ajbmt journal december issue

ISSN 2393 - 9702

ASIAN JOURNAL

OF

BUSINESS MANAGEMENT AND TECHNOLOGY

VOLUME 1 – ISSUE 4

OCTOBER – DECEMBER 2016

QUARTERLY

DEPARTMENT OF MANAGEMENT STUDIES

G. PULLIAH COLLEGE OF ENGINEERING AND TECHNOLOGY

(Approved by AICTE, New Delhi. Affiliated to JNTUA, Ananthapur)

Pasupula(V), Nandikotkur Road, Kurnool 518452. Andhra Pradesh, India.

Asian Journal of Business Management And Technology (AJBMT), ISSN 2393-9702,

Volume 1, Issue 4, October- December (2016)

CONTENTS

S. No. Title of the Paper and Author Pg. No.

1

Impact of Organizational Communication on Employee’s Performance Dr. H S Abzal Basha*

1-11

2 Human Resource Management Practices in Life Insurance Sector in India

K. Ranjith Naik* Prof. C.N. Krishna Naik**

12-25

3

A Comparative Study on Growth and Performance of Public and Private Insurance in Indian Insurance Sector

K. Nagaiah* E. Pallavi** T. S. Sanjeev Kumar*** 26-38

4

Corporate Social Responsibility: A Tool For Reinforcing The Societies

B. Ismail Zabiullah* T. Sanjeev Kumar** 39-49

5

Comparative Analysis of Economic Value Addition of Selected Automobile Companies

Ruhi Afreen* K. Uday Kumar Achari** 50-64

6

A Paradigm Shift in Financial Reporting Standards

Dr. Ch .Krishnudu* 65-70

7

A Study on Quality of Customer Service in Public Sector Banks with Special Reference to Ananthapur District of A.P.

Sugali Dese Naik* Dr. Godha Rama Krishna**

71-90

8

A Study on Human Resource Planning With Special Reference to Sugar Industry

Shaik Rubeena* Shaik Mubeena** 91-102

9

A Study on Employee Job Satisfaction with Special Reference to Penna Cement Industries

B. Rajitha* 103-113

10

Analysis of Leadership Practices in India and USA

Vipin Chandra Sharma* Prof. D. R. Jat** Prof. Trilok Kumar Jain***

114-119

11

Education of Girls in Conflict Zone – A Survey Study in

Srinagar (J&K)

Nafees Fatima* Trilok Kumar Jain**

120-137

ASIAN JOURNAL OF BUSINESS MANAGEMENT AND TECHNOLOGY

1

ISSN 2393-9702

Volume 1, Issue 4, October – December (2016), pp. 01-11

Website: www.ajbmt.com

………………………………………………………………………………………………......

Impact of Organizational Communication on Employee’s

Performance

Dr. H S. ABZAL BASHA*

*Assistant Professor, Department of Management Studies,

G. Pullaiah College of Engineering & Technology, Pasupala (V), Kurnool -518452, A.P

Email: [email protected], Mobile: +91 9703757372

----------------------------------------------------------------------------------------------------------------

Abstract

“Communication-the human connection,

is the key to personal and professional success” - Paul J. Meyer

Now-a-days Indian banking sector is being considered as one of the most glorious,

innovative service industry that has witnessed constant growth over the past three decades.

Indian banking industry has a vital role in promoting public lending and public savings, and

is widely recognized as a significant factor for the economic development of the country. The

Indian banking industry is expected to be among the top 10 global markets in terms of value

by 2025, strengthen by increasing domestic demand. In today’s competition business

scenario prompt information plays a vital role in supporting the employees to make quick and

suitable decisions. Effective communication motivates and directs the employees towards

their means. Employees who are well allied with right communication system are more

positive to contribute and can perform more effectively. This also converts into better

customer experience and in turn, leads to stronger financial performance by the firm and

overall economic growth. The present paper aims to decisively analyze and interpret the role

of Organizational Communication System in SBI and ICICI bank and its impact on employee

and organizational performance.

Keywords: Organization Communication, Economic Growth, Organisational Effectiveness.

Introduction

In modern organizations, communication has become as an indispensable factor for

the overall organizational execution and success. The way the organization communicates

with its employees is reflected in morale, motivation and performance of the employees.

mailto:[email protected]


Volume 1, Issue 4, October- December (2016), pp. 01-11

2

If employees feel that communication from management is effective, it can lead to

feelings of job satisfaction, commitment to the organization and increased trust in the

workplace.

Communication is significant in the organization for three reasons. First, all the

functions of management such as planning, organizing, leading and controlling involve the

act of communication without which they cannot be performed at all. Next, managers devote

a major portion of their time to the activity of communication. Third, interpersonal relations

and group relations are maintained and develop only through the system of communication.

Communication is the central process through which employees share information,

create relationships, make meaning and “construct” organizational culture and values. This

process is a combination of people, messages, meaning, practices and purpose, and it is the

foundation of modern organizations. With the advent of social media, the number of

communication options has been exploded. As the speed of communication accelerates,

challenges to communicate effectively also increase. Thus, keeping communications accurate

and informative becomes a daily challenge.

Role of Communication: Through, the purposes of communication are;

1. To develop information and understanding which are necessary for group efforts;

2. To foster an attitude which is necessary for motivation, co-operation and job

satisfaction;

3. To discourage the spread of misinformation, rumours, gossips, and to release the

emotional tensions of workers;

4. To prepare employees and workers for a change by giving them the necessary

information in advance;

5. To encourage ideas, suggestions from subordinates for an improvement in the product

and work conditions, for a reduction in the time or cost involved and for the avoidance

of the waste of raw material;

6. To improve labour-management relations by keeping both in contact with each other;

7. To ensure such free exchange of information and ideas that assist all the employees in

understanding and accepting the reasonableness of the status and authority of everyone

in the organization;



3

8. To satisfy such basic human needs as the needs for recognition, self-importance and a

sense of belonging; and

9. To serve as auxiliary functions such as entertainment and the maintenance of social

relations among human beings.

Significance of Communication Systems

Information flows faster than ever before in modern organizations. Even a dismal

stoppage on fast moving operation time can be very costly. There is no universally applicable

communication system. But every individual manager has to tailor their own system

depending on their needs. Communication flows through various channels. These channels

include downward, upward, horizontal and cross-wise. Downward communication is a

system, where information flows from higher level to lower level in the organizational

hierarchy. Here, information flows from superior to subordinate. In upward communication

system, information flows from lower level to upper level in the organizational hierarchy.

Thus, in this structure information flows from subordinate to superior. In horizontal

communication system, information flows between the peers. But in cross communication

system, information flows vertically and horizontally among all the employees in the

organization.

Methods to improve Effective Communication

Effective communication refers as sending the right information to a right person at

the right time to make timely decisions. Effective communication helps to improve healthy

working environment in the organization. Management has to use the following methods to

improve the effectiveness of communication in their organizations.

1. Managing by Walking Around

2. Apply the Open door Policy

3. The Ombudsman Position

4. An Empowerment Strategy

5. Participative Management

6. Counseling, Attitude Surveys and Exit Interviews

7. The Grievance Procedure

8. E-mail



4

Interpersonal Communication

The interpersonal communication refers transfer of information from one person to

another. The purpose of interpersonal communication is to effect behavioural change by

incorporating psychological processes (Perception, Learning and Motivation) and language.

Getting feedback and providing feed forward are most important in interpersonal

communication. Effective communication highly depends on effective feedback. Both formal

and informal networks should be used for effective feedback. It makes communication two-

way process.

Characteristics of effective feedback

Intention: The intention of effective feedback is to improve job performance.

Specificity: Effective feedback is designed to provide specific information.

Description: Effective feedback is descriptive rather than evaluate.

Usefulness: Effective feedback provides useful information to employees.

Timeliness: Effective feedback provides information on right time.

Readiness: Employee must be ready to receive information.

Clarity: The recipient must understand the information clearly.

Validity: The information and communication must be reliable and valid.

Need and Significance of the Study

Today’s corporate Management vastly depends on the communication system to

achieve the organizational objectives. Especially communication system gained great

importance in service-oriented institutions like banks. Because, employees in a service

organization have frequent contacts with the customer, they usually serve as representatives

for both the organization and their products and services to the customer at contact point and

play a major role in determining whether a customer would enjoy the experience or turn to

their competitors for better solutions.

Scope of the Study

The present study included to examine the extent of interrelation between the

Organisational Communication, Employee Performance and organizational effectiveness in

banking professionals with respect to SBI and ICICI banks in Rayalaseema region of Andhra



5

Pradesh only. Particularly, I select these two banks because they are giant in public and

private sector in terms of operations, employees and turnover.

Figure-1: Organizational Communication-Organizational Effectiveness

Organizational Communication Employee Performance Organisational Effectiveness

Source: Designed by Researcher

Objectives of the Study

1. To study the role of Communication System on Employee Performance., and

2. To critically evaluate the effect of Communication System on Employee Performance

and Organisational Effectiveness in SBI and ICICI banks.

Hypotheses

H1: There is a significant difference between the two banks regarding the

Communication System that affect Organisational Effectiveness.

Research Design and Methodology

The present study is an empirical research in nature. The descriptive research

procedure is also used for describing the current scenario in SBI and ICICI bank.

Sources of Data: For the present study, the data has been collected from both primary and

secondary sources. The primary data has been collected by administrating a structured

questionnaire from the non-executive level employees of select SBI and ICICI banks. The

secondary data has been gathered from Internet, books, research articles, survey reports,

newsletters, various journals and magazines.

Sample Size

For the present study 397 non-executives were purposefully selected by applying

convenience sampling and their responses were the form basis for analysis, interpretation and

Development

Oriented

Behaviour

Organizational Communication Employee Performance

Organisational

Effectiveness



6

empirical findings of the study. The researcher was also obtained the required information

and clarifications from selected non-executives and other authorities of both the Banks to

draw meaningful conclusions.

Table-1

Total Sample Size

Source: Primary Data

Data Collection Instruments

Structured questionnaire method was adopted to collect primary data from employees.

Based on the review of literature on empowerment and detailed discussion in the human

resource consultants, Likert scale was constructed following the procedure developed by

Rensis Likert.

Statistical tolls and techniques

The present study is a qualitative analysis of the responses and results based on

observations. The collected data is analyzed and interpreted based on Weighted Averages,

Correlation coefficient analysis and Independent t-test with the aid of Microsoft Excel

software and Statistical Package for Social Sciences (SPSS-20 Version).

Limitations of the study

The present study has the normal limitations of time, finance and other facilities

usually faced by all research scholars. Apart from this limitation some of the other limitations

were as under;

1. This research study is limited to select commercial Public & Private Banks in

Rayalaseema region only.

2. The results of the research cannot be generalized to other banks like rural, co-

operative and foreign.

Name of the Bank

Employees Strength

(No. of Non-Executives)

No. of Respondents

(Primary Data)

State Bank of India. 1664 247

ICICI Bank 200 150

Total 1864 397



7

3. The accuracy of given information may owe to change by time, work place and

individual factors.

Table- 2: Demographic Profile of SBI and ICICI Bank Employees

Source: Primary data

Table-2 exhibits the response rate for the age, educational qualifications, marital

status and experience of the employees in SBI and ICICI Bank.

Demographic Aspects: In the present study, it has been observed that irrespective of the

banking sector, in both the banks majority of employees are in the age group of 26-30 years.

In terms of the educational qualifications ICICI bank employees are ahead with post

graduation. Though in SBI majority of employees are married, whilst in ICICI bank majority

Demographic Aspects

Bank Wise Respondents

SBI

(%)

ICICI Bank

(%)

Age

20-25 years 3.7 22.0

26-30 years 39.0 68.0

31-35 years 28.9 10.0

36 years and above 28.3 22.0

Total 100 100

Educational Qualifications

Intermediate 2.7 0

Graduation 40.1 12.0

Post Graduation 33.2 78.0

Professional Degree 24.1 10.0

Total 100 100

Marital Status

Married 81.3 34.0

Unmarried 18.7 66.0

Total 100 100

Job Experience

Less than 5 years 26.7 90.0

5-10 years 42.8 6.0

10-15 years 2.1 4.0

15 years and above 28.3 0

Total 100

100



8

of respondents are bachelors. And, it is also found that as in the terms of experience SBI

employees are ahead compared to ICICI bank employees.

Table- 3: Employee Communication and its Outcomes

S.No.

STATEMENTS

SBI

(MEANS)

ICICI Bank

(MEANS)

1 I am getting Prompt Information to make Quick and

Suitable Decisions 4.35 3.54

2 I have Observed Boost-up in My Morale with

Present Communication 4.06 3.76

3 If I have a Problem I can Speak Directly to My

Superior 4.21 4.32

4 I am able to give an Open Feedback on My

Subordinates and Superior 3.23 4.10

5 Employee’s Weaknesses are communicating in a

Smooth Manner 3.80 3.74

6 Hierarchy and Cross Culture are the Barriers in

Communication 2.99 3.34


Table-3 portrays the weighted average responses of the statements for employee

communication and its outcome. Employee communication, in the form of prompt

information exchange to take quick and suitable decisions builds employee effectiveness. For

this the rating given by the respondents of SBI and ICICI Bank are 4.35 and 3.54. From the

above weighted responses in SBI and ICICI bank, it’s very clearly observed that the

employees’ morale has become amplified with the present communication practice. For this

ratings given by the respondents of SBI and ICICI Bank are 4.06 and 3.76. The respondents

of both banks said that they have direct access to their superiors. For this ratings given by the

respondents of SBI and ICICI Bank are 4.31 and 4.32.

The above table discloses that both banks respondents agreed that both banks are

maintaining an open feedback system. For this ratings given by the respondents of SBI and

ICICI Bank are 3.23 and 4.10. SBI and ICICI bank are practicing smooth approach to convey

employee weakness. For this rating are given as 3.80 and 3.74 respectively. In both banks, the

respondents have almost identical perceptions about the communication barriers as 2.99 and

3.34. From the overall analysis, the inference can draw that both banks are practicing

identical communication practices. Here, SBI is ahead of providing prompt information to



9

their employees, whilst ICICI bank ahead in offering open feedback and direct accessibility

of superiors.

Table- 4: Correlation Coefficient B/W Communication -Performance Quality

Variables Performance Quality Communication

Employee

Performance

Quality

Pearson Correlation 1 0.057**

Sig. (2-Tailed) 0.000

N 397 397

Employee

Communication

Pearson Correlation 0.057** 1

Sig. (2-Tailed) 0.000

N 397 397

**. Correlation is significant at the 0.01 Level (2-Tailed).


Table-4 discovers that significant value of p (0.001) < 0.01. Therefore, it means, that

there is a significant positive relationship between the employee communication and

performance quality in the banking sector. It means, if an employee gets apt information by

decision time instinctively performance quality of the employee turn into better. Employee

performance quality merely depends upon information flow, feedback, zero barriers and

superior’s support.

According to Kim et al.,1 employee communication is believed to contribute to the

organization are in the areas of relationships, morale, productivity, cost control, teamwork,

safety, change management, reduced turnover and improved market value. Some other

studies also notify that employee communication has been linked to increased innovation,

participation, employee involvement, increased creativity and quality.

Watson Wyatt has founded2 a correlation between high-performing organizations and

strong communication practices. MacDonald et al.,3 also found a positive and significant

relation among employee engagement, improved performance quality, healthy employee

relations, less turnover, higher customer satisfaction and the greater productivity.

Hypothesis Testing-1

H0: There is no significant difference between the two banks regarding the role of




10

H1: There is a significant difference between the two banks regarding the role of


Table- 5: Communication Differences B/W SBI and ICICI Bank

Group Statistics

Bank Name

N

Mean

Std.

Deviation

Std. Error

Mean

Communication

Differences

Between SBI and

ICICI Bank

SBI 247 4.3529 .72106 .05273

ICICI Bank 150 3.5400 .90212 .07366


Table- 6: Independent Samples Test

Levene's

Test for

Equality of

Variances

t-test for Equality of Means

F

Sig.

t

df

Sig.

(2-tailed)

Mean Differ

Std. Error Differ

95% Confidence Interval of the

Difference

Lower Upper

Role of Emp.

Communication

& its impact on

Organisational

Effectiveness

Equal

variances

assumed

14.33

0

.000 9.195 395 .000

.8129

4

.8841 .98686

.63902

Equal

variances

that not

assumed

8.974

341.

601

.000

.8129

4

.9059

.99125

.63463


Tables-5 and 6 show that there is a statistically significant difference between SBI

and ICICI bank at 0.01 of the level of significance with regard to communication, including

information flow, feedback and superior support as the significant level (p=0. 00) is less than

0.01. Consequently, from the overall analysis and inferences it is proved that there is no

unanimity and there is a significant difference between the SBI and ICICI bank practices with

regard to employee communication. Therefore, from this it is proved that the formulated

hypothesis H2 is accepted and H0 is rejected. It is evident from the table-5 and 6 and very



11

clear that the SBI employees are getting more prompt information compared to ICICI bank,

which improves employee morale.

Conclusion

The present study confirms that there is significant relationship among Organisational

Communication, Employee Performance and Organizational Effectiveness. In current

scenario both SBI and ICICI banks are using greater communication system, but, SBI

employees have better chances in getting prompt information, right directions, factual

feedback and healthy superior-subordinate relations. However, some of the employees have

stated that lack of open feedback, hierarchy and cross culture as the main obstacles in

communication.

References:

1. Chan Kim, W., and Renee A, Mauborge, R., “Procedural justice, attitudes, and

subsidiary top management compliance with multinationals' corporate strategic

decisions”. Academy of Management Journal, 36(3): 502-526, 1993.

2. Watson Wyatt Worldwide., “Linking communications with strategy to achieve

business goals”. Communication ROI study :Washington, DC, 2004.

3. MacDonald, Brown, and Duncan, A., “Proving communication impacts business

performance: Strategic communication management”, 7(6), 28-33, 2003.

4. Asiya Gul et al., “Role of Capacity Development, Employee empowerment and

Promotion on Employee Retention in the banking sector of Pakistan”, IJARBSS, Vol. 2,

No. 9, ISSN: 2222-6990, September 2012.

5. Gurvinder Kaur;“A Thesis on Employee Empowerment and Organizational

Effectiveness: A Comparative Study of Public, Private and Foreign banks in Some

North Indian States, submitted to Thapar University, Punjab, November, 2013.

6. Chandra Mohan Patnaik& Ashok Kumar Sahoo; “Empowerment of award staff in

regional rural banks through training system: an analysis” Asian Journal of

Multidimensional Research Vol.2 Issue 1, January 2013, ISSN 2278-4853. 7. Quratul-AinManzoor; Impact of Employees Motivation on Organizational

Effectiveness, ISSN 2157-60682012, Vol. 3, No-1.

8. PreetiS.Rawat; Effect of Psychological Empowerment on Commitment of Employees:

An Empirical Study, IPEDR vol.17 (2011), IACSIT Press, Singapore.

9. Angwenyi Callen Nyanchama; Employee Empowerment Practices in Commercial

Banks in Kenya, School Of Business, University Of Nairobi, 2009.

10. Peters Silvia Chigozirim and ElhamMazdarani; The impact of employee empowerment

on service quality and customer satisfaction in service organizations-A Case study of

Lansforsakringar Bank AB, 2008,Malardalen University, Vasteras.

11. David E Bowen and Edward Lawler; The Employment Approach to Service, Center for

Effective Organizations, January, 1994.

12. Decotics and summers; “A Path Analysis of a Model of the Antecodents and

Consequences of Organisational Commitment”, Human Relations, 1987, pp. 445-470.


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ISSN 2393-9702



………………………………………………………………………………………………......

Human Resource Management Practices in Life Insurance Sector

in India

(A Comparative study of Public Sector and

Private Sector Insurance Companies) K. Ranjith Naik*

Prof. C.N. Krishna Naik**

* K. Ranjith Naik, Research Scholar, SKIM, S.K. University

**Prof. C. N. Krishna Naik, Principal, University Arts College, S.K. University,

Ananthapuramu, A.P., 515003

Introduction:

The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together

with banking services, insurance services add about 7% to the country’s GDP. A well-

developed and evolved insurance sector is a boon for economic development as it provides

long- term funds for infrastructure development at the same time strengthening the risk taking

ability of the country.

During April 2015 to February 2016 period, the life insurance industry recorded a

new premium income of Rs 1.072 trillion (US$ 15.75 billion), indicating a growth rate of

18.3 per cent. The general insurance industry recorded a 14.1 per cent growth in Gross Direct

Premium underwritten in FY2016 up to the month of February 2016 at Rs 864.2 billion (US$

12.7 billion).

India's life insurance sector is the biggest in the world with about 360 million policies

which are expected to increase at a Compound Annual Growth Rate (CAGR) of 12-15 per

cent over the next five years. The insurance industry plans to hike penetration levels to five

per cent by 2020. The country’s insurance market is expected to quadruple in size over the

next 10 years from its current size of US$ 60 billion. During this period, the life insurance

market is slated to cross US$ 160 billion. The general insurance business in India is currently



13

at Rs 78,000 crore (US$ 11.44 billion) premium per annum industry and is growing at

a healthy rate of 17 per cent.

In life insurance business, India ranked 9th among the 156 countries, for which data are

published by Swiss Re. During 2010-11, the estimated life insurance premium in India grew

by 4.2 per cent (inflation adjusted). However, during the same period, the global life

insurance premium expanded by 3.2 per cent. The share of Indian life insurance sector in

global market was 2.69 per cent during 2010, as against 2.45 per cent in 2000.

The Human Resource Development department has to play a more proactive role in

shaping the employees to flight out the challenges. The insurance companies not only have

to make plans and policies and devise strategies, the actual functionaries have to show

willingness, competence and effectiveness in executing the said policies and strategies. In

commercial organizations like insurance companies, HRD departments have the advantages

of not being excessively burdened with day–to–day problems of running the business or

ensuring profitability of individual transactions. They are in positions to take strategic and

long term view of the competitive advantage of the human resources as well as identify areas

of professional weaknesses to rectify well before any damage takes place in the organization.

Indeed they have the golden opportunity to implement the desired human resources policies

to improve and strengthen the organization to withstand the onslaught of fierce competition

in future.

Based on this perspective, an attempt has been made to highlight the factors which, if

implemented, may lead to substantial transformation of insurance companies to compete in

an environment of risks and uncertainty.

Review of Literature:

The management without any right policy is like “building a house on sand”. It means an

effective management always needs a thorough and continuous search into the nature of the

reasons for, and the consequences of organisation. In line with this, some related earlier

studies conducted by individuals and institutions are reviewed to have an in-depth insight into

the problem and exploring the reformation of insurance business.

In India also several studies have been carried out by Research scholars regarding

consumer satisfaction with services of insurance companies. Mishra, K.C. and Simita Mishra1



14

in their article on “Insurance Industry: Recipe for a Learning Organization” say that like any

other industry, insurance industry in India suffers from one challenge repeatable a hundred

times, that is the constraints of infrastructure. Balasubramanian, T.S. and Gupta, S.P.2 in their

book on “Insurance Business Environment” explain at length the global and Indian pictures

of Insurance systems. The impact of globalization and also liberalization on Insurance

business environment is also discussed analytically to have a clear understanding of the

challenges faced by the insurance industry.

Mitra Debabrata3 in the thesis entitled “Employees and the PSU: A Study of their

Relationship with Special reference to Jalpaiguri Division of the Life Insurance Corporation

of India” opines that the State-owned Undertakings provide all sorts of facilities and

amenities to employees along with usual emoluments. But, their productive rate is low when

compared it with the private sector undertakings. In the Jalpaiguri Division, the employee

relationship with the LIC is clearly discussed and some suggestions are also given in the

thesis. Wadikar Ashok Laxaman4 in his thesis on “Innovativeness in the Insurance

Industries”, confirms a general opinion that innovativeness in every activity alone rules and

dominates the industry. But, at the same time, the practicality and economic justification of

that innovativeness are also to be considered. With the introduction of the latest technology

into the industry, innovativeness in the insurance industry is the order of the day.

Srivastava, D.C. and Srivastava, S.5 in their book on “Indian Insurance Industry–

Transition and Prospects” discuss analytically the financial significance of insurance

industry, its contribution to Indian economy and also the transitory prospects and challenges

of insurance industry due to liberalization and the opening up of the sector to private players.

Ramesh Lal Dhanda6 in his thesis on “Divisional Performance Evaluation of LIC

Business in North Zone” states that the factors affecting policy purchase decisions of the

insured are the risk cover and also the tax benefits. The ratio of management expenses to total

premium income, the productivity analysis for agents, the average percentage of death claims

settled and the overall outstanding claims ratio are found important yard sticks for measuring

the Divisional performance of LIC.



15

Suri Seeta Ram7 in his article on “Life as a Life Insurance Agent – Difficulties,

Challenges and Rewards Galore” describes clearly his personal growth as an insurance agent

while thanking his mentors for honing professional skills. Two basic lessons that almost all

the agents are coerced into learning are ‘Rebate’ and ‘Wrong Medicals’. These are lessons

that are very hard to unlearn. He emphasizes that the purpose of life insurance is not just tax

relief and savings, but a lot more to think and learn.

