change has occurred and the banking services are dynamically shifting the face of banking, as banks are marching towards e-banking from traditional banking. As the Indian economy is continuously becoming strong and continuing efforts to fast-track it creates new demands on the banking industry. Higher continuous growth has resulted into upper income groups and therefore, higher consumption groups, along with improved demand for financial investment opportunities.

The industrial growth from the production side has resulted in to huge demands for infrastructure investment from the private sector, public sector and public-private partnerships. This has encouraged the Indian banks to grow fast, both through consolidation and organic growth. The banking industry has understood that for the long term survival of bank, they not only need to be proactive towards information and knowledge, but also be customer-centric, market-driven, highly networked, on the constant search for global opportunities and flexible in their approach to deliver superior value to customers. The growth of e-banking rest on customer so understanding the customer perceived requirement, satisfying their requirement and expectation are a challenge.

Now a day, customers perceiving the services based on internet banking service as a key attractive feature than any other key product features of the bank. Customers evaluating the

GFJMR Vol. 9 July – December, 2014 banks based on the comforts and convenience it delivers to them. Bankers are focusing now on developing various product features and services based on internet applications.

The perception is shaped by the customer‘s experience. The contemporary research shows that there is a growing interest among the researchers in understanding the users‘ experience (Hiltunen et al., 2002); as it is detected as a larger concept than user satisfaction. From this viewpoint, measuring the user experience is essential for many technology products and services (Wilson & Sasse, 2004).

The earlier research advocates perceived service quality is strongly influencing customer‘s usage of internet banking (Casaló et al., 2008). In addition to this, if a banker want to increase market share then the good service quality of internet banking can be helpful in acquiring new customers in banking business (Yang et al., 2009). Service quality is the skill of banker to deliver the service in a manner which can satisfy customer needs and expectations (Shailey Minocha et al. 2003).

One report on internet banking in United Kingdom indicates that after the launch of internet banking in the UK, credit card and debit card fraud has reduced in online transaction in 2011 (MarketWatch, 2011).

So, bearing in mind the above considerations, the aim of current study is to study Factors Determining the Indian Banking Consumer‘s Perception on Internet Banking. Understanding of dimension of the customer‘s perception towards online banking can be helpful to craft strategy for future growth of bank.

LITERATURE REVIEW

Corrocher (2002) suggested that through internet banking customer base can be increased by bankers. Internet banking can be used by customer from anywhere and anytime (Casalo et al., 2007), so a bank can increase its geographical coverage through it. The advancement of integrated, tailor-made financial services is the ground for competition between financial sector organizations (Poon, 2008; Ding et al., 2011; Ladhari and Leclerc, 2013). Bank client is so much demanding today and do not like to surf different website to get update of their investments. The loyalty of consumer can be earned by banker only when the web enable services is more convenient, easier to use, and less costly among the other alternative delivery channel (Cronin,

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1998; Shah and Siddiqui, 2006; Freed, 2011; Forsee, 2011). One of the greatest potential benefits of e-banking is the real time integration of distributed resources. The e-banking provides an opportunity for banker to have deeper understanding of customer behaviour towards banking product due to interactive nature of technology.

The customer trust is significantly influenced by the security and privacy in online transaction (Lee and Turban, 2001; Ratnasingham, 1998; Rxha et al., 2003,; Lehu,200; Ba, 2001). At the time of making e-commerce transaction customer has to share their private information. The sacrifice of private information can be considered as privacy risk by bank clients (Vijayasarathy, 2002). Security comprises of three dimensions- safety, reliability and privacy (Polatoglu & Ekin, 2001). The trust of customer on the bank website will be improved if they have good experience of security and privacy. The customers‘ way and intention to use the Internet banking service is positively associated with the level of consumer‘s trust in general (Grabner-Kräuter and Faullant, 2008; Alsajjan and Dennis, 2010). Lack of consumer trust has traditionally been considered to be a major obstacle to a more usage of online transactions and commercial relationships (Schlosser et al., 2006). Consumers must provide their credit card numbers and other personal information at the time of buying through the internet so consumer trust is prerequisite (Bargh and McKenna, 2004).

Security has been documented as important element of internet banking quality (Liao & Cheung, 2002; Casalo et al., 2007; Chiou and Shen, 2012; Zavareh et al., 2012). Security factor, comprises variables like protection of consumers' private data and safe transactions to prevent frauds, is supreme important for the development of any sort of online trade including e-banking (Enos, 2001; Regan and Macaluso, 2000; and Turban et al., 2000). Security in this context includes secure transactions as well as secure front end and back end systems. Existing research recommends perceived risk as an important factor significantly influencing online consumer behaviour (Salam et al., 2003; Pavlou, 2003; Cunningham et al., 2005; Schlosser et al., 2006) Yibin, MU (2003) also suggested that the enhancements of infrastructure of the system are to: a) develop transaction reporting services; b) strengthen the system for credit cards and other types of electronic transaction; c) improve payment system; and d) improve infrastructure of telecommunication. After the proper construction of infrastructure, banks can use new delivery channels with security for doing banking transaction. Few researcher studied obstacles of e- banking such as privacy, security and trust of Web enabled system (Gerrard and Cunningham,

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2003; Rotchanakitumnuai et al., 2003; Rotchanakitumnuai and Speece, 2003). Carlos Flavián et al (2005) findings show that there is no significant effect of the image on trust in sense of the long term relationship in distribution through conventional channels. However, significant effect of image on trust has been observed in distribution of financial services through the internet have been witnessed. Suh and Han (2002) findings shows that trust have a significant effect on the acceptance of Internet banking among banking consumers. According to Milind Sathye, (1999) security issues, low level of awareness about Internet banking and its benefits are the main hurdle to the acceptance of online banking in Australia.

Quality of service delivered through website is considered one of the important factor from the customer satisfaction and loyalty point of view (Mahajan et al 2002, Reibstein 2002,Shanker et al 2003, Lin et al., 2012). One of the past study (Patricio et al, 2003) propose that perceived service quality of one channel of service delivery has strong effect on how another service channel is perceived. One study in Singapore, Lio and Cheung (2002) suggest that individual expectation regarding accuracy, security, transaction speed, user friendliness, user involvement and convenience are the most important variable that affects perceived use of internet banking. Legislation for basic protection, awareness about regulatory framework and development of rules and regulation has significant impact on trust towards online transaction (Haque at al 2009).

DATA COLLECTION

Under the current study the researcher has reviewed the main measurement scale used in the previous service quality research SERVQUAL – Parasuraman et al. (1985, 1988), SERVPERF scale - Cronin and Taylor (1992, 1994), E-S-QUAL by Parasuraman et al., 2005, e-SERVQUAL – Zeithaml et al. (2000, 2002), WEBQUAL by Loiacono et al., (2007), Haque et al., (2009) scale and the researcher has found that found that scale developed by Haque et al. (2009) is most appropriate scale for the measurement of electronic service delivery quality context, so it has been used for further research.

A Structured questionnaire was used by the researcher to collect the primary data for investigation of objectives under the study. The main objective of research is to study factors determining customers‘ perception on Internet banking transaction in India. Under the current study non probability convenience sampling method used by researchers because of the time, cost constraints and not availability of sampling frame. The survey contains 248 samples.

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RESEARCH DESIGN For collection of quantitative primary data, structured questionnaire was developed. Questionnaires were personally administered and explained to respondents to ensure accurate collection of data. The primary data was collected through personal interview and online survey. Exploratory research study was selected for the study. Exploratory research was conducted for a better understanding of the nature of the problem and then descriptive study conducted to explain the factor that constitute the perception towards internet banking in India. The study was carried out in the field and not in the laboratory. Sampling element comprises a single member of the population. In this research, bank account holder using internet banking is the sampling unit. Statistical Package for Social Sciences (SPSS) was used for data preparation and data analysis.

DATA ANALYSIS AND INTERPRETATION

Table 1 Respondents’ Profile

Demographic Variables Range Frequency Percentage Age group 18-25 54 21.77 26-35 92 37.10 36-45 79 31.85 46-55 17 6.85 Above 55 6 2.42 Gender Male 221 89.11 Female 27 10.89 Qualification Up to Primary 0 0.00 Up to secondary 0 0.00 Higher secondary 22 8.87 Graduate 90 36.29 Post Graduate 104 41.94 Other 32 12.90 Annual Family Income (In Rupees) Less than 2,00,000 13 5.24 200001 to 400000 77 31.05 400001 to 600000 61 24.60 600001 to 800000 44 17.74

800001 to 10,00,000 40 16.13 1000001 and more 13 5.24 Occupation Service 138 55.65 Business 55 22.18 Profession 39 15.73

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Retired 13 5.24 Other 3 1.21 Marital status Single 34 13.71 Married 214 86.29

Under the current study, the majority of respondents were male (86%) in comparison to female (approx. 14%). The majorly of respondents belong to service class using internet banking service in India. The highest number of respondents belongs to the category of annual family income Rs 2,00,001 to Rs 4,00,000, age group of 26 to 35 years and Married.

Table 2 Reliability Statistics Overall Cronbach's Alpha No. of Items 0.782 16

The reliability of the scale measured through Cronbach‘s Alpha and it is 0.782 so it can be concluded that the scale is reliable in nature.

Factor Analysis Previous studies were conducted in context of other countries and first time such kind of study conducted in India using the scale developed by Haque et al. (2009) so exploratory factor analysis is conducted by researcher.

To perform factor analysis the value of KMO must be 0.60 or more and Bartlett‘s Test of Sphericity should be less than 0.05. Kaiser-Meyer-Olkin (KMO) measure of sampling adequacy is a useful method to show the appropriateness of data for factor analysis. The KMO statistics varies between 0 and 1. Under the current study the value of KMO is 0.710 and the Bartlett‘s Test of Sphericity is significant with the value of 0.000, it satisfies necessary condition to reject null hypothesis. It points out that satisfactory relationship be present among the variables to carry out factor analysis. Both value of KMO and Bartlett‘s Test of Sphericity shows that they were highly noteworthy and established that this variables are suitable for the factor analysis and factor analysis can be performed. Table 3 KMO and Bartlett's Test of Sphericity Calculation KMO Measure of Sampling Adequacy. 0.710 Bartlett's Test of Sphericity App. Chi-Square 1135.630 Degree of Freedom 28

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KMO Measure of Sampling Adequacy. 0.710 Bartlett's Test of Sphericity App. Chi-Square 1135.630 Degree of Freedom 28 Significance 0.000

The factor analysis is performed on 16 items using principal component analysis and then varimax factor rotation. Factor analysis is conducted on the variables of perception of the consumers toward E-banking transactions to explore the underlying factor associated with the variables. With the help of factor analysis three factor underlying consumer perception towards online banking transaction found.

Table 4 Total Variance Explained Extraction Sums of Squared Rotation Sums of Squared Initial Eigen Values Loadings Loadings Comp. % of Cumulative % of Cumulative % of Total Total Total Cumulative % Variance % Variance % Variance

1 3.889 48.617 48.617 3.889 48.617 48.617 2.259 28.243 28.243

2 1.446 18.077 66.694 1.446 18.077 66.694 2.245 28.065 56.308

3 1.073 13.411 80.105 1.073 13.411 80.105 1.904 23.797 80.105

4 0.528 6.594 86.699

5 0.468 5.854 92.553

6 0.292 3.645 96.198

7 0.176 2.206 98.404

8 0.128 1.596 100.000 Extraction Method: Principal Component Analysis.

