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Research Zone India - 1, Vol. I(1) Dec.- 2012 (1)

Education

Research Zone India - 1, Vol. I(1)

Dec.- 2012 -2

ISSN No.

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* * *


Education


Dec.- 2012 -9

ISSN No.

CONSTRUCTION AND EFFECTIVENESS OF YOGA EDUCATION

PROGRAMME FOR SECONDERY SCHOOL STUDENTS

Dr. Jayant Vyas* & Dr.Tarika Gohil**

* Associate Professor, Department of Education, M.K. Bhavnagar University, Bhavnagar

** Research Scholor Department of Education, M.K. Bhavnagar University, Bhavnagar

Introduction

The common man lives in Annamaya

(Food is the ultimate truth), Pranamaya (Vital

air the ultimate truth) and manomaya (Mind is

the ultimate truth) cell. There is unconscious

ability to be lived by the human beings, but it

cannot be known by the common man and the

human beings lose their life before knowing the

ability. The Yoga is the key to achieve the dreams

dreamt by the human beings. Today everybody

wants goodwill of health and it can be got by

exercising Yoga. In the primitive era, Indian

ethics have shown four strive (Purushartha): (1)

Dharma (Duty), (2) Artha (Work), (3) Kama

(wish) and Moksha (Salvation). In these four

strive (Purushartha), Moksha (Salvation) is the

best to achieve. Yoga can achieve all the strive

(Purushartha). Curiosity about yoga can be seen

increasing in the whole world. The sages of India

have done Tapascharya for so many years and

whatever they had got in Samadhi state has been

known as ‘Yoga’. Thus, the Yoga is the valuable

gift of the Indian sages to the world.

We accept that we can realize the

material world around us by our senses. But it

is not the whole world. There is world beyond

the reach of materialistic world. It’s a belief that

world which cannot be seen by the normal

senses realized by the Yoga.

The ultimate path to become stress free

in the noisy world is one and only Yoga. The Yoga

has spread all over the world from the peaceful

prosperity of the forest. What is the importance

of the Yoga with the reference to international

background can be known by the medium of

internet (Research on Yoga in Education, Parrot,

nd). The Indian Government is also working for

the spread and expansion of the Yoga.

Yoga is the source not only of man

building but also of the nation building. Yoga

both builds the personality of the man and

makes the person expertise in physical, mental,

emotional and all round development. Yoga

brings the different vision in looking at the truth.

The Yoga helps the person to work in

reality, to do continuous work, to change the

problem, challenge and hardships into an

opportunity. The Yoga helps to be conscious in

self building and nation building. The Yoga gives

peace, prosperity and health. Thus, the Yoga

helps both self and the nation.

The Yoga is not the superstition or a

tradition but validated on the basis of science.

It has seized the attention of many interested

researchers all over the world. There are four

Yoga Institute are running in the India by the

support of UGC. The Yoga has spread its wings

in the modern world.

The major function of the Yoga is to fill

in the vacuum in the modern education. The

major aim of the education is not the collection

of the information but the manifestation of the

perfection of human being. The Yoga helps to

cultivate the personality building in four stages:

practical ability, mental determination, physical

ability and humane approach. The foretold

aspect should be the main aim of the education.

Many researchers have been undertaken to

prove the former aim of the education and it is

proved that by exercising regular and systematic


Yoga, mental ability, listening ability, readingability, memory ability and innovative ideas canbe developed.

When the mental stress enters the body,it comes out as dieses. The main aim of the Yogais to control the diseases. The Yoga fosters peaceto the stressed, worried and frustrated people.Yoga can be considered an instrument by whichclear and continuous ideas can be cultivated.Yoga helps to those who want to bring out thebest particles from within the self.

Yoga has contribution in couple of field:(1) Health and (2) Education. The Yoga has beenspreading from the India to Internationalplatform since last some decades. The Yogaeducation has been getting the internationalattention. The Yoga education has been alsogetting the vital importance in the dignified fieldsuch as medical, management etc.

In secondary education, enoughimportance has been given to the Yoga educationin the syllabus. As the student gets on the higherclasses, the development in the Yoga exercise canbe noted. The aim of the education is the healthymind in the healthy body. The base of the Indianeducation is the the education of the soul withthe education of the body. Dr. Radgakrishnan,Vinoba Bhave, J. Krishnamurthy, RavindranathTagor and Mahatma Gandhi had given theimportance to the Yoga as a progress of the soul.A report related to education, “The TreasureWithin” had also emphasized to the internalpersonality development. We can thus get theideas of how the Yoga education is importantnow a day. More over the researcher ishabituated to the Yoga. The researcher had gotnational and international achievement in Yogaduring the graduation and post graduationstudies in Bhavnagar University. The researcherhad thought to work on this subject by keepingin view the international importance of Yogaeducation and the interest in the field. For this,the researcher had used the model, physical skilleducation based on internal and externalsituation, given by renowned educationalpsychologist and educational technologistRobert M. Gagne (Gagne, 1977 and Donga, 1995).The researcher had used the model, constructedthe programme and checked its effectiveness on

the basis of the curriculum of Yoga Education in

the secondary high school.

Moreover, in the fifth survey of

educational research, none research as such was

carried out in the physical and health education

section. Study on nutrition education by play way

method to adolescence was noted.

Bridge and Madlem (2007) has carried

out the study on the Yoga and Physical education.

The experiment was carried for to increase the

self respect. The students who were studying

Yoga and physical education of eighth standard

were selected as a sample. The major outcome

of the study was the self respect can be increased

by Yoga and physical activities. Some researches

regarding the Yoga education were seen on the

internet. Related research had played the vital

role for the selection of the research problem.

Objectives of the Study:

1. To construct the programme for the

students of secondary school based on the model

of Yoga Education of Gagne.

2. To study the effectiveness of the

constructed programme on the students of

secondary school.

3. To study the effect of the gender with the

Yoga education programme.

4. To construct the separate Yoga

Education programme regarding included Yoga

exercise in the curriculum of each for the

students of 8th and 9th standard

Hypothesis of the Study

1. There will be no significant difference

between the mean score of pre-test and post-

test of the programme constructed for Yoga

education for the 8th standard students.


between the mean score of pre-test and post-

test of the programme constructed for Yoga

education for the 9th standard students.


between the mean score of male students and

female students of the programme constructed

for Yoga education for the 8th standard students.


between the mean score of male students and


female students of the programme constructedfor Yoga education for the 9th standard students.5. There will be no significant differencebetween the mean score of pre-test and

retention test of the programme constructed forYoga education for the 8th standard students.6. There will be no significant differencebetween the mean score of pre-test andretention test of the programme constructed forYoga education for the 9th standard students.

7. There will be no significant differencebetween the mean score of male students andfemale students of the 8th standard students onretention test of Yoga exercise.8. There will be no significant differencebetween the mean score of male students and

female students of the 9th standard students onretention test of Yoga exercise.

Delimitations of the Study

1. In the present study, Yoga exercisesincluded in the curriculum of 8th standard were

included. They are as under:(1) Tadasana, (2) Utkatasana, (3)Yagamudrasana, (4) Bhunamuna vajrasana, (5)Pashchimotasana, (6) Ardhamatsyendrasana,(7) Ekpada Shirasana, (8) Utanpadasana, (9)Sarvangasana, (10) Matsyasana, (11)

Chakrasana, (12) Bhujangasana, (13)Shavasana, (14) Salbhasana, (15) Makrasana2. In the present study, Yoga exercisesincluded in the curriculum of 9th standard wereincluded. They are as under:(1) Vrukshasana, (2) Padhstasana, (3)

Trikonasana, (4) Dhanurasana, (5)Pavanmuktasana, (6) Tadasana, (7)Chandrasana, (8) Shavasana3. In the present study, male and femalestudents of 8th and 9th standard were included.