Krishanaveni, M.8 in her article on “Issues and Challenges of Indian Insurance

Industry” highlights the fact that detailed standards should be issued by the Regulator

covering the constitution and also the methods of calculating reserves and provisions to

ensure that all companies have to follow and adopt policies of capital adequacy standards in

time and in tune with the best of the international practices. She also asserts that an Insurance

Information Bureau should be created with data on underwriting policies, incidents of loss,

claims and insurance brand.

Jaya Prakash Rai, T.9 in his thesis on “Attitude and Behaviour of Life Insurance

Policyholders: A Study with Reference to Dakshina Kannada District” conducts an empirical

study to know the attitude and behavioural patterns of the selected insurance customers of the

District. He suggests that customer expectations towards different attitudinal factors are to be

properly analyzed to formulate a suitable and a necessary marketing strategy for each and

every insurer.

Pooja Bhalla and Gagandeep Kaur10 in their article on “Private Players and Life

Insurance Industry” present that the opening up of the insurance sector to private players has

posed a challenge to the public sector giant i.e. LIC of India. Though, it still enjoys the

dominant position but the proportionate share is decreasing year after year. On the other

hand, the private players with their innovative products, smart marketing, wider distribution

networks and better customer service have been successful in attracting a large number of

customers.

Need for the Study:

A peculiar feature of insurance has been that it needs to be marketed aggressively in order for

the general public to buy. This is more so in ‘not so financially literate markets’ like India.



16

Insurers conceptualise, design, obtain approvals and offer their products. But in order that the

product reaches the intended beneficiary and the beneficiary is convinced to buy, an effective

intermediary – who acts as a bridge always at your Service between the seller and the buyer –

is utmost essential. That is where the industry gives scope for Agents, Brokers, Banks,

Insurance Marketing Firms etc to play an important role. With time, the Regulator has

allowed innovation in the intermediary space whereby Insurance Marketing Firms, Common

Service Centres, restructured corporate agency system for banks, Web Aggregators, Point of

Sale persons etc have come into existence to expand the reach of insurance delivery

mechanisms. Further innovations are also underway like the Insurance Service Centres,

whereby, post-sale services of multiple insurance companies are proposed to be made

available at a single window.

The last one and half decade, which marks the era of reforms in the country for

insurance sector changed the face of the economy far beyond recognition. Technology has

brought in substantial changes in insurance sector in terms of customer services and new

product innovations. The liberalized norms employed by the public sector insurance

companies demonstrated the resolve of the insurance sector to take hard decisions to gear up

themselves in terms of human resources for today’s highly competitive environment.

On the other hand private insurance companies are more dynamic in adopting latest

HR practices. It is in this scenario that a comparative study of HR practices in public sector

and private sector insurance companies has been examined.


The following are the objectives of the study:

To identify the recruitment methods in Public sector and Private sector insurance

companies.

To evaluate the selection criteria in Public sector and Private sector insurance companies.

To assess the rationale of training & development practices in Public sector and Private

sector insurance companies.

To offer suitable suggestions for the effective functioning of Public sector and Private

sector insurance companies.



17

Methodology

Area Selection for Primary Data: Rayalaseema region of Andhra Pradesh has been selected

for the purpose of primary data collection.

Primary and Secondary Data: To carry out the objectives, the researcher has used both

primary and secondary data. The secondary data and information have been collected from

various sources like business newspapers, journals, magazines, IRDA Reports and

publications etc. Primary data has been collected through structured questionnaire from the

employees and intermediaries of Public sector and Private sector insurance companies.

Data Analysis and Interpretation: The primary and secondary data collected from different

sources have been tabulated and interpreted meaningfully. The information has been

represented using bar charts, pie diagrams, graphical method etc.

Table No. 1 : List of Life Insurance Companies in India

1. Aegon Life Insurance Co. Ltd.

2. Aviva Life Insurance Co. India Ltd.

3. Bajaj Allianz Life Insurance Co. Ltd.

4. Bharti AXA Life Insurance Co. Ltd.

5. Birla Sun Life Insurance Co. Ltd.

6. Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd.

7. DHFL Pramerica Life Insurance Co. Ltd.

8. Edelweiss Tokio Life Insurance Co. Ltd

9. Exide Life Insurance Co. Ltd.

http://www.aegonreligare.com/

http://www.avivaindia.com/

http://www.allianzbajaj.co.in/

http://www.bharti-axalife.com/

http://www.birlasunlife.com/

http://canarahsbclife.com/

http://www.dhflpramerica.com/

http://www.edelweisstokio.in/

http://www.exidelife.in/



18

10. Future Generali India Life Insurance Co. Ltd.

11. HDFC Standard Life Insurance Co. Ltd.

12. ICICI Prudential Life Insurance Co. Ltd.

13. IDBI Federal Life Insurance Co. Ltd.

14. IndiaFirst Life Insurance Co. Ltd

15. Kotak Mahindra Old Mutual Life Insurance Ltd.

16. Life Insurance Corporation of India

17. Max Life Insurance Co. Ltd.

18. PNB MetLife India Insurance Co. Ltd.

19. Reliance Life Insurance Co. Ltd.

20. Sahara India Life Insurance Co. Ltd.

21. SBI Life Insurance Co. Ltd.

22. Shriram Life Insurance Co. Ltd.

23 Star Union Dai-Ichi Life Insurance Co. Ltd.

24. Tata AIA Life Insurance Co. Ltd.

Source: IRDA website

Sample of the Study: There are currently, a total of 24 life insurance companies in India. Of

these, Life Insurance Corporation of India (LIC) is the only public sector insurance company.

All others are private insurance companies. Many of these are joint ventures between

public/private sector banks and national/international insurance-financial companies. Private

http://www.futuregenerali.in/

http://www.hdfcinsurance.com/

http://www.iciciprulife.com/

http://www.idbifederal.com/

http://www.indiafirstlife.com/

http://www.kotaklifeinsurance.com/

http://www.licindia.com/

http://www.maxlifeinsurance.com/

http://www.metlife.co.in/

http://www.reliancelife.com/

http://www.saharalife.com/

http://www.sbilife.com/

http://www.shriramlife.com/

http://www.sudlife.in/

http://www.tataaia.com/



19

life insurance companies in India got access to the life insurance sector in the year 2000.

Most private players have tied up with international insurance giants for their life insurance

foray.

State-owned LIC is the biggest life insurer in the country with an approximate market share

of 52.7%. ICICI Prudential Life is the market leader among private life insurers.



20

A sample of 225 employees / intermediaries from Public Sector Life insurance

company i.e. LIC of India and another 225 employees / intermediaries from 23 Private Sector

Life insurance companies has been selected for the study. The total sample size is 450.

Sampling Technique: Convenient sampling method has been employed for the study.

Table No. 2: Details of Claim Settlement Ratio

S.No List of Life Insurance Companies Claim Settlement

Ratio

1 Life Insurance Corporation of India 98.14 %

2 ICICI Prudential Life Insurance 94.10 %

3 HDFC Standard Life Insurance 94.01 %

4 Max Newyork Life Insurance 93.86 %

5 Star Union Dai-ichi Life Insurance 92.86 %

6 Bajaj Allianz Life Insurance 91.29 %

7 SBI Life Insurance 91.06 %

8 Kotak Life Insurance 90.69 %

9 IDBI Federal Life Insurance 90.34 %

10 PNB MetLife Insurance 90.24 %

11 Sahara Life Insurance 90.19 %

12 Tata AIA Life Insurance 89.68 %

13 Bharti AXA Life Insurance 88.13 %

14 Birla Sun Life Insurance 87.76 %

15 Canara HSBC OBC Life Insurance 86.76 %

16 Aviva Life Insurance 84.01 %

17 Exide Life Insurance 83.16 %

18 Reliance Life Insurance 81.97 %

19 AEGON Life Insurance 81.00 %

20 Future Generali India Life Insurance 74.88 %

21 India First Life Insurance Company

Ltd - India First

73.13 %

22 Shriram Life Insurance 67.69 %

23 Edelweiss Tokio Life Insurance 60.00 %

24 DHFL Pramerica Life Insurance 22.14 %

Source: http://www.policybazaar.com

http://www.policybazaar.com/insurance-companies/life-insurance-corporation-of-india/

http://www.policybazaar.com/insurance-companies/icici-prudential-life-insurance/

http://www.policybazaar.com/insurance-companies/hdfc-standard-life-insurance/

http://www.policybazaar.com/insurance-companies/max-life-insurance/

http://www.policybazaar.com/insurance-companies/star-union-dai-ichi-life-insurance/

http://www.policybazaar.com/insurance-companies/bajaj-allianz-life-insurance/

http://www.policybazaar.com/insurance-companies/sbi-life-insurance/

http://www.policybazaar.com/insurance-companies/kotak-mahindra-old-mutual-life-insurance/

http://www.policybazaar.com/insurance-companies/idbi-federal-life-insurance/

http://www.policybazaar.com/insurance-companies/pnb-metlife-life-insurance/

http://www.policybazaar.com/insurance-companies/sahara-life-insurance/

http://www.policybazaar.com/insurance-companies/tata-aia-life-insurance/

http://www.policybazaar.com/insurance-companies/bharti-axa-life-insurance/

http://www.policybazaar.com/insurance-companies/birla-sun-life-insurance/

http://www.policybazaar.com/insurance-companies/canara-hsbc-life-insurance/

http://www.policybazaar.com/insurance-companies/aviva-life-insurance/

http://www.policybazaar.com/insurance-companies/exide-life-insurance/

http://www.policybazaar.com/insurance-companies/reliance-life-insurance/

http://www.policybazaar.com/insurance-companies/aegon-religare-life-insurance/

http://www.policybazaar.com/insurance-companies/future-generali-india-life-insurance/

http://www.policybazaar.com/insurance-companies/indiafirst-life-insurance/

http://www.policybazaar.com/insurance-companies/indiafirst-life-insurance/

http://www.policybazaar.com/insurance-companies/shriram-life-insurance/

http://www.policybazaar.com/insurance-companies/edelweiss-tokio-life-insurance/

http://www.policybazaar.com/insurance-companies/dhfl-pramerica-life-insurance/



21

Scope of the Study:

While there are public sector insurance companies, private sector companies, the employees

and intermediaries of LIC of India (only Public Sector Company) and 23 Private Sector

companies were considered for the study. Hence, the scope of the study refers only to 24

companies operating in Life Insurance segment in India.

Awareness about the Job:

Table 3: Awareness about the Job

Mode of

Awareness

Public Sector Private Sector

Sample Size Percentage Sample Size Percentage

Employee

Referral

25 12.32 54 26.60

Notification /

Advertisement

157 77.34 116 57.14

Personal

Enquiry

21 10.34 33 16.26

Total 203 100% 203 100%

Source: Field Survey

It is understood from the above table that, among Public Sector employees a majority

of 77.34% claimed that their source of awareness regarding the job is by Advertisement or

Notification, followed by 12.32% from Employee Referral and 10.34% of the employees said

that it was by Personal enquiry. Among Private Sector employees a majority of 57.14%

claimed that their source of awareness regarding the job is by Advertisement or Notification,

followed by 126.8% from Employee Referral and 16.26% of the employees said that it was

by Personal enquiry.

Number of Stages in Selection Process:

Table 4: Number of stage in Selection Process

No. of Stages

in Selection



2 Stages 183 90.15 184 90.64

3 Stages 9 4.43 19 9.36

4 Stages 11 5.42 0 0

Total 203 100% 203 100%




22

It is understood from the above table that, among Public Sector employees a majority

of 90.15% claimed that they underwent two stages of tests in selection process, 4.43% of the

employees said that it was three stages and 5.42% of the respondents said that they had four

stages in selection process.

Among Private Sector employees a majority of 90.64% claimed that their selection

was done based on two stages and 9.36% of the respondents said they were selected by

conducting tests at three stages.

Basis for Selection:

Table 5: Basis for Selection

Basis for

Selection



Merit 191 94.09 203 100.00

Influence 12 5.91 0 0

Total 203 100% 203 100%


It can be interpreted from the above table that, among Public Sector respondents an

Overwhelming majority of 94.09% claimed that their selection is based on Merit. Where as a

very minority of 5.91% respondents said that they could influence the concerned authorities

in getting selected.

Among Private Sector employees 100% of the respondents felt that their selection was

purely based on Merit. From the above information, it can be interpreted that besides merit,

there are other methods for getting selected in Public sector.

It is suggested that the Public Sector should take measures to erase the opinion among

the employees that there are other considerations for getting selected besides merit.

Offering Training and Development Programmes:

Table 6: Offering Training and Development Programmes

T& D

Programmes



Yes 203 100.00 203 100.00

Total 203 100% 203 100%



23


It can be understood from the above table that, 100% of the respondents from both

Public Sector and Private Sector claim that they have attended Training & Development

programmes.

Number of Training and Development Programmes Attended:

Table 7: No. of Training and Development Programmes Attended

No. of T&D

Programmes

attended



Up to 5 134 66.01 119 58.62

5 to 10 47 23.15 84 41.38

Above 10 22 10.84 0 0

Total 203 100% 203 100%


It can be seen from the above table that, among the respondents from Public Sector,

66.01% of the respondents stated that they have attended less than five Training &

Development programmes, 23.15% stated that it is in between five to ten programmes, and

10.04% of the respondents stated that they have attended above ten Training & Development

programmes. 58.62% respondents from Private Sector stated that they have attended less than

five Training & Development programmes and 41.38% of the respondents said that they have

attended five to ten Training & Development programmes. It is suggested to increase number

of Training and Development programmes based on employee cadre in Private Sector

organisations.

Opinion about the Necessity of the Training:

Table 8: Opinion about the necessity of Training

Opinion



Strongly

agree 137 67.49 36 17.73

Agree 66 32.51 167 82.27

Total 203 100% 203 100%




24

It can be seen from the above table that, among the respondents from Public Sector,

67.49% of the respondents stated that they strongly agree that the Training programmes are

very much required and 32.51% of the respondents agree that Training programmes are

required. Among the respondents from Private Sector, 17.73% of the respondents stated that

they strongly agree that the Training programmes are very much required and 82.27% of the

respondents agree that Training programmes are required.

Limitations of the Study:

In a study of this magnitude, though meticulous care has been taken in each and every aspect

of study, certain limitations are likely to be there in the study.

1. Some respondents were not aware of certain procedures and aspects of Human

Resource Management.

2. The findings cannot be generalized as the study is confined only Rayalaseema Region

and to 24 companies operating in Life insurance segment in India.

3. Few respondents were hesitant to give correct details.

4. There might be a sense of bias crept in answers given by the respondents.

References:

1. Mishra, K.C. and Simita Mishra, “Insurance Industry: Receipe for a Learning

Organization”, The Management Accountant, March, 2000, p.186.

2. Balsubramanian, T.S and Gupta, S.P., “Insurance Business Environment”, IC-12,

Insurance Institute of India, Mumbai, 2000.

3. Mitra Debabrata, “Employees and the PSU: A Study of their Relationship with Special

reference to Jalpaiguri Divison of the Life Insurance Corporation of India”, Ph.D. Thesis

submitted to the Department of Commerce, University of North Bengal, Raja Rammohunpur,

Dist., Darjeeling, 2000.

4. Wadikar Ashok Laxaman, “Innovativeness in the Insurance Industries”, Ph.D. Thesis

submitted to the Department of Management, University of Pune, Pune, 2001.

5. Srivastava, D.C. and Srivastava, S., (Eds.) “Indian Insurance Industry – Transition and

Prospects”, New Century Publications, New Delhi, 2001.



25

6. Ramesh Lal Dhanda, “Divisional Performance Evaluaiton of LIC Business in North Zone”,

Ph.D. Thesis submitted to the Department of Commerce, Guru Jambheshwar University,

Hissar, 2002.

7. Suri Seeta Ram, “Life as a Life Insurance Agent – Difficulties, Challenges and Rewards

Galore”, IRDA Journal, January, 2005, pp.28-29.

8. Krishnaveni, M., “Issues and Challenges of Indian Insurance Industry”, The Management

Accountant, December, 2005, p. 937.

9. Jaya Prakash Rai, T., “Attitude and Behaviour of Life Insurance Policyholders: A Study

with Reference to Dakshina Kannada District”, Ph.D. Thesis submitted to the Department of

Commerce, Mangalore University, Mangalagangothri, 2005.


26

ISSN 2393-9702



………………………………………………………………………………………………......

A Comparative Study on Growth and Performance of Public and Private

Insurance in Indian Insurance Sector

K. Nagaiah MBA., (Ph.D.,)*

E. Pallavi**

T. S. Sanjeev Kumar***

*Asst. Professor, Dept. of MBA, G.Pullaiah College of Engineering & Technology, Kurnool,

Email ID: [email protected] Mobile No: 9703159439.

**Student, Dept. of MBA, G.Pullaiah College of Engineering & Technology, Kurnool.

***Student, Dept. of MBA, G.Pullaiah College of Engineering & Technology, Kurnool

----------------------------------------------------------------------------------------------------------------

Abstract:

The paper probes into the Indian Economy and observes the features of Insurance

Industry in India based on Strength and Weakness of Insurance Industry in India economy.

Further making literature survey, it is essential to re-look into the Private and Public Players

in insurance industry in India as insurance companies are mushrooming after liberalization.

Further, increase in the foreign direct investment from 26% to 49% shows that insurance

business will grow in India. Thus, in this study, an attempt has been made to make the

comparison of Private and Public firms in Insurance industry in India. The performance will

be evaluated using the Key Performance Indicators (KPIs) in the Insurance Industry such

registered insurers, new policies, penetration and density, number of offices, operating

expenses and incurred claims ratios. The period of study has to be taken from 2010 to 2015.

An attempt is made to clarify the results and generalize them to insurance industry

performance. The study will be carried on making content analysis from the data collected

from various secondary sources such as annual reports of insurance companies, Insurance

Regulatory Development Authority (IRDA) journal, and insurance journal. The statistical

tools used in the study will be descriptive statistics, percentage analysis, growth trends. The

study is explorative, descriptive and empirical in nature.

Keywords: Insurance, Private sector, Public sector, Penetration, Operating expenses,

Density.



27

Introduction

The financial service industry has made significant changes after liberalization and

globalization. Among all, insurance sector is also one of the important sectors in India. The

Private and Public companies in insurance industry in India are rapidly increasing after

liberalization. Further, increase in the foreign direct investment from 26% to 49% says that

insurance business will grow in India but facing hard-hitting competition from rest of the

world and. So, there is an opportunity that there may be some difference observed in between

the private and public insurance sectors. By the entry of private players, the competition is

changing intense. In order to satisfy the customers, there should be competition between the

public and private companies to invent new creations and innovative product features to

attract customers. Hence it is intended, through this study, to make an comparative analysis

between private and public sectors to understand the differences that lies in terms of demand

conditions, competition, product innovations, use of technology, innovative bundling of

insurance with other financial services, aggressive marketing share, and better customer care,

and regulations. Apart from it, in-depth analysis of the performance of insurance business in

India is done with reference to various performance parameters.

Review of Literature

Indian insurance industry has come a long way since the days of private dominance

and Government monopoly in more than a century. The establishment of Insurance

Regulatory and Development Authority in 1999 and subsequent entry of foreign and private

players has changed the entire insurance landscape of the country. Professionalism and the

technologies brought in by the foreign players have forced the hitherto sluggish and

complacent players to devise their strategies from company-business-oriented to customer-

satisfaction-oriented (Hole and Misal, 2013) and that are progressive in nature. But

unfortunately, most of the strategies are far more of survival than growth oriented. Though,

company’s say that utmost care is being taken to maximize customer satisfaction yet the

ground reality is something very different. Customer centric products and strategies are

required because insurance provides social security to both the employees and non employees

(Davar and Singh, 2014). This also increases the competition among them and helps develop

emotional intelligence. Various studies (Lagrange & Roodt, 2001; Slaski & Cartwright, 2002;

Sitarenios, 1998; Rapisarda, 2002 and Donaldo-Feidler & Bond, 2004) conducted abroad and

studies in India (Jain & Sinha, 2005; Sinha & Jain, 2004; Srinivas and Anand, 2012; and



28

Kumar, Mishra & Varshney, 2012) amply suggest that insurance coverage, besides providing

social security, brings in job satisfaction and results in improved emotional intelligence

which in turn improves the organizational effectiveness and organizational commitment.

Many studies also have found out that employee insurance have a positive impact on the job

performance (Jayan, 2006; Bechara, Tranel & Damasio, 2000 and O'Boyle Jr. et al., 2010) of

the employees as performance of employee is crucial to the survival and growth of insurance

industry in India.

Realizing the potential of insurance sector in mobilizing the savings for the productive

use and its ability to provide job security and social safety, Government has taken various

steps to improve its quality, reach and popularity. As a result, the sector was opened to both

the private and the foreign players. It is seen that the process of liberalization, privatization

and globalization has brought in a sea change in Indian economy in general and the insurance

sector in particular. The private players have been penetrating their business more and more

into the rural and untapped areas with more number of policies, higher amount of premium

and changes in the commission expenses and operating expenses (Chand, 2014).With the

growing competition emanating from domestic and international players, there is healthy

competition and a different level of job satisfaction among the employees. But, to compete

and grow, both the employees of private and public sector companies need to work in proper

harmony and co-existence manner. Increased competition has, though brought in satisfaction,

it has also necessitated innovative marketing strategies and customer satisfaction practices,

which are again dependent upon the increased employees job satisfaction and this will be

possible through the social security i.e., insurance (Kaur, 2012).

Besides other sectors, the Insurance sector also plays a vital role in the economic

development of our nation by providing various useful services like mobilising savings,

intermediating in finance, promoting investment, stabilizing financial markets and managing

both the social and financial risk. Despite its added advantages, India still lags behind other

nations and considered as an under-insured country in the world. It has come a long way and

made much strides since 2009, when it had the 18th position among Life Insurance markets

and 28th in Non-Life Insurance markets. But, considering its ever growing population and

demographic dividend, it has huge unexplored potential yet to be explored and harnessed.

Even the establishment of IRDA and opening of markets have not helped in the growth of

insurance penetration, except for the period during 2001 to 2009 when it rose from 2.71 per

cent to 5.20 per cent. Since then, it declined to 3.96 per cent in 2012, which is much below



29

the global average of 6.5 per cent of GDP. Density of insurance which rose from 11.50 in

2001 to 64.40 in 2010 also declined to 53.20 in 2012-13 and continues to decline even today.

This is due to the fall in the premium collections and the regulator tightening of the rules and

decline in the household financial savings (Ganesh, 2014).

Liberalization followed the de-tariffing of the non-life insurance products in 2007

which provided impetus and level playing field to the sector bringing in flexibility,

profitability and competitiveness among the players (Sharma and Sikidar, 2014). Even after

opening up the market and de-tariffing, the insurance companies in India are facing various

problems such as paying of outstanding claims which are primarily based on their strong

national franchise, presence, sound financial position, comfortable solvency position,

diversified investment portfolios and strength of reinsurance ties. Along with this, changes

necessitated among the domestic insurance industry due to the intensified competition and

sharp decline in interest rates continues to be the major cause of concern. Besides, emerging

dynamic environment has exerted pressure on their profitability, costs of operations, claim

management and their service standards. Moreover, systemic inefficiencies and the

inadequacy of the tariff structure in certain lines of business have also diluted their strength.

Other than the life insurance and its claim, there are also other issues like under insurance,

technological advancement, data management, underwriting, fund management, actuarial

efficiency special health insurers and the end-to-end service delivery process, etc. These must

be addressed at the earliest to realize the full potential of the insurance.

The literature survey is made to get an insight of the relevance and scope of the

insurance business. It also probes into how characteristics of private and public sectors

influence insurance sector. The review of past studies is also made to find out and summarize

the compilation criteria relevant for insurance industry between public and private

companies.

Statement of the Problem

Insurance industry in India has come a long way from the days of its inception. The

factors that has influenced the trend of insurance companies are i) A social security and

pension system ii) Catastrophes/ risks iii) Changes in customs and social practices iv)

Disposable income v) Healthcare systems vi) Household financial savings vii) Interest rates

viii) Rapid aging of populations ix) Rate of growth of population x) Stronger economic

growth /GDP growth xi) The levels of domestic savings (Gross Domestic Savings).