Naming of factors Factor 1 comprises the variables 1) Bank correct transaction errors as soon as possible, 2) Bank takes actions for erroneous transaction and 3) E-Banking transaction is secure enough. These variables are relevant to security mechanism of the internet banking so the first factor is given name as ―Security Mechanism‖. Factor 2 comprises variables 1) Satisfied with e-bank service, 2) Satisfied with e-bank working hrs, 3) Satisfied with security level and these variable are related

GFJMR Vol. 9 July – December, 2014 to satisfaction for service quality so factor 2 is given name as ―Service Quality Satisfaction‖. Factor 3 comprises variables 1) Awareness about regulatory framework affect trust and 2) Legislation provides basic protection which are relevant to regulatory aspects in the country so it given name as ―Regulatory Issues‖.

Table 5 Results of Factor Analysis

Vari. Short Description of Variable

No.

Factor 1 Factor 2 Factor 3 Factor Communalities V 11 Bank correct transaction errors as soon as possible 0.940 0.886 V 5 Bank takes actions for erroneous transaction 0.650 0.846 V 3 E-Banking transaction is secure enough 0.647 0.608 V 16 Satisfied with e-bank service 0.886 0.875 V 15 Satisfied with e-bank working hrs 0.777 0.859 V14 Satisfied with security level 0.704 0.804 V 4 Awareness about regulatory framework affect trust 0.875 0.767 V 1 Legislation provides basic protection 0.759 0.763 Reliability Statistics (Cronbach’s Alpha) 0.796 0.788 0.668

The total variance explained by the underlying factor is 80.105% out of which security mechanism factor explain 48.62% variation which consist of Bank correct transaction errors as soon as possible with highest factor loading of 0.940, Bank takes actions for erroneous transaction with loading of 0.650 and E-Banking transaction is secure enough with loading of 0.647

Factor 2 which accounts for about 18.077% variation was named as Service Quality Satisfaction which consist of variables like Satisfied with e-bank service with loading of 0.886, Satisfied with e-bank working hours is having factor loading 0.777 and Satisfied with security level is having factor loading 0.704.

Factor 3 which accounts for about 13.411 % variation. It is given name as Regulatory Issues which consist of variables like Awareness about regulatory framework affect trust with factor

GFJMR Vol. 9 July – December, 2014 loading 0.875 and Legislation provides basic protection with factor loading 0.759. Statements removed because of low MSA at Anti-Image Correlation: 2, 6, 7, 8, 9, 10, 12, 13.

Reliability:

The internal reliability of each factor was examined using Cronbach's Alpha. The result suggests adequate reliability for overall scale as well as for each factor. The overall reliability as well as factor wise reliability should be above 0.6 as per generally accepted norm. Under the current research, the overall reliability was (Overall Cronbach's Alpha 0.782), Security Mechanism factor (Cronbach‘s Alpha) 0.796, Service Quality Satisfaction factor with 0.788 and Regulatory Issues factor with 0.668.

CONCLUSION AND IMPLICATION

The implications of current research are mainly for practitioners and bank managers for improvement in service quality in terms of security. Security of internet banking is considered highly important among participants. So, to attract more customers towards internet banking facility, issues related to security must be addressed. To improve security level of net banking, banks must use more security features such as firewalls, filtering routers, encryption biometrics. They should educate client regarding security breach. Bank should focus on publicity of security level and rules and regulation related to security so it can improve the confidence and trust of customer. Bank correct transaction when there is any error as soon as possible is one of the important things that affect the perception of customer. It is to be noted that for the majority of respondent the interpretation and functionality of these security features are beyond their technological understanding. So it is advisable for bank manager to provide the necessary training on security features to customer for more usage of internet banking. Bank should provide policy related to online fraud e.g. Banks may give guarantee for refund of losses due to online fraud. The bank should create awareness about the service quality attributes like security guarantee about internet banking and regulatory environment for internet banking. With the help of such initiative banks can reduce the fear associated with net banking and they can motivate customer for more usage internet banking. It is recommended that the banks should invest in technological research for greater prevention and protection tools to be innovated for better security.

The Bank‘s customer in India most importantly considers the factors like security mechanism of bank, service quality satisfaction and regulatory issues so the banking industry in order to expand

GFJMR Vol. 9 July – December, 2014 their business they should focus on this factors while designing their strategy for expansion of business.

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Appendix

RESEARCH QUESTIONNAIRE STATEMENTS Neither Vari. Strongly Strongly Statement Agree Agree Nor Disagree No. Agree Disagree Disagree 1 Legislation provides basic protection 1 2 3 4 5 2 Lack of trust on security 1 2 3 4 5 3 E-Banking transaction is secure enough 1 2 3 4 5 4 Awareness about regulatory framework 1 2 3 4 5 affect trust 5 Bank takes actions for erroneous transaction 1 2 3 4 5 6 Lack of trust on system's integrity 1 2 3 4 5 7 E-Bank security features should increase 1 2 3 4 5 8 Regulation is not developing with e-bank 1 2 3 4 5 world 9 Feeling towards own bank 1 2 3 4 5 10 Trust vary with development of rules and 1 2 3 4 5 regulation 11 Bank correct transaction errors as soon as 1 2 3 4 5 possible 12 Consumers are scared to use internet 1 2 3 4 5 13 Confidence on PC technology limit internet 1 2 3 4 5 use 14 Satisfied with security level 1 2 3 4 5 15 Satisfied with e-bank working hrs 1 2 3 4 5 16 Satisfied with e-bank service 1 2 3 4 5 (Source: Haque at al., 2009)

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Evaluating the Role of On-line Review for Bollywood films on box office performance

The study is designed to know role of On-line rating of a Bollywood Patel Naresh Professor and Head films on box office collection. Response was got from 1165 people in Center for Management different age group and gender through questionnaire. A simple Studies Dharmsinh Desai University questionnaire using five point rating scale was administered by using Nadiad , Gujarat. convenience sampling approach. Secondly, secondary research also Mobile: 094266 99665 [email protected] carried out in order to find out on-line rating of a Top 10 film which has highest box office collection in 2013. Data were analyzed by bi-

variate data analysis techniques. The study helped to explore the

Frince Thomas impact of on-line rating on box office collection of a movie/film and Assistant Professor also comes into logical conclusion that on-line rating does not have Center for Management Studies much significant impact on box office collection of a movie/film. Dharmsinh Desai University Nadiad, Gujaat. [email protected] Key words: Film, Box Office, On-line rating, Bollywood.

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INTRODUCTION

India, a population of 1200 million and still counting, having diversified the cinematic culture of Andhra Pradesh, Gujarat, Karnataka, Kerala, Mumbai, Punjab, Tamil Nadu, Uttar Pradesh and West Bengal in languages especially Telugu, Gujarati, Kannada, Malayalam, Hindi, Punjabi, Tamil, Bhojpuri and Bengali respectively. The Motion Picture or Film Industry is a key and perhaps the most vibrant industry of the Indian economy. The number of films produced annually is higher than that produced in any other country including Hollywood, USA. While Hollywood produces around 550 movies a year, the Indian film (movie) industry produces more than 1000 movies every year (Krishnan & Sakkthivel, 2010). The Hindi film making industry in India that is based out of Mumbai, referred to as ‗Bollywood‘ by the media, is largest film producing centre in the country (Sarkar & Nayak, 2009).

LITERATURE REVIEW

Films or movies are cultural goods defined as ‗non material good directed at public consumers for whom they generally serve an aesthetic or expressive, rather than clearly utilitarian function (Hirsch, 1972). Cultural goods derive value from the subjective experiences, perceptions and emotions of consumers, all of which are idiosyncratic and do not have predictable patterns such as utility curve. Moreover, consumer not only judge cultural goods from their own experience but are also influenced by what others perceive about these goods (Ramchandran & Mukherji, 2010). As a result, Movies are classified as ‗credence goods‘ as opposed to search goods, where quality can be assessed before purchase, or experience goods where quality can be learnt after use. For credence goods, quality can only be partially assessed during experience because the perception of quality is significantly influenced by what other people think about it (Kretschmer, Kimis & Choi, 1999).

Another studies involves to examine that what metrics of online ratings for informative indicators of a product‘s future sales and how the explanatory power of such metrics compares to that of other variables that have traditionally been used for similar purposes in the past (Dellarocas, Farag & Zhang, 2004). The Bass new product diffusion model, the authors explore how media publicity and word of mouth (WOM) about a to-be-released new movie drive movie going behavior in emerging markets in country like China (Wang, Zhang, Li & Zhu, 2010).

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NEED FOR THE STUDY

Literature concludes that there is a lack of research in the Indian context specifically relationship between On-line review and box office collection. In such scenario, systematic research aimed at measuring the relationship between box office collection and On-line review of film. Moreover, new trends emerge like On-line review of films which may influence the movie goers to watch the film. However due to intensity of large number of films produced in a year especially country like India, shelf life of films are becoming shorter and shorter. Henceforth, it is need of hour, to know what is the role of On-line review due to rise of internet user, will have impact on box office collection, will it contribute for hit or flop and whether it will act as influencer or predictor for the movie. In order to understand if any difference among gender is exist or not in regard to On-line review of a film. Accordingly key research objectives this study are: 1) To examine impact of On-line review of Bollywood films on box office performance. 2) To find out if any difference among gender exists in respect to On-line review of a film.

RESEARCH METHODOLOGY

To explore the first objective ―to examine impact of On-line review of Bollywood films on box office performance‖, is carried out from the secondary data and to explore the second objective ―to find out if any difference among gender exists in regard to On-line review of a film‖, Researcher has carried out primary survey and formulated the hypothesis to test the whether relationship exist or not.

Hypothesis

H0(a) There is no significant impact on box office collection from on-line rating of films

H0(b) There is no significance difference among gender for on-line rating of films

Films selection

2013 marked the completion of 100 years of Bollywood. It saw many big-budget films in Bollywood releasing, as well as a number of sequels and quasi-sequels lined up. Some of these sequels were: Dhoom 3, Krrish 3, Murder 3, Race 2, Once Upon a Time in Mumbai 2, Aashiqui 2, Shootout at Wadala, Saheb, Biwi Aur Gangster Returns, Grand Masti, Satya 2 and Yamla Pagla Deewana 2. The Researcher took top ten grossing Bollywood films at the Indian box office in 2013. Films are ranked here according to the domestic net gross in India only. Bollywood net

GFJMR Vol. 9 July – December, 2014 gross given here also includes net gross of Tamil and Telugu-dubbed versions of Bollywood films, as the table is for only Bollywood films. The sample for the study was selected from the population by convenience sampling method. The population for this study consisted of 10 films which has highest box office collection in 2013. In order to explore the role of On-line rating for Bollywood films on box office performance. Here, the Researcher took online rating from The Internet Movie Database (IMDb).