Importance of the Study:

1. In the present study, Yoga Educationprogramme was constructed using the model ofrenowned educational psychologist andeducational technologist Robert Gagne based oninternal and external situation required for

physical education skill2. The programme on Yoga education hadbecome available for secondary education.

3. The programme was revised with thereference to the gender. Thus, the relation ofgender with the effectiveness of the Yogaeducation was checked.

The Operational Definition of the Words

Yoga Education Programme. YogaEducation Programme is the programmeconstructed as a part of the research on the basisof the model given by Robert Gagne for the Yoga

exercises included in the textbook, Yoga, Healthand Physical Education of 8th and 9th standard.Pre-test. Achievement test of Yoga educationbased on the Yoga exercises included in the yogaeducation programme means pre-test. Pre-testwas constructed separately for 8th and 9th

standard. The type of the test used wasperformance test.Post-test. Achievement test after the teachingof respectively each yoga exercises of Yogaeducation based on the Yoga exercises includedin the yoga education programme

Retention Test. The test which was given lastday after the completion of the Yoga educationprogramme including all the Yoga exercisestaught throughout the programme to thestudents of 8th and 9th standard. It wasperformance base test. Each standard had been

given the separate test.

Experimental Group

In the present study, there were fourexperimental groups.Experimental group-1: the male students of 8th

standard.Experimental group-2: the female students of 8th

standard.Experimental group-3: the male students of 9th

standard.Experimental group-4: the female students of 9th

standard.

Research Design

Universe

The universe of the study was the students of 8th

and 9th standard of the Gujarati medium schools.

Sample Selection

In the present study, the researcher had selected


respectively the boys’ high school and girls’ high

school which was in the one campus or nearer

campuses handling by same trust . For this, the

researcher had selected Kumarshala and

Nandkuvarba Kshatriya Kanya Vidyalaya. The

researcher selected respectively 30 boys of 8th

standard and 30 boys of 9th standard from

Kumarsha and 30 girls of 8th standard and 30

girls of 9th standard from Nandkuvarba Kshatriya

Kanya VIdyalaya. Thus the sample was made of

120 students. The method of the sampling was

subjective technique keeping in view the

necessity convenience in the experience.

Construction of Groups

In the present study, one random group

pre-test post-test design was used as an

experimental design. For this, 30 boys and 30

girls from 8th standard and 30 boys and 30 girls

from 9th standard were selected randomly after

the selection of the schools. The effect of the

experience was checked on randomly selected

four groups. Firstly, the experiment was carried

out on the boys of 8th and 9th standard. The

experiment was revised on the girls of 8th and

9th standard.

Method/ Design

In the present study, the design of

research was as under.

Research Design

Creating Familiarity

Pre-test

Application of the Programme

Post-test after competing each Yoga exercise

Retention Test after Completing Whole

Programme

Construction of Material/ Yoga Education

Programme

To construct the Yoga education

programme was the major objective of the

research. The researcher had selected one from

1. Verbal Presentation

2. Pictoria l Presentation

3. Demonstration

4. Rememorizing sub skills and rememorizing

performance ma nager technique

5. Pra ctice and Drilling

many techniques to teach the Yoga exercise to

construct the yoga education programme. In

the present study, Yoga Education programme

was constructed using the model of renowned

educational psychologist and educational

technologist Robert Gagne based on internal

and external situation required for physical

education skill. The model was distributed in

six different steps.

Steps

The programme was constructed on the

basis of the six steps mentioned above. For

example.

Standard- 8

1. Tadasana

1. Verbal Presentation

In the beginning, the researcher had given the

information about how this exercise should be

carried. The researcher had given the

information and advices in the group.

I. Stand tightly holding both the leg

together.

II. Keep both the hands in line of shoulder

breathing in.

III. Keep both the hands up on the line of

head breathing in.

IV. Straighten hands towards the head and

pull the body on toe while breathing in. last until

strength lasts and breathe out.

2. Pictorial Presentation

The exercise which was to demonstrate was

presented respectively sub skill wise by the

researcher using power point presentation.


3. Demonstration

The yoga exercise which was to teach the

students was demonstrated by the researcher

sub skill wise.

4. Rememorizing sub skills and

rememorizing performance manager

technique

The researcher had asked some

question and tried to get the answer to know

the sub skills demonstrated by the researcher

have been understood by the students or not. So,

the researcher had asked the question to know

could the student rememorize sub skills and

performance manager technique.

I. How many sub skills Tadasana have?

II. Which was the first sub skill?

III. Tell all the sub skills of Tadasana

respectively.

The questions were asked to decide the students

have understood the yoga exercise.

5. Practice and Drilling

The researcher had told the students to

drill the Yoga exercise which they had learnt. The

researcher and her comate had supervised the

practice done by the students with the reference

to the Tadasana.

The photo copy of the description of the

Tadasana was also given to each student for the

further practice at the home for the betterment

of the retention test.

6. Reinforcement

The researcher and her comate had

supervised the students at the time of practice.

The researcher had given the reinforcement

about the student was drilling in correct manner

or not i.e.

During Tadasana exercise, students had

to lift from the toe, but some students were not

following the instructions. The researcher had

told the student the mistake which they were

doing. Thus, the mistake of the students was

rectified.

Thus, the same method and steps were

followed for the teaching of all the Yoga exercises

to the students of 8th and 9th standard.

Tool

In the present research, pre-test, post-

test and retention test were constructed. These

achievement tests were performance test type.

Pre-test and post-test were kept same while over

all test was given at the end of the programme

was used as a retention test.

Data Collection

In the present study, following steps

were followed for collecting the data important

for the study.

1. Pretest was given to the boys and girls

of the 8th and 9th standard respectively. The test

was performance test type.

2. During the experiment post test which

performance test type was given to the boys and

girls of 8th and 9th standard respectively after

completion of each Yoga exercise. This test was

also performance test type.

3. After the application of the programme,

over all test was given to the student which was

retention test. It was whole test based on all Yoga

exercise.

4. The duration of the each test was over

all two hours.

5. The estimated number of days and

hours are as under.

· Application of the Programme: 7/9/

2010 to 6/10/2010.

· Application of the experiment for the

boys: 21/9/2010 to 3/10/2010.

· Application of the experiment for the

girls: 7/9/2010 to 6/10/2010.

Standard- 8

Standard- 9

No. of Students Days Hours

Boys Girls Boys Girls 30 08 12

30 08 12

30 06 12

30 06 12

Data Interpretation

In the present study, to check the

difference between the mean score of the pre-

test and post-test of the students of the

experiment group, with the reference to null

hypothesis, the calculations of t ratio was

calculated.


The hypothesis regarding the gender and

standard, the same method of statistical

calculations were used. The effect size was also

calculated.

Descriptive statistics was also calculated.

Necessary graphs were constructed. Well known

computer programme, SPSS was used to

calculate all the data.

Results

On the basis of calculations of null

hypothesis and effect size, following major

findings were got.

1. For difference between the mean score

of pre-test and post-test of 8th standard students

which was given with the reference to Yoga

education programme, t ratio calculation was

28.33 for the boys and 39.70 for the girls was

higher than 2.58. So, it was significant at .01 level.

The deference between the mean score was in

the favor of experiment. Thus the experiment

was proved effective and the first hypothesis

was rejected.


of pre-test and post-test of 9th standard students

which was given with the reference to Yoga

education programme, t ratio calculation was

34.72 for the boys and 30.74 for the girls was

higher than 2.58. So, it was significant at .01 level.

The deference between the mean score was in

the favor of experiment. Thus the experiment

was proved effective and the second hypothesis

was rejected.


of boys and girls of 8th standard students on the

post-test constructed under Yoga education

programme secondary schools, value of t ratio

calculation was 1.78 which was less than 1.96.