30

The share of life insurance in gross financial savings of household sector is important

factor for insurance business. As per RBI Annual Reports, in 2003-04, the contribution of

insurance funds to the financial savings was 14.9 per cent in 2003-04, viz., 2.2 per cent of the

GDP at current market prices. Life Insurance Funds, Postal Insurance and State Insurance

contributed 14.5, 0.1 and 0.3 per cent, respectively. The percentage of life insurance funds to

the GDP at current market prices increased from 2.1 per cent in the previous year. In 2004-

05, financial savings of the household sector in the form of Life insurance funds has been

declining from 15.5 per cent in 2002-03 to 12.8 per cent in 2003-04 and further to 12.4 per

cent in 2004-05. Some of the other major components of financial savings were contractual

savings, mainly life insurance funds at 12.8 per cent. In 2005-06, Insurance funds accounted

for 16.0 per cent, of which life insurance funds accounted for 15.1 per cent, postal insurance

0.3 per cent and state insurance 0.6 per cent. Insurance funds accounted for 15.0 per cent; of

which 14.6 per cent was constituted by life insurance funds. As a percentage of GDP,

insurance funds accounted for 2.8 in 2006-07 as against 2.3 in 2005-06. Postal insurance and

state insurance funds constituted 0.2 per cent each. In 2007-08, insurance funds constituted

17.5 per cent of the total gross financial savings of the households in 2007-08. This has

resulted in an increase in the share of insurance funds in the total household savings. The net

financial savings of the household sector reduced to 7.8% in GDP in 2011-12 from 9.3% in

previous year and 12.2 % in 2009-10. The net financial saving of the household sector in

2008-09 is 10.9 per cent of GDP at current market prices, is lower than 11.5 per cent in 2007-

08. It has been declining over the period from 12% in 2009-10 to 8% in 2011-12, while

during same period savings in physical assets by household increased from 13.2% in 2009-10

to 14.3% in 2011-12. The main reason for this is inflation which has resulted in less return or

negative return leaving few savings in hands of households due to hike in general prices. The

growth of household savings remained stagnant in 2010-11. The share of life insurance funds

in total financial savings of household continued to surge in 2010-11. Its share increased to

24.2 % up from 22.6% in 2009-10 and 21% in 2008-09. In 2013-14, the household financial

saving remained low at 7.2 per cent of GDP in 2013-14 compared to 7.1 per cent of GDP in

2012-13 and 7.0 per cent of GDP in 2011-12. During 2013- 14, households increased their

savings in deposits (especially with commercial banks) and small savings, while that in

currency and mutual funds declined. The political environment is not conducive to

constructive change or sound economic management. The dominance of entrenched players



31

makes it possible that the industry will stagnate. The legal framework, bureaucracy and

financial infrastructure worsen the insurance business environment.

Various studies show that no significant change has occurred as far as mobilizing the

national savings by the insurance sector is concerned. According to RBI data, there is upward

trend in the business but no structural change in the trend of the savings in life insurance by

the households to GDP ratio. This can be interpreted that the inflow of foreign capital has not

been accompanied by any technological innovation in the insurance business, which would

have created greater dynamism in savings mobilization.

Further, far from expanding the market for the insurance sector in rural and semi-

urban areas, private companies is more concentrated in urban areas where good market

network, created by public sector companies, and already existed. This is corroborated by the

public sector company’s agent’s ratio of 100:76 in urban and rural India as compared to the

private insurance company’s ratio of 100:1.4 respectively (IRDA Annual Report, 2002-03

and 2013-14). So, the liberalization has not contributed to the expansion of the insurance base

of the economy. So far as the innovative products and the induction of new technology is

concerned, private players have offered nothing as the mortality rates and other principles of

insurance are based on the Indian conditions for Indian policyholders and, in most cases,

renamed LIC products are sold by the private insurance companies as their own products.


This paper attempts to study the following objectives:

1. To observe the number of insurers registered in Insurance Industry in India

2. To examine the growth of insurance business in public sector and private

sector.

3. To analyze the financial and operating performance of public and private

players in Indian insurance sector.

Research Methodology

The objective of the paper is to make the comparison of Private and Public sectors in

the Indian insurance sector. For this, the set of comparison criteria’s are Competition,

Insurance policies, penetration and density, number of offices, operating expenses, etc,. The

performance will be evaluated using the Key Performance Indicators (KPIs) in the Insurance

Industry such registered insurers, new policies, penetration and density, number of offices,

operating expenses and incurred claims ratios. The period of study has to be taken from 2010



32

to 2015. An attempt is made to clarify the results and generalize them to insurance industry

performance. The study is carried on making content analysis from the data collected from

various secondary sources such as annual reports of insurance companies, annual reports of

IRDA, IRDA journals, insurance journals. The statistical tools used in the study will be

descriptive statistics, percentage, growth trends. Data Analysis is done using Ms Excel. The

hypothesis of the study is that there is difference in the growth and performance between the

public and private firms in insurance industry. The study is explorative, descriptive and

empirical in nature.

Data Analysis and Interpretation

Insurance Industry in India

The insurance industry is also an integral part of the financial system. The

overview of insurance industry in India is shown below in Table I:

Table I - Overview of Insurance Industry in India

Nature Insurance Industry

Regulators Insurance Regulatory and Development Authority (IRDA)

Number of insurers General insurance companies: 29

Life insurance companies: 24

FDI limit 49% (26% earlier)

Largest player in India Life Insurance Corporation of India (For overall sector)

Listing on Indian Stock None of the insurance companies are listed on Indian stock exchange

as of

Exchange Now

Related Acts Insurance Act, 1938

Insurance Regulatory Development Authority Act, 1999

Source: Author’s Compilation from various online sources

The above table indicates the position of insurance sector (public and private) in

Indian economy. It shows regulatory body, number of insurers, FDI status and related acts to

form insurance sector in India.



33

Table II - Registered Insurers in India (up to 2015)

Year Type of

Business

Life

Insurance

Non-Life

Insurance

Re-

insurance Total

2014-15

PSU 1 6 1 8

Private Sector 23 23 0 46

Total 24 29 1 54

2013-14

PSU 1 6 1 8


Total 24 28 1 53

2012-13

PSU 1 6 1 8


Total 24 27 1 52

2011-12

PSU 1 6 1 8


Total 24 27 1 52

2010-11

PSU 1 6 1 8


Total 24 24 1 49

Source: Source: Compiled from Annual reports of IRDA of different years from 2010-11 to

2014-15 Notes: 1. Life insurance 2. Non-life insurance 3. Total number of insurers

Table II shows the growth in registered insurers in India over a period of time. By the

end of 2014-15, the total number of registered insurance companies is 53, out of which 45 are

in private sector and eight are in public sector. 24 life insurance companies and 29 non life

insurance companies are operating in India by the end of March, 2015. In public sector there

is one and only the life insurance company which is LIC and are six in non-life insurance

companies. While in private sector there are 23 life insurance companies and 23 non life

insurance companies operating in India. There is only one re-insurer in India which is

General Insurance Corporation of India (GIC). In public sector, there are two specialised

non-insurance companies named, ECGC (Export Credit Guarantee Corporation of India Ltd)

and AIC (Agriculture Insurance Company of India Ltd.). In private sector, out of 23 non-life

insurance companies, there are five Standalone Health Insurance Companies. They are 1)

Star Health & Allied Insurance Co., 2) Apollo Munich Health Insurance Co., 3) Max Bupa

Health Insurance Co., 4) Religare Health Insurance Co., and 5) Cigna TTK Health Insurance

Co.



34

Table III - New Policies Issued: Life Insurers and Non-life Insurers

Year

Life Insurers Non-life Insurers

Public

sector Private Total Public Private Total

2014-15

201.71 57.31 259.02 677.82 504.97 1182.79

-78% -22% -100% -57% -43% -100%

2013-14

345.12 63.6 408.72 600.06 424.47 1024.52

-84% -16% -100% -59% -41% -100%

2012-13

367.82 74.05 441.87 689.68 380.56 1070.24

-83% -17% -100% -64% -36% -100%

2011-12

357.51 84.42 441.93 528.14 329.3 857.44

-81% -19% -100% -62% -38% -100%

2010-11

370.38 111.14 481.52 505.78 287.65 793.41

-77% -23% -100% -64% -36% -100%

Table III shows that number of new policies introduced by life insurance companies

and non-life insurance companies in India from 2010-11 to 2014-15 financial year. From

2010-11, the value of new policies issued by life insurance companies under public sector are

decreased from 481.52 lakhs to 259.02 lakhs in 2014-15. Similarly from 2010-11, the value

of new policies issued by public sector non-insurance are increased from 505.78 lakhs to

677.82 lakhs in 2014-15.



35

Table IV- Distribution of Offices by the Life Insurers

Year Insurer Metro Urban Semi Urban Others Total

2015

Private 705 1867

3584

6156

-56%

PSU 375 622

3877

4877

-44%

Total 1083 2489

7461

11033

-100%

2014

Private 676 1926

3591

6193

-56%

PSU 372 617

3850

4839

-44%

Total 1048 2543

7441

11033

-100%

2013

Private 703 1519

4537

6759

-66%

PSU 368 614

2544

3526

-44%

Total 1071 2133

7081

10185

-100%

2012

Private 741 1393 3822 1756

7712

-69%

PSU 365 563 970 1557

3455

-31%

Total 1106 1956 4792 3313

11167

-100%

2011

Private 769 1428 3715 2263

8175

-71%

PSU 363 560 953 1495

3371

-29%

Total 1132 1988 4668 3758

11546

-100%

2010

Private 897 1555 3607 2709

8768

-74%

PSU 347 550 923 1430

3250

-26%

Total 1244 2105 4530 4139

12018

-100%

Table IV shows that Distribution of Offices of Life Insurers in metros, Urban and

semi urban areas. In different years, it shows the spread of offices is more number among

the private sector with compare to public sector. The distribution of offices around the

country is more among the private players.



36

Operating expenses

Operating expenses are occurring by the daily business activities. Low operating expenses

will refers that the management of the company is performing the best and the firm has better

ability to compete with its competitors.

Table V - Operating Expenses of Life and Non-Life Insurers

List of

Years

Life Insurers Non-Life Insurers

PSU Private Total PSU Private Total

2014-15

22395.5 14466.1 36861.6 11181 7527 18708

-61% -39% -100% -60% -40% -100%

2013-14

23760.7 13704.7 37465.4 8791 6312 15103

-63% -37% -100% -58% -42% -100%

2012-13

16707.7 14844.7 31552.4 7791 5516 13307

-53% -47% -100% -59% -41% -100%

2011-12

14914.4 14760.2 29674.6 6563 4609 11172

-50% -50% -100% -59% -41% -100%

2010-11

16980.3 15962 32942.3 6688.6 3931.88 10620.5

-52% -48% -100% -63% -37% -100%

Source: Compiled from Annual reports of IRDA of different years

Note: Values are given in INR Crore, LIC is the only public life insurers

Public firms both in life and non-life insurance sector have higher operating expenses

compared to private insurers. From 2010 to 2015 only the public sector has been taken the

higher position under Life Insurance and Non-life insurance.

Incurred Claims ratio

Incurred Claims ratio is the ratio of all paid claims versus all paid premiums of an

issued insurance policy for a particular account. It is sometimes called Combined Ratio that

is total amount of paid claims /total amount of premium. Table VI shows the Incurred

Claims Ratio of Non-Life Insurers (per cent). From 2010-15 to 2014-15 the percentage

share of Incurred Claims Ratio of Non-Life Insurers was higher for public sector than

private sector.



37

Table VI - Incurred Claims Ratio of Non-Life Insurers (per cent)

Segment Year Fire Marine

Miscellaneous

Motor Health Others Total

Public Sector 2014-15 75.21 57.8 72.38 109.97 55.97 82.09

Private Sector 2014-15 66.19 87.38 81.91 79.17 60.61 79.69

Public Sector 2013-14 80.39 59.3 77.51 106.19 64.55 83.2

Private Sector 2013-14 55.45 71.24 81.4 87.62 63 79.58

Public Sector 2012-13 52.46 76.88 81.26 79.93 55.47 79.56

Private Sector 2012-13 71.55 60.39 92.41 103.21 46.39 84.79

Public Sector 2011-12 67.06 82.07 97.62 77.93 50.31 88.26

Private Sector 2011-12 101.45 84.32 92.41 100.28 55.58 89.27

Public Sector 2010-11 87.86 92.89 111.1 106.31 58.11 97.03

Private Sector 2010-11 75.16 82.12 93.7 85.15 49.76 86.9

Source: Compiled from Annual reports of IRDA of different years

Reinsurance

Reinsurance Ceded is that portion of risk that a primary insurer transfers to a

reinsurer. Reinsurance ceded allows the primary insurer (the ceding company) to reduce its

risk exposure to an insurance policy by passing that risk onto another company (the accepting

company), with the accepting company receiving a premium for taking on the risk. The

accepting company pays a commission to the ceding company on the reinsurance ceded, and

the ceding company can recover part of any claim from the accepting company. 2010-11 to

2013-14, the percentage of Total Reinsurance Ceded is higher in private sector life insurer

than public life insurer.

Findings

Opening of the Indian market of insurance sector for the private and foreign players

has definitely brought in noticeable changes in the insurance industries in India. It has taken a

big challenge to hegemony of LIC in life insurance and the GIC in general insurance with its

subsidiaries in the non-life insurance sector. Market share of these two Government players

have also dropped but not as expected. The global financial crisis has reversed the trend and

the market share of these companies almost remains unchanged, even today. Private players



38

are developed their professionalism, technology, range of products and the operational

efficiency yet it has not reached anywhere near the global standard. Unlike the developed and

other emerging economies, there is dominance of life than non-life insurance in India which

is to be reversed to make it on par with other insurance players. Moreover, the

professionalism and customer centric approach of the private players is yet to bring in

substantial development and break the hegemony of LIC and GIC in Indian insurance

industry.

Overall analysis of data and review of past literature said that though we have

progressed yet there is dominance of LIC in life insurance and the private players in the non-

life domain. Even at present, we should yet to have the specialists in health insurance.

Conclusion

This paper developed a comparative statement of insurance level in Indian insurance

industry that can compare between the status of public and private insurance companies

presently involved in doing insurance business in India. In life and non-life insurance, public

sector firm is doing better than the private sector insurance firm. It may because of their

dominance in market and reliability of customers on the public firms.

References:

1. C. Barathi, D. Balaji and Ch. Ibohal Meitei (2011), “Innovative Strategies To Catalyse

Growth of Indian Life Insurance Sector-An Analytical Review”, Indian Journal of

Commerce and Management Studies, Vol. Ii, Issue IV, May 2011.

2. Chatterjee. P (2009) In Her Article Titled “Private Insurers Command Majority Share of

Life Insurance Market”.

3. Krishnamurthy. S, Jhaveri. Nani, Bakshi. S (July-Sept 2005), Insurance Industry in India:

Structure, Performance and Future Challenges, Volume 30, No. 3, Pg No. 93-95.

4. Kundu. S (2003), “What’s Next In India’s Insurance Market”, Knowledge Digest

Com.,May 12.

5. Murthy.T.N (2009), "Performance Evaluation of Lic", Icfai Journal of Risk & Insurance,

Jan- April 2009, Vol. II.

6. Rastogi. S and Sarkar.R (2006), “Enhancing Competitiveness: The Case Of The Indian

Life Insurance Industry”, Conference On Global Competition & Competitiveness of

Indian Corporate”, IIMK, September 2006.

7. Sumninder Kaur Bawa (2007), ‘Life Insurance Corporation of India: Impact of

Privatization And Performance’, Regal Publication, New Delhi.

8. Tripathi.S (2009), “A Comparative Analysis of Life Insurance Corporation and Private

Insurance Company” Disse rtation Fms Banaras

9. Goswami, P. (2007), “Customer Satisfaction with Service Quality in the Life Insurance

Industry in India,” Icfai Journal of Management Research, vol.2, pg-331-342,

10. Shendey B K and Neelkant Rao, Trends in Insurance Industry in India since 21st Century,

Southern Economist, December : 2010

11. Hymavathi Kumari, Performance Evaluation of Indian Life Insurance Industry in Post

Liberalization, IJSS, Arts & Humanities, Vol1 No. 1:201


39

ISSN 2393-9702



………………………………………………………………………………………………......

Corporate Social Responsibility: A Tool for Reinforcing the

Societies B. Ismail Zabiullah*

T. Sanjeev Kumar**

*Assistant Professor, Department of Management Studies, Gates Institute of Technology,

Gooty- 515401, Ananthapuramu Dist. A.P, Email: [email protected]( M) +91-

9701852327

**Assistant Professor, Department of Management Studies, Gates Institute of

Technology,Gooty-515401, Ananthapuramu Dist. APemail: [email protected] Mobile:

+91-9985379547

--------------------------------------------------------------------------------------------------------------

Abstract:

Corporate social responsibility (CSR) can be described as the continuous commitment by

corporations towards the economic and social development of communities in which they

operate their business. It is a humanistic and moral obligation to do something good for the

betterment of the stakeholder of the company without expecting anything in return. The term

CSR came in to common use in the early in 1970’s and by late 1990s the concept was fully

recognized: people, institutions and all sections of societies started supporting it. CSR holds

very important place in the development scenario of the world today and can pose as an

alternative tool for sustainable development.

The concept of CSR until the 1990’s was purely in terms of philanthropy or charity under it,

welfare programs were organized as part of their charity and through it, they want to convey

their company’s virtues: during 1990’s many corporate leaders have started charitable trust

that provide financial assistance for various worthy causes. in accordance with the change in

the world and human number the impact of activities is being felt in more and more ways

their change has performed implications for business and means that the word of corporate

social responsibility or how business respond to society’s expectations is at the forefront of

this change. With the shifting of CSR paradigm to a stakeholder center approach, practices

at ground level have undergone a radical transformation. Now a day there is a growing




40

concern for socially responsible business behavior because growing consumerism, trade

unionism, public opinion, enlightened professionalization and trusteeship. Allthese have

encouraged corporate firms to inculcate CSR policies in their policies and design programs

that will reinforce the societies. Through CSR activities many corporate houses throughout

the world are addressing the issues which the public sectors have not shown much concern.

in the absence of their reinforcing strategies it is difficult to cope up with the demanding

issues.

Inspite of many CSR initiatives there are some areas which the corporate houses are yet to be

address for fulfillment of reinforcement mechanism. Secondary source of literature on the

topic has been consulted for the development of the concept. Through this paper an attempt

has been made to know the CSR activities of corporate houses and their role in reinforcing

societies.

Key Words: Corporate social Responsibility- Consumerism-Trade Unionism-Public

Opinion-Trusteeship-Reinforcement

Introduction

Corporate Social Responsibility remains embryonic and contestable concept. CSR is

expressed as the voluntary assumption of responsibilities that go beyond the economic and

legal responsibilities of business firm. Ideally, CSR policy would function as a built in self-

regulating mechanism whereby business world monitors and ensure its support to law, ethical

standards and international norms in other words, CSR is the process of continuing

commitment by business to behave ethically and contribute to economic development. While

improving the quality of workforce, their families and also to the local community, society at

large. In this concept the companies are integrating with social, environmental and economic

concerns in their business operations and have an interaction with their business operations

and have an interaction with their stakeholders on a voluntary basis. The ministry of

corporate affairs along with the Indian institute of corporate affairs has been making efforts to

adoption of responsible governance activities by the corporate sector. Consequently, business

would embrace responsibility towards the employees, stake holders, communities and all

other members of the public sphere. CSR not only addresses the above attributes but also

fights against climate change, sustainable management of natural resources and consumer

protection too.



41

CSR is a form of corporate self-regulation in to a business model. CSR is also known as

corporate conscience, citizenship, social performance, or sustainable responsible business.

CSR act as an activity which can built by self-regulating mechanism where by business

monitor and ensure its activities compare with the spirit of law, ethical standards and

international norms

The concept of CSR began in 1920 and found itself in the spot light after 1990. The exercise

of social responsibility must be consistent with the corporate object of earning a satisfactory

level of profit. It implies a willing to forego a certain measure of profit. In order to achieve

non-economic aids, CSR focused business would proactively promote the public inters by

encouraging community growth and development and voluntary eliminating practices that

harm the public regardless of legality. Driven by the CSR movement, firms, especially MNCs

have sought to positions themselves as good corporate citizens.

New Phase of CSR in India

Ministry of Corporate Affairs has notified that 2% profits spending are made mandatory

under Section 135 and Schedule VII of the Companies Act as well as the provisions of the

Companies (Corporate Social Responsibility Policy) Rules, 2014 (CRS Rules) which has

come into effect from 1 April 2014. Section 135 of the Companies Act provides the

threshold limit for applicability of the CSR to a Company i.e.

Applicability

1. Net worth of the company to be Rs.500 crore or more;

2. Turnover of the company to be Rs.1000 crore or more

3. Net profit of the company to be Rs.5 crore or more.

Further as per the CSR Rules, the provisions of CSR are not only applicable to Indian

companies, but also applicable to branch and project offices of a foreign company in India.

CSR Committee and Policy: Every qualifying company requires spending of at least 2%

of its average net profit for the immediately preceding 3 financial years on CSR activities

http://www.mca.gov.in/Ministry/pdf/CompaniesActNotification2_2014.pdf



42

CSR project are deployed by companies directly while some are deployed by strategically

partnering with credible and professional non profitorganisations.

Through CSR activities many corporate houses around the world are addressing few social

issues where the public sector has not shown much concern. With these activities, they are

trying their level best in filling the gaps between the expected actions and executed ones by

the respective authorities. These activities are acting as a platform for reinforcing the

societies and contributing a lot achieving expected outcome.

Literature Review

The social responsibility is standards and moral activities by a firm can create a positive

rapport between the firm and all its stake holders (Sharma and Mani,2013).

A socially responsible corporation is one that runs a profitable business that takes into

account of all the positive and negative environmental, social and economic affect which

has its impact on society (McDonald and Randle, 2008). The choice of engaging in CSR

activities by a firm depends upon the economic perspective of the firm. Venu Srinivasan

(2007). Highlighted that CSR is more than philanthropy and must not mean giving and

receiving. An effective CSR initiative must engage the less privileged on a partnership

basis. CSR means sustainable development of the community by being partners in their

progress.

S P Kothari & J E Short (2003) emphasized that the importance of social discloser and its

impact on the financial health of the company.

Figure-1

The pyramid of Social Responsibility

Source: MANAG 300 Study Guide (2014-15 Hen

https://www.google.co.in/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjtrZ-yiLTQAhVEPY8KHUvXD4EQjhwIBQ&url=https%3A%2F%2Fwww.studyblue.com%2Fnotes%2Fnote%2Fn%2Fmanag-300-study-guide-2014-15-henry%2Fdeck%2F14295651&psig=AFQjCNHMHEI12hurJ9csFojNogw0Al7rdw&ust=1479618913657999



43

Functions of CSR

The function of CSR is for corporations to hold themselves accountable for an ethical, legal

societal and ecological impact of their business activities are practices. CSR practices are

self-monitoring, they doesn’t require laws to behave in a socially responsible manner. The

CSR functions are as follows

a. Ethical functions

b. Social functions

c. Legal functions

d. Ecological functions

1. Ethical function for every organization ethics are one of the most important aspects

in corporate governance and it is an important function in corporate social

responsibly. A company must have internal controls regarding their expected ethical

behavior. Behaving ethically makes that company as a whole impact to their

investors, shareholders and consumers it helps to prevent the conflicts of interest

between earning corporate profits and maintaining the integrity of company goods

and services.

2. Societal function the societal function of corporate social responsibility is to respect

and invest in the communities in which company is operates. In this function

companies are aware of about how the Affect of their products in a local community.

And also, companies are taking necessary actions to return down (diminish) the

negative impact of factors. Such as increased traffics, noise and pollution for the

communities in which they operate as a donating a money to the local charities or

trust

3. Legal function in corporate social responsibility this function leads to encourage the

transparence of company’s business practices and financial reporting. If a company

maintains high level of legal business activities such as to occupational safety and

health administration. It promotes good will towards employee’s. maintaining legal

financial will activities leads to goodwill among investors, shareholders and

government financial report regulatory agencies such as Security Exchange

Commission.



44

4. Ecological function in this function the corporate social responsibility includes not

only in to respect the immediate environment in which the company operates but also

to respect the company’s effect on the global environment. And follow the standards

in a company lead to impact on both local and global environment.

Objectives 1. To Study the CSR practices of selected Indian corporate houses.

2. To Study their role in reinforcing the societies.

3. To identify the unaddressed areas where the reinforcement is essential.

Methodology The secondary source of literature available on the title has been consulted by the

researchers in order to study, interpreter, state the facts and draw conclusions. Top 4

companies in 4 different sectors are 1. Software 2. Banking 3. Pharmaceuticals 4. Automobile

has been chosen for the purpose of the study. The criteria of selection for the above said

companies are based on its net profits available in P & L account statement as on date.

CSR in India

The evolution of corporate social responsibility in India refers to changes over time in

Indian of the cultural norms of corporation’s engagement of corporate social

responsibility(CSR) with CSR referring to the way that business is managed to bring about an

overall positive impact on the communities, cultures, societies, and environments in which

they operate. The fundamentals of CSR rest on the fact that not only public policy but even

corporate should be responsible enough to address social issues. Thus, companies should deal

with the challenges and issues looked after to a certain extended by the states.

Among other countries India has one of the richest traditions of CSR. Much has been done in

recent years to make Indian entrepreneurs aware of social responsibility as an important

segment of their business activity but CSR in India has yet to receive widespread recognition.