On line rating: The Internet Movie Database (IMDb). On line rating means that recent advances in information technology has enabled the creation of a diverse mosaic of technology mediated word-of-mouth communities where individuals exchange experiences and opinions about films (Dellarocas, Farag and Zhang, 2004). The Internet Movie Database (IMDb) is an online database of information related to movies, television shows, actors, production crew personnel, video games and fictional characters featured in visual entertainment media. It is one of the most popular online entertainment destinations, with over 100 million unique users each month and a solid and rapidly growing mobile presence. IMDb was launched on October 17, 1990, and in 1998 was acquired by Amazon.com. The researcher has taken on line rating from internet movie database (IMDb). As a result Box office collection in Opening weekend is taken as dependent variable and on-line rating as an independent variables. Data were collected and analyzed through correlation, regression and ANOVAs by using the SPSS software.

DATA ANALYSIS Table 1: List of Bollywood Movies with online rating Sr. Films Month of Domestic net On Line Rating No Release in gross (Rs.) (out of 10) 2003 1 Dhoom 3 Dec 259 6.2 2 Chennai Express Aug 208 6.0 3 Krrish 3 Nov 188 6.2 4 Yeh Jawaani Hai Deewani May 179 6.6 5 Goliyon Ki Raasleela Ram-Leela Nov 113 6.3 6 Bhaag Milkha Bhaag July 109 8.4 7 Grand Masti Sept 101 4.3 8 Race 2 Jan 100 5.3 9 Aashiqui 2 April 79 7.1 10 Special 26 Feb 67 7.8 (Source: http://en.wikipedia.org)

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Table 2 Correlations Domestic Net Gross in Crores On Line Rating Domestic Net Gross Pearson Correlation 1 -.195 in Crores Sig. (1-tailed) .294 N 10 10 On Line Rating Pearson Correlation -.195 1 Sig. (1-tailed) .294 N 10 10

Form Table 2 it is found that Pearson correlation coefficient is -0.195 which indicates that on line rating and gross domestic collection on box office is negatively and poorly correlated with each other. It means movies with relatively high on-line rating fails to collect good collection on movies.

Table 3 Model Summary

Std. Error Change Statistics R Adjusted of the R Square F Sig. F Durbin- Model R Square R Square Estimate Change Change df1 df2 Change Watson 1 a .195 .038 -.082 66.21728 .038 .318 1 8 .589 .315 a. Predictors: (Constant), On Line Rating b. Dependent Variable: Domestic Net Gross in Crores

To empirically test whether any fall or rise in the ratings given to the film, implying an increase or decrease in box office collection where correlation and regression analysis is performed. For that on line rating is taken as an independent variable and domestic net gross box office collection as a dependent variable.

The Durbin-Watson statistics is used to test for the presence of serial correlation among the residuals. The value of Durbin-Watson statistics ranges from 0 to 4. As a general rule of thumb, the residuals are uncorrelated if the Durbin-Watson statistics is approximately 2. A value close to zero indicates strong positive correlation, while a value of 4 indicates strong negative correlation. Here the DW value is 0.315 as shown in Table 3indicates weak positive correlation.

So, equation works out to be: Gross Domestic Collection = 208.449 -10.615 On-Line Rating .

So, 1 percent increases in ‗On line rating‘ leads to -10.615 percent decreases in ‗Gross Domestic Collection‘.

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Table 4 ANOVA Mean Model Sum of Squares df Square F Sig. 1 Regressio 1392.275 1 1392.275 .318 .589a n Residual 35077.825 8 4384.728 Total 36470.100 9 a. Predictors: (Constant), On Line Rating b. Dependent Variable: Domestic Net Gross in Crores

Table 5 Correlation Unstandardized Standardized Coefficients Coefficients Model B Std. Error Beta T Sig. 1 (Constant) 208.449 122.739 1.698 .128 On Line -10.615 18.838 -.195 -.563 .589 Rating a. Dependent Variable: Domestic Net Gross in Crores

The sixth column of Table 5 indicates the p-level to be 0.589. This indicates that the model is not statistically significant at all. The p-value indicates the insignificance of the F-value. The R2 value is 0.038. Again, looking at the individual variable t- test, it has been found that the coefficient of variables for gross domestic collection and online rating is statistically not significant as their respective p-values are 1.698 and -0.563.

In order to explore second and final objective, Researcher took primary research and got response from 1165 respondents through questionnaire to find out if any difference among gender exist in regard to On-line review of a film. The sample for the study was selected from the population by convenience sampling method. The structured questionnaire was prepared with help of likert scale. The Researcher has kept five point scales. The number indicates the value to be assigned to each possible answer, with 1 Not at all important and 5 the Very Important. The questionnaire was prepared and kept it on online to fill it. Finally, the researcher got 1165 responses that filled questionnaire and that also from different demographic segment. Data were collected and analyzed through Independent Samples t test.

Researcher has conducted independent sample t test to find out any difference exist among gender in regard for on-line rating. Moreover, if the ‗p‘ value is less than the significance level set by us for the test, one can reject null hypothesis. Otherwise, one will accept the null hypothesis. In this case, Researcher found that the ‗p‘ value for‗t‘ test is 0.244 assuming unequal

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Table 6 Group Statistics Gender N Mean Std. Deviation Std. Error Mean On-line Female 560 3.8839 .95466 .04034 review Male 605 3.7504 .99278 .04036

Table 7 Independent Samples Test Levene's Test for Equality of Variances t-test for Equality of Means 95% Std. Confidence Sig. Error Interval of the (2- Mean Differen Difference F Sig. t Df tailed) Difference ce Lower Upper On-line Equal review variances 1.356 .244 2.336 1163 .020 .13352 .05715 .02138 .24565 assumed Equal variances 2.340 1.161 .019 .13352 .05707 .02155 .24548 not assumed variance in two population. This value of 0.244 being more than our significance level of 0.05, So Researcher cannot statistically reject the null hypothesis.

CONCLUSION

The study helped to explore the impact of on-line rating on box office collection of a movie/film and also comes into logical conclusion that on-line rating does not have significant impact on box office collection of a movie/film. Moreover finding of other objective also claimed that there is no difference among gender in regard to on-line rating of film. In other words statistically, the both the null hypothesis cannot reject it. The finding also suggest that those films whose rating or review are average or below has actually performed well in box office collection. As a result research indicates that, this finding suggest that on-line rating, at least from an aggregate-level perspective, appear to act more as predicator rather than influencer.

LIMITATION AND RECOMMENDATION

Like virtually any study in the tradition form which the present research emerges, our findings are subject to various limitations and caveats. For example, our results pertain to the Top 10 Bollywood films which are highest box office collection in 2013. Even in the case of motion

GFJMR Vol. 9 July – December, 2014 pictures, they might well differ in other countries or at other times. Future research should address the generalizability of our findings across time periods and geographical settings. Similarly, the present study, the researcher has taken consideration of On-line rating as a role of reviewer, even though there are also other sources that could possibly has its own limitation. Future research can benefit from further by including some other sources like expert review, newspaper review etc. In sum, all the caveats and limitations just enumerated support needed for future investigations of using data from multiple time periods, multiple countries and multiple reviewers. Refreshingly, we note that availability of movie and entertainment related data on the Internet and elsewhere has grown by leaps and bounds in recent years. This progress augur well for the potential feasibility of future studies aimed at addressing the issues just raised. Though it is proposed that further research needs to be done for the validation of findings of this study, finding of on-line rating at least from an aggregate-level perspective, appear to act more as predicator rather than influencer.

REFERENCES

Anand, B. (2007). The effectiveness of pre-release advertising for motion pictures: an empirical investigation using a simulated market, Journal of Information Economics and Policy, 19(4), 319- 343.

Anita, E. (2007). The power of stars: Do star actors drive the success of movies? Journal of Marketing, 71(10), 102-120.

Barry, L. (1983). Predicting success of theatrical movies: An empirical study, Journal of Popular Culture, 16(3), 159-175.

Basuroy, S; Chatterjee S. and Ravid, S. (2003). How critical are critical reviews? The box office effect of film critics, star power, and budgets, Journal of Marketing, 67(10), 103-117.

Boatwright, P; Basuroy, S. and Kamakura, W. (2007). Reviewing the reviewers: The impact of individual film critics on box office performance, Journal of Quant Market Econ, 5(2), 401–425.

Eliashberg, J. & Shugan, S. (1997). Film critic: Influencer or Predictor?, Journal of Marketing, 61(2), 68- 78.

Eliashberg, J., Jonker, J., Sawhney, M. and Wierenga, B. (2000). MOVIEMOD: An implementable decision- support system for prerelease market evaluation of motion pictures, Journal of Marketing Science, 19(3), 226–243.

Desai, K K & Basuroy, S (2005). Interactive influence of genre familiarity, star power, and critics‘ reviews in the cultural goods industry: the case of motion pictures, Journal of Psychology & Marketing, 22(3), 203–223.

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Drake, P. (2008) Distribution and marketing in contemporary Hollywood, The Contemporary Hollywood Film Industry edited by Wasko, J and McDonald, P (63-82) Oxford and New York: Blackwell.

Desai, K. and Talukdar D. (2006). An empirical investigation of signaling in the motion pictureindustry Journal of Marketing Research, 43(4), 287-295.

Dellarocas, C., Farag, N., and Zhang, X. (2007). Exploring the value of online product reviews in forecasting sales: The case of motion pictures, Journal of Interactive Marketing, 21(4), 23-45.

Don, M., Hillebrand, E. and Hilliard, J. (2008). Pricing an option on revenue from an innovation: an application to movie box office revenue, Journal of Management Science, 54(4), 1015-1028.

Eliashberg, J. (2003). Demand and supply dynamics for sequentially released products in international markets: the case of motion pictures, Journal of Marketing Science, 22(3), 329-354.

Eliashberg, J., Elberse A., and Leender, A. (2006). The motion picture industry: Critical issues in practice, current research, and new research directions, Journal of Marketing Science, 25(6), 638-661.

Eliashberg, J., and Sawhney, M. (1996). A parsimonious model for forecasting gross box-office revenues of motion pictures, Journal of Marketing Science, 15(2), 113-131.

Krishnan, T. V. and Sakkthivel, A. M. (2010). To push for stardom or not: A rookie‘s dilemma in the Tamil movie industry, IIMB Management Review, 22(3), 80-92.

Morris, H. (1999). Popular appeal versus expert judgments of motion pictures, Journal of Consumer Research, 26(2), 144-155.

Sarkar, S.and Nayak, A. (2009). Film merchandising in India,‖GMJ, 3(1), 1-10.

Sawhney, M. S. (1994). Modeling goes to Hollywood: predicting individual differences in movie enjoyment, Journal of Management Science, 40(9), 1151-1173.

Wang, F; Zhang, Y; Li, X and Zhu, H. (2010). Why do moviegoers go to the theater? The role of prerelease media publicity and online word of mouth in driving moviegoing behavior, Journal of Interactive Advertising, 11(1), 45-63.