So, it was not significant at .05 level. The

difference was in favor of girls. So, the third

hypothesis was not rejected.


of boys and girls of 9th standard students on the

post-test constructed under Yoga education

programme secondary schools, value of t ratio

calculation was .603 which was lesser to 1.96. So,

it was not significant at .05 level. There was the

same effect on the boys and girls of the

experiment. So, the fourth hypothesis was not

rejected.


of pre-test and retention test which was given

after the application of Yoga education

programme of 8th standard students, value of t

ratio was found 45.764 which was higher than

2.58. So, it was significant .01 level. Thus, the null

hypothesis was rejected.


of pre-test and retention test which was given

after the application of Yoga education






of girls and boys on the retention test which was

given after the application of Yoga education


ratio was found .850 which was lesser than 1.96.

So, it was not significant .05 level. Thus, the null

hypothesis was not rejected.


of girls and boys on the retention test which was

given after the application of Yoga education





9. In the present study, effect size was

calculated for practical significance. The value of

effect size was 1 or more than 1 (Heledyna and

Thomas, 1979). Thus, the results were

significant practically also.

Findings

1. Yoga education programme constructed

in the present research was effective for the

boys of 8th standard.


in the present research was effective for the

boys of 9th standard.


in the present research was effective for the girls

of 8th standard. Thus, the revision of the

programme was also effective.



in the present research was effective for the girls

of 9th standard. Thus, the revision of the

programme was also effective.

5. The programme was also practically

effective with the reference to the calculation of

effect size.

Reference

Bridge and Madlem (2007). Yoga

physical Education and Self Esteem. Retrieved on

May 19, 2009 from the world wide web http://

www.csuchico.edu./Bidges.pdf.

Gagne, R.M. (1977). The Conditions of

Learning (3rd Ed.). New York, Holl, Rin.

Haladyana, Tom, and Thomas, Greg

(1979, Fall). The Attitude of Elementary School

Children towards School and Subject Matters.

Journal of Experimental Education, Vol. 48(1),

19-23.

Murthy and Kumar (1992). Physical and

Health Education, in NCERT (Eds.). Fifth Survey

of Educational Research, (pp 1303-1332), New

Delhi.

Parrot, ( nd). Application of Yoga in

Education. Retrieved on April 15, 2009 from

world wide web http://www.ryluk.org/

indet.htm

do>ga, Aen. Aes. ÜÉÑÑÍÝ. A@yapn

mnoiv)an. rajko3 : iniJjn sa[ko seN3r

* * *


HUMAN RIGHTS AND INDIAN WOMEN

Dr. J. A. Pandya*

Law


Dec.- 2012 -11

ISSN No.

* Principal, Sheth H. J. Law College & Dean, Law College, M.K. Bhavnagar University, Bhavnagar

Pandit Jawaharlal Nehru, the first Prime

Minister of India said, “You can tell the condition

of a nation by looking at the status of its women”.

This statement revels that, status of women of any

nation is the mirror of its civilization. If women enjoy

good status, then it shows that the society has reached

the level of maturity and sense of responsibility.

Constitution has bestowed us with equal rights. But

when it comes to opsition of women, we observe

gender bias and unequal treatment given to women.

Women today have achieved success in all the

possible fields and are in no way no way less

competitive than men. This is on one side. But the

real story reflects the darker side of the status of

women. Gender disparity is obvious by the trend of

continuously declining female ratio in the population.

Social sterio typing and violence at domestic and

social levels are some of the manifestations. A study

carried out by a nongovernmental organization

“Nazaria”1 reveals that on an average, four women

out of ten, have to still suffer physical and mental

abuse at work place and at home. The media is also

continuously reporting sordid tales of violence against

women. With such advanced society, there is a need

of having a “Women’s Development Cell” at college

and university level. This cell examines reported cases

regarding sexual harassment and one should not feel

astonished with the number of such reported cases.

This is with respect to educated and literate women.

Condition of women belonging to weaker sections,

backward class, minorities is still worse. In spite of

constitutional provisions, women continu to become

a soft target of exploitation. Author’s anxiety to

examine the role of various legislations in protecting

rights of women is due to the ineffectiveness of the

statutory provisions in curbing the violence against

women. When it comes to sexual harassment, the

Indian Supreme Court has given a landmark decision

in the case of Vishakha and others VS State of

Rajasthan2. The decision was handed down by a three

judge bench including chief Justice J.S. Verma, Justice

Sujata Manohar and Justice B. N. Kirpal. In this case,

the Supreme Court had declared, sexual harassment

in the work place to be “unconstitutional”. Justice

Verma held the opinion that sexual harassment at the

work place is a violation of fundamental rights of

equality and right to life and liberty. In addition J.

Verma found that article 19(1)(g) which protects the

right to “practice any profession or to carry out any

occupation, trade or business’ is also violated when

there is an incident of sexual harassment. He

emphasized on safe working enrionment and the

responsibility of ensuring such safety and dignity

through suitable legislation and its enforcement. J.

Verma has given guidelines and has mentioned these

with regard to the definition of Human Rights, as

given in The Protection of Human Rights Act 1993.

While deciding this case, he also stated the judiciary

is now doing what the legislature should have done in

the first place. This clearly indicates that there is a

need of proper and codified set of rules, for prevention

of any sexual harassment at work place.

There are many provisions under the Indian

Penal Code, for filing a complaint for physical abuse,

cruelty and harassment. The object of Indian Penal

Code is to try the criminals and punish them. However

there was no rescue in the direct laws for

1. Mental torture

2. Deprivation of finances.

3. Denial of maintenance

4. Use of abusive language.

5. Right to marry a person of one’s own choice.


The Vishakha’s 3 case which was filed by

several social activists and NGO has actually resulted

in creation of women’s development cells in

organizations which have women as its integral part.

The Supreme Court had given a special guideline to

that effect.

It was in the case of Nargesh Meerza, 4

where Honourable Justice Bhagwati observed,

“Airhostess not to be having any children interferes with

and deiverts the ordinary course of human nature. The

termination of service of airhostess is not only a callus

and cruel but an open insult to Indian womanhood’.

Certain land mark precedents clearly indicate that the

courts are also sensitive towards issues and status of

women. On Indian scene, there is lot of harassment

which women have to face for bearing or not bearing

a child. This should absolutely be a right of women to

choose what she wants the best.

India has goven beyond institutional, legal

and educational measures to strengthen the ability

of women. Article 14 of the constitution provides for

equality for all subjects. Article 15prohibits

discrimination on grounds of sex. Article 16 provides

for equality of opportunity in public employment.

Article 15(3) of the constitution permits the state to

make special provisions for women and children.

Our laws, plans and development policies

have aimed at women’s advancement in different

spheres. There has been a change on women’s issues

from their welfare to development. In the recent years,

women empowerment has been a central issue for

determining status of women.

There have been international conventions

on women issues like Convention on Elimination of

all forms of Discrimination against Women (CEDAW)

in 1993. The Mexico plan of action 1975, the Nairobi

Forward Looking Strategies, the Beijing Declaration,

are certain instruments advocating rights of women

as Human Rights.5

In the above mentioned paragraph, we have

seen the legislative role and different provisions made

for the purpose of discussing women’s issues. There

are 39 central laws laid down by government of INdia.

Despite all these measures, the government was

persuaded to pass a new law to prevent domestic

violence against women, It is this law which

recognizes rights of women as Human Rights. This

law identifies protection of dignity of a woman as an

individual. It recognizes the torture inflicted on

women by way of conduct and words. The researcher

believes that, this is a path breaking provision for

protection of women’s rights. Violence against

women in different forms is already recognized under

the civil laws and Indian penal code. It is this

identification of domestic violence and making a law

for protection of the same is important. This study of

Human Rights aims at finding out wheter status of

women has actually been enhanced in the society as

a human being, and as an individual at part with men.