If this goal has to be realized then the CSR approach of corporate has to be in line with their

attitudes toward mainstream business- companies setting clear objectives, undertaking

potential investments, measuring and reporting performance publicly. CSR is not a new

concept in India. Ever since their inception, corporate like the Tata Group, The Aditya Birla

Group, and Indian oil Corporation, to name a few have been involved in serving the

community. Through donations and charity events, many other organizations have been

doing their part for the society. The basic objective of CSR in these days is to maximize the

company’s overall impact on the society and stakeholders. CSR policies, practices and



45

programs are being comprehensively integrated by an increasing number of companies

through their business operations and processes. A growing number of corporate feel that

CSR is not just another form of indirect expense but is important for protecting the good will

and reputation, defending attacks and increasing business competitiveness.

In India, several companies have started realizing that rational move to take up CSR activities

and integrate it with their business process. Corporations are becoming increasingly aware of

their role towards the society. They are responsible bodies that feel a sense of duty towards

the common welfare and the environment. This comes with a growing realization that, as an

integral part of this society themselves, can contribute to its upliftment and empower of the

entire county in turn. Thus, companies now are setting specific departments and terms that

develop policies, strategies and goals which are for their CSR programs and allocate separate

budgets to support them. In the modern era, the new generation of corporate leaders considers

optimization of profits as the key, rather the maximization of profit. Companies conduct

events like health camps, population control measures, support a few sick persons, give some

scholarships, organize a few SHGs, a few sports events, impart trainings for some livelihood

practices without linking them to further growth in the process of conducting CSR. Some

corporate found to work on disability, some on elderly issues, some work on street children.

All these are either time bound projects or institution run activity or supports to some NGOs.

They also meet the deficiencies of government run schemes or programs with an aim to

enhance the quality of the programme. Short term activities are mostly eye washing efforts by

corporate where sustainable development approaches are usually missed.

Table -1

Trends of CSR In India

Phase Period Year Nature of CSR

First Pre-

industrialization

1800 CSR activities were undertaken

in the form of philanthropy with

religious belief

Second Pre-

industrialization

1800-

1914

CSR activities were undertaken

in the form of donations with

social welfare objectives

Third Industrialization 1959-

1980

CSR activities were undertaken

in the form of responsible

behavior with progressive

approach

Fourth Post

industrialization

1980 until

today

CSR activities are being

performed in various forms by

keeping in view multi

shareholders benefit



46

Table – 2

CSR Activities Performed By Top 5 Indian Corporate Houses of Different Sectors

S.No Name of The

Company

Corporate Social Responsibility Initiatives

Software

1 TCS

Adult Literacy Programme, Academic/Institutional Collaboration, Affirmative

Action, Education- Others.

2 INFOSYS Hunger, malnutrition, Poverty, Health care, Education and Rural Development.

3 WIPRO

Education, Primary Health Care and Communities, Ecology & Environment, The

power of Engaged Employees,

4

HCL TECH

Eradicating hunger, poverty and malnutrition, employment enhancing, promoting

gender equality, ensuring Environmental sustainability, protection of national

heritage, training to promote rural sports,

Banking

1 HDFC BANK

Sustainable Livelihood, Sanitation, Education, Skilling, Community Initiatives,

Environmental Sustainability, Go Green

2

ICICI BANK

Education, Health care, Skill development and sustainable livelihoods, Financial

inclusion, Support employee engagement in CSR activities, Capacity building for

corporate social responsibility, Other areas

3

AXIS BANK

Education, livelihood enhancement & Rural Development, medical relief Trauma

care, environmental sustainability, sanitation, Humanitarian Relief, Armed Forces

Veterans, Capacity Building of Personnel and NGO Partners

4

YES BANK

Livelihood security and enhancement (Education, Skills/ Employability training),

Healthcare and Social welfare, Environment Sustainability, Arts/Sports and

culture

Pharma

1 LUPIN

Skill Development, Solar energy in the rural areas, TB eradication, Learn and

Earn’

2 CADILA HEALTH Programs for health care & safety and environment, program for education.

3 TORRENT

PHARMA

Community health care, sanitation and hygiene, education and knowledge enhancement

4 AUROBINDO

PHARMA

Community empowerment programmes, social welfare programmes,

environmental protection, upliftment of marginalized and underprivileged sections

of society, community health care,

Automobile

1

BAJAJ AUTO

Health care, literacy & awareness program, research activities, national

integration communal harmony, promotion of Indian traditional medicine, hostel

facilities and reading rooms for poor and needy, restoration and beautification of

towns and villages, disaster management and relief activities, livelihood and for

farmers and agriculturalist, promotion of sports.

2

HERO

MOTOCORP

Welfare of disabled persons, health camps for unprivileged sections, eradicating

hunger, poverty and malnutrition, education and employment enhancing vocation

skills, livelihood enhancement projects, gender equality, public library ,

environmental sustainability, protecting national heritage, promoting rural sports,

rural development,

http://www.moneycontrol.com/india/stockpricequote/computerssoftware/tataconsultancyservices/TCS

http://www.moneycontrol.com/india/stockpricequote/computerssoftware/infosys/IT

http://www.moneycontrol.com/india/stockpricequote/computerssoftware/wipro/W

http://www.moneycontrol.com/india/stockpricequote/computerssoftware/hcltechnologies/HCL02

http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/hdfcbank/HDF01

https://www.hdfcbank.com/htdocs/aboutus/csr/financial_literacy.html

https://www.hdfcbank.com/htdocs/aboutus/csr/education.html

https://www.hdfcbank.com/htdocs/aboutus/csr/training.html

https://www.hdfcbank.com/htdocs/aboutus/csr/communityInitiatives.html

https://www.hdfcbank.com/htdocs/aboutus/csr/environmental-sustainability.html

http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/icicibank/ICI02

http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/axisbank/AB16

http://www.moneycontrol.com/india/stockpricequote/banksprivatesector/yesbank/YB

http://www.moneycontrol.com/india/stockpricequote/pharmaceuticals/lupin/L

http://www.moneycontrol.com/india/stockpricequote/pharmaceuticals/cadilahealthcare/CHC

http://www.moneycontrol.com/india/stockpricequote/pharmaceuticals/torrentpharmaceuticals/TP06

http://www.moneycontrol.com/india/stockpricequote/pharmaceuticals/torrentpharmaceuticals/TP06

http://www.moneycontrol.com/india/stockpricequote/pharmaceuticals/aurobindopharma/AP

http://www.moneycontrol.com/india/stockpricequote/pharmaceuticals/aurobindopharma/AP

http://www.moneycontrol.com/india/stockpricequote/auto23wheelers/bajajauto/BA10

http://www.moneycontrol.com/india/stockpricequote/auto23wheelers/herohondamotors/HHM

http://www.moneycontrol.com/india/stockpricequote/auto23wheelers/herohondamotors/HHM



47

Source: Official websites of respective companies.

Table - 3

Unaddressed areas under CSR Initiatives by the Companies in the Study

S.No Less Addressed Area

1 Self-help groups/ micro finance

2 Helping cancer/ chronic diseases of vital organs/

organ donation & HIV affected patents and their

families

3 Distribution of hearing aids, tricycles, artificial

limbs & crunches

4 Creating awareness on Crop insurance, organic

forming, modern forming methods using technology.

5 Continuing education system, libraries for

disadvantaged, women and children in rural and

urban areas.

6 Providing training in nursing, paramedical and allied

areas.

7 Rural electrification through solar, biomass, power

grid

8 Adoption of slums, villages, schools and colleges.

9 Conducting research studies on the local issues

10 Women empowerment, legal cells and counselling

centers

11 Entrepreneurship development and incubation

centers

12 Prevention of native culture art and literature

Source: Observation of the sample

Findings

1. The study identifies that there is a dramatic increase in disclosing of CSR activities by

corporate houses in recent times.

2. CSR implementation and monitoring of CSR policy are in compliance with CSR

objectives and the policies of the company. Companies have well defined separately,

their CSR policies as per the Companies Act 2013.

3. Majority of the companies failed to spend their mandatory 2% of average net profit of

the last three financial years, on CSR activities.

3 TVS MOTOR

Economic development, education, environment, health, hunger, poverty,

malnutrition &health, national heritage, art and culture.

4 ATUL AUTO Education, health & medical care, community at large, environment.

http://www.moneycontrol.com/india/stockpricequote/auto23wheelers/tvsmotorcompany/TVS

http://www.moneycontrol.com/india/stockpricequote/auto23wheelers/atulauto/AA08



48

4. A close observation of the sample unveiled that fact that, they have left some areas

where more attention is required for social development.

5. A review of corporate houses CSR activities within the study suggest that, some firms

are significantly ahead of others in its activities and its coverage of areas under

CSR initiatives.

6. Corporate houses are giving less importance to the burning social issues and focusing

on routine activities

Suggestions:

1. CSR initiative discloser reveling area, budget, spending, etc. should be made

mandatory by enactment of an act

2. Instead of 2% on the net profit of three financial years spending on CSR activities. 1%

of profit should be spent on CSR in every financial year

3. Acting against those companies should be initiated against those who does not comply

their activities and spending.

4. Corporate houses should identify some vital areas where CSR initiatives are essential

and prepare acting plans for the implementation of the same.

5. Companies should adopt a village, community, group, slum, school, college or a

vocational trading center and extend maximum help for the upliftment of the same.

6. Current, emerging and burning issues must be addressed on priority basis

7. Unaddressed areas should be addressed to fill up the gap between what is done and

expected.

8. A monitoring and implementation mechanism on CSR should be constituted on

regular basis to fallow up, review, amend, omission or commission, of the initiatives

as per the requirements and demand by the societies

Conclusion:

In the recent times, CSR has assumed lot of importance not only among the corporate

but also among the policy makers and other stake holders. It is quite natural that the corporate

houses are embrace these responsibilities for the impact of its activities on the environment,

consumers, employees, communities, stake holders and all other members of the public

sphere. CSR among Indian corporate houses have yet to realize its full potentials. There is

certainly no lack of CSR Programmes and projects in India, but what are not or less

addressed matters a lot. This gap should be identified and filled up for the overall

improvement of the social conditions. All the proposed projects are identified under CSR

should be based on the scheduled VII of 2013. In a nutshell, it can be stated that possible

extends should be addressed to have a balance and sustainable reinforcement of societies.

Through CSR a deliberate inclusion ion into corporate decision making and the harmonizing

of triple bottom line: People, Planet, and Profit is possible.



49

References:

Twinkle Prusty & Alok Kumar (2016) CSR discloser practices in Indian insurance

sector - study of public sector insurance companies, pp 24-33

Choudhary, v. and Tandon, s. (2013). Corporate Social Responsibility of public sector

Banks in India. GIIRJ, Vol 1.

Datta, P.K (2010). Corporate Social Responsibility and Leadership. Prabhandan,

Indian journal Management, Vol. 3, 51.

www.tcs.com/Pages/default.aspx

http://www.tcs.com/Pages/default.aspx


50

ISSN 2393-9702



………………………………………………………………………………………………......

Comparative Analysis of Economic Value Addition of Selected

Automobile Companies

Ruhi Afreen*

K. Uday Kumar Achari**

*Assistant Professor, Department of MBA, G. Pullaiah College of Engineering &

Technology, Kurnool.

**Student, Department of MBA, G. Pullaiah College of Engineering & Technology, Kurnool.

----------------------------------------------------------------------------------------------------------------

Abstract

Economic Value Added (or) Addition (EVA) is a value based financial performance

measurement tool used to assess the true economic profit of an enterprise. It is the

performance measure directly linked to the creation of shareholders wealth over time.

Shareholders are much choosy for their interest into the business and they like management

to come up with very specific solution. Automobile sector as a vital sector of economy has

been known for wealth creation for shareholders and economic upliftment of society through

employment creation on large scale. Hence, I have selected 3 major two-wheeler companies

viz. Hero Motors, Bajaj Motors, & TVs Motors for the study.

Keywords: EVA, Shareholders, Automobile sector

Introduction

Economic Value Addition (EVA) is an estimate of a firm's economic profit, or the value

created for the company's shareholders. EVA is the net profit less the opportunity cost of the

firm's capital. The idea is that value is created when the return on the firm's economic capital

employed exceeds the cost of that capital. This amount can be determined by making

adjustments to GAAP accounting.

Economic Value Added (EVA)

EVA is superior to accounting profits as a measure of value creation because it recognizes the

cost of capital and, hence, the riskiness of a firm’s operations. Under conventional

accounting, most companies appear profitable but many in fact are not. As Peter Drucker put

https://en.wikipedia.org/wiki/Economic_profit

https://en.wikipedia.org/wiki/Types_of_companies

https://en.wikipedia.org/wiki/Shareholder

https://en.wikipedia.org/wiki/Generally_accepted_accounting_principles



51

the matter in a Harvard Business Review article, "Until a business returns a profit that is

greater than its cost of capital, it operates at a loss. Never mind that it pays taxes as if it had a

genuine profit. The enterprise still returns less to the economy than it devours in resource.

Until then it does not create wealth; it destroys it." Company may intentionally pay tax to

prove that they have made profit for their shareholders and thus a falsification is done with

owners that is not a rare corporate practice. EVA corrects this error by explicitly recognizing

that when managers employ capital they must pay for it, as if it were a wage. It also adjusts

all distortions that are very much prevalent in the information generated by conventional

accounting. Thus, it is the most demanded tool for the owners in every situation. The decision

role is very simple; if the EVA is positive, the company creates shareholder wealth. Negative

EVA indicates that shareholder wealth is destroyed.

Definition

Economic value added (EVA) is a measure of a company's financial performance based on

the residual wealth calculated by deducting cost of capital from its operating profit (adjusted

for taxes on a cash basis.

Calculation

The formula for calculating EVA is as follows:

= Net Operating Profit after Taxes (NOPAT) - Cost of Capital

NOPAT is profits derived from a company’s operations after cash taxes but before financing

costs and non-cash bookkeeping entries. It is the total pool of profits available to provide a

cash return to those who provide capital to the firm.

The cost of capital is the minimum rate of return on capital required to compensate investors

(debt and equity) for bearing risk, their opportunity cost.

From the above derivation it is clear that EVA computation requires a lot of hurdles to be

passed. Net operating profit is adjusted for accounting distortions and a charge on capital

employed at the rate of weighted average cost of capital (WACC) is subtracted from NOPAT

to reach to the amount of EVA. It aims to tell about what happens to the wealth of

shareholders. As per equation 1, earning a return greater than the cost of capital increases

value for the owners and vice versa. The primary objective of EVA is to convert accounting

profits in terms of economic reality.

http://www.investopedia.com/terms/c/costofcapital.asp

http://www.investopedia.com/terms/o/operating_profit.asp

http://www.investopedia.com/terms/n/nopat.asp



52

Steps in EVA Computation

EVA computation requires some basis steps. The common steps are exemplified here that

may be modified due to the typical nature of business or processes where it has been used.

Step 1: Collect and Review Financial Statements EVA is based on the financial data

produced by traditional accounting system. Most of the data come from either income

statement or balance sheet both of which are available from general-purpose financial

statements.

Step 2: Identify the distortions and adjustments required to make it distortion free Stern

Stewart has identified around 164 potential adjustments to GAAP and to internal accounting

treatments, all of which can improve the measure of operating profits and capital.

Step 3: Identify the company’s capital structure (CS) A company’s capital structure (CS)

comprises all of the money invested in the company either by the owner or by borrowing

from outsiders formally. It is the proportions of debt instruments and preferred and common

stock on a company’s balance sheet. (Van Horne, 2002). Stewart (1990) defined capital to be

total assets subtracted with non-interest bearing liabilities in the beginning of the period.

However, it can be computed under anyone of the following methods:

Direct Method: By adding all interest bearing debts (both short and long term) to owner’s

equity.

Indirect Method: By subtracting all non-interest bearing liabilities from total liabilities (or

total assets).

Step 4: Determine the company’s weighted average cost of capital (WACC) Estimation of

cost of capital is a great challenge so far as EVA calculation for a company is concerned. The

cost of capital depends primarily on the use of the funds, not the source. Some financial

management tools are available in this case to calculate the cost of capital. A more common

and simple method is Weighted Average Cost of Capital (WACC) (Copeland et. al., 1996).

For calculating WACC, we have to know a lot of other issues like

1) Components of capital employed like equity, debt etc;

2) Respective weight of various components into total amount of capital employed;

3) Factors that affect the risk and return of various components in a capital structure;

4) Standalone cost of all such components in a capital structure.

The overall cost of capital is the weighted average of the costs of the various components of

the capital structure. The cost of each component of the firm’s capital – debt, preferred stock,



53

or common stock equity – is the return that investors must forgo if they are to invest in the

firm’s securities (Kolb & DeMong, 1988). The Capital Asset Pricing Model (CAPM) is a

common method in estimating the cost of equity.

Step 5: Calculate the company’s Net Operating Profit after Tax (NOPAT) NOPAT (eq. 7) is

a measure of a company’s cash generation capability from recurring business activities and

disregarding its capital structure.

Step 6: Calculation of Economic Value Added Finally, the EVA can be calculated by

subtracting capital charges from NOPAT.

Objective of the Study:

The main objective of EVA is to maximize the shareholders wealth creation. This study is

primarily undertaken to focus on the EVA of selected companies viz., Hero Motors, Bajaj

Motors, TVs Motors and suggest shareholders which company is better to invest.

Need for the Study

Shares are the major source of capital for any firm. The firms can use the positive EVA value

as a tool to attract more share holders and hence raise more capital to the firm. Therefore

there is need to study EVA of the selected firms.

Limitations of the Study

The study is limited only to the selected three major companies i.e. Hero Motors,

Bajaj Motors, TVs Motors.

The findings of the research are based upon the accuracy of the annual reports of the

Companies.

The study period only covers three fiscal years.

Research Design

An extensive data analysis of all three Auto Sector Companies viz. Hero Motors., Bajaj

Motors., and TVs Motors for year ending March 2015 is being considered as they are top

wealth creators in the industry and have been present for more than a decade.

Sources of Data

The data for analysis is taken mainly from reliable web resource, respective annual reports

especially from profit and loss accounts, balance sheet and other publications made by the

companies.



54

Research Tools

To achieve the objectives of the research, the following NOPAT proforma and Cost of

Capital calculations will be used.

EVA = Net Operating Profit after Tax - Cost of Capital

Net Operating Profit after Tax (NOPAT)

In corporate finance, Net Operating Profit after Tax (NOPAT) is a company's after-tax

operating profit for all investors, including shareholders and debt holders. NOPAT is used by

analysts and investors as a precise and accurate measurement of profitability to compare a

company's financial results across its history and against competitors.

Calculating Net Operating Profit after Tax

NOPAT = Profit after Tax + Interest * (1-tax rate)

Proforma for calculating NOPAT

Particulars Amount ( Rs )

Net Sales XXX

Less: Cost of Goods Sold Xxx

Gross Profit XXX

Less: Selling, General & Administrative Expenses Xxx

Add: Other Incomes Xxx

Operating Profit XXX

Less: Interest+ Depreciation+ Exceptional Income / Expenses Xxx

Profit Before Tax ( PBT ) XXX

Provision for Tax Xxx

Profit After Tax ( PAT ) XXX

Add: Interest*(1-tax rate) Xxx

NOPAT = PAT + Interest*(1-t) XXX

Cost of Capital

In economics and accounting, the cost of capital is the cost of a company's funds (both debt

and equity), or, from an investor's point of view "the required rate of return on a portfolio

company's existing securities". It is used to evaluate new projects of a company. It is the

minimum return that investors expect for providing capital to the company, thus setting a

benchmark that a new project has to meet.

https://en.wikipedia.org/wiki/Corporate_finance

https://en.wikipedia.org/wiki/Tax

https://en.wikipedia.org/wiki/Earnings_before_interest_and_taxes

https://en.wikipedia.org/wiki/Economics

https://en.wikipedia.org/wiki/Accounting

https://en.wikipedia.org/wiki/Capital_%28economics%29

https://en.wikipedia.org/wiki/Debt

https://en.wikipedia.org/wiki/Equity_%28finance%29



55

Calculation of Cost of Capital

For calculating Cost of Capital first we have to calculate Weighted Average Cost of Capital

Calculation of Weighted Average Cost of Capital

Weighted Cost of Equity

Weighted cost of Equity = Cost of Equity * % of Total Capital supplied by Equity

For calculating Cost of Equity we required

Risk-free rate ( Rf )

The market premium ( Rm-Rf )

Beta coefficient

Formula

Weighted Cost of Debt

Cost of Debt includes

Long Term Borrowings

Short Term Borrowings

Loans

Secured Loans

Un-Secured Loans

Net

Assets

Cost of

Capital

WACC

WACC

Weighte

d Cost of

Debt

Weighte

d Cost of

Equity

https://en.wikipedia.org/wiki/Capital_%28economics%29



56

Weighted Cost of Debt = After-Tax Cost of Debt * % of Total Capital supplied by Debt

According to my convenient I have taken those percentages.


Economic Value Addition or Added of Hero

Calculating Hero NOPAT (In Rs Cr’s)

NOPAT of Hero

(In RsCr’s)

Particulars MAR 2015

MAR

2014

MAR

2013

Net Sales 27,585.30

25,275.47

23,768.11

Less: Cost of Goods Sold 22,344.98

20,374.83

19,253.67

Gross Profit 5,240.32

4,900.64

4,514.44

Less: Selling, General &

Administrative Expenses

1,788.92

1,453.43

1,323.41

Add: Other Incomes 583.52

539.23

491.83

Operating Profit 4,034.92

3,986.44

3,682.86

Less: Interest+ Depreciation+

Exceptional Income / Expenses

706.10

1,119.19

1,153.66

Profit Before Tax ( PBT ) 3,328.82 2,867.25 2,529.20

Provision for Tax 943.18 758.17 411.04

Profit After Tax ( PAT ) 2,385.64 2,109.08 2,118.16

Add: Interest*(1-tax rate) 7.763 8.274 8.337

NOPAT=PAT+Interest*(1-t) 2393.00 2117.00 2126.00

Before-Tax Cost of

Debt 5%

5%

5%

Before-Tax

Operating Profit in % 100%

After-Tax Cost of

Debt 4%

After-Tax

Operating

Profit in

%

70%

Weighted

Cost of Debt

Income-Tax Rate

30%

% of Total Capital

Supplied by Debt



57

Interpretation

In 2012-13 the Net Operating Profit after Tax of hero is 2,126.00 Crores and it has slightly

decreased in the year 2013-14 i.e. 2,117.00 Crores. And compare to both the years the

NOPAT in the year 2014-15 has increased to 2,393.00 Crores.

Calculating Cost of Capital of Hero

Hero Weighted Average Cost of Capital

Cost of Equity

Market premium and income tax rate taken has my assumption.

= 0.08 + 0.87 (0.1)

Es = 0.167

Cost of Equity = 16.7%

Weighted Cost of Equity = Cost of Equity * % of total capital supplied by Equity

= 16.7% * 100%

= 16.7%

Cost of Debt

Hero company cost of debt is Zero.

Weighted cost of capital = weighted cost of equity + weighted cost of debt

= 16.7% + 0

WACC of Hero = 16.7%

Hero Cost of Capital

And here the Cost of Capital of Hero Company is

Cost of Capital = Net Assets of hero company * WACC

Net Assets = Fixed Assets + Current Assets

= 36252400000 + 52821300000

= 89073700000

Cost of Capital = 89073700000 * 16.7%

Hero Cost of Capital = 14875307900

Particulars 2014-15

Amount

Beta 0.87

Risk-free rate 0.08

Market premium 0.1

Income tax rate 0.3



58

Calculation of Hero EVA value

EVA = NOPAT – Cost of Capital

TABLE – 1 Graph – 1 Hero EVA (In Rs Cr’s)

Interpretation

Net Assets of Hero Company is 8,907.37 Crores.

WACC & Cost of Capital is 1,487.6 Crores.

Net Operating Profit after Tax is 2393 Crores.

Economic Value Added is 905.46 Crores.

Economic Value Addition or Added of Bajaj

Calculating Bajaj NOPAT (In Rs Cr’s)

NOPAT of Bajaj (In Rs Cr’s)

Net Assets (Rs.)

89073700000

WACC

16.7% 14875307900

NOPAT

23930000000

Cost of Capital

14875307900

EVA = NOPAT – Cost of Capital 9054692100

Particulars MAR 2015

MAR

2014

MAR

2013

Net Sales 21,612.01 20,149.51 19,997.25

Less: Cost of Goods Sold 16,894.35 15,579.87 16,010.51

Gross Profit 4,717.66 4,569.64 3,986.74

Less: Selling, General &

Administrative Expenses

608.84 498.90 411.79

Add: Other Incomes 586.92 739.37 854.45

Operating Profit 4,695.74 4,810.11 4,429.40

Less: Interest+ Depreciation+

Exceptional Income / Expenses

610.95 178.06 163.17

Profit Before Tax ( PBT ) 4,084.79 4,632.05 4,266.23

Provision for Tax 1,271.05 1,388.73 1,222.66

Profit After Tax ( PAT )

2,813.74 3,243.32 3,043.57

Add: Interest*(1-tax rate)

4.543 0.343 0.378

NOPAT = PAT + Interest*(1-t)

2818.00 3244.00 3044.00



59

Interpretation

In 2012-13 the NOPAT of Bajaj auto company is 3,044.00 Cr’s and it increases 3,244.00 Cr’s

in the year 2013-14. And comparing to 2013 & 2014 the NOPAT is very much decreases in

2015 i.e. 2,818.00 Cr’s.