Wenjing, D., Gu, B., and Whinston, A. B. (2008). The dynamics of online word-of-mouth and product sales-an empirical investigation of the movie industry, Journal of Retailing, 84(2), 233-242.

Yong, L. (2006). Word of mouth for movies: its dynamics and impact on box office revenue, Journal of Marketing, 70(7), 74-89.

Zufryden, F. S. (1996). Linking advertising to box office performance of new film releases: a marketing planning model, Journal of Advertising Research, 36(4), 29-41.

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Impact of Operating Leverage on Profitability: A Study on Indian Automobile Industry

The term 'profitability ratio' is a class of financial metric that is used

to assess a business's ability to generate earnings as compared to its D. Silambarasan Research Scholar expenses and other relevant costs incurred during a specific period Department of Commerce of time. The study is an attempt to analyze the impact of operating Kanchi Mamunivar Centre for Postgraduate Studies leverage on profitability of Indian Automobile Industry. The study Pondicherry University, has chosen 20 sample firms from Automobile industry in India, Puducherry, India which are listed in National Stock Exchange. The study used [email protected] descriptive statistics, correlation and regression for analysis. The study proves that there is a significant impact of operating leverage Azhagaiah Ramachandran Associate Professor on profitability. The analysis of data reveals that the operating Department of Commerce, leverage has impact, of course positively, on profitability of firms of Kanchi Mamunivar Centre automobile industry as a whole in India. for Postgraduate Studies, Pondicherry University, Puducherry, India Key words: Profitability, Operating Leverage, Automobile Industry [email protected]

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INTRODUCTION

Leverage is a technique that amplifies investor profits or losses. It's most commonly used to describe the use of borrowed money to magnify profit potential (financial leverage), but it can also describe the use of fixed assets to achieve the same goal (operating leverage). A profitability ratio is a measure of profitability, which is a way to measure a firm‘s performance. Profitability is simply the capacity to make profit, and it is what is left over from income earned after one has deducted all costs and expenses related to earnings.

LITERATURE REVIEW

Titman and Wessels (1988), in a study titled ‗the determinants of capital structure choice‘ found that highly profitable firms have lower level of leverage than that of the less profitable firms because they first use their earnings before looking for external capital.

Wald (1999) stated that profitability, which is the most important determinant of firm‘s financial leverage, negatively affected the debt to asset ratio in the heteroskedastic Tobit regression model. Varsha and Virani (2010), in the study ―Impact of leverage on profitability of Pantaloon Retail India Ltd‖ stated that finance decision was concerned with selection of correct mix of debt and equity in its capital structure.

Chandra Kumaramangalam and Govindasamy (2010), in a study titled ‗Leverage – An analysis and its impact of profitability with reference to selected Cement firms in India‘ examined the impact of leverage on the profitability of selected cement firms in India. They explained the relationship between debt equity ratio and earnings per share and how effectively the firm used debt financing. The study suggested that leverage, profitability and growth are positively related and leverage had impact on profitability of firms.

Sabir and Malik (2012) found that there were four factors that significantly affecting the leverage in Oil and Gas sector of Pakistan and concluded that size, tangibility and liquidity have positive and significant relationship with leverage while profitability has significant and negative relationship with it.

Khushbakht and Tayyaba (2013), in a study concluded that there was positive correlation between return on assets (ROA) and degree of financial leverage (DFL) while there was negative correlation between ROA and degree of operating leverage (DOL). The DFL and return on

GFJMR Vol. 9 July – December, 2014 investment (ROI) have inverse relationship and similarly the DOL and the ROI also have inverse relationship. There was a positive correlation between DFL and earnings per share (EPS) while there was negative correlation between DOL and EPS.

Srivastava and Namita (2014) studied about the variables determining the leverage and risk of cement firms operating in India. The study concluded that profitability, size and liquidity were negatively correlated with leverage whereas; tangibility had positive impact on leverage or capital structure of the firm. The results revealed that growth played very insignificant role in defining capital structure of the firm.

OBJECTIVES OF THE STUDY

1. To study the relationship between operating leverage and profitability of firms of Automobile Industry in India. 2. To study the impact of operating leverage on profitability of Automobile Industry in India.

HYPOTHESES DEVELOPED FOR THE STUDY

H01: There is no significant relationship between Operating Leverage (OL) and Profitability.

H02: There is no significant impact of Operating Leverage (OL) on Profitability.

RESEARCH METHODOLOGY

This study is based on the secondary data. The five year secondary data ranging from 2010 to 2014 of selected companies of Indian Automobile industry were collected from the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The present study has chosen 20 sample firms from Automobile industry in India. The reason for choosing these firms from the listing of NSE is due to the fact that the NSE has the largest number of quoted domestic firms on any stock exchanges in the world.

Table 1 shows the Automobile firms which are selected for the study. The study has selected only 20 firms based on the availability of data. The study used descriptive statistics, correlation and regression for analysis of data.

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Table1 List of Firms Selected for the Study Sl. Firm Name Sl. Firm Name No. No. 1 Ashok Leyland 11 LML 2 Atul Auto 12 M & M 3 Bajaj Auto 13 Mah. Scooters 4 Eicher Motors 14 Majestic Auto 5 Escorts 15 Maruti Suzuki 6 Force Motors 16 Scooters India 7 Hero Motocorp 17 SML ISUZU 8 Hind.Motors 18 Tata Motors 9 HMT 19 TVS Motor Co. 10 Kinetic Engg. 20 VST Till. Tract. Source: www.nse.com

(a) Profitability Ratio A class of financial metrics that are used to assess a business's ability to generate earnings when compared to its expenses and other relevant costs incurred during a specific period of time. For most of these ratios, a higher value relative to a competitor's ratio or the same ratio from the previous period is found to be indicative that the firm is doing well.

(b) Correlation Analysis Correlation is computed between operating leverage and profitability to find out the relationship between them and to enable to study the impact of operating leverage on profitability.

Y = P (Profitability); X = OL (Operating Leverage);

GFJMR Vol. 9 July – December, 2014 a = Regression constant b1 = Regression Coefficient u = Error Term

(d) Operating Leverage A high operating leverage indicates a larger proportion of fixed cast causing low net profit and the EBIT will tend to vary more with sales. Therefore, the operating leverage may be defined as the firm‘s ability to use fixed operating cost (FOC) to magnify the effects of changes in sales on its EBIT. The leverage associated with investment activities is called operating leverage. It is caused due to fixed operating expenses (FOE) in the firm.

Operating leverage is present anytime when a firm has fixed operating costs-regardless of volume. In the long run, of course, all costs are variable. Consequently, the analysis necessarily involves the short-run too. A firm incurs fixed operating cost in the hope that sales volume will produce revenues more than sufficient to cover all fixed and variable costs. One of the more dramatic examples of an effect of operating leverage is the airline industry, where a large proportion of total operating cost (TOC) is fixed. Beyond a certain break-even load factor, each additional passenger essentially represents straight operating profit (earnings before interest and taxes, or EBIT) to the airline.

DATA ANALYSIS

(a) Descriptive Analysis Table 2 Descriptive Statistics of Profitability and Operating Leverage of Automobile Industry in India from 2010 to 2014 Std. Variables N Minimum Maximum Mean( ̅) Deviation Profitability 20 -382.51 19672.36 4.67 7548.25 OL 20 -1.60 27.34 1.31 6.13 Source: Collected data from National Stock Exchange.

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Fig. 1 - Descriptive Statistics of Profitability and Operating Leverage of Automobile Industry in India from 2010 to 2014 Descriptive Statistics

Profitability Operating Leverage

19672.36 7548.25 -382.51 27.34 4.67 6.13 1 -1.6 2 3 1.31 4

Source: Collected data from National Stock Exchange.

The descriptive statistics of profitability and operating leverage of Automobile industry in India is shown in table 2 and Figure A. The profitability has the minimum value as -382.51 and maximum value as 19,672.36, while the mean ( ̅ ) is 4.67 and standard deviation ) is 7,548.25. The Operating Leverage has the minimum value as -1.60 and the maximum value as 27.34, while the mean ( ̅ ) is 1.31 and standard deviation ) is 6.13.

(b) Correlation Analysis The correlation analysis is used to study the relationship between predictor variables and response variable, and the relationship between profitability and OL (0.472) is highly significant 1 positively at 5% level (vide table 3). Hence, H0 : “there is no significant relationship between Operating Leverage (OL) and Profitability‖ of firms of Automobile Industry in India is rejected at 5% level.

Table 3 Results of Correlation Analysis for Operating Leverage and Profitability of Automobile Firms in India from 2010 to 2014 ( in crore) Variables Profitability OL Pearson Correlation .472*

Profitability Sig. (2-tailed) .036 N 20

Pearson Correlation .472*

OL Sig. (2-tailed) .036 N 20

Source: Collected data from National Stock Exchange. *. Correlation is significant at 0.05 level (2-tailed).

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(c) Regression Analysis Table 4 shows that the OL has significant positive co-efficient (579.83) on profitability in Automobile industry in India. The value of F statistics is 5.14, which shows a good fit of 2 regression and is significant at 5% level with R² 0.22 (Adjusted R² 0.17). Hence, H0 : ―there is no significant impact of Operating Leverage (OL) on Profitability‖ of firms of Automobile Industry in India is rejected at 5% level.

Table 4 Regression Results of Operating Leverage on Profitability of Automobile Industry in India from 2010 to 2014 Variables Un-standardized Standardized t Sig. Coefficients Coefficients Β Std. β Error Profitability 3914.66 1565.52 2.50 .000 OL 579.83 255.56 .472 2.26 .036 R 0.47 R2 0.22 Adjusted R2 0.17 F 5.14(0.036) Source: Computed results based on collected data from NSE. CONCLUSION

The results of the correlation and regression show that there is a significant relationship between operating leverage and profitability; there is a significant impact of operating leverage on profitability. Hence, it may be concluded that the operating leverage plays a significant role in determining the profitability of Automobile industry in India during 2010-14.

SUGGESTIONS

The profitability of the firms is comparatively higher. The operating risk of the firms is comparatively lesser when compared with the profitability, hence it is suggested that the firms of Automobile Industry should try to minimize the operating risk, so that profitability can be maximized.

LIMITATIONS OF THE STUDY

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Determinants of leverage in Automobile industry could be better observed if more number of firms of Automobile industry is considered as sample. The present study is limited to 20 firms of Automobile industry listed in NSE only for want of full-fledged data over the study period. Originally, it was decided to carry out the study on all the firms listed in NSE, covering a period of 5 years (2010 to 2014).

REFERENCES

Chandra, K. S., & Govindasamy, P. (2010). Leverage – An analysis and its impact of Profitability with reference to selected Cement Firms in India. European Journal of Economics, Finance and Administrative Sciences, (27), 53-65.

Khushbakht, T. (2013). Leverage – An analysis and its impact on profitability with reference to selected Oil and Gas firms. International Journal of Business and Management Invention, 2(7), 50-9.

Sabir, M., & Malik, Q, A. (2012). Determinants of capital structure: A study of Oil and Gas Sector of Pakistan. Interdisciplinary Journal of Contemporary Research in Business 3(10): 395-400.