The Author has attempted to examine if law

has been instrumental in achieving gender balance on

the basis of analysis of decided cases related to the

following rights of women.

1. Right to education.

2. Right to life and personal liberty.

3. Right to development.

4. Right to work.

5. Right to medical care and enjoyment of

Freedoms granted by the Indian constitution like

freedom of speech and expression, freedom of

movement etc.

Referance

1 - “Bol”-documentation by Najzaria for the Physi-

cal Abuse of Women-2004

2 - Vishakha VS State of Rajasthan. AIR 1998 SC

3031.

3 - Vishakha V. State of Rajasthan. AIR 1998 SC

3031

4- Air India V. Nargesh Mirza. 1981, SCC P.335.

5- Report of the Fourth World Conference on

Women. 1995.p.177

* * *


HEALTH SECTOR IN INDIA – A REALITY

Dr.P.A.Gohil*

World Health Organization (WHO) defince health as a state of complete physical, mental and

social well-beling and not as consisting only of the absence of diseasw or infirmity or mental

reatardation, Health or people plays an important role in the development process of any economy.

The state of development is closely associated with the helath status of invididuals. The level of economic

development and health status of individuals are interdependent. High level of economic development.

High level of economic development ensures availability of good and advanced health care by

strengthening health sector. In return the availability of advanced health facilities improve the

productivity levels of individuals and thus contributes to economic developments. Healthy individuals

make positive contribution to overall wealth of any economy through creativity and innovation in

various spheres. Health status of individuals is an indicator of human development. The quality of

human wealth in any nation can be judged by the health status of its people. The presence of wide

spread sick, disabled and unhealthy individuals are true indicator of low health status.

Physical Education


Dec.- 2012 -15

ISSN No.

* Director of Phisical Education., M.J.College of Commerce, M.K. Bhavnagar University, Bhavnagar

OBJECTIVES

The objectives of the present study are :

1. To evaluate the health sector in India in

terms of various indicators.

2. To compare health status of people in

India with the same in advance countries.

3. To suggest measures to improve the

health status.

Data Sources :

Present study is based on secondary

source of data. Data sources include world health

report, World health statistics, Global health

Atlas, web site of WHO, National Health policy-

1983 and 2004.

DISCUSSION

One can judge the health status of any

society based on several criteria such as indence

of porvery, improvement if life expectancy, fall

in infant mortality, fall in death rate, eavilability

of medical facilities, food security, balanced diet,

improvement in productivity of people,

eradication of epidemics, expenditure on health

sector and access to pure drinking water etc.

Since independence, the government has been

providing basic health facilities in rural and

urban areas. As a result of various measures

initivated by the government there has been a

significant fall in death rate and considerable

improvement in maternal and infant mortality,

the steps initiated by government on war-foot

eradicated epidemics such as small pox, cholera.

The direct consequence of strengthening helath

sector in India is well reflected in terms of an

improvement in life expectancy of its people. Life

expectancy improved from mere 36 yers by

2005. There has been a significant reduction in

the incidence of proverty. This was due to

improvement in income levels and nutrition level

of people. The government announced National

Health Policy (NHP) in 1983. It was aimed at

providing primary health care services through

trained health volunteers having appropriate

knowledge and establishement of referral

system. Government’s initiatives in the public


health sector have recorded note worthy success

over time. We could understand the

achievements of health sector in India with the

help of table-1 and 2. table-1 reveals the fact that

the sustained efforts by the government yieled

positive result. Life expectancy improved from

36.7 years to 64.6 years in the first fifty years of

systematic economic planning. The crude birth

rate decreased from around 41 per thousand to

26 per thousand and crude death rate frofm 235

to 9 per thousand., Infact mortality rate

decreased from 1246 per thousand live buitthrs

to 7 per thousand live births to 70 per

sdthousand live births. It is true that, India is

committerd to achive the goal fof health for all

by the year 2004, A.D. through expancing its vast

ner work of primary health care services.

Table-2

Reveals success in respect of control of

diseases. The incidence of malaria was very high

at the time of in depencedence . Seventy five

million people were affected by malaria by 1951.

The emphasis of government on health & social

service sector since 1951 had its long lasting

impact in containing malaria by the year 2004.

To a great extent, Government also succeeded in

containing leprosy. The highly commendable

achievement was theeradication of small pox by

the year 1981. Guinea worm was also eradicated

by the year 2004. In respect of control of polio

also, government experienced good amount of

success. The government aimed at eliminating

polio by 2007. Avaliable number of doctors also

increased from 62 thousands to 5 lakhs.

The government’s efforts in public health care,

in fact, made considerable amount of

contribution in terms of improving health status

of people through disease control and

eradication in some cases, ensuring better

sanitation, supply of drinding water and all the

more basic health infrastructure. It is beyond

doubt that we have achieved good amount of

success by staring form scratch at the time of

independence. Pertaining to health sector, the

government has set bold goals to achieve during

2005-2015 Table-3 presents the goals to be

achieved in the health care system of India.

The in depth examination of goals (Table-

3) set by government regarding various

diseased indicates that they are attainable. But

the volume of public expenditure on health

sector acts as an obstacle between goals and

achievments. With respect to polio, leprosy, kala

azar, filariasis government’s initiatives yielded

good results. The achievement of zero growth

of HIV/AIDS is unattainable and it remains as a

myth, given the low level of public investment

and lack of healthawarencess among mass of

people. It has opened its wings and spreading

like wild fire. According to WHO estimates, India

is one among few countries where the incidence

of HIV/AIDS is very high. Unless the government

and the people them selves take adequate

measures to contain AIDS, this in due course of

time adversely affect the health of people. One

may fear that its adverse consequences may be

more than epidemics. The goals related to IMR

and MMR are also quite optimistic. with our

expanding the basic health facilities in rural

areas the reqlization of this goal is like “walking

in vacuum” Even now trained personal are not

available in rural areas at the time of delivery.

Unless the government strengthens the primary

health infrastructure in terms of primary health

centers, trained staff, balanced nutritional diet

to mother and child the goals of IMR & MMR may

remains as mere goals. Enhancement of public

expenditure is a crucial factor that determines

the health of “health sector” With thee present

levels of inadequate health investment the health

status of people may move in forward direction

but at a snails place. Government should realize

in unequivocal terms the fact that, health of

individuals is nation’s real wealth.

In spite of the impressive achievements

realized in respect of health status of individuals,

one can not ignore the relatively low health status

enjoyed by our people.

The government announced national

health policy (NHP) in 2004. Its main aim is to

achieve an acceptable standard of good health

amongst the general population of the country.

According to the review of NHP-2004, 70

percent of rural population has no access to

potable drinking water supply and 99 percent


are deprived of basic sanitation. The mortality

rates of women and children are considerably

high and millions of poor are suffering from

malnutrition. Still rich as well as poor people are

victims of communicable and non-

communicable diseases. The relatively poor

performance of health sector in terms of various

indicators is a true reflection of limited success

of public health system in India. The fast

increase in the number of heart, diabetic, bold

pressure, AIDs patients in the country are the

witnesses of nature of health scenario in India.

The frequent of onslaught of Chikun Guinea and

Dengu fever reveals the state of development of

public health care system in India. Increasing

incidence of people suffering from mental

retardation, psychological illness, lack of

balanced diet have their own indelible imprints

on India’s health sector.

Tabel-4

Reveals the fact that per capita health

expenditure in India is inadequate to ensure

reasonable health status. In respect of per capita

health expenditure, Sri Lanka and China are

much ahead of India. China’s per capita health

expenditure is around three times that of India.