Calculating Cost of Capital of Bajaj

Bajaj Weighted Average Cost of Capital

Cost of Equity

Risk-free rate, market premium and income tax rate are taken has my assumption.

= 0.08 + 0.63 (0.12)

Es = 0.1556

Cost of Equity = 15.56%


= 15.56% * 72%

= 11.2%

Cost of Debt

Long Term Borrowings = 0

Short Term Borrowings = 0

Loans

Secured Loans = 0

Un-Secured Loans = 111.77 Cr’s

Weighted Cost of Debt = After-Tax Cost of Debt * % of Total Capital supplied by Debt

= 4% * 28%

= 1.12%


= 11.2% + 1.12%

WACC of Bajaj = 12.32%

Bajaj Cost of Capital

Cost of Capital = Net Assets of Bajaj * WACC


= 21721800000 + 95262700000

Particulars 2014-15

Beta 0.63

Risk-free rate 0.08

Market premium 0.12

Income tax rate 0.3



60

= 116984500000

Cost of Capital = 116984500000 * 12.32%

Bajaj Cost of Capital = 14412490400

Calculation of Bajaj auto EVA value


TABLE – 2 Graph-2 Bajaj EVA Chart

(In Rs Cr’s) (In Rs Cr’s)

Interpretation


WACC & Cost of Capital is 1,441.24 Crores.


Economic Value Added is 1,376.75 Crores.

Economic Value Addition or Added of TVS Company

Calculating TVS Company NOPAT (In Rs Cr’s)

Net Assets (Rs.)

116984500000

WACC

12.32% 14412490400

NOPAT

28180000000

Cost of Capital

14412490400


Particulars MAR 2015 MAR 2014 MAR 2013

Net Sales 10,098.22 7,965.94 7,169.25

Less: Cost of Goods Sold 8,499.57 6,622.62 6,041.76

Gross Profit 1,598.65 1,343.32 1,127.49

Less: Selling, General & Administrative Expenses 994.35 861.13 718.46

Add: Other Incomes 34.39 30.21 27.54

Operating Profit 638.69 512.40 436.57

Less: Interest+ Depreciation+ Exceptional Income / Expenses 182.53 159.86 272.99

Profit Before Tax ( PBT ) 456.16 352.54 163.58

Provision for Tax 108.33 90.91 47.56

Profit After Tax ( PAT ) 347.83 261.63 116.02

Add: Interest*(1-tax rate) 20.44 17.78 36.218

NOPAT = PAT + Interest*(1-t) 368.00 279.00 152.00



61

NOPAT of TVS Company (In Rs Cr’s)

Interpretation

The NOPAT is increasing year by year in 2012-2013 the NOPAT is 152.00 Crores in the

year of 2013-2014, 279.00 Crores and also increases in the Sequencing year 368.00

Crores.

Calculating Cost of Capital of TVs

TVS Weighted Average Cost of Capital

Cost of Equity

Here Risk-free rate, market premium and income tax rate taken has my assumption.

= 0.08 + 1.41 (0.09)

Es = 20.69%


= 20.69% * 5%

Weighted Cost of Equity = 1%

Cost of Debt

Long Term Borrowings = 0

Short Term Borrowings = 399.76 Cr’s

Loans

Secured Loans = 230.08 Cr’s

Un-Secured Loans = 288.90 Cr’s

Particulars 2014-15

Amount

Beta 1.41

Risk-free rate 0.08

Market premium 0.09

Income tax rate 0.3



62

Weighted Cost of Debt = After-Tax Cost of Debt * % of Total Capital supplied by

Debt

= 4% * 95%

= 3.8%


= 1% + 3.8%

WACC of TVS = 5%

TVS Cost of Capital

Cost of Capital = Net Assets of TVs * WACC


= 14189900000 + 20290200000

= 34480100000

Cost of Capital = 34480100000 * 5%

TVs Company Cost of Capital = 1724005000

Calculation of TVs Company EVA value


TABLE – 3 (In Rs Cr’s) Graph-3 TVs EVA Chart (In Rs Cr’s)

Interpretation


WACC & Cost of Capital is 172.4 Crores.


Economic Value Added is 195.59 Crores.

Net Assets (Rs.)

34480100000

WACC

5% 1724005000

NOPAT

3680000000

Cost of Capital

1724005000




63

Comparision of three Companies Eva in the Year March 2015

Table – 4

(00,00,000) Rs

Hero Ltd Bajaj auto Ltd TVS Ltd

Net Sales (Rs)

27,585.30 21,612.01 10,098.22

Net Assets (Rs)

8,907.37 11,698.45 3,448.01

WACC 1,487.53079

1,441.24904 172.4005

NOPAT

2393 2818 368

Cost of Capital 1,487.53079

1,441.24904 172.4005

EVA

905.46921 1,376.75096 195.5995

Hero Motors Bajaj Motors TVS Motors

WACC 16.7% 12.32% 5%

GRAPH – 4 EVA-Chart of Hero, Bajaj auto and TVs Companies (In Rs Cr’s)

Interpretation

In the year ended March 2015 the three companies (Hero, Bajaj auto, TVs) the Net Sales are

like 27,585.30, 21,612.01, 10,098.22 Crores. And Net Assets are 8,907.37, 11,698.45,

3,448.01 Crores and WACC or Cost of Capital is 1,487.53, 1,441.24, 172.4005 Crores and

finally EVA is 905.46, 1,376.75, 195.59 Crores.



64

Findings

The Hero, Bajaj auto, TVs have sufficient NOPAT of Rs 2,393, 2,818, 368 crores

respectively.

The EVA of Hero, Bajaj auto, TVS are 905.46, 1,376.75, 195.59 crores.

EVA of three companies are less than NOPAT, but it has real profits (or) genuine

profits.

Here I found that the Hero, Bajaj auto & TVS companies create wealth for

shareholders, because the EVA value is positive.

Conclusion

In the present study, the top automobile companies i.e. Hero, Bajaj auto & TVs were

evaluated with respect to EVA. The study reveals that all the three companies have

satisfactory EVA. The firms can prepare & publish their EVA statements to attract more

investors. The firms can further enhance EVA by reducing cost of capital, increasing the sales

and NOPAT. Hence we can conclude that all the three companies are quite profitable to the

investors.


65

ISSN 2393-9702



………………………………………………………………………………………………......

A Paradigm Shift in Financial Reporting Standards

Dr. Ch .Krishnudu*

*Dr. Ch. Krishnudu, Assistant Professor, Dept. of Business Management, SKIM, SK

University, Ananthapur Pin 515003. Cell 9440577673

------------------------------------------------------------------------------------------------------------

Introduction

The International Financial Reporting Standards (IFRS) are rapidly emerging as a

globally accepted accounting frame work with over 100 countries mandating or permitting

IFRS.IFRS was implemented in January 2005 with more than 8,000 European listed

companies adopting them; with its inherent benefits in the global economy countries like

Australia, Hong Kong, China and the Middle East have mandated IFRS compliance for listed

companies. The Institute of charted Accountants of India has announced a coverage

declaration for all public interest entities from 1 April 2011.

Need for the Study:

In the era of Globalization, Liberalization and Privatization it is very important to have a

worldwide common language for financial reporting to present the financial statements on

uniform basis. Most of the companies in the world deal their financial operations through

stock exchanges. It is essential for the companies to get list with Stock Exchanges. Hence, for

maintain consistency in entire global wide reporting standards increases. IFRS, formerly

known as International Accounting Standards (IAS), clearly addresses this issue; its goal is to

create comparable, reliable, and transparent financial statement that will facilitate greater

cross-border capital raising and trade.

Operating Mechanism of IFRS

The goal of IFRS is to provide the world’s integrating capital markets with a common

language for financial reporting. An Independent standard setting board consisting of 14

members from nine countries, including the United States will do a thorough, open and



66

transparent due process with investors, regulators, business leaders and the global accounting

professionals at every stage and a collaborative efforts will be done to form a financial

reporting standard which suits with the worldwide standard-setting community. The

Members consists major accounting firms, private financial institutions and industrial

companies, central and development banks and other international and professional

organizations throughout the world.

Objectives of the study:

1) To Know about International Financial Reporting Standards

2) To Study the operating Mechanism of IFRS

3) To study and interpret various issues arising from IAS and IFRS

The international accounting standard committee foundation is not-for-profit, a private

sector body that raises funds to support operations of the International Accounting Standard

Board as an independent accounting standard-setter.

The IASC Foundation staff has been prepared, the list is: Till date, IASB has issued 30 IAS

and 8 IFR. It has also issued 11 SICs and 17 IFRICs to provide guidance on some

interpretation issues arising from IAS and IFRS.

IFRS 1: First-time Adoption of International Financial Reporting Standards.

IFRS 2: Share-based Payment.

IFRS 3: Business Combinations

IFRS 4: Insurance Contracts

IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations

IFRS 6: Exploration for and Evaluation of Mineral Resources

IFRS 7: Financial Instruments: Disclosures

IFRS 8: Operating Segments

Advantages of IFRS:

Converting to IFRS is a complex process; however these standards have important and

positive consequences for individuals and organizations that adopt them.

1. For Investors: Greater investment opportunities will be available to investors as much

information is available for decision making and reports as easy to compare among

the competitors.

2. For Companies: Possibility for consistent reporting standard from subsidiaries in

many different countries. Cost of capital can be reduced from greater cross-border

capital raising and trade.



67

3. For National Regulatory bodies: More and proper disclosure is possible in this system

of reporting for market participants. Hence, it is easy for national and international

market regulatory bodies to control the market participants.

IFRS 1: First-time Adoption of International Financial Reporting Standards.

The objective of this IFRS is to ensure that an entity’s first IFRS financial statements,

and its interim financial reports for part of the period covered by those financial statements,

contain high quality information. An entity shall prepare and present an opening IFRS

statement of financial position at the date of transition to IFRSs. This is the starting point for

its accounting under IFRSs. In general, the IFRS requires an entity to comply with each IFRS

effective at the end of its first IFRS reporting period. The IFRS grants limited exemptions

from these requirements in specified areas where the cost of complying with them would be

likely to exceed the benefits to users of financial statements. It also prohibits retrospective

application of IFRSs in some areas, where it requires the judgments by management.

IFRS 2: Share-based Payment.

The objective of this IFRS is to specify the financial reporting by an entity when it

undertakes a share-based payment transaction. In particular, it requires an entity to reflect in

its profit or loss and financial position the effects of share-based payment transactions. It

includes the share based payment transactions like the expenses associated with transactions

in which share options are granted to employees, transfers of equity instruments of the

entity’s parent, or equity instruments of another entity in the same group as the entity, to

parties that have supplied goods or services to the entity.

IFRS 3: Business Combinations

The objective of this IFRS is to enhance the relevance, reliability and comparability of

the information that an entity provides in its financial statements about a business

combination and its effects. It does that by establishing principles and requirements for how

an acquirer provides all the necessary information in about the business combination.

The IFRS requires the acquirer to disclose information that enables users of its

financial statements to evaluate the nature and financial effect of business combinations that

occurred during the current reporting period or after the reporting date but before the

financial statements are authorized for issue. After a business combination, the acquirer must

disclose any adjustments recognized in the current reporting period that relate to business

combinations that occurred in the current or previous reporting periods.



68

IFRS 4: Insurance Contracts: IFRS is the first guidance from the IASB on accounting for

insurance contracts-but not the last. A comprehensive project on insurance contracts is under

way. The board issued IFRS 4 it saw an urgent need for improved disclosures for insurance

contacts and some improvements to recognition and measurement practices in time for the

adoption of IFRS by listed companies throughout Europe and elsewhere in 2005.

Accounting policies

The IFRS exempts an insurer temporarily (until completion of phase 11 of the insurance

project) from some requirements to consider IAS 8 accounting policies changes in accounting

estimates and errors in selecting accounting policies for insurance contracts. However , the

standard Prohibits provisions for possible claims under contracts that are not in existence at

the reporting dates (such as catastrophe and equalization provisions).

Requires a test for adequacy of recognized insurance liabilities and an impairment test

for reinsurance assets

Requires an insurer to keep insurance liabilities in its balance until they are

discharged or cancelled or expire and prohibits offsetting insurance liabilities against related

reinsurance assets and income or expense from the related insurance contracts.

Changes in accounting policies

IFRS 4 permits an insurer to change its accounting policies for insurance contracts only if as

a results its financial statements present information that is more relevant and no less reliable

or more reliable and no less relevant in particular an issuer can’t introduce any of the

following practices although it may continue using accounting policies that involve them:

Measuring insurance liabilities on an undiscounted basis

Measuring contractual rights to future investment management fees at an amount that exceeds

their fair value as implied by a comparison with current marked market based fees for similar

services

Rating agency analysis of IFRS 4

Fitch ratings – a leading global fixed income rating agency –has analyses the implication of

IFRS 4 insurance contracts and has concluded the Fitch “does not expect any rating actions as

a direct result of the move to IFRS. However the Fitch cannot rule out the possibility that the

additional disclosure and information contained in the accounts could lead to rating changes

due to improved perceptions of risk based on the enhanced information available .The special

report mind the GAAP. Fitch view in insurance IFRS provides an overview of IFRS4 and the

issues being addressed in phase11 of the IASB Insurance project assess the implication



69

including increased volatility greater use of discounting and fair values changes to income

recognition and enhanced disclosers and discusses the changes effect rating analysis .

IFRS 5: Non-Current Assets Held for Sale and Discontinued Operations

IFRS 5 achieves substantial convergence with the requirements of IFRS 144 accounting for

the impairment or disposal of long lived assets with respect to the timing of the classification

of operations as discontinued operations and the presentation of such operations. With respect

to long lived assets that are not being disposed of the impairment recognition and

measurement standards in SFAS are significantly different from those in IAS 36 impairment

of assets however those differences were not addressed in the short term IASB-FASB

convergence project.

IFRS 6: Exploration for and Evaluation of Mineral Resources:

The objective of this IFRS is to specify the financial reporting for the exploration for

and evaluation of mineral resources. Exploration for and evaluation for mineral resources is

the search for mineral resources, including minerals oil, natural gas and similar non-

regenerative resources after the entity has obtained legal rights to explore in a specific area,

as well as the determination of the technical feasibility and commercial viability of extracting

the mineral resource.

It permits an entity to develop an accounting policy for exploration and

evaluation assets without specifically considering the requirements of paragraphs 11 and 12

of IAS 8. Thus, an entity adopting IFRS 6 may continue to use the accounting polices applied

immediately before adopting the IFRS. This includes continuing to use recognition and

measurement practices that are part of those accounting policies.

IFRS 7: Financial Instruments: Disclosures:

The objective of this IFRS is to require entities to provide disclosures in their financial

statements that enable users to evaluate:

a) the significance of financial instruments for the entities financial position and

performance: and

b) The nature and extent of risks arising from financial instruments to which the entity is

exposed during the period and at the end of the reporting period, and how the entity

manages those risks. The qualitative disclosures describe management’s objectives

policies and processes for managing those risks. The quantitative disclosures describe

management’s objectives, policies and processes for managing those risks. The



70

quantitative disclosures provide information about the extent to which the entity is

exposed to risk, based on information provided internally to the entities key

management personnel. Together, these disclosures provide an overview of the

entity’s use of financial instruments and the exposures to risks they create.

IFRS 8: Operating Segments:

This IFRS specifies how an entity should report information about its operating

segments in annual financial statements and, as a consequential amendment to IAS 34 Interim

Financial Reporting, requires an entity to report selected information about its operating

segments in interim financial reports. It also sets out requirements for related disclosures

about products and services, geographical areas and major customers. The IFRS requires an

entity to report financial and descriptive information about its reportable segments. It also

requires an entity to report a measure of operating segment profit or loss and of segment

assets and also requires an entity to report a measure of segment liabilities and particular

income and expense items if such measures are regularly provided to the chief operating

decision maker. It requires reconciliations of total reportable segment revenues, total profit or

loss, total assets, liabilities and other amounts disclosed for reportable segments to

corresponding amounts in the entity’s financial statements

Abbreviations

SICs: Standing Interpretations Committee

IFRIC: International financial Reporting Interpretations Committee


71

ISSN 2393-9702



………………………………………………………………………………………………......

A Study on Quality of Customer Service in Public Sector Banks

with Special Reference to Ananthapuramu District of A.P

Sugali Dese Naik*

Dr. Godha Rama Krishna**

* Sugali Dese Naik, Research Scholar in Management, Dravidian University, Kuppam.

** Dr. Godha Rama Krishna, Asst. Professor & Coordinator, Dept. of Management,

Rayalaseema University, Kurnool, Ph: 9951422499, Email: [email protected]

------------------------------------------------------------------------------------------------------

Introduction:

India has passing through rapid economic transition. The past record of the country can only

be marginal support to help it write new economic equation entitling it to the future. The

Banks have to prepare themselves for a fundamental economic transformation and to develop

a new self-adjusting framework providing continuous opportunity for growth.

Competitiveness is the litmus test in the present era of globalization and Internationalization.

Consumer demands are rapidly changing and a large population is asking for banking

services of the highest quality. A customer driven bank provides unique attributes to products

and services that are important to the customer. Such a bank dedicates itself to be capable of

delivering the products and services at levels that not only meet but exceed customer’s

expectations. Customer satisfaction is the essence and goal of the bank. Goals, resource

allocation, policies, procedures and management style are all focused at this objective and all

other goals are subservient to it. The essence of service excellence is to delight the customer

and exceed his/her expectations. The market place is demanding more and better service.

Service leaders are moving beyond quality service to a new level called service excellence.

Exceeding customer expectations or service excellence is becoming the differentiating and

essential factor for the success of a bank.

In the Globalised Indian economy all the industries are doing well in the market and

Indian banks are also performing well comparatively. In the booming economy and the

continuing expansion most of the banks facing challenges to perform well and it clearly

brought out by the fact that, contrary to public perception, it is not just the new private sector



72

banks that are doing well. There are few public sector banks are also doing well and got the

place in top 10 best performing Indian banks. Private sector banks are posing challenge to the

public sector banks by all means. And it is worth mentioning that the public sector banks

have performed so admirably in spite of the fact that they operate with many handicaps, such

as strong unions and the inability to offer market salaries and incentives and burdened with

huge workforce. The secret of success of any company simply depends on how they treat

employees and keep them satisfied. For that they have design their human resource process

like recruitment, selection, training and development, performance appraisal and other based

on employee perspective in order to benefit them. In India the banking industry becoming

more competitive than ever, private and public sector banks are competing with each other to

perform well. The executives of the bank are now in the position to modify their traditional

customer service practice in to innovative customer service practices in order to meet the

challenges from other competitive banks.

Review of Literature:

Banking is a prime mover in the economic development of a nation and research is so

essential to improve its working results. The management without any right policy is like

“building a house on sand”. It means an effective management always needs a thorough and

continuous search into the nature of the reasons for, and the consequences of organisation. In

line with this, some related earlier studies conducted by individuals and institutions are

reviewed to have an in-depth insight into the problem and exploring the reformation of

banking policy. An overall view of a few studies is presented below.

Sharma, R.D.1, in his research paper "A multiple item scale for measuring marketing

effectiveness in American Consumer banking through customer judgment", has presented

the development of 33 item scale called MKTEFFECT for obtaining customer judgment on

the efficiency of marketing efforts in American consumer banking. MKTEFFECT measures

how good bankers have achieved their business goal effectively by positioning and

monitoring their marketing mix consistently.

Yang and Fang2 Service quality is a significant instrument to measure customer

satisfaction. There is a close relationship between customer satisfaction and service quality.

Customer satisfaction can be given by providing quality of products and services to



73

customers. And for accessing customer satisfaction SERVQUAL mode! is used to know the

different services provided by banks and customer perceptions about the services. This tool is

used to overcome problems with related to customer satisfaction and quality of services

offered to customers.

Wong, A. and Sohal, A.3 discussed about customer satisfaction as often recognized as

the future expectations of banks in terms of its profitability and market share, a satisfied

customer always shares his or her experiences to others like a word of mouth advertising

thereby creating to increase more new customers to bank. This is possible only when the

banks give quality services with ease. Whereas on the other hand dissatisfied customer gives

a negative feedback about the bank to outsiders where the image of the bank will get spoiled

thereby losing an opportunity to increase its market share and attract new customers. It is not

only the customer satisfaction, the social relationships with customers is also equally

important. Interacting with customers and their family increases the opportunity for bank, it is

seen in foreign banks that passing the wishes on birthdays and marriage anniversaries is a

news strategy for banks to keep in touch with customers.

Laroche4 described banking industry is the one which creates a long term relationship

with its customers. The range of products and services it is providing like home equity,

personal loans, home loans, Credit and debit cards, insurance, mutual funds, investment

finance, project finance and many other products which can help a customer in getting an

opportunity to enhance their personal as well as business banking needs.

Smith and Bolton5 Customer satisfaction is the main role in profitability of retail

banking. This includes retention of customers for long term, by attracting new customers, etc.

However there are still satisfied and dissatisfied customers with banking services in the

current circumstances, it may be the quality of services, timings of banks, interaction of a

banker with customer etc. However, banks are providing online banking system and phone

banking which works 24/7 and can communicate with a banker easily to know about any

information related their accounts.

Anderson et al. 6 in his study described about customer satisfaction explained in a

different way of convenience and accessibility that make easy for him to do the transactions



74

of banking. On another side, it is the bank's ability to deliver these benefits on a regular basis

to its customers that will have impact on customer satisfaction. Providing the best to

customers is one strategy which banks have in their hands. It is the responsibility of every

one working in the bank to provide quality services, thereby which creates customer

relationship stronger.

It is found that from the study done by Chaoprasert and Elsey7 that it incur more cost

for acquiring a new customer than maintain the existing customer. Customer satisfaction,

customer relationship and quality services are there important aspects for banks to retain the

customer for long run, and investments on these three elements gives profitability and market

share. Customer satisfaction and High quality service frequently result in more recurrence

purchases and market share. Customer satisfaction leads to customer loyalty and thereby

leads to profitability and hence service quality is known as one of the basics of customer

satisfaction.

Hossain and Leo8 discussed that banks understand that, if they provide greater value

of services than their competitors in the market then, customer will be loyal and consequently

and on other hand, if banks ignore about the satisfaction level of customers and concentrate

on the profits that are getting better than its competitors can only earn high profits if they are

able to position themselves better than competitor within a particular market. Accordingly,

banks need to concentrate on service quality as an essential competitive -strategy. The author

defined service quality as a process consisting of series of intangible 'activities that takes

place in one particular organization to reach its determined customer satisfaction about

organization.

Siddiqi9 discussed about customer satisfactions an important essence of success and

outcomes of marketing activity in competitive banking industry. Most of the research studies

have dealt with customer satisfaction with related to banking products and services, and many

researchers agreed that customer satisfaction gets based on the consumption of related

experiences with the bank. It is the Banks responsibility to fulfill the needs of customer and

provide best services, so that customer gets maximum satisfaction and be satisfied with the

services of banks, this creates positive image for the bank from the existing customers and



75

brings opportunities for new customers to enter by just word of mouth advertisements from

existing customers.

Need for the Study:

The past two and half decades, which marks the era of liberalization and reforms in the

country, has been eventful one for the Banking industry changing the face of the industry far

beyond recognition. Technology has brought in substantial changes in Banking in terms of

customer services and new product innovations. It is necessary to know whether the reforms

are being fruitful or not.

The review of various studies and literature on Banking revealed that there are very

few studies that speak about Quality of customer service in Public sector banks in the most

backward region of Andhra Pradesh State i.e. Rayalaseema region, particularly in Ananthapur

district. Hence, it is felt that, there is an imperative need to conduct a study on Quality of

customer service in Public sector banks with special reference to Ananthapur District of A.P.

Objectives of the Study:

The following are the objectives of the study:

1. To study the concept of Quality of Customer Service.

2. To understand the SERVQUAL technique.

3. To evaluate and analyze the Quality of customer service using SERVQUAL

4. To examine the overall satisfaction of customers towards their bank and

5. To derive suitable suggestions.

Methodology & Sampling

To achieve the stated objectives, the researcher has used both primary and secondary

data. The primary data are collected from the customers of public sector bank branches

located in Ananthapur District of A.P. through Structured Questionnaire. The secondary data

and information have been collected from various sources like Reserve Bank of India Reports

and publications, Indian Bankers Association publications, National Institute of Bank

Management publications, business newspapers, journals, magazines etc.

Ananthapur District of A.P. is selected for the study, as it is the backward and drought

District of Andhra Pradesh. A sample of 400 customers has been taken for the study. After



76

elimination of few partially unfilled questionnaires the resultant final sample is 369. The

sampling technique employed is convenient sampling.

Scope of the Study

While there are private banks, foreign banks, co-operative banks and regional rural

banks and public sector banks, only the branches of selected public sector banks located in

Ananthapur District have been chosen for the study. The scope of the study refers only to

public sector banks located in Ananthapur District.