Srivastava, N. (2014). Determinants of leverage of Indian Firms: An empirical analysis (A study of Cement Industry in India). The International Journal of Business & Management, 2(3), 49-53. Titman, A. and Wessels, R. (1988). The determinants of capital structure choice. Journal of Finance, 43(1), 01-19.

Varsha, V. (2010). Impact of leverage on profitability of Pantaloon Retail India Ltd. Advances in Management, 3(8), 52-9.

Wald John, K. (1999). How firm characteristics affect capital structure: An international comparison. Journal of Financial Research, 22(2), 161-87.

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Empowering Women through Microfinance: Fundamentally Interesting but Pragmatically Irrelevant

Empowerment of women should not be started merely using coercion leading to conflicts in households but emphasizing on understanding and

consensus. Empowerment begins with transformation and willingness to change. The realization of subordinated status and gender discrimination

against women is the starting point of journey of women empowerment. There are differences in perceptions of what stakeholders (government

Rajdev Amit NGOs, donors) of society believe about empowering women through Assistant Professor microfinance and the way women (actors) perceive empowerment process V. M. Patel Institute of Management, itself. To emphasize this gap, the present paper explores observations made Ganpat University at the time of interacting with women of Gujarat on empowerment (through Mehsana, Gujarat microfinance). Therefore, the objective of this paper is to analyze the aar02@ganpatuniversity. ac.in perceptions and views of Gujarati women on empowerment through microfinance and critically examine the relationship between the same with the help of review of literature. The observations reveals acceptance of subordinated status; focus on intrinsic value of empowerment, avoiding independent decision making, considering loans as means of assistance and perceiving women as an object of development.

Key words: Micro-finance, women empowerment, gender discrimination, subordinated status, intrinsic value.

32 Key Words: Micro-finance, Women Empowerment, Gender

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(Sometimes) People (women) unconsciously adapt their perceptions of what is desirable to their perceptions of what is possible.

– Amartya Sen (Cited by Kabeer N, 2013c) INTRODUCTION

―If it is our fault….they (my husband) can beat too‖ answered a woman respondent politely when asked whether she has been beaten by her husband. It is believed that with the help of microfinance, women become economically empowered and for this to lead to improved well- being and social, political and legal empowerment without explicit attention to other dimensions of gender subordination. However, it was observed that violence in the household has increased as men feel increasingly threatened their role as primary income earners.

The present paper explores observations made at the time of interacting with women of Gujarat on empowerment (through microfinance). Therefore, the objective of this paper is to analyze the perceptions and views of Gujarati women on empowerment through microfinance and critically examine the relationship between the same with the help of review of literature.

Adapted Perceptions: Subordinated Status

Power is understood in terms of ability of one person to control or influence the behaviour or actions of the other person. When such power is accepted by the woman (in our case) as highlighted in the above statement; we can say that woman has internalized the belief of male dominant values. Amartya Sen, as cited by Naila Kabeer (1999a), has revealed the same logic in terms of ―adapted perceptions‖. Further Sen observed that ―Acute inequalities often survive precisely by making allies out of the deprived. The underdog comes to accept the legitimacy of the unequal order and becomes an implicit accomplice‖.

Why such belief of ―internalized oppression‖ (in words of Rowlands, 1995) is accepted by women as survival mechanism? It is difficult to answer using single social theory. One of the explanations given by Distelhorst D (2005), using socialization and cultural programming theory, is that women and men are socialized very differently around issues of dominance and deference. Competition (Strive to win), hierarchy (take charge) and individualism (stand on your own) are seen as central to male behaviour. Men are therefore, acculturated to dominate and control. Women, on the other hand, are socialized to cooperate and collaborate with an emphasis on maintaining relationships above all else.

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Intrinsic Value of Women Empowerment

―Do you participate in deciding when to have a child?‖ a question asked to women respondent is taken for granted and is not so important for her to answer except a formality to complete questionnaire. It is observed that asking women about empowerment also reflects differences in terms of value they attach with the empowerment itself. Further, women do not assign the same degree of value to empowerment the way researcher assigns. Therefore, empowerment of women can be analyzed in two different contexts. First, from intrinsic approach, how women value empowerment and set up preferences in terms of agency and the second is instrumentalist approach, analyzing powers that they have even if they do not value these. As cited by Rowlands (1995), according to Taliaferro (1991), true power cannot be bestowed; it comes from within. Similarly, woman can be facilitated for empowerment; but we cannot empower her on our own efforts; unless she desires to do so.

Independent Decision Making by Women

When a woman, in a village area, has been questioned: Do you purchase utensils for household independently? She replied that we (me and my husband) jointly decide on such issues rather than a single person taking decision. Further she explained that taking decisions independently does not always lead to empowerment; but it is the cooperation and mutual understanding that plays an important role. Kiran Bedi (2005), in her speech on women empowerment, supports the same logic saying that dominance in decision making is not always empowering itself but rather disempowers; in fact mutual decision making in house would empower women. As the word empowerment has derived from ‗power‗; it is believed that it is a zero-sum game; the more power one person (husband in our case) has, the less the other (wife) has. However, Naila Kabeer (2013c) in her speech on women empowerment, asserts that feminist literature which has focused on power in terms of male domination does not rule out acknowledgement of man power but it puts focus on different notion of power; the power as the ability to transform oneself and other in the world.

Selling Girls ―I sold my daughter‖ is the answer given by a woman residing in a village; when she was asked about her daughter‘s education. The language that women used to speak reflects their level of subordination. It was found that rural women have gender preferences too. As cited by Gupta K

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& Yesudian P (2006), traditions such as dowry, as well as women‗s economic and social dependence on men throughout their life cycle, reinforce a preference for sons.

Loans means Assistance

―I will not form Self-help Group (SHG) because I have to pay money on behalf of other women borrowers being a leader of the group‖ said a leader of SHG in Rajkot when she was asked about her experience of working as a Group leader in SHG. Further she believed that at the time of taking money everybody promises to repay but when installment amount due nobody come for payment.

It is observed that poor women have internalized belief that microfinance loans are not commercial loans but it‗s a kind of assistance they would get from service providers. The perception is that if they understate their economic status; they would get further assistance. For the same reason microfinance women clients do not disclose real earnings and income levels of their family. They don‗t understand part of obligation of loan rather it‗s a cheaper source of raising money for them and using it for their own requirement. It is for the same reason why many SHG leaders have been found exiting from microfinance lending activities due to women clients defaulting at the time of loan becoming due. SHG leaders had to pay remaining amount to protect their credibility.

As explained by Throat (2005), Managing Director – NABARD that it is due to our banking system which has failed to internalize lending to the poor as a viable activity but only as a social obligation – something that had to be done because authorities wanted it so. Further it was translated into banking language of the day: Loans to the poor were part of social sector lending and not commercial lending; the poor were not borrowers, they were beneficiaries; poor beneficiaries did not avail of loans they availed of assistance.

Women: as ‘Object’ of Development The programmes, administered by the ‗outsiders‘ (who include government) view people as ‗object‘ of development and the agencies make provisions of things and services ―what they can rather than what people need‘ (Narayanan P, 2003). According to World Bank, empowerment is understood as enhancing an individual or group‘s capacity to make choices into desired actions and outcomes (Palier J. 2005). This capacity to make an effective choice is primarily influenced by two sets of factors: agency and opportunity structure. Agency is defined as an actor‗s ability

GFJMR Vol. 9 July – December, 2014 to make meaningful choices; that is, the actor is able to envisage options and make a choice. It is observed that empowered women are highly influenced by the organization through its socialization process they consider important. Most of organizations manipulate ‗agency‘ and establish the identity of their own philosophy under the pretext of women empowerment. As marked by Aslanbeigui N, Oakes G. and Uddin N. (2010) the empowered woman is conceived as a construct, an artifact of specialists in women and development—chiefly academics trained in western universities, NGO officials, and state policy makers on gender matters. Empowerment, therefore, is mainly a consequence of what is done to women as opposed to what they do on their own behalf.

CONCLUSION

It is believed that empowerment refers to a process of giving power to someone. However, in actual sense, it is transformation of oneself that gradually transfer the power in his/her favour. Women, without willingness to change and process of consciousness, cannot be empowered immediately. Empowerment process requires that an actor (woman) herself move towards gaining power (confidently) rather than pushing up her (nervously) by third parties (like NGOs). As pushing up women for empowerment is temporary outcome and leads to exit (divorce or separation) from household.

Access to microfinance services serves as one of opportunities for poor women to empower; by availing the same, nobody can ensure that it will lead to empowerment of women. There are so many possibilities; rather than a predetermined set of outcomes. Further, as cited by Kabeer N. (2005b), which of these possibilities realized in practice will be influenced by host of factors including the philosophy that governs their delivery, the extent to which they are tailored to needs and interests of those they are intended to reach, the nature of relationships which govern their delivery and – that most elusive of all developmental inputs – the caliber and commitment of people who are responsible for delivery.

However, the most important aspect of women empowerment is that the degree of value a poor woman attaches with it; the higher the value; the greater chances of empowerment. Finally empowerment is not for all women; it is for those women that value (deserve) it most.

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REFERENCES

Aslanbeigui N, Oakes G. and Uddin N. (2010). Assessing microcredit in Bangladesh: A critique of the concept of empowerment. Review of Political Economy, 22(2), 181-204.

Bedi Kiran (2012). A new take on empowerment of women, A Speech delivered at Rao Hospital, Coimbatore.

Distelhorst D. (2005). Dominance and Deference: Status Expectations of Men and Women, Making New Connections, 13(2), 24-28.

Kabeer N. (1999a). The Conditions and Consequences of Choice: Reflections on the Measurement of Women Empowerment, UNRISD, Discussion Paper No. 108.

Kabeer N. (2005b). Is Microfinance a ‗Magic Bullet‘ for Women Empowerment? Analysis from findings from South India, Economic and Political Weekly, 40(44/45), 4709-4718.

Kabeer N. (2013c). Reflections on Researching Women’s Empowerment – Journeys, Maps & Signpost, Speech Delivered at SOAS, University of London.

Narayanan P. (2003). Empowerment through Participation: How Effective Is This Approach?

Economic and Political Weekly, Vol. 38, No. 25, 2484-2486.

Rowlands, J. (1995). Empowerment Examined. Development in Practice , 101-107.

Taliaferro, M. B. (1991). The Myth of Empowerment, Journal of Negro Education, 60/1:1-2

Gupta K. and Yesudian P. (2006). Evidence of Women’s Empowerment in India: a Study of

Socio-spatial Disparities, Geo Journal, Vol. 65, No.4, 365-380.

Palier J. (2005). Defining the Concept of Empowerment through experiences in India, In Guèrin I and Palier J. (Ed.), Microfinance Challenges: Empowerment or Disempowerment of the Poor?,

All India Press: Pondicherry.