China’s health expenditure as percentage of GDP.

was 5.6 as against India’s 4.8 percent. In case of

child mortality also the achievements of China

and Sri Lanka are far better than India. The per

capita health expenditure of U.S, Canada and

other European countries is much higher than

that of India. This single factor alone might be

the reason for reduction in adult & child

mortality, improving the healthy life expectancy

at birth and general life expectancy in advanced

countries of the world.

Suggestions to improve health status :

1. Raise the public expenditure on health

to desired level.

2. Initiate steps to control population.

3. Initiate steps to achieve high rate of

literacy.

4. Strengthen the primary health care

especially in rural areas.

5. Ensure food security to millions of

people living below poverty line.

6. Control the severity of AIDS and other

life style diseases such as diabetics, cancer heart

ailments etc.

7. Ensure pollution free environments.

8. Strengthen the health infrastructure.

9. Inculcate health awareness among

people by conducting community health

programs and following the basic norm

:Prevention is better than cure.

10. Encourage people to opt for health

insurance.

CONCLUSION

Health refers to overall physical, mental

and social well-being. At the time of

independence our health sector was backward

and the health status of people was very poor.

The poor, health status of people was reflected

in terms of high death rate, infant mortality rate,

prevalence of epidemics, lack of nutritional diet,

absence of basic heath facilities such as

sanitation, drinking water, primary health

centers, trained staff etc. After independence, the

measures initiated, the measures initiated by the

government yielded good results over time and

improved the health status of people slowly but

steadily. As a result, there has been a continuous

decline in death as well as infant mortality rate.

Life expectancy, availability of nutritional diet

and basic health facilities recorded significant

improvement. Government also set its goal as

“health to all by the year 2004”. In spite of the

impressive performance of health sector

overtime, one can not ignore the poor health

status of people in India. There is a glass curtain

between super specialty medical facilities and

poor & low income groups in our country. As far

as medical facilities are concerned, it is a fact

that there is a wide gap between government’s

cup and poor man’s lip. Further, there is urban

bias in medical facilities provided by

government and the millions of rural people are

deprived of primary health care. In the context

of development of any economy, one can look at

the number of healthy people rather than total

number. This implies that, the quality of human


resource is more important than quantity. Sick,

disabled people with ill health can not make

positive contribution to the growth process. In

fact they are like debt burden. There is need for

the government to fully recognize the fact that,

good health status of individuals is key to over

all progress of the economy. This reveals that

economic growth and health status of

individuals must move together and are

interdependent. Finally, India achieved great

success in improving the health sector even by

starting from very low level. But still the health

status of people is lagging behind compare to

people in other developed countries in the world.

Hence there is tremendous responsibility on the

shoulders of government to develop the health

sector and improve the health status of people

on per with people living in developed countries.

Of course, improving the health status of

majority of its population consisting of low

income and poor people is a daunting task on

the part of the government. Even then the

effective implementation of the steps initiated

by the government may go a long way in

improving the health status of people. We should

be optimistic and hope to see their positive

impact on economic growth.

Table-1 : Achivements of health sector

1951-2004

Indicator 1951 1981 2004

Life expectancy 36.7 54 64.6

Crude birth rate 40.8 33.9 26.1

Crude death rate 25 12.5 8.7

Infact mortality rate 146 110 70

Source : National healthy policy-2004

Table-2 : Epidemiological Achievements

1951 1981 2004

Malaria (cases in millions) 75 2.7 2.2

Leprosy cases per 10000 38.1 57.3 3.74

Small pox no of cases above 44887 eradicated ---

Guinea worn no of cases --- 739792 eradicated

Polio no of cases --- 29709 265

Doctors 61800 268700 503900

Source : National healthy policy-2004

Table-3 : Goals to be achieved during

2000-2015

Name of disease Year

Polio eradication 2005

Elimination of leprosy 2005

Elimination of Kala azar 2010

Elimination of filariasis 2015

Zero growth of HIV/AIDS 2007

Reduce the incidence of

Blindness to 0.5 percent

2010

Reduce IMR to 30 per 1000

and MMR to 100 per lakh

2010

Increase health investment as

percentage of GDP from the

present 0.9 to 2 percent.

2010

Increase state sector investment

from 5.5 to 7 percent of the budget

and further to 8 percent.

2010

Source : National Health Policy-2004


Commerce


Dec.- 2012 -21

ISSN No.

INDIAN INSURANCE COMPANIES IN THE

PRESENT GLOBAL SCENARIO

DR. SHAILESH N. RANSARIYA*

Insurance may be described as a social device to reduce or eliminate risk of loss to life and

property. Insurance sector in INDIA is booming up but not to level comparative with the developed

economies such as Japan, Singapore etc. Insurers are the earlier adopters of technology. Because of

the Information revolution, customers are free to choose from a wide range of new and innovative

products. The Insurance companies are utilizing the Information technology applications for better

customer service, cost reduction, new product design and development and many more. New technol-

ogy gives the policyholders / insured better, wider and faster access to products and services. The

impact of Information Technology in Insurance business is being felt at an accelerating pace. The

present paper is an attempt to study the Indian insurance companies in present global scenario in

the light of product, use of technology, growth of insurers, market share of life and non life insurers.

* Head, Department of Commerce, S. S. P. Jain Arts and Commerce College, DHRANGADHRA

INTRODUCTION:

Today, only one business, which affects

all walks of life, is insurance business. That’s

why insurance industry occupies a very

important place among financial services

operative in the world. Owing to growing

complexity of l ife, trade and commerce,

individuals as well as business firms are turning

to insurance to manage various risks. Therefore

a proper knowledge of what insurance is and

what purpose does it serve to individual or an

organisation is therefore necessary. Insurance

is a mechanism that ensures an individual to

thrive on adverse consequences by

compensating the individual his/her loss

financially. Every individual in this world is

subject to unforeseen and uncalled for hazards

or dangers, which may make him and his family

vulnerable. At this place, only insurance helps

him not only to survive but also recover his loss

and continue his life in a normal manner, which

would otherwise be unthinkable.

CHARACTERISTICS OF INSURANCE:

1. Sharing of risks

2. Cooperative device

3. Evaluation of risk

4. Payment on happening of a special event

5. The amount of payment depends on the

nature of losses incurred

6. Insurance is not a gambling and charity

REVIEW OF LITERATURE:

In the present section an attempt has

been made to examine the review of literature

related to the study.

1. Rao, S. (2000) analyzed that India is still an

underdeveloped insurance market, it has a huge

catch-up potential. According to him even

though there is strong potential for expansion

of insurance into rural areas, growth has so far

remained slow. Considering that the bulk of the

Indian population still resides in rural areas, it

is imperative that the insurance industry’s

development should not miss this vast sector of

the population.

2. Goyal, K. (2004), reviewed that private

insurance companies had reason to celebrate

with the lifting of the scrotal cap in the insurance

sector to 49 per cent in the Union Budget 2004-


05, as against 26 per cent earlier.

3. Jain, A.K. (2004), revealed that Waves of

liberalization have done wonders to proper the

insurance occupation to the status of a career

with a bright future. The average mindset,

particularly of younger generation in India was

very amenable to the changes in insurance as an

avenue where exhilarating opportunities are

opened up in changed environment.

4. Krishnamurthy, S. (2005) revaled that

Insurance companies have a pivotal role in

offering insurance products which meet the

requirements of the people and, at the same time,

are affordable. With the liberalization and entry

of private companies in insurance, the Indian

insurance sector has started showing signs of

significant change.

5. Bhattacharya (2005) advocated that banc

assurance provided the best opportunities to tap

the large potential in rural and semi urban areas

as banks have a strong network of more than

40000 branches in these areas. He suggested

that the insurers should focus on Single Premium

policies, Unit Linked Insurance, Pension Market

and Health Insurance.