Measuring Customer Satisfaction: There are occasions when a banker may fall into the trap

of using measures of customer satisfaction and dissatisfaction to assess the bank’s

performance in providing value, rather than to plan for understanding customer value and

needs. Measuring customer satisfaction comes after understanding customer value.

Satisfaction (or dissatisfaction) is the judgment on the perceived value of the service received

by the customer.

The customer’s valuation (judgmental) process attaches a measure (positive or

negative) to the experience perceived (of having the service). Satisfaction or dissatisfaction

is the result where customer compares the experience (perceived value) to some standard of

anticipated or expected value. This standard could be an expectation such as what the value

was”supposed to be” prior to the use of the service. Therefore, satisfaction or dissatisfaction

expectation was not fulfilled. It will be incumbent on bankers to determine what standards

people use to rate satisfaction or dissatisfaction, so that they are in a position to understand

better the meaning of their measures and take suitable actions for improvement. SERVQUAL

technique proposed by Parasuraman, Zeethmal and Berry serves as better tool for evaluation

of Service Quality.

SERVQUAL Methodology: Clearly, from a Best Value perspective the measurement of

service quality in the service sector should take into account customer expectations of service

as well as perceptions of service. However, as Robinson (1999) concludes: "It is apparent that

there is little consensus of opinion and much disagreement about how to measure service

quality". One service quality measurement model that has been extensively applied is the

SERVQUAL model developed by Parasuraman et al. (1985, 1986, 1988, 1991, 1993, 1994;

Zeithaml et al. , 1990).



77

SERVQUAL as the most often used approach for measuring service quality has been

to compare customers' expectations before a service encounter and their perceptions of the

actual service delivered (Gronroos, 1982; Lewis and Booms, 1983; Parasuraman et al., 1985).

The SERVQUAL instrument has been the predominant method used to measure consumers'

perceptions of service quality. It has five generic dimensions or factors and are stated as

follows (van Iwaarden et al., 2003):

(1) Tangible: Physical facilities, equipment and appearance of personnel.

(2) Reliability: Ability to perform the promised service dependably and accurately.

(3) Responsiveness: Willingness to help customers and provide prompt service.

(4) Assurance (including competence, courtesy, credibility and security): Knowledge and

courtesy of employees and their ability to inspire trust and confidence.

(5) Empathy (including access, communication, understanding the customer): Caring and

individualized attention that the firm provides to its customers.

In the SERVQUAL instrument, 22 statements measure the performance across these

five dimensions, using a seven point Likert scale measuring both customer expectations and

perceptions (Gabbie and O'neill, 1996).

It is important to note that without adequate information on both the quality of

services expected and perceptions of services received then feedback from customer surveys

can be highly misleading from both a policy and an operational perspective.

S.NO ASPECTS OF BANK RATING

TANGIBLES

1 The bank has modern looking equipment

2 The banks physical features are visually appealing

3 The bank’s front desk employees are neat appearing

4 Materials associated with the service (such as information broachers

etc) are visually appealing at the bank

RELIABILITY

5 When a bank promises to do something by a certain time, it does so

6 When you have a problem, the bank shows a sincere interest in

solving it

7 The bank performs the service right the first time



78

8 The bank provides its service at the time it promises to do so

9 The bank insists on error free records

RESPONSIVENESS

10 Employees in the bank tell you exactly when the service will be

performed TAT

11 Employees in the bank give you prompt service to customers

12 Employees in the bank are always willing to help you

13 Employees in the bank are never too busy to respond to your request

ASSURANCE

14 The behaviour of employees in the bank instills confidence in you

15 You feel safe in dealing your transactions with the bank

16 Employees in the bank are consistently courteous with you

17 Employees in the bank have the knowledge to answer your questions

EMPATHY

18 The bank gives you individual attention

19 The bank has operating hours convenient to all its customers

20 The bank has employees who give you personal attention

21 The bank has your best interests at heart

22 The employees of the bank understand your specific needs


Table No. 1: Details of the bank having modern looking equipment

Public Sector Banks

Frequency Percent

Valid Strongly Disagree 118 32.0

Slightly Disagree 137 37.1

Neutral 42 11.4

Slightly Agree 32 8.7

Strongly Agree 40 10.8

Total 369 100.0


It can be explained from table No. 1 that, with regard to SERVQUAL analysis and the

parameter that the bank has modern looking equipment, among respondents from public



79

sector banks 32.0% have strongly disagreed, 37.1% slightly disagreed, 11.4% were neutral,

8.7% have slightly agreed and 10.8% strongly agreed.

Table No. 2: Details of the banks physical features are visually appealing

Public Sector Banks

Frequency Percent



Neutral 52 14.1



Total 369 100.0


It can be illustrated from table No. 2 that, with regard to SERVQUAL analysis and

the parameter that the banks physical features are visually appealing, among respondents

from public sector banks 28.7% have strongly disagreed, 38.5% slightly disagreed, 14.1%

were neutral, 11.1% have slightly agreed and 7.6% strongly agreed.

Table No. 3: Details of the banks front desk employees are neat appearing

Public Sector Banks

Frequency Percent



Neutral 47 12.7



Total 369 100.0


It can be observed from table No. 3 that, with regard to SERVQUAL analysis and the

parameter that the banks front desk employees are neat appearing, among respondents from

public sector banks 30.1% have strongly disagreed, 34.7% slightly disagreed, 12.7% were

neutral, 14.6% have slightly agreed and 7.9% strongly agreed.



80

Table No. 4: Details of Materials associated with the service are visually appealing

Public Sector Banks

Frequency Percent



Neutral 61 16.5



Total 369 100.0


It can be represented from table No. 4 that, with regard to SERVQUAL analysis and

the parameter that the materials associated with the service are visually appealing, among

respondents from public sector banks 32.5% have strongly disagreed, 27.9% slightly

disagreed, 16.5% were neutral, 16.8% have slightly agreed and 6.2% strongly agreed.

Table No. 5: When a bank promises to do something by a certain time, it does so

Public Sector Banks

Frequency Percent



Neutral 52 14.1



Total 369 100.0


It can be visualized from table No. 5 that, with regard to SERVQUAL analysis and

the parameter that when a bank promises to do something by a certain time, it does so, among





81

Table No. 6: When you have a problem, the bank shows a sincere interest in solving it

Public Sector Banks

Frequency Percent



Neutral 41 11.1



Total 369 100.0


It can be analysed from table No. 6 that, with regard to SERVQUAL analysis and the

parameter that, when you have a problem, the bank shows a sincere interest in solving it,

among respondents from public sector banks 20.3% have strongly disagreed, 37.1% slightly


Table No. 7: The bank performs the service right the first time

Public Sector Banks

Frequency Percent



Neutral 36 9.8



Total 369 100.0


It can be described from table No. 7 that, with regard to SERVQUAL analysis and the

parameter that the bank performs the service right the first time, among respondents from





82

Table No. 8: The bank provides its service at the time it promises to do so

Public Sector Banks

Frequency Percent



Neutral 48 13.0



Total 369 100.0


It can be explained from table No. 8 that, with regard to SERVQUAL analysis and the

parameter that the bank provides its service at the time it promises to do so, among



Table No. 9: The bank insists on error free records

Public Sector Banks

Frequency Percent



Neutral 56 15.2



Total 369 100.0



the parameter that the bank insists on error free records, among respondents from public





83

Table No. 10: Employees in the bank tell you exactly when the service will be performed

Public Sector Banks

Frequency Percent



Neutral 44 11.9



Total 369 100.0


It can be observed from table No. 10 that, with regard to SERVQUAL analysis and

the parameter that employees in the bank tell you exactly when the service will be performed

TAT, among respondents from public sector banks 22.5% have strongly disagreed, 32.5%

slightly disagreed, 11.9% were neutral, 23.3% have slightly agreed and 9.8% strongly agreed.

Table No. 11: Employees in the bank give you prompt service to customers

Public Sector Banks

Frequency Percent



Neutral 27 7.3



Total 369 100.0



the parameter that employees in the bank give you prompt service to customers, among





84

Table No. 12: Employees in the bank are always willing to help you

Public Sector Banks

Frequency Percent



Neutral 38 10.3



Total 369 100.0



the parameter that employees in the bank are always willing to help you, among respondents

from public sector banks 38.2% have strongly disagreed, 37.1% slightly disagreed, 10.3%

were neutral, 8.7% have slightly agreed and 5.7% strongly agreed.

Table No. 13: Employees in the bank are never too busy to respond to your request

Public Sector Banks

Frequency Percent



Neutral 57 15.4



Total 369 100.0


It can be analysed from table No. 13 that, with regard to SERVQUAL analysis and

the parameter that employees in the bank are never too busy to respond to your request,





85

Table No. 14: The behaviour of employees in the bank instills confidence in you

Public Sector Banks

Frequency Percent



Neutral 42 11.4



Total 369 100.0


It can be described from table No. 14 that, with regard to SERVQUAL analysis and

the parameter that the behaviour of employees in the bank instills confidence among

customers, among respondents from public sector banks 34.1% have strongly disagreed,

38.8% slightly disagreed, 11.4% were neutral, 5.1% have slightly agreed and 10.6% strongly

agreed.

Table No. 15: You feel safe in dealing your transactions with the bank

Public Sector Banks

Frequency Percent



Neutral 32 8.7



Total 369 100.0


It can be explained from table No. 15 that, with regard to SERVQUAL analysis and

the parameter that the customers feel safe in dealing transactions with the bank, among





86

Table No. 16: Employees in the bank are consistently courteous with you

Public Sector Banks

Frequency Percent



Neutral 27 7.3



Total 369 100.0



the parameter that employees in the bank are consistently courteous, among respondents from



Table No. 17: Employees in the bank have the knowledge to answer your questions

Public Sector Banks

Frequency Percent



Neutral 29 7.9



Total 369 100.0


It can be observed from table No. 17 that, with regard to SERVQUAL analysis and

the parameter that employees in the bank have the knowledge to answer the questions,





87

Table No. 18: The bank gives you individual attention

Public Sector Banks

Frequency Percent



Neutral 36 9.8



Total 369 100.0



the parameter that the bank gives you individual attention, among respondents from public



Table No. 19: The bank has operating hours convenient to all its customers

Public Sector Banks

Frequency Percent



Neutral 42 11.4



Total 369 100.0



the parameter that the bank has operating hours convenient to all its customers, among





88

Table No. 20: The bank has employees who give you personal attention

Public Sector Banks

Frequency Percent



Neutral 42 11.4



Total 369 100.0


It can be analysed from table No. 20 that, with regard to SERVQUAL analysis and

the parameter that the bank has employees give personal attention, among respondents from



Table No. 21: The bank has your best interests at heart

Public Sector Banks

Frequency Percent



Neutral 31 8.40



Total 369 100.0


It can be described from table No. 21 that, with regard to SERVQUAL analysis and

the parameter that the bank has best interests of customers at heart, among respondents from





89

Table No. 22: The employees of the bank understand your specific needs

Public Sector Banks

Frequency Percent



Neutral 69 18.6



Total 369 100.0


It can be explained from table No. 22 that, with regard to SERVQUAL analysis and

the parameter that the employees of the bank understand specific needs of customers, among



Table No. 23: Details about overall satisfaction towards banks

Public sector banks

Highly satisfied 76 20.5

Moderately satisfied 232 62.8

Dissatisfied 61 16.5

Total 369 100


It can be illustrated from table No. 23 that, with regard to overall satisfaction of

customers among respondents from public sector banks 20.5% rated it as highly satisfied,

62.8% are moderately satisfied and 16.5% are dissatisfied.


In a study of this magnitude, though meticulous care is taken in each and every aspect of

study, certain limitations are likely to be there in the study.

1. The study is confined to the selected public sector bank branches located in Ananthapur

District of Andhra Pradesh

2. Some respondents were not aware of certain procedures and aspects of banking.



90

3. Few respondents were hesitant to give correct details.

4. There might be a sense of bias crept in answers given by the respondents and

5. Only limited demographic profile of the respondents has been included in the study.

References:

1. Sharma R.D., “MKTEFFECT, A multiple item scale for measuring marketing

effectiveness in American consumer banking through customer judgement, VIKALPA, Vol.

21, Jan-Mar 1996.

2. Yang, .Z. and Fang. X., "Online Service Quality Dimensions And Their Relationships

With Satisfaction: A Content Analysis Of Customer Reviews Of Securities Brokerage

Services'". International Journal Of Service Industry Management, Volume 15. Issue 3, 2004.

3. Wong, A. and Sohal. A, "Service quality and customer loyalty perspectives on two levels

of retail relationships". Journal of Services Marketing, Vol. 17 No. 5, 2003.

4. Laroche, M.. and Taylor. T, An Empirical Study of Major Segmentation Issues in Retail

Banking. International Journal of Bank Marketing, 6( 1), 1998.

5. Smith, A.K.. and Bolton, R.N, "An experimental investigation of customer reactions to

service failure and recovery encounters", Journal of Service Research, Vol. I No. 3. 1998.

6. Anderson, .1. C. and .1. A. Narus, A Model of Distributor Kirm and Manufacturing Firm

Working Relationships, Journal of Marketing, Vol 54 (I), 1990.

7. Chaoprasert, C. and filsey. B, "Service quality improvement in Thai retail banking and its

management implications", ABAC Journal, Vol. 24 No. 1., 2004.

8. Mohammed Hossain, Shirley Leo, "Customer perception on service quality in retail

banking in Middle East: the case of Qatar". International Journal of Islamic and Middle

Eastern Finance and Management, Vol. 2 Iss: 4, 2009.

9. Siddiqi, K.O. (2010). Interrelations between service quality attributes, customer

satisfaction and customer loyalty in the retail banking sector in Bangladesh. International

Trade & Academic Research Conference (ITARC), 2010.


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A Study on Human Resource Planning With Special Reference to

Sugar Industry

Shaik Rubeena*

Shaik Mubeena**

*Assistant Professor, Department of MBA, G. Pullaiah College of Engineering &


**Assistant Professor, Department of MBA, Srinivasa College of Engineering &


----------------------------------------------------------------------------------------------------------------

Abstract

The Human Resource Department of an organization is very much significant in establishing

itself as a brand. The past one year has seen an increasing number of companies focus on

creating a unique HR brand for their organization. The scope of Human Resource

management is very large and expanded the scope of HR function into the areas as personnel

aspect, welfare aspect and individual relations aspect. Human Resource management is now

regarded as a “must” for the successful running of a business or industrial enterprise. HRM

helps management at enterprise level, industrial level and at societal level.

The basic purpose of “Human Resource Planning” is to recruit and maintain an equitable

man power in the organization. So that deficit of employees minimized and sufficient

employees are maintained for the organizational tasks accomplishment. The man power

planning concerned with the human resource aspects of the needs. The needs of the

organization so that the jobs designed for individual tasks to full fill requirement of the man

power in the organization. Before them recruiting the personnel they look for a position

required for certain task or job. And also they think in the situation of the employee surplus

whether they retrench the employee or to assign a new task to them.

The study has been taken up with the following objectives. to study the process of

human recourse planning in NCS sugars ltd and to study the effectiveness of methods using



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for human recourses demand and supply forecasting and to evaluate the methods using to

manage shortage and surplus of human recourses.

After my study I found that, every year HR Planning process taking place. both HR

Executives and head of the departments are involving in the HRPprocess. Mainly they are

using managerial judgment method for demand forecasting and staffing tables for supply

forecasting.

Key words: Human Resource (Manpower or Personnel) Planning (HRP) Forecasting

(Estimating) the Manpower requirements and recruitment, Manpower Allocation, Manpower

Motivation, Manpower Development.

Introduction:

The twenty-first century is unique in the pace at which change occurs. The business

environment of organizations is more complex and dynamic when compared to the

environment 15 years ago this is the age of contradictions _economic growth as well as

recession, shortage of skilled unemployed, massive layoffs as well as large –scale

recruitments. A question emerges: is ‘planning’ meaningful in this age of discontinuous

change? Is it feasible or even possible for organizations to develop future business plans and

forecast human resource requirements? When that of the job itself has undergone

transformation and when the world of work has altered beyond what could be imagined just a

decade earlier, is it possible to describe job precisely? Although mint berg (1994) commented

that ‘the most successful strategies are visions, not plans, planning remains critical.

However, it is more challenging now.

Human resource planning has traditionally been used by organizations to ensure that the right

persons should be placed in the right job at the right time. Under past conditions of relative

environmental certainty and stability, human Resource planning focused on the short term

and was dictated largely by line management concerns. Increasing environmental instability,

demographic shifts, changes InTechnology, and heightened international competition

arranging the need for and the nature of human resource Planning in leading organizations.

Planning is increasingly the product of the interaction between line management and

planners. In addition, organizations are realizing that in order to adequately address human

resource concerns, they must develop long-term as well as short-term Solutions. As human

resource planners involve themselves in more programs to serve the needs of the business,

and even influence the direction of the business, they face new and increased responsibilities

and challenges.



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An insight into the increasing significance of HRP in dynamic business environment

is presented. The macro and micro perspectives of HRP and their objectives are highlighted.

This provides a complete overview of job analysis, the basis of all HR activities. It explores

the strategic importance of job analysis, and its significance in the changing world of work. It

discusses the competency-based approach to job analysis the HRP process is outlined and the

range of techniques available to managers for forecasting a HR demand and supply is

presented.

Sugar Industry Profile

Sugar Industry is very important to the Indian National economy, because of its

multiple contributions in the shape of employment and provision of raw materials to other

industries. Sugar is produced in 121 Countries and global production now exceeds 120

Million tons a year. Approximately 70% is produced from sugar cane a very tall grass with

big stems which is largely grown in the tropical countries. The remaining 30% is produced

from sugar beet a root crop resembling a large parsnip grown mostly in the temperate zones

of the north. It had been rightly pointed out by the Late Shri. Fakhrudin Ali Ahmed when he

was Minster for food and agriculture, at the eleventh annual general meeting of the national

federation of co-operative factories limited. “The co-operative factories in some parts of the

country have become symbol of industrializations in the development of ancillary industries

providing opportunities of employment to the village folk”. The industry provides

employment to about 35 million cultivations and 3.6 lakhs skilled and unskilled workers.

Further, it accounts for providing employment to crores of thousands in the sugar trade, in the

transport of sugarcane and sugar etc. It’s by - products are used as raw materials in industries

such as alcohol, plastics, synthetics, rubber, and fiberboard Pharmaceuticals, paper, etc. The

sugar industry in recent years has begun to export sugar, thus earning valuable foreign

exchange .Besides it provides Rs. 300 crores in the form of taxes to the exchange consisting

these many facts of important of the industry ,it ranks second among the major consumer

industries of this country, next only to cotton, Textile industry . The sugar industry is mostly

oriented to a single material, namely sugarcane that forms 60% of the total cost of

production. Therefore, the availability of sugar cane and facilities of transporting raw

material of the sugar mill naturally condition the industry of sugar proximity to. The raw

material is essential because the sucrose content of the sugar cane begins to decrease soon

after the cane is cut obtained as the factories for generating power use a byproduct during the

producing. Therefore, power is not at all a dominating factor determining thelocation of sugar



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industry .in recent times, techniques feasibility and economics visibility of the sugar projects

have been given importance in the location of sugar industry. In the words of Dr.M.Mehta,

“The location pattern of the sugar industry is greatly influenced by the character local

distribution depends entirely of physical and Geographical factors, nature plays a dominant

role in the location industry”.

In India, major sugarcane growing states are Uttar Pradesh, Maharashtra, Karnataka, Gujarat,

Tamil Nadu, and Andhra Pradesh. These six states contribute more than 85% of total sugar

production in the country; Uttar Pradesh and Maharashtra together contribute more than 57%

of total production.

SCENARIO OF SUGAR INDUSTRY:

India is the largest consumer and second largest producer of sugar in the world (Source:

USDA Foreign Agricultural Service). The Indian sugar industry is the second largest agro-

industry located in the rural India. The Indian sugar industry has a turnover of Rs. 500 billion

per annum and it contributes almost Rs. 22.5 billion to the central and state exchange as tax,

and excise duty every year (Source: Ministry of

Food, Government of India). It is the second largest agro-processing industry in the country

after cotton textiles. With 453 operating sugar mills in different parts of the country, Indian

sugar industry has been a local point for socio-economic development in the rural areas.

About 50 million sugarcane farmers and a large number of agricultural laborers are involved

in sugarcane cultivation and ancillary activities, constituting 7.5% of the rural population.

Besides, the industry provides employment to about 2 million skilled/semi skilled workers

and others mostly from the rural areas. The industry not only generates power for its own

requirement but surplus power for export to the grid based on by-product biogases. It also

produces ethanol, an ecology friendly and renewable energy for blending with petrol.

Economy Role:

India is one of the largest sugar producing and consuming country in the world. The sugar

industry plays a vital role in rural areas and provides direct and indirect employment in the

country. India emerged as the largest producer of white sugar in the world. The central

government has already de-licensed. The sugar productions they purpose to decontrol the

release mechanism by introduction of reduce on sugar price. At present India enjoys second

place in the world sugar production. Central as well as State government has been getting 140

crores in the form of excess taxes from sugar industry. The industry has been providing



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substance to 5.5 lakhs workers and sustaining about 4.5 crores agricultures. Its total capital

investment is amount to Rs.1560 crores. The sugar industry has a unique place in Indian

economy and rural development because of its multiple contributions in terms of employment

and provisions of raw materials to other industries. The sugar industry is the second largest

agro based processing industry. Thus occupies a vital role among the 4 major sugar

producing countries in the world. The other 3 are being USA, Brazil and Cuba.

Growth of Sugar Industry in India:

There were only twenty nine factories in India during the year 1931. Protection granted to

the industry in 1931 brought tremendous growth in the number of locations. The number of

factories in operation had grown from 29 to 140 in 1950 – 1951. Out of which 110 factories

were in northern parts of India. During the next decade the number of factories increased to

174. Out of which 116 factories are in the sub tropical region of northern India. Finally, the

number of factories has grown from 200 in 1965 to 1966 to 417 in 1994 to 1995 of which

75% of the factories are located in the northern India. The industry is predominantly localized

in the Uttar Pradesh, particularly in the districts of Meerut, Saharnpur, Bijmour, Barely,

Muzaffar Nagar Moradabad and Rampur, next Uttar Pradesh. The industry is mainly

concentrated in Maharashtra, Bihar and in the eastern costal districts of Andhra Pradesh. If

we refer to the historical event in the sphere of sugar industry, Uttar Pradesh and Bihar

occupied the predominant position as far as the location pattern of the industry is concerned,

and still these states are enjoying the same position. The reason of such heavy concentration

in the states of Uttar Pradesh enjoys in respect of cane cultivation is due to the advantages

confirmed by the rich and fertile alluvial soil of the genetic plain, the bulk of which contains

adequate quantities of lime and potash, the pressure of thin varieties of cane admirable suited

in the climate cheap and extensive of cheap and extensive irrigation facilities. The

concentration of sugar cane crop incompact blocks enables the sugar factories to get fresh

suppliers of sugar cane direct from the fields. Moreover, the cost of the cane cultivation is

less and the cultivators are not accustomed to raise alternative crops like ground nuts, chilies,

plantains etc



96

Profile of NCS Sugars Ltd

NCS Sugars Ltd., was incorporated on 06th June 2002 for the purpose of purchasing

the core assets and business of Latchayyapeta unit of Nizam Sugars Ltd (NSL), a

Government of Andhra Pradesh undertaking. Latchayyapeta unit is one of the sugar mills

operated and owned by NSL. Latchayyapeta is the principal industrial employer in the

region.. With a growth that consistently established, now NCS Sugars Limited is a full

fledged sugar manufacturing unit with the state- of – art technology managed by a crew of

professionals from various capacities, poising towards a crushing capacity up to 6000 TCD.

The plant has been allotted a zone of about 43 000 acres of agricultural land consisting 17

mandals, 820 villages and about 22 000 potential farmers in the zone.

NCS Sugars Limited is the first company to import Raw Sugar to India for the first time

during 2004-05 and processed into white sugar, which has predominantly compensated the

domestic need as well. Thus, NCS has changed the Sugar Manufacturing business from

seasonal to throughout the year.

Present projects of the company:

The company is presently manufacturing sugar at its factory at Latchayyapeta.

Company manufacturing sugar with raw sugar in the off-season due to un availability of the



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cane. Company imports raw sugar from Brazil and it is the first company in India in the sugar

production with importing raw sugar from other country. The capacity of the company in

producing the sugar is 94 bags per day which is increased from the previous production 86

bags per day. The company target is to produce 95 bags per day and its almost reaches their

target and tries to reach target completely. The co-generation plant is producing power with

the capacity of 20 mw per hour and it continues its same project at present. Company seeks to

establish a ethanol plant in the nearest place of sugar factory and also seeks to establish

another sugar plant to form complex sugar factory.

Welfare Facilities Provided by the Company:

Statutory Welfare facilities Washing facilities

Canteen facilities Restrooms and lunchrooms

Dispensary Facilities for sitting

Non – Statutory Welfare facilities School bus

Arranging Picnics Other benefits and allowances

Bonus Gratuity

Workmen Compensation Medical expenses for insured persons

Provident fund

Departments in the NCS sugars limited:

Production department Finance department

Marketing department. Cane department.