Y.S.P Throat (2005), Microfinance in India: Sectorial Issues and Challenges, Theme Paper at High Level Policy Conference on Microfinance in India, New Delhi

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Study the Trend of Private Label Brands around the globe with special reference to India

Dharamdasani Deepesh Private Label brands have seen a remarkable growth in few Assistant Professor V. M. Patel Institute of decades of the world. In recent years, many developed country

Management have innovated successful way to create private label offerings Ganpat University, Gujarat. [email protected] with different pricing and qualitative strategies to attract people of d eveloping countries. This paper represent the trend of the private

label brands in the globe and to know private label brands offer by the different developed country in developing country like India

Bhojak Nimesh through the using of different strategies. The paper shows how Department of Hospital Management people of developing countries change their views based on private Hemchandracharya North label brands. Gujarat University, Patan, Gujarat [email protected] Key words: Private Label Brands, Pricing and Qualitative Strategy

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INTRODUCTION

According to Private Label Manufacturer‘s Association (PLMA), Private Label products encompass all merchandise sold under retailer‘s brand. That brand can be retailer‘s own brand name or created exclusively by the retailers.

Private Label Brands (PLB) is main strategy used by retailers in the globe and India. Private Label Brands contribute 17 percent of retail sales.1 It also grows 5 percent annually. The different type of private label brands like Generic and Premiums store brands provide the more benefit to the retailers and satisfaction to the customers through the using of low price and differentiation strategy. In developing countries like India, Private label brands also helpful to sustain the economy at the time of slowdown to provide win- win situation to both parties. Private label brands are available in various categories of product like Food and Beverages, Personal Care, cosmetics, Healthcare, Homecare, consumer durable and clothes and apparels.

LITERATURE REVIEW OF THE STUDY

Sumit Bedi (2010) describes the journey of the Private label from cheap substitutes to serious competition. This research articles mention the evolution of private label brands in India. It also describe the different factor which helpful to stimulate the private labels in India such as differentiation, freedom with pricing strategy, implication for Indian retail marketers, leverage the consumer connection and communicate at the point of sale etc.

Hariprakash (2011) observed the growth of private labels brands in organized retail industry. The paper focuses on the private label brands in Indian retail industry. It mainly concentrate on the significance of private labels to a retailer, the growth potential of private labels, renowned private labels in Indian retail industry and performance of private labels with illustrations.

Lakshmi Nair (2011) inspects the growth prospects among Indian and international retailers, mostly in grocery and food section. It also examines the consumer‘s perception towards PLBs and engross themselves in purchasing PLBs in the retail section.

1 Business Today News Paper “The rise of Private Labels” 6th November, 2005.

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Krishna and Dash (2012) described the population of India preference of private label branded clothes and apparel through the pilot survey in Hyderabad and presented what is the buying behavior of the consumer of India towards the private label branded clothes based on empirical study. Paper describe the main factor of price, quality, design and assortment while the purchasing of the private labels apparel in India.

Vijay Kulkarni (2012) found in the study that customers buying private label apparels due to quality, price and durability. Customers also perceive the new design and fashion in the apparels.

Prashanth and Balan (2013) represented the how different factor of the people affects to select the private label brands of the different categories of the products. This research mainly carried out different stores like Spencer and Reliance fresh in Kerala and it describe the age, marital status and education factor affects to purchase the private label foods - grocery and personal care products.

Raturi and Parekh (2013) focused on the impact of national brand and private label on customers and sales where multi-brand outlet was exists.

NEED OF THE STUDY

Thus, an examination of earlier studies carried out in the area of PLBs states that, research has been more limited to growth and trend comparison of globe and India level and also consumer level – factors that make PLBs differentially across certain product categories. As the private labels are not only escalating sales and level of different products, but are generating new avenues to launch innovative, healthy and conveniently-packaged products to apt diverse consumer‘s requirements. Range of PLBs in India is narrow across categories in comparison to developed markets. This paper aims to uncover current trend and growth of the private label brands in India and the globe. Furthermore it aims to shed light on different factor affecting the selection of private label brands in different category of product in India.

OBJECTIVES OF THE STUDY

The current study has been carried out to understand the growth of the private label brands in the globe. In specific the research concentrates on:  To Study evolution and the growth of the private label brand in the globe

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 To Study the growth and trend of private label brands in India  To study the different strategy used to growth of Private Label Brands  To analyze the private label brands in India

METHODOLOGY The present study has made an attempt to collect secondary data are important to this study. Secondary data were collected from various sources like books, Reports of Industry, Reports of Private Labels agencies, Journals and Magazines and news articles related private labels. In this paper study the secondary data and try to interpret the data through the using of appropriate statistical tool. This research fulfills their objective through the study and analysis of the major issues.

EVOLUTION OF PRIVATE LABEL BRANDS

Historically, private label products related concept is the first developed by the Sainsbury in the United Kingdom in 1869(Collins and Bone, 2008) to attract the lower income consumers through the reducing the cost of product by the reduce quality level of the products. Private label were generic, commodity-based products developed to destabilize higher-priced traditional national brand products. Private Label brands became ―premium‖ brands that harmonized quality of national brands in many developed nations during the 1990.

GROWTH OF PRIVATE LABEL BRANDS IN THE GLOBE

Worldwide own label brands contribute to majority Retail Sales with a growth tremendously growth annually. International retailers like Tesco of UK have 55 percent of their own label brand representation in their stores and international retailers like Wal-Mart of USA have 40 percent own label representation in their stores2. In India, the PLBs are highly accepted now days and thus there is increase and rise in Home care, Consumer Durables, Apparels and FMCG segments.

2http://www.kpmg.com/IN/en/IssuesAndInsights/ArticlesPublications/Documents/Indian%20Retail- %20Time%20to%20change%20lanes.pdf

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Fig. Bar chart of Market penetration of Private Label Brands across the countries

Source: http://www.nielsen.com/us/en/insights/news/2013/what-makes-private-labels-click-in-india.html access on 3rd Feb, 2014.

Fig. 2 Private Label Sales growth (%)

World Europe Asia Pacific Latin America Series1 North America Emerging Markets

0 5 10 15 20

Source: Images Retail Report, 2009

Table 1 Percentage of Penetration of Private Label Brands INDIA USA 2008 10 19 2013 15 22

H0: There is no association between country context and time in year.

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Table 2 Expected and Observed Frequency O E O-E (O-E)2 (O-E)2/E 10 10.98 -0.98 0.97 0.09 15 14.02 0.98 0.97 0.07 19 18.02 0.98 0.97 0.05 22 22.98 -0.98 0.97 0.04 X2= 0.25

DISCUSSION

It is conclude that there is no association between the penetration of private label growth of India and USA during the period under study. Because if the calculated value of chi-square is less than the table value then null hypothesis is accepted. Here the calculated value of chi-square 0.25 is less than the tabulated value both at 5% (3.84) and 1% (6.63) level of significance. Hence null hypothesis framed for this study is accepted. Based on above analyses the study it shows that the Developed counties like USA and Developing countries like India have no significance growth of the penetration of private label.

GROWTH AND TREND OF PRIVATE LABEL BRANDS IN INDIA

On the whole, in India, Private Labels comprise of 10-12 percent of the organized retail product mix3.It is increasingly apparent that private label retailers are continuously expanding product selection to appeal to the greatest consumer segments. Fig. 3 Bar chart of share of Private Labels in selected organized retailors % Share in Private Labels

Spencers Shopper's Stop Indiabulls/Piramyd Pantaloon Trend 0% 20% 40% 60% 80% 100%

% Share in Private Labels

Sources: Images Retail report 2009

3http://www.kpmg.com/IN/en/IssuesAndInsights/ArticlesPublications/Documents/Indian%20Retail- %20Time%20to%20change%20lanes.pdf

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With great retail growth and economic expansion, India is going to become US $ 450 billion retail market by 2015 as compared to Italy in size(US$ 462 billion) and much larger than US$ 258 billion in Brazil. The evolution of Private Label Brand has just began with organized retailers leading to just 5% of today‘s market and likely to increase 14 to 18 percent by 2015. By 2015, it is projected that 65 million household will support organized retailer leading to over 300 million shoppers.

In India, various retailers are concentrating on PLB in fresh foods, apparels, appliances, home products and cosmetics. In the majority cases, branded players hold 10% of market which is small segment in comparison to 40 to 60 percent in other markets.4 This shows that Indian brands of tomorrow will be retailer brands. In the grocery, the families concentrated on low cost products & thus in 2008, PLB gain lot of reputation due to increasing concern over the rising food prices & the growing economy. Despite of price stabilizing in 2009, consumers have continued to get lower cost items.

STRATEGIES USED FOR THE GROWTH OF PRIVATE LABEL BRANDS

Private labels stock keeping units (SKUs) have enhanced eleven-fold worldwide from 2004 to 2008, lastly reaching 9,500 during 2008 to 2009. A renowned hypermarket would have 8,000 to 10,000 SKUs. Due to lower uneven retail and lower affordability, consumers have traditionally concentrated on very little stock keeping units. In the time to come, more range of products will be demanded by customers and this will be used as a source of distinction by the retailers. Private labels or store brands can lessen entry prices and raise margin: high-value private-label manufacturing contract enhance retailers‟ bargaining power with vendors and fascinate more shoppers owing to lower prices.

Indian is the developing countries which faces the problem of lack of resources in the nation so it is really tough task to grow the national brands tremendously while the private label brands mainly derived for the low price strategy so it is really helpful to increase the growth in India because most of the people of the nation as middle class it means the lower income class which mainly focus to satisfy their need based on the lower price of food, beverages, clothes & apparel,

4 2013 Global Retail Development Index, http://www.atkearney.com/consumer-products-retail/global-retail-development-index/full-report/- /asset_publisher/oPFrGkbIkz0Q/content/2013-global-retail-development-index/10192

GFJMR Vol. 9 July – December, 2014 personal care and homecare related products etc. So most of the Developed countries Retail chain like wall-mart want to capture the wholly market of India through the lowest price strategy.

Fig. 4 Overview of Private Label Brands

It is conclude that the table shows the compare to the main stream private label growth today onwards the value private label and Premium private label are higher it shows the earlier the

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Table 3 Overview of Private Label Brands in India 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 CAGR Main Stream Private Label 11 11 11 12 13 13 13 13 13 14 14 14 2% Value Private Label 5 5 5 5.5 5.5 5.5 6 7 7 7 7 8 4% Premium Private Label 1 0.5 1 1 1 1 1 1 1.5 2 2 2 7% Source: Rabobank report Private Label Vs. Brands: An Inseparable Combination

private label brands shows the only generic and copy cats through the using of low cost price strategy but today the private label brands also focus on differentiation strategy to capture the market through the using or premium store brands and value innovator brands in India. This is because of the changing of the different environment like social, political, technological and legal etc. People of the nation also changed their views related products so the private label brand changing the low price strategy to differentiation strategy such developing nation like India.

CONCLUSION

Private label brands tremendously increase their growth in the globe and it is also increase their growth developing countries such as India. Private Label Brands mainly focus the need of the people and also affects the economy of the nation it means recession time it help the booming economy through the using of low price strategy same as booming economy it also provide the premium and value innovator base product categories to the satisfy the people of nation. People have also changed their views likewise looking for price as well as value in the PLBs‘.

REFERENCES

Ashley, S. (1998). How to effectively compete against private-label brands. Journal of Advertising Research, 38(1), 75-82.