6. Ray, Subhashish and Pathak, Ajay. (2006)

opined that ever since the privatization of the

insurance sector in India in 2000, the industries

has been witnessing the birth of numerous

private players, mostly joint ventures between

foreign insurance giants and Indian diversified

conglomerates and each one is trying to make

an inroad into the huge untapped market.

7. Sinha, Ram Pratap. (2007) revealed that the

public sector insurers dominate the private

sector insurers in terms of mean technical

efficiency in constant returns to scale, while the

private sector insurers have a slightly higher

mean technical efficiency than the public sector

insurers in variable returns to scale.

8. Goswami, P. (2007) examined that Prior to

privatization of insurance sector, Life Insurance

Corporation (LIC) of India was the sole player

in the life insurance industry in India. In six

years since the entry of private players in the

insurance market, LIC has lost 29% market

share to the private players, although both,

market size and the insurance premium being

collected, are on the rise

OBJECTIVES OF THE STUDY:

The broad objectives of the study are as follows:

1. To describe the services of insurance

sector in the present global era

2. To explain the market share of life and

non life insurers in the present global era

3. To evaluate the use of information

technology in insurance sectors

4. To evaluate the changing scenario in

product innovations

5. To study the growth of insurance players

and premium income of insurance companies

DATA COLLECTION AND ANALYSIS

The study is based upon secondary data

which has been collected from annual reports

of IRDA, IRDA journal and Life Insurance Today.

Besides, a few websites have also been consulted.

The data used in the paper covers the period

from 2000-01 to 2010-11. For the analysis of

data, statistical tools like percentages, ratios,

growth rates and coefficient of variation have

been used.

GROWTH IN NO. OF INSURANCE

PLAYERS:

Growth of Life Insurance Companies

and Non life Insurance Companies operating in

India:

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

Life Insurers

Public 1 1 1 1 1 1 1 1 1 1

Private 12 12 13 13 15 15 21 21 22 23

Non Life Insurers

Public 5 6 6 6 6 6 6 6 6 6

Private 8 8 8 8 9 10 15 15 17 20

Reinsurer 1 1 1 1 1 1 1 1 1 1

(Source: Source: http://www.irda.gov.in)

Most of the private players in the Indian

insurance industry are a joint venture between a

dominant Indian company and a foreign insurer.

The above table shows that the no. of insurers

are in the increasing trend in both life insurers

and non life insurers.


GROWTH OF TOTAL PREMIUM EARNED BY

LIFE INSURANCE INDUSTRY

Year

Total Premium earned

LIC Private Companies Total

Total

Premium (` In crore)

Market

Share

( %)

Total

Premium (` In crore)

Market

Share

( %)

Total (` in

crore)

2000-01 34890.02 99.98 6.45 0.02 34898.47

2001-02 49821.91 99.46 272.55 0.54 50094.46

2002-03 54628.49 97.99 1119.06 2.01 55747.55

2003-04 63533.43 95.32 3120.33 4.68 66653.75

2004-05 75127.29 90.67 7727.51 9.33 82854.80

2005-06 90792.22 85.75 15083.54 14.25 105875.76

2006-07 127822.84 81.92 28218.95 18.08 156041.79

2009-10 61718.52 71.18 24980.33 28.81 86698.85

2010-11 67135.31 70.67 27864.73 29.33 95000.04

G 36.96 26.08 37.6

C.V. 43.5 131.54 52.13

(Source: Computed from various Annual Reports

of IRDA)

MARKET SHARE OF LIFE AND NON-LIFE INSURERS

MARKET SHARE (%)

LIFE INSURERS NON – LIFE INSURERS

1. LIC 76.07 New India 21.41

2. ICICI Prudential 6.91 National 17.11

3. Bajaj Allianz 4.75 United India 17.11

4. HDFC Standard 2.98 Oriental 17.02

5. Brila Sunlife 1.72 ICICI- Lombard 8.04

6. Tata AIG 1.66 Bajaj Allianz 6.15

7. SBI Life 1.46 IFFCO-Tokio 4.00

8. Max New York 1.28 Tata-AIG 2.89

9. Aviva 1.08 ECGC 2.50

10. Kotak Mahindra

Old Mutual

0.71 Royal Sundaram 2.17

11. ING Vysya 0.54 Cholamandala m 1.22

12. AMP Sanmar 0.46 HDFC-Chubb 0.89

13. Met Life 0.37 Reliance General 0.75

14. Sahara Life 0.03 Agriculture

Insurance Co.

--

Private total 23.93 Private total 27.35

Public total 76.07 Public total 72.65

Grand total 100.00 Grand total 100.00

Source : www.irdaindia.org

In the above table shows, the private players

in the life insurance business have increased their

market share to 23.93 per cent. Among them ICICI

prudential is ranked first in capturing the market

followed by Bajaj Allianz and HDFC Standard. In the

General Insurance sector the private players have

captured 27.35 per cent. Among them ICICI-Lombard

is ranked first, followed by Bajaj Allianz and IFFCO-

Tokio. The healthy competition in the sector enabled

the State owned insurers of our mother country to

reduce its market share to 76.07 per cent and 72.65

percent in life and non-life business respectively.

Moreover, private insurers have planned to increase

their market share in the next five years. The public

insurers have to enrich its approach to withhold its

share.

Company

Policies sold till

December 2011

(approximate figure)

LIC 20404281

Future Generali Life 100143

ICICI Prudential 785938

Met Life 98904

Reliance Life 698109

Star Union Dai-ichi 82037

Bajaj Allianz 640483

Shriram Life 73490

Birla Sunlife 589855

Bharti AXA Life 69151

SBI Life 491927

Aegon Religare 47332

Max New York 405662

IDBI Federal 45833

HDFC Standard 397408

Canara HSBC OBC Life 44899

Tata AIG 199275

DLF Pramerica 43299

Kotak Life Insurance 199614

IndiaFirst 38498

Aviva 100216

Sahara Life 36228

Edelweiss Tokio 1968

TOP INSURERS IN INDIA:

In terms of policies sold following are the top insurers

in India:

REINSURANCE IN THE INDIAN MARKET:

Reinsurance regime in India before

2000: During the pre-reform period when GIC was

the holding company of the four PSUs, the insurance

market was characterized by existence of tariffs and

market agreements amongst insurers. GIC played an

important role in drawing up and in placing the

reinsurance programme of each insurance company.

As a result, the reinsurance programme of the entire

market was placed as a single block. GIC organized

pools for different classes of business such as Fire,

Marine Hull and inter-company cessions amongst

companies to increase retention within the country. It

also organized market surplus treaties and participated

in a significant way in company’s surplus treaties. The

companies made obligatory cessions to the extent

of20%with GIC. The foreign inward business was done

by GIC alone through a single window by pooling its

own capacity and that of the four PSUs. The benefits of

such arrangements were the high reinsurance

retentions within the country, optimum utilization of

underwriting capacity and negotiation of better

reinsurance terms and prices. On the other hand, the

downturn was reflected in lack of innovative covers

and absence of competition.