Co-generation department. Electronic data processing center.

Engineering department. Purchase and stores department.

Human resource department



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Objectives of the study

To study the process of Human Resource planning in NCS Sugars ltd.

To study the effectiveness of forecasting of demand for and supply of human

resources.

To evaluate the methods of managing surplus (or) shortage of Human resources.

To the suitable suggestions for effective HRP.



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Time constraint for completion of present study and making out a detailed analysis.

The present study is limited only to NCS SUGAR COMPANY LTD., Latchayyapeta

The employees were not willing to give the detailed information, because of their

busy work schedule.

Research Methodology

The information for the study has been gathered from two sources namely:

Primary data

Secondary data

Primary data:

Primary data have been collected through personal observations, discussions and interviews

with various officials, management and from the Human Resource Department.

Secondary data:

Research design : Descriptive research

Research approach : Survey method

Research instrument : Questionnaire

Sampling unit : HR executives, Officials

Sampling size : 24

Sampling technique : convenience sampling

Statistical tool : MS Excel

S. No Items of scale No. of

respondents

percentages

1 Only HR executives 4 16.66

2 Both HR executives and HOD 20 83.33

3 Production variation 12 50

4 Organisation strategy 4 16.66

5 Technology 5 20.83

6 Managerial judgement 16 66.66

7 work study method 8 33.33

8 Staffing tables 18 75

9 Skills and management inventories 6 25

10 Recruitment and selection 20 83.33

11 Work current staff over time 4 16.66

12 Retrenchment 8 33.33

13 News papers 7 29.16

14 Employee referrals 17 70.83



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15 Compensation plan 4 16.66

16 Performance appraisal 10 41.66

17 Both 10 41.66

Findings:

1. Both HR managers and Head of the Departments involving in the planning

process once a year.

2. Managerial judgment and work study methods are using for demand forecasting.

3. Staffing tables, skills and management inventory methods are using for supply

forecasting of human resources.

4. The HR forecasting done by the department is not 100% correct in NCS Sugars.

5. Effective maintenance of Human Resource Information System (HRP) is not

observed.

6. The low level employees are recruited through employee referrals for higher

positions, interviews will be conducted.

7. During shortage working of current staff over time is observed in engineering

department.



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8. During surplus the seasonal employees are down sized and the unseasonal

employees are offering voluntary retirement schemes.

9. Employee turnover rate and employee absenteeism are highly observed in low

level employees.

Suggestions:

To provide information and statistical reports to internal and external customers of

NCS Sugars Ltd.

Support, analyze, and maintain the HR web site and provide web technology solutions

and services to improve the efficiency of Human Resources Planning , effectiveness

of HR services and programs to customers.

To recommend and implement HRP projects based on production issues and/or

departmental IS needs

All the departments should provide accurate information to HR department.

The forecasting of demand and supply should be accurate.

The company should maintain HRP effectively.

The employee turnover rate must be prevented.

Effective recruitment process must be maintained to reduce the overtime work of

current staff in shortage conditions.

Conclusion

HRP supports development, documentation and use of structures. HRP supports staffing

plan, sourcing candidates, candidate evaluation, on-boarding and security clearance

processing. HRP supports staffing plan, sourcing candidates, candidate evaluation, on-

boarding, security clearance processing etc. Hence, HRP is very useful to the management. It

helps to minimize the cost and maximize the profit. It is also helpful to achieve the

organization’s goal within the specific time period.

The importance of the human resource function and the human resources information

system has to develop the overall activities NCS Sugars Ltd.



102

References:

Websites:

www.indiastat.com

www.ncssugara.com

Www.Indiasugar.Com

www.google.com

Text Books:

P. SUBBARAO(1996),3rd Edition “ Essentials of Human Resource Management and

Industrial Relations” Himalaya publishing house pvt.ltd.

Scott snell, George Bohlander, Human Resource Management, Cengage Learning

India private limited.

Donald R. Cooper, Pamela S. Schindler(2006)9th edition, “Business Research

Methods” Tata McGraw Hill Education Private Limited, New Delhi

http://www.indiastat.com/

http://www.ncssugara.com/

http://www.indiasugar.com/

http://www.google.com/


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Impact of Job Satisfaction on Employee’s Performance

Mrs. B. RAJITHA*

*Assistant Professor, Department of Management Studies, G. Pullaiah College of

Engineering & Technology, Pasupala (V), Kurnool -518452, A.P.

Email: [email protected] Mobile: +91 9440756118

----------------------------------------------------------------------------------------------------------------

Abstract

“Job satisfaction is the extent to which people like (satisfaction)

Or dislike (dissatisfaction) their jobs” - Paul J. Meyer

In the fast changing socioeconomic and technological conditions, the management

scenario has also been changing rapidly. Human resources therefore, occupy a key position.

Human resource Management is primarily concerned with the people’s dimensions in the

organization. It is a crucial subsystem in the process of management. The success or failure

of an organization not only depends on material;, machines and equipment but also on the

Personal called Human Resources who are put in their best efforts for an efficient

performance at the job. A management basic job is the effective utilization of Human

Resources for the achievement of organizational objectives. The combined efforts of the

human resources, technological, financial, physical and all other resources are utilized.

Motivation of human resources is of utmost importance everywhere. The satisfied human

resources are responsible for success or failure in achieving organizational objectives. The

present study aims to study the job satisfaction of employees and its impact on personal

performance of employees working in Penna Cement.

Keywords: Human resources, Technological, Financial, Physical resources.

Introduction

Job satisfaction, a worker's sense of achievement and success, is generally perceived to be

directly linked to productivity as well as to personal wellbeing. Job satisfaction implies doing

a job one enjoys, doing it well, and being suitably rewarded for one's efforts. Job satisfaction

further implies enthusiasm and happiness with one's work. The Harvard Professional Group




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(1998) sees job satisfaction as the keying radiant that leads to recognition, income,

promotion, and the achievement of other goals that lead to a general feeling of fulfillment.

Importance to Worker and Organization

Frequently, work underlies self-esteem and identity while unemployment lowers self-

worth and produces anxiety. At the same time, monotonous jobs can erode a worker's

initiative and enthusiasm and can lead to absenteeism and unnecessary turnover. Job

satisfaction and occupational success are major factors in personal satisfaction, self-respect,

self-esteem, and self-development. To the worker, job satisfaction brings a pleasurable

emotional state that often leads to a positive work attitude. A satisfied worker is more likely

to be creative, flexible, innovative, and loyal.

For the organization, job satisfaction of its workers means a work force that is

motivated and committed to high quality performance. Increased productivity the quantity

and quality of output per hour work a day seems to be a byproduct of improved quality of

working life. It is important to note that the literature on the relationship between job

satisfaction and productivity is neither conclusive nor consistent.

Tangible ways in which job satisfaction benefits the organization include reduction in

complaints and grievances, absenteeism, turnover, and termination; as well as improved

punctuality and worker morale. And although only little correlation has been found between

job satisfaction and productivity, Brown (1996) notes that some employers have found that

satisfying or delighting employees is a prerequisite to satisfying or delighting customers, thus

protecting the "bottom line."

Creating Job Satisfaction

Organizations that aspire to creating a work environment that enhances job

satisfaction need to incorporate the following:

Flexible work arrangements, possibly including telecommuting

Training and other professional growth opportunities

Interesting work that offers variety and challenge and allows the worker opportunities

to "put his or her signature" on the finished product

Opportunities to use one's talents and to be creative

Opportunities to take responsibility and direct one's own work

A stable, secure work environment that includes job security/continuity

An environment in which workers are supported by an accessible supervisor who

provides timely feedback as well as congenial team members

http://www.answers.com/topic/satisfaction

http://www.answers.com/topic/anxiety

http://www.answers.com/topic/monotonous

http://www.answers.com/topic/absenteeism

http://www.answers.com/topic/punctuality-2

http://www.answers.com/topic/prerequisite

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Flexible benefits, such as child-care and exercise facilities

Up-to-date technology

Competitive salary and opportunities for promotion

Probably the most important point to bear in mind when considering job satisfaction

is that there are many factors that affect job satisfaction and that what makes workers happy

with their jobs varies from one worker to another and from day to day. Apart from the factors

mentioned above, job satisfaction is also influenced by the employee's personal

characteristics, the manager's personal characteristics and management style, and the nature

of the work itself. Managers who want to maintain a high level of job satisfaction in the work

force must try to understand the needs of each member of the work force. For example, when

creating work teams, managers can enhance worker satisfaction by placing people with

similar backgrounds, experiences, or needs in the same workgroup. Also, managers can

enhance job satisfaction by carefully matching workers with the type of work. For example, a

person who does not pay attention to detail would hardly make a good inspector, and a shy

worker is unlikely to be a good salesperson. As much as possible, managers should match job

tasks to employees' personalities.

Managers who are serious about the job satisfaction of workers can also take other

deliberate steps to create a stimulating work environment. One such step is job enrichment.

Job enrichment is a deliberate upgrading of responsibility, scope, and challenge in the work

itself. Job enrichment usually includes increased responsibility, recognition, and opportunities

for growth, learning, and achievement. Large companies that have used job-enrichment

programs to increase employee motivation and job satisfaction include AT&T, IBM, and

General Motors (Daft, 1997).

Good management has the potential for creating high morale, high productivity, and a

sense of purpose and meaning for the organization and its employees. Empirical findings

show that job characteristics such as pay, promotional opportunity, task clarity and

significance, and skills utilization, as well as organizational characteristics such as

commitment and relationship with supervisors and co-workers, have significant effects on job

satisfaction. These job characteristics can be carefully managed to enhance job satisfaction.

Of course, a worker who takes some responsibility for his or her job satisfaction will

probably find many more satisfying elements in the work environment. Everett (1995)

suggests that employees ask themselves the following questions:

1. When have I come closest to expressing my full potential in a work situation?

http://www.answers.com/topic/salesperson

http://www.answers.com/topic/job-enrichment

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106

2. What did it look like?

3. What aspects of the workplace were most supportive?

4. What aspects of the work itself were most satisfying?

5. What did I learn from that experience that could be applied to the present situation?

Workers' Roles in Job Satisfaction:

The following suggestions can help a worker find personal job satisfaction:

Seek opportunities to demonstrate skills and talents. This often leads to more

challenging work and greater responsibilities, with attendant increases in pay and

other recognition.

Develop excellent communication skills. Employers value and reward excellent

reading, listening, writing, and speaking skills.

Know more. Acquire new job-related knowledge that helps you to perform tasks more

efficiently and effectively. This will relieve boredom and often gets one noticed.

Demonstrate creativity and initiative. Qualities like these are valued by most

organizations and often result in recognition as well as in increased responsibilities

and rewards.

Develop teamwork and people skills. A large part of job success is the ability to work

well with others to get the job done.

Accept the diversity in people. Accept people with their differences and their

imperfections and learn how to give and receive criticism constructively.

See the value in your work. Appreciating the significance of what one does can lead

to satisfaction with the work itself. This helps to give meaning to one's existence, thus

playing a vital role in job satisfaction.

Learn to de-stress. Plan to avoid burnout by developing healthy stress-management

techniques.

Need for the Study

The importance of job satisfaction is obvious because if the employees are

satisfied then the organization can function smoothly, increases its performance and

face competition. Therefore, the organization needs information on job satisfaction of

their employees in order to make sound decisions and to enhance their performance

to high level. Hence, the present study has been undertaken in this direction.

http://www.answers.com/topic/workplace

http://www.answers.com/topic/boredom

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Scope of the Study

The study is confined to PENNA CEMENT LIMITED. The study aims to know

that whether the employees are satisfied with the existing career. This study helps to

make a managerial decision to the company.


1. To study the job satisfaction of employees in PENNA CEMENT INDUSTRIES

LIMITED, Kadapa.

2. To find out whether experience have an effect on job factors.

3. To know the workers option about the employee job satisfaction to them.

4. To suggest the measure for improved job satisfaction of employees.

Research Design & Methodology

The present study is an empirical and Descriptive research includes surveys and fact-

finding enquiry of different kinds.

Sources of Data

1. Primary data

2. Secondary data

Primary Data : Primary data is collected through structured questionnaire.

Secondary Data: Secondary data is collected from records maintained by the

personal department and internet (www.pennacement.com).

Research Instrument

A structured questionnaire was designed and administered for eliciting in primary

information from the sample the sample respondents.

Sampling procedure

Here the researcher follows the non-probability sampling for conducting survey and

in detail sampling procedure is convenience of the researcher time and constraints.

Population: Population includes all the employees working in “PCIL”.

Total population is 850.

Sample Size: sample size was limited

Statistical Tools:

Simple percentage

Weighted average

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1. Limited sample size.

2. The duration of the project was limited.

3. The study is limited to PENNA CEMENT INDUSTRYS LIMITED, Kadapa.

4. The finding of the study cannot be extended to other areas.

1. What is the Response about the support from the HR department?

A) Satisfied B) Neutral C) Dissatisfied

Opinion NO OF RESPONDENTS PERCENTAGE

Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100


2. What is the Response about the support from the HR department?


PARTICULARS NO OF RESPONDENTS PERCENTAGE

Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100


3. Whether the Management is interested in motivating the employees?


PARTICULARS NO OF RESPONDENTS PERCENTAGE

Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100




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4. What type of incentives motivates you more?

A) Financial incentives B) Non financial incentives C) Both

Sl No Particular No. of Respondents Percentage

1 Financial Incentives 15 30

2 Non financial Incentives 9 18

3 Both 26 52

4 Total 50 100


5. Are you satisfied with the present incentives scheme?


Particulars No of Respondents Percentage

Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100


6. How eagerly the company is recognizing and acknowledging employees work?



Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100


7. Whether there is Periodical increase in salary?



Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100




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8. Does the company provide job security?



Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100


9. How do you maintain Good relations with the co- workers?



Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100


10. Does the company fallow Effective performance appraisal system?



Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100


11. What kind of promotional opportunities in present job?



Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100



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12. Are good safety measures existing in the organization?



Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100


13. What type of Performance appraisal activities is helpful to get motivated?

A) Satisfied B) Neural C) Dissatisfied


Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100


14. Is there Support from the co-worker is helpful to get motivated?



Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100


15. Career development opportunities are helpful to get motivated?



Satisfied 29 58

Neutral 21 42

Dissatisfied 0 0

Total 50 100




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16. Which Factors motivates you the most?

A) Salary increase B) Promotion C) Leave D) Motivational talk E) Reorganization

Sl No Particular Number of Respondents Percentage

1 Salary increase 21 42

2 Promotion 15 30

3 Leave 3 6

4 Motivational talk 5 10

5 Recognition 6 12

Total 50 100


17. Incentives and other benefits will influence your performance?

A) Influence B) Does not influence C) No opinion


1 Influence 32 64

2 Does not influence 12 24

3 No opinion 6 12

Total 50 100


18. Whether Management involves you in decision making, which are connected to your

department? A) Yes B) No


1 Yes 47 94

2 No 0 0

3 Occasionally 3 6

Total 50 100


Conclusion

The result of this study shows that the employees are overall satisfied with their job.

They perceive their work as challenging and secure. They feel comfortable working with

their co- workers. Also they get enough resources and support from their superiors. However,

the study shows that the respondents are still demanding on the promotion and compensation

systems in the company. So it is important for managers to take into consideration the results



113

of this study to adjust the work setting to reach full satisfaction and loyalty. Hence reducing

job turnover intention among the employees.

References:

1. Aswathappa K., “Human Resource and Personal Management”. Tata Mc Graw Hill,

2005.

2. P. Subba Rao., “Human Resource Management And Industrial Relations”. Himalaya

Publications, 2004.

3. Edwin B Flippo., “Personal Management”, Mc Graw Hill, in New York, 2003.

4. Rathan Reddy., “Effective Human Resource Training And Development Strategy”,

Himalaya Publication House, September 2012.

****


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………………………………………………………………………………………………......


Vipin Chandra Sharma*

Prof. D. R. Jat**

Prof. Trilok Kumar Jain***

*Vipin Chandra Sharma, Research Scholar, Suresh Gyan Vihar University, Jaipur

**Prof. D. R. Jat, (Retd.) [Research Supervisor], Department of Economic Administration

and Financial Management, University of Rajasthan, Jaipur

***Prof. Trilok Kumar Jain, Dean ISBM, Suresh Gyan Vihar University, Jaipur

----------------------------------------------------------------------------------------------------------------

Abstract

This research paper explores the analysis of leadership practices in two countries India

and USA which have different in culturally and economically. Transformational leadership

behaviors of Indian and USA business leader were measured with the Leadership Practice

Inventory (LPI) developed by Kouzes & Posner (2003) [15] [16] to assess the five leadership

practices. The total population of the survey was 77. This population includes 45 Indian

Business Leaders and 32 USA Business Leaders. The total response received was 59 which

include 33 Indian Business Leaders and 26 USA Business Leaders. The population taken in

the present study is limited to the top level business leaders such as President, Vice-

President, CEO or Managing Director of a large business concern of India and USA.

This research paper will explore the comparative analysis of leadership practices in

these two countries.

Key Words: Globalization, Leadership Style, Leadership Practices, Transformational

Leadership

Introduction

Due to increasing globalization, there will be frequent interaction between workforce

of USA and India, which results the need to undertake the study of cross-cultural behaviour

to assist and guide the managers in organization to meet the new challenge and future aspect

of globalization. These managers need to aware of the impact of globalization in leadership



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practices and to know how to obtain knowledge and skills to respond the opportunity in

diversified culture.

Leadership practices and management methods across the world are diverse in nature.

The leadership practices are influenced specifications dominant in the environment. With the

increased globalization of business and other economic activities cross-cultural awareness

becomes one of the most critical factor in successful business operation. According to

Matviuk (2007)[1], its success depends on the ability of both parties i.e. leader and follower,

to understand and predict their counterparts behaviour. According to researchers (Redpath

and Nielsen, 1997)[5], the cultural differences not only influence the kind of leadership but

also affect the specific leadership action – reaction, behaviour and leadership practices.

Talking about leadership style as well as leadership practices, it is important to explore

the elements of its formation which are not only personal traits and individual behaviours but

also the background culture of the leader (Holt, 1998)[2]. Managers' attitudes, their ways of

doing business and manners of exchanging ideas reflect values and understandings which are

rooted in their own national culture (Brooks, Ian 2009)[7].

Most of the studies performed in this area of research have included middle

management or students of management in their survey of the study. This study is going to be

the first cross-cultural leadership research that will include top level management of high

profile business organizations of both countries.

Review of Literature

Leadership is vision and energizing others to pursue a goal or dream. Management is

focused on results and efficiency. Administration executes through rules, policies, and

procedures[8][9].

Leadership means having a kind if dominance over the activities of group of people to

realize the motive. To execute the leadership task, influence the people under their

supervision and motivate and direct them to achieve the organizational goals and objectives

(Taleghani, Salmani, & Taatian, 2010, p. 92)[10]. Leadership motivates the subordinates to do

their work with zeal and positively to reach the objective of the organization.

According to Punnett[11] “Leadership is one step ahead of management because it not

only develops a shared vision within the group but it also stimulates the others to work on

same path”. The responsibilities of leadership are significant - without a clear vision or push

in the right direction, a company is aimless. (Punnett, 2009, p. 161)[11]. A leader's



116

responsibilities include aligning the rhetoric of the organization with the reality of its

operating environment (Diana Estes, 2012, p. 15)[12]. According to Vicere, the leaders are the

"roots" and "wings" of the company and its goal (Vicere, 2011)[9].

Many researchers[3][4][6][13][14] have done ample work and successes to find different

leadership style as well as different leadership practices with different situations and

conditions. If there is similarity in leadership style but there are considerable differences in

leadership practices in different countries and various cultures, and many researches have

done surveys in the field of leadership in which the relation of leadership style with situations

conditions have been emphasized (Taleghani, Salmani, & Taatian, 2010, p. 92)[10].

Leadership practices and management methods across the world are diverse in nature.

The leadership practices are influenced specifications dominant in the environment. With the

increased globalization of business and other economic activities cross-cultural awareness

becomes one of the most critical factor in successful business operation. According to

Matviuk (2007)[1], its success depends on the ability of both parties i.e. leader and follower,

to understand and predict their counterparts behaviour. According to researchers (Redpath

and Nielsen, 1997)[5], the cultural differences not only influence the kind of leadership but

also affect the specific leadership action – reaction, behaviour and leadership practices.

The analysis of leadership practices between these two countries is based on Kouzes

and Posner's[15][16] LIP. Kouzes and Posner (1987)[15][16] have developed Leadership Practice

Inventory (LIP) to assess the five leadership practices narrated in their Exemplary Leadership

Model, by which transformational leadership behaviors can also be measured. “Self” (self

report) and “Observer” version are the two versions of the LIP test which offers a 360-

degreefeedback.


As shown in Table: 1 as well as analysis of variance of leadership practices, there

exists a significant difference in practices modeling the way (MW) and inspiring a shared

vision (ISV) between Indian business leaders and business leaders of USA. There is no

significant difference in practices challenging the process (CP), enabling others to act (EOA)

and encouraging the heart (EH) between India and USA. The leadership practices directly

reflect on the leadership style of the business leaders.



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Table 1: Mean and SD of Leadership Practices

INDIA USA

Mean SD Mean SD

Modeling the way (MW) 64.31 7.32 79.57 3.95

Inspiring a Shared Vision (ISV) 58.67 6.87 69.38 9.14

Challenging the Process (CP) 70.30 11.14 73.65 13.20

Enabling Others to Act (EOA) 89.82 4.41 88.62 4.39

Encouraging the Heart (EH) 80.43 6.37 78.57 6.10

72.71 11.19 77.96 6.46

Grand Mean 75.33

Grand SD 9.51

(Source: Primary Data Interpretation)

Figure 1: Mean Value Analysis of Leadership Practices between India and USA

(Source: Primary Data Interpretation)

There exists significant difference in leadership practices modeling the way (MW)

and inspiring the shared vision (ISV) but there is no significant difference in leadership

practices challenging the process (CP), enabling others to act (EOA) and encouraging the

heart (EH) in these countries. There is no significant difference in mean and standard

deviation of all leadership practices in India and USA (Table: 1). Also the grand mean and

the grand SD is not significant different from the mean and standard deviation of both

countries (Table: 1).



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Conclusion

One of the categorization of the world is by geography, and one facet of geography is

borders. The world is full of hundreds of countries, and each of their inhabitants has a distinct

way of thought and outlook on life influenced by the region’s history, philosophers, language

and values.

Most of the studies performed in area of research this have included middle

management or students of management in their survey of the study. This study is the first

cross-cultural leadership research that included top level management of high profile business

organizations of both countries.

Inspiring a shared vision is the least frequently used leadership practice in both

countries. This might be because it is probably most difficult practice to master. The

difference between both countries in encouraging the heart is almost insignificant. The

respondents in both countries encourage collaboration and teamwork. As compared to India,

USA respondents are forward in modeling the way and inspiring a shared vision leadership

practices. There is a large deviation from the average in modeling the way and inspiring a

shared vision in Indian business leaders. The study also revealed that there was no impact of

gender, age, educational background and work experience on the usage of leadership

practices.

References

[1] Matviuk, S. (2007), “Cross-Cultural Leadership Behaviour Expectations: A

Comparison Between United States Managers and Mexican Managers” Journal of

American Academy of Business.

[2] Holt, D. B. (1998), " Does Cultural Capital Structure American Consumption?" The

Journal of Consumer Research, Vol. 25, No. 1.(Jun., 1998), pp. 1-25.

[3] Spela, K., (2007), “Comparative analysis of leadership practices in Slovenia and

Portugal”.

[4] Northouse, P.G. (2010), "Leadership: Theory and practice", (5th Ed.) Thousand

Oaks, CA: Sage.

[5] Redpath, L., and Nielsen, M.O. (1997), “A Comparison of Native Culture, Non-Native

Culture and New Management Ideology.”, Canadian Journal of Administrative

Sciences.

[6] Pfeffer, J. (1977), "The ambiguity of leadership. Academy of Management Review", 2,

104-112.



119

[7] Brooks, Ian (2009), "Organisational Behaviour: Individuals, Groups and

Organisation"

[8] Goldsmith, M., Baldoni, J., & McArthur, S. (2010), The AMA handbook of

Leadership, New York.

[9] Goldsmith, M., Baldoni, J., Vicere, A.A. (2011), “The real legacy of leadership:

Aligning rhetoric with reality”, The AMA handbook of Leadership, New York:

AMACON.

[10] Taleghani, G., Salmani, D., Taatian, A., (2010), “Survey of leadership styles in

different cultures”, Iraniam Journal of Management Studies.

[11] Punnett, B.J. (2009), “International perspectives on organizational behaviour

and human resource management”, Armonk, NY: M.E. Sharp.

[12] Diana Estes, (2012), “An Analysis of Korean and American Leadership Styles

in Business”

[13] Jago, A.G. (1982). “Leadership: Perspectives in theory and research.

Management Science”, 28(3), 315-336.