Batra, R., & Sinha, I. (2000). Consumer-level factors moderating the success of private label brands. Journal of retailing, 76(2), 175-191.

Bedi, S. (2010). Private labels: From cheap substitutes to serious competition. Markathon retrieved from http://iims-markathon.blogspot.in/2010/02/private-labels-from-cheap-substitutes.html.

Hariprakash (2011). Private labels in Indian retail industry. International Journal of Multidisciplinary Research, 1(8).

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Hoch, S. J., & Banerji, S., (1993). When do private labels succeed? Sloan Management Review, 34 (2), 57- 67.

Krishna, C. V., & Dash, M. (2012). Consumer Preferences Towards Private Label Brands In Indian Apparel Retail-A Pilot Study. International Journal of Research in Management, Issue2, 2, 1-10.

Kulkarni, V. (2012). An exploratory study of customer perceptions of private labels in apparels retailers in organized retail in India. International Journal of Research in Management, Economics and Commerce, 2(6), 121-141.

Nair, L. (2011). Private labels brands in food & grocery: the changing perceptions of consumers & retailers in India-A study in the Pune region. Researchers World, 2(1), 144.

Prasanth, M. K., & Balan, J. (2013). A study on the consumption pattern of private labels in Kerala with reference to grocery and FMCG. International Journal of Scientific & Technology Research, 2(2), 190-198.

Rani, R. A. (2012). An Analysis on Consumers‘ Intention of Buying Private Label Brands Within Food And Grocery Retail Sector–A Study In Chennai Region. Sajmmr, 2(6), 22-36.

Raturi, S., & Parekh, V. (2013). Impact of National Brand and Private Label on Customers and Sales. SIES Journal of Management, 9(1), 113.

Scaff, R., Dickman, K., Berkey, R., & Baran, L. (2011). Private label: Don‘t fight it, thrive in it. Accenture Report.

Selvakumar, J. J., &Varadharajan, P. (2013). Study on the growth prospects of private labels to that of national brands in the FMCG retail sector in Coimbatore. International Journal of Economics, Business and Finance, 1(2), 26-34.

Universals, D. N. P. P. M. (1994). Consumers Use of Brand Name, Price, Physical Appearance, and Retailer Reputation as Signals of Product Quality. Journal of Marketing, 58(2), 81-95. http://www.gov.mb.ca/agriculture/statistics/food/global_private_label_trends_en.pdf dated on 10/01/2014. http://www.gmaonline.org/file-manager/Times_Trends/report1011.pdf dated on 10/01/2014. https://www.foodinstitute.com/images/media/iri/TTDec2013.pdf dated on 10/01/2014. http://rasci.in/downloads/2009/Indian_Retail_Time_change_lanes_2009.pdf dated 10/01/2014.

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BEST FOODS CORPORATIONS – HOW SUSTAINABLE A

GROWTH RATE IS?

Shah Mayur This case elucidates the process of determining growth rate based Assistant Professor Shri Chimanbhai Patel Institute on financial data of a firm. This case focuses upon determining of Management and Research return on equity which is an important factor affecting growth Gujarat Technological University, Gujarat rate of any firm. Sustainable growth rate is widely used in [email protected] determining value of many companies. Dividend policy of any

firm has direct impact on such sustainable growth rate.

Shah Avani Assistant Professor Key Words: Sustainable growth rate (SGR), Return on equity Shri Chimanbhai Patel Institute (ROE), Cumulative Annual Growth rate (CAGR), Intrinsic of Management and Research Gujarat Technological Value. University, Gujarat [email protected]

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BACKGROUND

Analysts and financial consultants devote almost much of their time and energy to analyse growth prospects of various listed companies on stock exchanges to determine its proper value. Growth prospects of any firm are related with its important decision making of how much of their earnings to be retained for planned investment in to new projects or to be distributed as dividends. Analyst grapple with the issues pertaining to determination of proper growth rate based on such planned investment into new venture or project of the firm. Profitability of any planned investment of any company is reflected in its return on investment/equity (ROE). This case better captures the essence of determining such return on equity as well as growth rate. Thus, Analysts and experts in markets are focusing upon financial data to identify growth opportunities in any firm, but question remains how sustainable a growth rate is when it is taken into account for determining valuation of companies in this ever changing world.

Mr. Nilesh Shah, CA and CFA, is an analyst at the Clear Advice Investment Consulting Firm (CAIC). He has been assigned the task of assessing sustainable growth rate of Best Foods Corporations (BFC) so that proper valuation of BFC can be carried out further.

Best Foods Corporations is large diversified FMCG Company. Approximately 75% of its revenues come from processed dairy and food products with remainder from other Agri. products. Company is better positioned in Indian market having 16 major products capturing highest sales compared to other competitors.

Mr. Darsh Shah, Head of Clear Advice Consulting Firm, is of an opinion that annual growth rate in earnings is better estimate of calculating proper value of BFC. He strongly believes that CAGR of earnings or sales will be sufficient to assess the intrinsic value of any company.

Mr. Darsh Shah to Mr. Nilesh Shah, ―Nilesh, I think, we can use past 5 to 10 years of net income or net sales to find out growth rate of BFC and this growth rate figure can be embedded into calculation of intrinsic value‖

Mr. Nilesh Shah to Mr. Darsh Shah, ― Sir, rather than using CAGR of earnings data, we can simply measure return on equity of this firm which is one of the basic factor in determining firm‘s growth rate of earnings. Return on equity can further be decomposed into five major segments to check firms‘ leverage, burden of tax and interest, productivity and efficiency. Each component of

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ROE is meaningful and the process will serve to focus upon factors influencing performance of BFC in better manner.

Mr. Nilesh Shah to Mr. Darsh Shah, ―Sir, its sustainable growth rate that matters most‖

―Sustainable growth rate is better input to capture the contribution made by the company in its growth without borrowing money‖ said Mr. Nilesh Shah to Mr. Darsh Shah.

Mr. Darsh Shah to Mr. Nilesh Shah, ― Nilesh, too much reliance upon accounting data will not help you to capture market sentiments and whole valuation exercise will lose its purpose‖

Mr. Nilesh Shah replied, ― Sir, BFC has been ranked very higher so far as its corporate governance practices are concerned, its disclosure compliance is also good, we can definintely rely upon data to measure its sustainable growth rate based on return on equity.

Mr. Nilesh Shah to Mr. Darsh Shah, ― Sir, A firm‘s ROE is a key determinant of the growth rate of its earnings and if we divide its components, we will be able to track its performance over time‖

Mr. Darsh Shah to Mr. Nilesh Shah, ― you can go ahead with using sustainable growth rate and ROE for measuring proper value of this firm, but just check it out that you may have to face comparability problems in this‖

Table 1 Financial Overview Particulars 2008 2009 Income Statement (in millions) Revenue 5000 5600 Cost of Goods Sold 2250 2450 Selling, general & admin exps 1500 1610 Depreciation 200 260 Goodwill amortization 50 80 Operating income: 1000 1200 Interest expenses 100 120 Income before tax: 900 1080 Income taxes 315 378 Net Income: 585 702 Earnings per share 2.34 2.925 Average shares o/s 250 240

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Mr. Nilesh Shah to Mr. Darsh, ― we can assess distortions in earnings due to change in valuation of inventories, depreciation and interest expenses before measuring ROE which will clear your doubts regarding sustainable growth rate calculations‖

Mr. Nilesh Shah, who believes that economic earnings are more important for issues for valuation, whatever their shortcomings, accounting data still are useful in assessing the economic prospects of the firm. Quality of firm‘s earnings can be systematically analysed and even be used for finding out intrinsic value.

Table 2 Financial Overview Balance sheet (in millions) 2008 2009 Cash & Bank 550 735 Bills receivables 750 810 Stock 700 890 Net property, plant & machines 1100 1200 Intangible Assets 400 465 Total Assets: 3500 4100 Current Liabilities 600 900 Long term debt 400 500 Shareholder‘s equity 2500 2700 Total Liabilities: 3500 4100 Book value per share Rs. 10 Rs. 11.25 Annual Dividend per share Rs. Rs. 0.72 0.895

There are many measures that a company can use to measure growth. For example, it can measure it by increased market share, greater volume of sales or larger profit. The sustainable growth rate (SGR) is the maximum rate of growth that a firm can sustain without having to increase financial leverage or look for outside financing. The SGR is a measure of how large and how quickly a firm can grow without borrowing more money. After a firm has passed this rate, its growth will decline in the long term, and it must borrow funds to facilitate additional growth. Achieving SGR is every company's goal, but some headwinds can stop a business from growing and achieving its optimal SGR.

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CAGR is the year-over-year growth rate of an investment over a specified period of time. It‘s an imaginary number that describes the rate at which an investment would have grown if it grew at a steady rate. The return on equity (ROE) measures how much the shareholders earned for their investment in the company. The higher the ratio percentage, the more efficient management is in utilizing its equity base and the better return is to investors.

QUESTIONS:

1) ―Return on equity is the most important metric of financial performance‖ Do you agree with this statement of Mr. Nilesh Shah, Explain in detail. 2) Based on above data, Calculate ROE for the year 2009 for Best Foods corporations 3) Based on above data, Calculate sustainable growth rate for 2009 form firm‘s ROE and retained earnings ratio. 4) Discuss major obstacles in the way of an analyst while relying upon past financial data as narrated by Mr. Darsh Shah.

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Being No.1, To Be No. 1…

Vasavada Maurvi

Assistant Professor Centre for Management Studies,Ganpat University, Gujarat, maurvi.pandya@ganpatuniver Focusing on quality parameter of edible oil segment, Gulab Oil sity.ac.in had become No 1 edible oil brand of Gujarat. Being inseparable

Joshi Tejas part of Gujarati food items, the edible oil sector of state has Assistant Professor sustainable life cycle as well. Mukesh Nathwani, MD, Gulab Oil V. M. Patel Institute of Management, expanded Mangrol Oil Mill with a clear vision to come up as Ganpat University, Gujarat. number 1 retail brand on quality aspect in branded groundnut oil Thakkar Pooja market. With double filtration technology as well as product and Assistant Professor Centre for Management packaging innovations, Gulab Oil captured Gujarat edible oil Studies,Ganpat University, market with proper understanding of consumer expectation and Gujarat. preferences. ―Diversification is the key of sustainability‖ were the Bhatt Kedar Assistant Professor words of Nathwani on talking about his market expansion Centre for Management strategy. Being no 1 in Gujarat market, the company looked to be Studies, Ganpat University, Gujarat. no 1 in national market with ground-breaking strategy.

Gadhiya Palak Key words: Innovation, strategy, product promotion. Research Associate Mudra Institute of Communications, Ahmedabad (MICA),Gandhinagar,Gujarat.