Liberalization of the Indian insurance market: The

liberalization of the Indian insurance market was

undertaken in 1999 with passage of IRDA Act, 1999

and amendment to Insurance Act, 1938. Reinsurers

were allowed entry into the Indian market with an

equity capital of ‘200 cr and FDI limit of 26%. The

provisions of the Insurance Act, 1938 were operational

zed with the creation of IRDA. The Reinsurance

Regulations were notified by the Authority. However,

till date no reinsurer has applied for certificate of

registration Comparison between the reinsurance

retentions in 1999-2000 and 2010-11

1999-2000 2010-11

Gross

Prem (̀ in mn)

Net

Prem (̀ in mn)

Ratio

Gross

Prem (̀ in mn)

Net

Prem (̀ in mn)

Ratio

Fire 23,562 21,920 93.03% 42893.24 28046.96 65.39%

Marine

Cargo 7,933 7,141 90.01% 13676.47 10829.48 79.18%

Marine Hull 2,471 1,083 43.83% 8895.32 2228.76 25.06%

Engineering Included in Other Misc class 17254.18 12104.25 70.15%

Motor 34,282 34,282 100.00% 166537.49 164678.76 98.88%

Aviation 2,063 156 7.59% 4206.00 1577.15 37.50%

Other Misc 27,245 24,011 88.13% 174749.89 158369.55 90.63%

Total 97,559 88,596 90.81% 428212.60 377834.92 88.24%

Source: http://www.irda.gov.in

EMERGING TRENDS AND ISSUES IN INSURANCE

INDUSTRY:

The emerging trends in insurance companies are as

under:

1. APPLICATION OF INFORMATION TECHNOLOGY

IN INSURANCE SECTOR: There is an evolutionary

change in the technology that has revolutionized the

entire insurance sector. Insurance industry is a data-

rich industry, and thus, there is a need to use the data

for trend analysis and personalization. With increased

competition among insurers, service has become a

key issue. Moreover, customers are getting

increasingly sophisticated and tech-savvy. People

today don’t want to accept the current value

propositions, they want personalized interactions and

they look for more and more features and add ones and

better service The insurance companies today must

meet the need of the hour for more and more

personalized approach for handling the customer.

Today managing the customer intelligently is very

critical for the insurer especially in the very

competitive environment. Companies need to apply

different set of rules and treatment strategies to

different customer segments. However, to personalize

interactions, insurers are required to capture customer

information in an integrated system. With the

explosion of Website and greater access to direct

product or policy information, there is a need to

developing better techniques to give customers a truly

personalized experience. Personalization helps

organizations to reach their customers with more

impact and to generate new revenue through cross

selling and up selling activities. To ensure that the

customers are receiving personalized information,

many organizations are incorporating knowledge

database-repositories of content that typically include

a search engine and lets the customers locate the all

document and information related to their queries of

request for services. Customers can hereby use the

knowledge database to manage their products or the

company information and invoices, claim records, and

histories of the service inquiry. These products also

may be able to learn from the customer’s previous

knowledge database and to use their information when

determining the relevance to the customers search

request.

2. PRODUCT INNOVATIONS: Insurers are

continuously innovating new products based on

forward-looking models. They have developed new

products addressing the new challenges in society and

products to address the hazards from new

environmental issues. Companies will need to

constantly innovate in terms of product development

to meet ever-changing consumer needs. Understanding

the customer better will enable Insurance companies

to design appropriate products, determine price

correctly and to increase profitability. Since a single

policy cannot meet all the Insurance objectives, one

should have a portfolio of policies covering all the

needs. Product development is made possible by

integrating actuarial, rating, claims and illustration

systems. At present, the Life Insurers are concentrating

on the pension schemes and the Non-Life Insurers on

many innovative schemes of various realms and

thereby enriching their market share. Moreover, with

increased commoditization of insurance products,

brand building is going to play a vital role.

3. DISTRIBUTION NETWORK: While companies have

been successful in product innovation, most of them

are still grapping with right mix of Distribution

Channels for capturing maximum market share to build

brand equity, building strong and effective customer

relationships and cost effective customer service.

While the traditional channel of tied up advisors or

agents would be the chief distribution channel, insurer

should innovate and find new methods of delivering

Policies sold till

LIC 20404281

Future Generali Life 100143

ICICI Prudential 785938

Met Life 98904

Reliance Life 698109

Star Union Dai-ichi 82037

Bajaj Allianz 640483

Shriram Life 73490

Birla Sunlife 589855

Bharti AXA Life 69151

SBI Life 491927

Aegon Religare 47332

Max New York 405662

IDBI Federal 45833

HDFC Standard 397408

Canara HSBC OBC Life 44899

Tata AIG 199275

DLF Pramerica 43299

IndiaFirst 38498

Aviva 100216

Sahara Life 36228

Edelweiss Tokio 1968


the products to customers. Corporate agency,

brokerage, Banc assurance, e-insurance, cooperative

societies and panchayats are some of the channels,

which can be tapped by the insurers to reach the

appropriate market segments. Now days, the urban

masses are tapped with the new techniques provided

by Information Technology through Internet. Rural

masses are attracted by the consultative approach

adopted by the Insurers. Moreover, they attract the

customers through telephone and mobile also.

4. NEW RISKS & NEW COVERS: Companies could

purchase insurance products for their displaced

workers as part of severance package. All the jobs

displaced from off-shoring can be insured for as little

as 4-5% of saving coming out of off shoring these

jobs. This sort of a proposal has been jointly developed

by professionals of University of California and

Brooking Institute for Trade-displaced workers. This

would cover wage loss for all full-time workers. Once

they are re-employed, compensating them 70% of wage

loss between their old and new jobs for up to two years.

If this happens, the insurance premiums will increase,

cutting into the gains from off-shoring less attractive

to companies in periods of higher unemployment. This

form of insurance will create a self-regulating

mechanism, by aligning the rate of off shoring with

the rate of employment. Event insurance has created

rooms to cover new risks in the field of sports and

festival ceremonies. India, which is a country of

traditions and rituals, have plenty of religious and social

events which take place every now and then. These

events are dominated by religious and regional factors

and, therefore, various risks attached to these areas

are giving birth to the event insurance. In Health sector

also the new policies are designed by both Government

and insurance companies. The recent launching of

Universal Health Insurance pioneered by Central

Government is one step in this area.

5. INTER-COMPETITION AMONG INSURERS:

Private insurance companies can give a good

competition to the PSUs in terms of customer

orientation and quick settlements. There is a big scope

for financiers to book a good fee based income by

becoming corporate agents. Before the industry was

opened up, the four public sector insurance companies

were underwriting ‘ 14000/- crore premium a year. So

far, the eight private insurers had taken away only 14%

of the business. They have an uphill task in taking on

the four PSUs which have big network of officers,

market reach and a vast development force. The need

for de-trifling premium for the sake of removing unfair

trade practices has been stressed upon by all the private

players. While there is a big business potential, the

regulators, in a bid to create entry barriers, have forced

the promoters to pump over ‘ 100 crore as capital.

This will result in longer payback period of six to seven

years. The insurance companies so far have been

providing separate insurance cover for each and every

segment but the efforts are on to provide a

comprehensive insurance cover to machines, assets

and the people. Attempts are also on to include the health

and accident insurance for the IT companies where

the insurers are trying to bundle the existing services

to provide a comprehensive package. Three leading

insurance companies are preparing a blueprint for

offering the policy to IT companies. However, these

companies are yet to approach the insurance

Regulatory and Development Authority for seeking

approval. IT companies are still major clients for the

country’s budding insurance industry; attempts are on

to roll out an exclusive insurance cover for IT

Companies. Insurance broking Companies like India

Insure, Helios Insurance Services and Kadel Insurance

Services for IT Companies. Insurance companies are

today looking at different segments where there is

business potential and are trying to customize policies

to suit the specific needs of their clients.

KEY FINDINGS:

Following are some important findings from World

Bank regarding the condition of insurance industry in

India:

· Between 2005 and 2010 the yearly GDP growth was

approximately 8.56%

· At the same time, the ratio of gross savings to GDP

was 33%

· Middle class saw the quickest growth

· The life expectancy rate of people went up and urban

development happened at almost 54%.