[14] House, R.J., Hanges, P.J., M., Dorfman, P.W., & Gupta, V. (2004), “Culture,

leadership, and organizations: The GLOBE study of 62 societies”, Thousand Oaks,

CA: Sage Publications.

[15] Kouzes , J.M and Posner, B.Z. (1987), “The leadership challenge: How to get

extraordinary things done in organisations”, San Francisco, CA: Jossey-Bass.

[16] Kouzes , J.M and Posner, B.Z. (2003), “Exemplary leadership”, San

Francisco, CA: Jossey-Bass.


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………………………………………………………………………………………………......

Education of Girls in Conflict Zone – A Survey Study in Srinagar

(J&K)

Nafees Fatima*

Trilok Kumar Jain**

*Nafees Fatima, Research Scholar in Suresh Gyan Vihar University, Jaipur

** Prof Trilok Kumar Jain is research supervisor, Dean (Faculty of Management), Director

(Distance education), Principal (Academic Staff College) in Suresh Gyan Vihar University,

Jaipur

--------------------------------------------------------------------------------------------------------------------

Abstract

It is a survey study of Conflict Zone and tries to study the effect of the conflict on education of

women. This study has been carried out in two schools in Jammu and Kashmir Region in India.

The researchers have found that there are inadequate measures for counseling of students. The

researchers found that education is most affected due to strikes, protests, conflicts and other

such incidents. The survey revealed that insurgency, corruption and poor governance are

considered to be the most important reasons for conflicts and problems. The most important

impact of these conflicts is on education. Girls are most affected by these conflicts. Education of

girls is affected the most. The researchers have tried to present their suggestions for

improvement of education of girls on the basis of this study. This study brings to light the factors

relating to women education for education and development of conflict affected regions.

Keywords: Sustainable development, SDG, MDG, peace, education, prosperity, conflict, war,

children, democracy

Introduction:

Conflict refers to war, insurgency, disturbance or other such occasions which disturbs the

normal life. Education of girls and boys is affected due to conflicts due to situations under

difficulties (for example the recent situation in Jammu and Kashmir). The impact is generally

more on education of girls. Boys are sent to schools, but due to insecurity and due to traditional

taboos, girls are kept in the home and not allowed to go out during conflicts. Whenever conflicts



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are there, there are atrocities on girls and women, who are also most affected due to the resulting

stress and strain out of the situation. Jammu and Kashmir is the northern-most state of Indian

union bounded by China in the north and east, Afghanistan in the northwest and Pakistan in the

west. In the south the state touches the boundaries of Himachal Pradesh and Punjab.

Geographically the state of Jammu and Kashmir is divided into three distinct regions; Jammu,

Kashmir Valley (summer capital) and Ladakh. Jammu being the winter capital of Jammu and

Kashmir State, nestling in the foothills of Himalayas, is important not only because of its

administrative status, but also because of it being the city of temples and the base camp to Shri

Mata Vaishno Devi Cave Shrine which is located in Trikutta Hills (Outer Himalayas).

Throughout the year there is huge inflow of pilgrims and tourists in the city of temples.

Table 1.1: State Profile (Census of India, 2011)

Jammu and Kashmir State Education Profile - “ As per census report of 2011, though state of

Jammu & Kashmir stands at 23rd place among Indian states with over all literacy rate 68.7% .

The percentage of literacy rate of the state as per the census report of 2001, was 55. 52%. It

clearly shows that the state of Jammu and Kashmir has increased the literacy rate by 13.18%”

Population 12,548,926

Percentage of male population 53.94%

Percentage of female population 46.89%



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Literacy Rate 68.74%

Male Literacy Rate 78.26%

Female Literacy Rate 58.01%

Female Population 47.16%

Urban Literacy Rate 68.75%

Rural Literacy Rate 53.61 %

All India Average Literacy Rate 74.04%

Number of Primary Schools 14171

Number of Upper Primary Schools 6665

Number of High Schools 1194

Number of Higher Secondary Schools 597

Number of Sainik Schools 02

District Institute of Education (DIETs) 22

State Institute of Education (SIEs) 02

Number of KGBVs 79

1.1 Rationale of the Study

Conflict has been a feature of human society since the time immemorial which affects overall

development of society as well as of the human being (Murshed, 2002). During the armed

conflict women and children are worst affected and victimized. It is one of the reasons that

transform the lives of millions of children and women. Girls suffer from malnutrition,

psychological problems and lack of education which is seriously affecting the child

development and well being.

Education is considered to be an essential tool for human development; empowerment and

poverty eradication. It is instrument for upward mobility and ultimately succeeds fully in life.

After home, school is best place to impart education and it also represents miniature of social

world. Besides the formal educative values that a school imparts, this agency of knowledge

instills upon a child the value of socialization, provides a safe environment and grooms one to

be a better citizen. Thus, schools are vital in protecting children and supporting their emotional

and social development by giving them comfort, security, and opportunity. The routine of

school develop a sense of normality and the environment is one in which children are allowed to



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be children. In situations of armed conflict, women’s education becomes a serious casualty.

Hence, even in situation of conflict, it is important to carry out on educating women and young

people, irrespective of the circumstances. Education protects women from the most damaging

aspects of conflict and plays a significant role in building peace, restoring countries to a positive

development path and breaking the cycle of violence.

Recognizing the importance of education at the time armed conflict the summary note of The

United Nations High Commissioner for Refugees (UNHCR) “Strategy and Activities

concerning Refugee Children” (2005) has identified five main global priority for the protection

of children in emergencies where education is one of them which states that Education is crucial

for refugee girls and boys from the onset of an emergency, since:

Going to school, brings stability and security back into the lives of children affected by armed

conflict and displacement.

Education, by providing a potential “safe place”, may shield children from dangers such as

child labor, military recruitment or sexual exploitation, abuse or violence, and may prevent

teenage pregnancies and HIV infection while registration as a student also allows for follow-up

and monitoring.

Education enables children to gain the social skills development of childhood and provides

them with the hope of a better future.

Education as a right in term of access to school should be maintained at all times, even in the

most difficult circumstances and not neglected during times of conflict. Girls rarely get a second

chance at education. Where the opportunity of education has been lost due to conflict, it is not

just a loss to the individual, but also a loss of social – cultural capital and the capacity of a

society to recover from the conflict. Even in situations of armed conflict, it is important to carry

on educating girls and women, no matter how difficult the circumstances. All possible efforts

should be made to maintain education systems during conflicts. Inequalities in educational

access can lead to other inequalities – in income, employment, nutrition and health as well as

political position, which can be an important source of conflict.

The provision of education is a means of providing protection, a ‘normal’ life, social support

and opportunities for the future. Many developing countries struggle to provide an adequate



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education system during peacetime; during times of violent conflict, the disruption to the

education system makes this even more difficult. This leads to lack of resources for good quality

education, low attendance rates, additional pressure not to ensure that girls go to school and

other difficulties (Roger Williamson, 2007:10).

It is also found that the conflict issues, problems or proposed solutions for educating children

affected by conflict, are largely absent from educational planning documents, international

conferences on education, and debates about education for all. An urgent and effective action

need to be taken in order to achieve the target of education for all. Thus the proposed study will

provide a picture of conflict issues, problems in accessing the education of women in the

Srinagar district of Jammu and Kashmir State.

Education must be regarded as an integral part of the response even during conflict. This study

endeavors to create an understanding of the links between conflict and education. The study will

look upon the socio-cultural, political and historical factors of the conflict and how it’s affecting

the status of education for women in the Srinagar sector of Jammu and Kashmir. It is also

expected to help in improving and reforming the education system for achieving better quality

and equity.

Due to armed conflict the adolescent mental health is being affected which has also bearing on

their academic performance. The study will also explore the academic facilities for women

staying in the conflict sector of Srinagar in Jammu and Kashmir. This study will able to help us

in knowing how conflict situation has influenced the education of women who are on the crucial

phase in the academic journey.

For the study one district Srinagar is selected. Srinagar district often experiences curfews as it is

the also the summer capital of the state and the district experience armed conflict at varying

level of intensity. Based on school management government and private school is taken into

consideration as they have girls enrolment.

In the post cold war, the sense of urgency to address conflict and education extends beyond

individual humanitarian efforts, to a broader necessity to develop and understand best practices,

to investigate ways in which education systems can contribute in peace building. It’s time to



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address the complex dimensions of women affected by armed conflict in more comprehensive

way.

The proposed research study will be focused towards answering the following questions:-

1. What is the status of secondary education for girls in Srinagar Sector?

2. What are the factors of armed conflict as perceived by Secondary Grade Girls student,

teachers, parents, Principal and Education Officers.

3. Do the secondary students face access related problems in Education during conflict

situation?

4. What are the roles of Principals, teachers and education officers in managing the

education at the time of conflict situation?

5. What are the government initiatives for provisioning of school education during

conflict?

6. How the mental health, academic stress and academic outcomes of the secondary

students is affected during the conflict situation.

1.7 Statement of the Problem

Education of Girls in Conflict Zone – A Study in Srinagar Sector of Jammu & Kashmir

1.8 Objectives

1. To study the factors of conflict as perceived by the girl students, principals, teachers,

parents and education officers in the Srinagar District of Jammu & Kashmir.

2. To study the access related problems during conflict by girl student, principals, teachers,

parents and education officers in the Srinagar District of Jammu & Kashmir.

3. Consequences of conflict on school education as reported by the respondents.

1.9 Hypothesis

1. There will be different factors of conflicts according to the perceptions of Xth Grade

students, Principals, Teachers, Parents and Education Officers in Srinagar district of Jammu

and Kashmir.

2. There will be difference in the status of Secondary education specifically the

enrollment of girls and boys ration due to conflict.

3. There will be access related problem in secondary education during conflict by girls.



126

4. There will be difference in the role of Principals, Teachers and Education Officers in

managing girls school during conflict situation.

5. There will be different government initiative for provisioning of school education

time to time.

6. There will be differences in the health and academic stress and academic trajectories

in girl students in government and private and government schools.

1.10 Delimitations of the Study

The study is limited to two schools (One Private schools and one government schools) from

Srinagar district. Stratified Random sampling technique was applied. Total of 02 principals,

14 teachers, 87 Students,10 parents and 02 Education officer were selected.

2 Review of Literature

This chapter examines some of the published research work, documents, reports and articles

in the field of various types of conflict and education of women.

2.1 Conflict in Jammu and Kashmir – a historical perspective

The residents of Kashmir have often been called ‘prisoners in heaven’ (Ganai, 2008). They

are prisoners of one of the world’s longest interstate conflicts, juxtaposed to an exquisite

environmental setting. The ongoing strife has cost over 70,000 Kashmiri lives and played a

major role in the underdevelopment of Kashmir (Schofield, 1997). In light of this conflict

between Pakistan and India, especially as compounded by the 2008 summer riots, it is now

more important than ever that the turmoil surrounding Kashmir be addressed. Social services

from the State, including education, have been greatly affected by this conflict (Jammu &

Kashmir Development Report, 2003). It can be argued that until these issues are resolved, the

politically precarious situation of Kashmir will be prolonged even further. History has shown

that conflict arises when the majority in Kashmir is ignored and deprived of equal access,

opportunities, or a political voice (Rai, 2004). Therefore, it is in the best interest of policy

makers to ensure equal and adequate educational, political, and economic opportunities for

Kashmiris. This paper provides an overview of educational development in Kashmir, both

historically and currently, in the context of the political conflict. The scope of this paper has

been narrowed down to the Indian State of Jammu and Kashmir, and not the Dogra Kingdom

of Jammu and Kashmir, due to access to reliable data. A comprehensive examination of the

entire State of Jammu and Kashmir, or the Dogra Kingdom of Jammu and Kashmir,

disregarding the Line of Control between Indian and Pakistan administered Jammu and



127

Kashmir, would be ideal. However, circumstances did not allow this research to manifest. By

highlighting educational development in Indian administered Jammu and Kashmir within a

historical framework, the patterns of conflict are contextualized. This paper seeks to address

the lack of comprehensive and unbiased information regarding educational development in

Kashmir, in hopes to begin a dialogue that centers on the people of Kashmir, rather than the

political interests of the two nuclear nations of Pakistan and India. In order to address the

issue of educational development in Jammu and Kashmir, it is important to define the

vocabulary used in this analysis. Jammu and Kashmir (“JK”) is the Indian administered State

of Jammu and Kashmir. Kashmir is defined as the Muslim-majority Northern valley of the

Indian State of Jammu and Kashmir (Habibullah, 2008). Educational development is defined

as the systematic efforts to improve the education system in Kashmir in order to support

broader socio-economic development. The term ‘Kashmiri Pandit’ is interchangeable for

‘Hindu’, as most Hindus in Kashmir belong to Hinduisms Pandit caste (Mir, 2003). A

clarification of all of these terms is necessary, especially to aid those who are not familiar

with the region.

2.2 Women in Conflict Situation

“In the Kashmir Valley and the hill districts girdling it, 1989-90 saw a popular upsurge for

self-determination which brought women, men, and children out on the streets raising the cry

for azadi. Within the mass popular protest was the undertow of a fledgling armed militancy.

The Indian state retaliated with severe repression and military force. In the ensuing armed

conflict, an estimated seventy thousand people have been killed, more than two thousand

have ‘disappeared’ or are in illedal detention. There are fifteen thousand widows and

thousands of half widows of the disappeared. A generation has grown up which has known

nothing other than armed conflict. The social capital of Kashmir has been destroyed as

multiple armed agencies are at large with little or no accountability. More than half a million

people have been displaced. “ (Manchanda, Rita. Kashmiri Women and the Conflict: From

Icon to Agency. In Aparna Rao (Ed). The Valley of Kashmir. Manohar, 2008.)

2.3 Relationship of Conflict and Education

Attacks on education occur most often in conflict – affected areas and involve use or threat of

force in ways that disrupt and deter provision of good quality education and are actively

harmful to well-being. The opportunities such as learning and development are in jeopardy

for many women living in conflict zone.



128

Risser (2207) studied “The impact of conflict on women in southeast Asia”. The report has

provided an overview of the many ways in which conflict has negatively affected women in

Southeast Asia. The most dramatic impact on women during conflict does to the health of

women, psycho-social well-being, access to education, and their families’ livelihood assets is

frequently excessive. One of the most obvious impacts on education was to schools. Schools

are often target of attacks and also used to house the displaced in several locations. Thought

the devastation of structure is one of the most visible signs of impact on the education

system, teachers and other education personnel also ended up affected by the conflict.

Shemyakina, Ogla (2006) studied “ The effect of conflict on accumulation of schooling :

results from Tajikistan” to understand the impact of internal civil war on school enrollment

and completion of mandatory schooling by girls. Based on data the researcher compared

educational attainment of groups of individual who were exposed to the conflict and group

who did not. The result showed that there is strong negative relationship between the

exposure to conflict and school enrollment of girls. The finding explained that at the time of

conflict, households facing uncertainty were more inclined to invest in the education of the

boys as the expected return on investment in education of girls is lower. The exposure to

conflict had a large, negative and lasting effect on the education of girls who were of school

age during the conflict and lived on the conflict affected areas.

The report of Save the Children – rewrite the Future : Education for the Children in conflict

affected countries (2006) stated conflict inevitably affects the quality of education, and poor

quality is still one of the main reasons why children do not go to school or why they drop out.

As per the report today 43 million children are out of school in conflict – affected states. For

example, more than five million primary-aged children (6 – 11 years) are out of school in the

Democratic republic of Congo (DRC), and more than six million 12-17 year olds have never

been to school. In Darfur, in northern Sudan, only 39 per cent of primary – aged children are

enrolled in school and in southern Sudan the education enrolment rate is just 20 per cent, and

out of those, only 2 per cent complete primary education. In northern Uganda, 70 per cent of

children who enrolled in grade one do not complete primary school, and in Angola, poor-

quality teaching – and learning – are behind the 27 per cent of children who have to repeat

years. Keeping children in school is perhaps the biggest challenge. As situations deteriorate

and there are fewer qualified teachers, teaching methods are likely to become less effective.

The longer conflict continues, the more difficult it becomes to sustain funding and

administrative support for education. As the conflict continues for a longer period it becomes



129

to sustain funding and administrative support for education. It becomes increasingly difficult

to hold national level school – leaving examinations, resulting in incomplete or unaccredited

years of education.

3. Research Methodology

The present chapter deals with the procedure that had been followed in conducting the study,

the methods and procedures adopted for the selection of the sample for data collection,

organization of the study and the methods used for analysis of the data.

3.1 Title of the Study

Education of woman in conflict zone in Srinagar sector of Jammu and Kashmir

3.2 Population of the Study

The populations of the study include Principals, Teachers, Students, Parents and Education

Officers in Srinagar.

3.3 Sample and Sampling Procedure

In order to conduct the study the sample was selected from the population of two schools

(One Private schools and one government schools) from Srinagar district. Stratified Random

sampling technique was applied. Total of 02 principals, 14 teachers, 87 Students,10 parents

and 02 Education officer were selected.

3.4 Research Design

The propose study titled “Education of Girls in conflict zone – A Survey Study in Srinagar

sector of Jammu and Kashmir” is a survey research in nature. Both quantitative and

qualitative approaches were used.

3.5 Procedure followed for the Study

The researcher approached the Director of Department of Education, Srinagar seeking

permission for data collection from the selected school as well as to have an interview with

other Education Officials. The director spoke to the Education officer and informed to assist

researcher with the requirement of the study. An appointment with the Education Officer and

with other officials was held to conduct the interview.

Researcher visited Srinagar district and collected data from the government and private

school. With the permission of Principal of the School, questionnaires were distributed to the

teachers and students. The questionnaire for principal, teachers and students were filled up

and completed on the same day. For the questionnaire of the parents, it was given to selected

students and collected on the next day.



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3.6 Research tools

The researcher used the following tools for data collection.

1. Questionnaire

2. Interview

1) Questionnaire

A different set of an open ended and structured questionnaire was prepared for Principal,

Teachers, Students and Parents which includes demographic information and questions

related to concerned issues. The demographic information was collected to inquire about

the background information and socio- economic status of the respondents. For the

Principal total number of items in the demographic information is 8 and teachers have 15.

Information related to their age, gender, religion, caste, educational qualification,

teaching experience, name of the school, type of the school, year of joining in the present

school, area of specialization, pay scale, gross salary were collected in the demographic

information.

The questionnaires of the student were divided into two sections. The first section consist

of demographic profile which includes information related to age, gender, name of

school, type of school, type of family, total member of family, parents education, parents

occupation, family annual income, distance of school from home, mode of transport,

medium of instruction in school as well as their scored percentage in annual examination

from class VII up to class IX. Second section of the questionnaire includes all the

questions related to perception about armed conflict.

2) Interview

Interview was one of the methods for collecting the data needed for understanding the

study. For this purpose researcher chosen one education officer such as zonal education

officer. Semi- structured interviews were used both in open ended and close ended

questions. The interview was conducted to understand factors responsible for armed

conflict and its impact on school functioning and management at local level from the

point of education officials.

3.7 Analysis of the data

The data were analyzed based on content analysis and descriptive statistics as mean,

standard deviation, and reliability.



131

4.Data Findings, Data Analysis and Results

Findings from the data collected through various tools with the respondents such as Students,

Principals, Teachers and Education Officer as mentioned in design of Study are as under.

Section I

Table 4.1 Political Factors leading to armed conflict as perceived by respondents:

Respondent Factors Frequency Percentage

Students (N-87) Insurgency

Corruption

Poor Governance

Law and Order Problem

Inefficiency of Political Leader

AFSPA

35

20.5

11

8.5

5

4

20.1

10.2

6.7

4.8

2.8

2

Teacher (N-14) Insurgency

Corruption

Poor Governance


Inefficiency and Political Leader

AFSPA

7

2.5

5

4

1.5

1

25

9

17.75

12

5

3.5

Principal (N-2) Insurgency

Corruption

Poor Governance



AFSPA

2

1

1

1

2

1

25

12.5

12.5

37.5

25

25

Parents (N – 10) Insurgency

Corruption

Poor Governance



AFSPA

4

3

2.5

2

2

1

20

15

12.5

10

10

5

Education Officer (N – 2) Insurgency

Poor Governance

2

2

20

20



132

According to all the respondents the main factors of political conflict in the state is due to

insurgency. As per the students 50% of them has stated insurgency as the main factor

followed by corruption with 10.2%, poor Governance with 6.7%. The other reasons stated by

the Students are Law and Order Problem (4.8%). Inefficiency of Political leader (2.8%),

AFSPA (2%). Similarly 50% of the teachers also mentioned insurgency as one of the main

political factor of the conflict followed by poor governance and law and order problem. But

for the Principals the main factor of political conflict is not only the Insurgency but also the

Inefficiency of Political Leader followed by Corruption, Poor Governance, Law and Order

and AFSPA. Out of 10 Parents, 20 % of them stated insurgency as main factor of Political

Conflict and 15% as corruption. For the Education Officials of the sate insurgency and poor

governance equally with 20% each are the main factors.

Table 4.2. Socio Factor leading to armed conflict as perceived by respondents:-

Respondent Factors Frequency Percentage

Students (N-87) Lack of education

Lack of Unity

Social Discrimination

Increase in social crime

10

6.5

2

12

5.7

3.7

2

6.5

Teacher (N-14) Lack of education

Lack of Unity



1

1

4

2

7

1.5

1

1

Principal (N-2) Lack of education

Lack of Unity



1

1

1

1

12.5

12.5

12

10

Parents (N – 10) Lack of education

Lack of Unity



1

1

1

1

2.5

2.5

2.5

2.5

Education Officer (N – 2) Increase in social crime 1 10

From the above table it can be stated that as per students the main factor of social conflict is

due to the increase in social crime (6.5%) within the state of Jammu and Kashmir followed



133

by lack of proper education. Other factors that lead to social conflict are lack of unity and

social discrimination. According to the teachers the main factor is lack of education with

highest 7 % followed by lack of unity among the people and ignorance. Similarly all two

principals stated that ignorance, disharmony and killing of innocent civilian do lead to social

conflict in the state and Majority of the education officials also stated increase of social crime

as one of the main factor of social conflict in the state.

5 Implications, Findings, recommendations and Conclusion

5.1 Some of the Factors Which Impact Women And Girl‘S Education During

Conflict

1. When schools are destroyed, and children have to travel long distances, girls are more

likely to stay at home, as they may be at increased risk of abduction, sexual violence

and exploitation. Furthermore, boys are able to go out and engage in income-

generating activities to give their family financial assistance.

2. Girls who are separated from their families and live with relatives may lack the

support and encouragement to continue their education and are expected to do

household tasks.

5.2 Findings

1. A major drop in the attendance of girl students during conflict situation.

2. In the villages, family sizes are large while very few earning members.

3. Girls provide the much needed helping hand to their mothers in their household

work.

4. Preference for higher education is given to boys as they can go out to peruse higher

studies.

5. Preference is also given to boys due to financial factors.



134

5.3 There is Access Related Problems during Conflict

1. Activities related to education are largely affected by the frequent bandhs, general

strike. Majority of the students of both government/ private schools are unable to

attend their schools due to frequent school closure.

2. Teachers are unable to cover syllabus and rush through the chapters. Access to school

is also a problem of teachers and Principal.

3. A decline in the attendance of students and teachers is seen and postponing the

examination dates hampers the school management.

5.4 There will be differences in the role of Principals, Teachers, Parents and

Education Officers in managing the school education during conflict situation.

1. Principals are motivators for the teachers and teachers should be motivated to be

regularly taking classes. They should be encouraged to take special extra class.

2. To tackle the problem of teacher absenteeism principals should always have substitute

teachers to take the class.

3. As for education officers the main role is to put an effort to deliver quality and

continuous education as well as to increase access to education.

5.5 There are different government initiatives for provisioning of school education

from time to time.

1. The finding revealed that state government is not taking up initiatives to resolve the

conflict and to protect education during the conflict.

2. Almost all the respondents are not happy with the current conflict situation.

3. No counselor is appointed by the school who can counsel parents and girl students.

5.6 Recommendations

1. To achieve quality education, frequent bandhs and general strikes must be stopped and

education institution should be made free zone where children can freely access and

complete school.



135

2. Steps must be taken to ensure immediate restoration of peaceful academic atmosphere in

the state. An appeal should be made to make education a free zone in order to allow the

educational sector of the state to flourish.

3. When the forces occupy schools, children’s lives are put in risks. Seeing the uniform

military forces with guns will also affect the women, children and their mental health as

it might create fear and anxiety among the students.

4. The Supreme Court has ordered to remove all the military from schools. Schools must be

protected.

5. Efforts should be made to hold dialogue with the agitating organizations. Initiatives of

dialogues and reconciliation between the government and these groups should be

initiated.

6. Capacity building should be taken up for government officials, teachers and principals.

7. Measures should be taken to encourage regular attendance. It can be achieved by

building more and more boarding schools for girls.

5.7 Conclusion

In situations of armed conflict, it is important to carry on educating children and young

people, irrespective of the circumstances. Education protects women and children from the

most damaging aspects of conflict and plays a significant role in building peace, restoring

countries to a positive development path and breaking the cycle of violence.

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