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BACKGROUND

In 1966, Mangrol Oil Mill was established with a little capacity of 600 tons/day at interior place of Gujarat, India where groundnut cultivation was being taken place. In 1984, Mukesh Nathwani joined his family business after completing his degree for chemical engineering. In 1987-88, state had undergone severe famine, which lead to drastic fall in groundnut production. To meet their raw material need, Mukesh and his team travelled across the neighboring states of Gujarat and procured quality groundnut at lower rate. Personal involvement of owners in raw material purchase created valuable relations in market expansion and proved as major strength of the company. The brand stepped in Ahmedabad in 1992 with establishing the filling center in the city. With the passing years, company set up their refining units at Kadi, Mehsana, Gujarat, India.

Gulab Oil adopted the concept of quality as its key factor in setting the price. The double filteration concept helped the company to sustain as quality brand in consumers‘ minds.

In the year of 2004, Mukesh lead the company at another mile stone. Company started to purchase raw sunflower oil, cottonseed oil and muster oil from bulk edible oil market and started refining, filtering and branding the oil under umbrella brand of Gulab oil.By 2013, the company developed two units for manufacturing oil. One plant is at Mangrol and the other is at Rajkot in Gujarat.

INDUSTRY IMPACT

The industry has developed manifold over the years in Gujarat and India as a whole considering the factors like consumer tastes and preferences, quality products and health friendly edible oils. The industry has always looked Gujarat as a major hub for the business, as maximum consumption of edible oil has recorded in this state. Because of traditional buying behavior of consumer, initially company sales graph used to shoot up during months of November and December. After 2000-01 company noticed a dramatic change in overall edible oil consumption habits and started to receive balanced market response throughout the year. In these years globalization had narrowed down the gap between tradition Indian food and global cuisine. Even consumer became more health conscious. They started demanding for variety of edible oil with lower MUFA (Mono Unsaturated Fatty Acid) which is responsible for removing harmful cholesterol form human body.

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PRODUCT & PACKAGING INNOVATION

In 1992, Mukesh took initiative to establish the company‘s operations in Ahmedabad, Guajrat, India as major marketing hub of the state. At the outset, he identified the quality issues like sedimentation faced by consumers with the existing edible oil brands. To address this issue, the company introduced the concept of double filtering the groundnut oil for the first time in Gujarat. This not only helped the company to overcome the quality issues but also established Gulab Oil as a high quality edible oil brand in the mind of consumers. Apart from improving technology, it emphasized procurement of quality groundnut seeds from Gujarat, Maharashtra and other states of India, knowing the fact that the quality of seeds was the prime requisite to maintain their brand image in the market.

The company also introduced new packaging for their products continuously to address changing consumer preferences. Initially edible oil used to be sold in tin container (called ‗dabbas‘) of 15 kg which were difficult to handle. Company noticed that consumers were facing the problem of spoilage whenever they try to take oil out of this container for consumption. With this insight in mind, the company came up with two innovations. They changed ―man-hole‖ seal into ―spout seal‖, which lead to easy opening of the container. Another milestone, the company established was introducing the plastic container, locally known as ―jar‖ with a tap at the bottom to take out the oil easily without disturbing the quality of the product. Further, as consumers were shifting from their old habits of purchasing & storing more quantity of edible oil, to the purchase of small and convenient packaging products, the company started marketing oil in small sizes in pouch packing, tetra packs and smaller plastic bottles.

After 2004-05, the company seriously faced an issue of increased market range of edible oils. The number of consumers in Gujarat, who were purchasing other variety of edible oils like Cottonseed oil and Sunflower oil, was started to increase, which made Mukesh and his management team to give a second thought on their existing product. They analysed the market on consumers‘ feedback and decided to increase product line under the umbrella brand of ‗Gulab‘ as Gulab Sungold (Sunflower Oil), Gulab Health (Cottonseed oil), Gulab Prime (Corn Oil). The idea was to en-cash the already existing image of the brand as high quality edible oil. By the end of 2013-14, the company had the target to launch rice bran oil in state market.

PROMOTIONAL STRATEGIES

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Perfect usage of various promotional tools had played pivotal role in the emergence of Gulab oil as a brand. Mukesh Nathwani said, ‖Direct marketing is the best way to promote the brand‖. To sell the big bucket of product range they had selected to promote products to both retailers as well end customers. Free samples with existing products of edible oil, promotion through all media vehicles were some of the ideas for marketing. The celebrity endorsement of famous television stars amongst the house wives was turned out to be the milestone in this journey. Company every now and then comes out with skims, complementary gifts and discounts for retailers. Sample sales outside the malls and selected outlets had boosted the sales. They analyzed the consumer tastes and preferences across different location to find out the diversities and supplied as per the existing demand. Unique packaging and uncompromised quality were the USP for promoting the products.

CHANNELS OF DISTRIBUTION

Placing product at right time was always been key of success for Gulab oil. The selection of unique distribution system in this industry had lead Gulab Oil to be the trend setters. Removing multiple layers from channel of distribution was the idea. They had selected several retail outlets across Gujarat as well came out with company retail depot in Ahmedabad which had attracted customers for assurity of original quality products. Free home delivery across Ahmedabad and Gandhinagar was another thought which they had encash in form of generating more revenues. To tab the markets like Rajasthan, Madhya Pradesh and Maharashtra where they had present, they selected to stick with multiple layer distribution system as they were new to the market.

DIVERSIFICATION

Survival might not be the primary issue for the company, but they knew that reflections of market forces always been dynamic in nature. Mukesh Nathwani knew that cutting edge competition and changing consumer preferences may create big hurdles for the company. To overcome this issue company looked forward to diversify in another product line in agro products. They had started it by placing various agro food products range in malls and selected retail outlets across their coverage area. For promotion of this whole new product range they had launched skim of providing free packets of these products with their existing product line, i.e. edible oil. Again diversification may help them in building brand at national level which they were looking forward to.

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After identifying revolutionary consumer preference and market need, the company had launched different varieties of edible oil with different packaging material. Mr. Nathwani experienced positive entry in Mumbai market, but also realized that similar strategy might not going to work in other Indian Market. Even he had an idea to tap the rural market, which was virgin for branded edible oil segment. With considering the fact that edible oil is the product which is indivisible from Indian food industry, edible oil may not have the question of sustainability. At national level, market competition is gaming on the basis of extensive range of oil. Though, Gulab oil had also brought different variety of oil with higher quality standards, what strategy the company should follow to gain and maintain number 1 position at Indian market?

QUESTIONS:

1) Critically evaluate the Product design strategy adopted by the company. 2) Discuss the factors which have lead the company to face of market fluctuation during product market expansion. 3) What strategy the company should follow to gain and maintain leading position at Indian market?

Objectives of teaching the Case

The case will help the students in understanding following topics:

 Importance of quality Focus  Consumer insight as a driving force of marketing innovation  Product line extension and Brand extension  Use of Promotional tools to support product launch  Different strategies for different markets  Impact of changing market forces and consumer habits, preferences and lifestyle on marketers‘ decision

Major Issues involved in the case:

 Product line development  Expansion  Understating the market

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 Maintaining market position

Time given to the discussion of each issue: 10 mins.

Expectations from students in advance:

To get a brief idea about edible oil industry and its stakeholders

GFJMR Vol. 9 July – December, 2014

Book Review: Financial Services and Markets

Dr. Punithavathy Pandian Vikas Publishing House Pvt. Ltd., Noida (UP), 2012, pp. 418, Rs. 385,

Financial innovations and financial engineering has given a birth to numerous financial services and products, as a result of this, financial

markets have become more complex to understand and regulate.

Plethoras of financial products are available not only to save, invest,

and borrow but also to lend, which are not even imagined earlier. Inter-

linkages and inter-dependence between the financial services and markets have made it necessary for the reader to have a thorough

knowledge of the working of the financial system of the nation. Jariwala Harsha Assistant Professor The book covers extensive information about financial services and V. M. Patel Institute of markets. However, it does not include explanation of functioning of the Management Ganpat University financial institutions and its role in Indian financial systems. The [email protected] author has incorporated updated financial status and structural changes that happened time to time, not only within the country, but also around the globe.

The book is mainly divided into two parts. The first part of the book elaborates upon the various financial services. While the second part of the books deals with financial markets.

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Part I includes financial services available in the Indian financial systems ranging from issuers to investors and intermediaries. Total nine chapters are included in this part. The financial services such as lease financing, factoring and forfaiting, securitization, venture capital, credit rating, credit cards, mutual funds, insurance and merchant banking are included in this section of the boo;. Each of this financial services are explained extensively by devoting a separate chapter.

Starting with the bird‘s eye view of this section, chapter 1 has explained nature of financial services and markets, driving forces, structural changes, and factors influencing them and their growth and developments that took place are also explained. Impact of financial sector reforms on financial services and markets and linkage between WTO and financial sector creates the interest to the reader to read this book.

Chapter 2 includes Lease Financing. The scope of the term, salient features of the lease, leasing process, constituents of leasing industry, advantages and types of leasing, accounting treatment and income-tax considerations are explained with proper illustrations and case studies. Chapter 3 includes in-depth information about factoring and forfaiting. This includes meaning, scope and types of these specialized services, and how it differs from others financial services. Chapter 4 focuses on securitization, which includes in-depth information about its concept, structure, credit enhancement methods, and securitization market in India.

Chpater 5 focuses on venture capital, which includes extensive explanation about its meaning, stages of financing, investment process, and in-depth idea about preparation of business plan for entrepreneurs. The discussion on business plan make this chapter more practical to understand the importance of venture capital as an economic entity. Credit rating is discussed in chapter 6, which includes process of credit rating, rating framework, credit rating agencies and their symbols and importance of rating to issuers, regulatory authorities, and investors. Chapter 7 deals with plastic money i.e. credit card. Its mechanism, fees charged and facilities offered, variety of cards, and various acts related to credit card are discussed in this chapter. Chapter 8 deals with the mutual funds, the unique features of this chapter is the calculation of the NAV is discussed with illustrations, variables to be analyzed while investing in mutual funds and discussion of regulations related to mutual funds is provided. Chapter 9 includes insurance and related services. Chapeter 10 focuses on the merchant banking.

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The second part of the chapter starts from chapter 11. This chapter focuses on money market and Treasure Bills Market of India. The discussion includes basics of money market, need for money market, its developments and functioning, types of securities permitted. Chapter 12 gives attention on Call Money, CBLO and Repo Markets, their participants, functions, etc. Chapter 13 focuses on Commercial Papers and Certificate of Deposits Markets. This includes parties involved in trade, issue procedure, calculation of yield etc. Chapter 14 includes Commercial Bills Market. The discussion on reasons for lack of bills culture various committees involved in the bills discounting market and steps taken by RBI to improve the Bills Market are the unique features of this chapter. Government (Gilt Edged) Securities Market is explained in chapter 15. Chapter 16 explains Corporate Debt Market. Chapter 17 and Chapter 18 focus on the Primary and Secondary markets of India respectively. Chapter 19 and Chapter 20 explain Options and Futures markets in India. This book ends with the glossary and concept index.

The language of this book is simple, so a reader who wants to understand the basics of financial services and markets, this book is a boon for them. The book is written in the way that it captures the attention of the readers all the times. The unique features of this book are simple language, practical illustrations and case study, updates and developments in the financial markets and services are incorporated in all the chapters. The book provides a comprehensive view of the financial services and markets.