· In 2010 rate of premium growth came down to 4.2%

and compared to global standards the premium share

was pretty low

· Major operational issues for insurers were

expenditure control, claims settlement procedures,

improving investment yields, and capital requirements


· In the 2010-11 fiscal the life insurance industry grew

by 4.20% while the general insurance industry

increased by 8.10%.

· During that time the paid-up capital (private total)

for the life insurance sector was INR 236.57 billion

while the paid-up capital (industry total) was INR

236.63 billion.

· In 2010-11 the paid-up capital (private total) for the

general insurance sector was INR 39.56 billion while

the paid-up capital (industry total) was INR 67.06

billion.

· In 2010-11 the operating costs of privately owned

life insurers was INR 159.62 billion while the total life

insurance industry expense was INR 329.42 billion.

· In the same time the privately owned general insurers

spent INR 39.32 billion from an industry total of INR

106.20 billion.

· In 2010-11 the privately held life insurers paid

benefits and claims worth INR 312.51 billion while

the industry aggregate was INR 1425.24 billion.

· At the same time the private general insurers paid

benefits and claims worth INR 99.37 billion while the

industry total was INR 295.36 billion.

CONCLUSIONS:

The insurance industry in India has changed

rapidly in the challenging economic environment

throughout the world. In the current scenario, Indian

insurance companies have become competitive in

nature and are providing appropriate distribution

channels to get the maximum benefit and serve

customers in manifold ways. Indian Insurance industry

has big opportunity to expand, given the large

population and untapped potential. The insurance

market in India has witnessed dynamic changes

including entry of a number of global insurers. Most

of the private insurance companies are joint ventures

with recognized foreign institutions across the globe.

Saturation of markets in many developed economies

has made the Indian market even more attractive for

global insurance majors. Further, many new products

(like ULIPs, pension plans etc.) and riders were

provided by the life insurers to suit the requirements

of various customers. It was found that the total

business of LIC is in a fast increasing trend as

compared to other private insurance companies.

REFERENCES

1. Berman, Peter. “Rethinking Health Care Systems:

Private Health Care Provision in India.” Harvard School

of Public Health Working Paper, November 1996.

2. Bhattacharya, Anbil.. “Challenges before Life

InsuranceIndustry”, Life Insurance Today, 1 ( 8): 3-6,

2005.

3. Business Today. “The Monitory Group Study on

Insurance I and II.” March 22 and April 7, 2000.

4. Dasgupta, Samik. “RSA, Iffco-Tokio yet to appoint

actuaries,” Economic Times, January 23, 2001.

5. http://www.asiainsurancereview.com/

edsynopsis.asp

6. http://www.lic.wwindia.com/

7. IRDA Annual Reports, “Insurance Regulatory and

Development Authority”, Mumbai, 2001 to 2007.

8. John, Jimmy. “The War for Market Share – A View

from India”, Insurance Chronicle: 37-39, 2008.

9. Kulshresth, Laxmi R., Kulshresth, Anuja. 2006.

“Liberalization and Rural Insurance Prospects and

Challenges”, Life Insurance Today, 1(10): 9-13.

10. Life Insurance Today, Various Issues (2000-01 to

2009-10)

11. Mitra, Sumit and Nayak, Shilpa. “Coming to Life.”

India Today, May 7, 2001.

12. Roy, Samit. “Insurance Sector: India.” Industry

Sector Analysis, National Trade and Development

Board, US Department of State, Washington, DC,

December 1999.

13. Sinha, Tapen. Pension Reform in Latin America and

Its Implications for International Policymakers. Boston,

USA, Huebner Series Volume No. 23, Kluwer Academic

Publishers, 2000.

14. [email protected]


NON-STATUTORY DISCLOSURE BY INDIAN COMPANIES: A STUDY OF

AWARENESS AND PERCEPTION OF INVESTORS.

Dr. Yagnesh Dalvadi*

Statutory disclosure is compulsory which shows key financial performance of the company,

but recent research shows that Non- Statutory disclosure is equally important for investors and

other stake holders. To raise awareness regarding their prospects, companies give extra information

to their investors, creditors, customers and public at large. In modern times, many prosperous

companies come out with new patterns of presentation and furnish non statutory details. One of the

reasons behind increasing practices among companies to disclose non-statutory information is

that social auditing has a key importance as there is a growing awareness among corporate sector

enterprises that every such enterprise should contribute towards social goals.

The present study is intended to study the Awareness and Perception of Indian investors

regarding Non–Statutory Disclosure Practices by Indian companies. For this purpose, responses of

total 100 respondents have been collected through questionnaire. This study is useful to the public

companies and regulatory bodies. This study throws light on the direction of future non-financial

reporting.

Commerce


Dec.- 2012 -24

ISSN No.

As a part of statutory disclosure, companies

prepare Profit & Loss Account and Balance Sheet at the

end of the year to know the financial performance.

Apart from the above statements, the companies serve

much information to the shareholders and other stake

holders. This information helps to understand the

company better and forecasting the future. Non

statutory disclosure is also at par in importance with

statutory disclosure to get the complete idea of the

company’s business and prospects. It is discretionary

to give non statutory information in the annual reports.

It depends on the company’s policy to disclose it.

Companies have been increasingly disclosing non-

statutory information which is not required as per

regulations.

Prosperous companies started disclosing non-statutory

financial information like Inflation Accounting,

Human Resource Accounting, Statement of Value Added,

Social Responsibility Accounting, Sources and

Application of Fund, Comparative Statistical

Information for the past 5 to 10 years, Financial

Performance and Operation, Significant Accounting

Ratios of last 5 to 10 Years, etc. In non-statutory non-

accounting information, many companies give

summary of the company’s social activities, Pictorial

presentation of products and plants, Graphical and

diagrammatical presentations, information about main

products of the company, etc.

RESEARCH METHODOLOGY

The present study tries to understand the Awareness

and Perception of Indian investors regarding Non

Statutory Disclosure. It tries to find out the perception

of investors having stake in equity market about the

type of non-statutory information (both accounting and

non-accounting). For this, 100 investors were taken

as Samples using convenient sampling method. Their

Perception regarding Non –Statutory Disclosure (both

accounting and non-accounting) is measured. Total 7

non statutory accounting information and 5 non

statutory non-financial information were identified

from the annual reports of various companies and put

as a variable in affirmative statements and asked to

* Asst. Professor, P.G. Department of Business Studies, Sardar Patel University, Vallabh Vidyanagar


respondents to present their views in a five point scale

(from strongly disagree to strongly agree).

Findings and analysis

1- 29% of the respondents strongly agree with the

given statement, where as 26% of the respondents are

indifferent to the thought that Inflation Accounting

should be a part of annual report. 22% of the

respondents disagree whereas 16% of the respondents

agree with the given statement. Only 7% of the

respondents strongly disagree with the given statement.

Hence, Majority of the investors believe that inflation

accounting should be a part of annual report.


given statement, whereas 24% of the respondents are

neutral to the given statement. 21% of the respondents

disagree whereas 22% of the respondents agree with

the given statement. Only 12% of the respondents

strongly disagree with the given statement. Hence,

Majority of the investors believe that Human Resource

Accounting should be a part of annual report







Majority of the investors believe that Social

Responsibility Accounting should be a part of annual

report







Majority of the investors believe that Statement of Value

Added should be a part of annual report







Majority of the investors believe that Sources and

Application of Fund should be a part of annual report







Majority of the investors believe that statement of

Comparative Statistical Information of Past 5 to 10

years should be a part of annual report.







Majority of the investors believe that Statement of

Financial Performance and Operation should be a part

of annual report.







Majority of the investors believe that Significant

Accounting Ratios are helpful to know Financial

Soundness of the company. So, it should be a part of

annual report.





the given statement. 17% of the respondents strongly

disagree with the given statement. Hence, majority of

the investors are neutral about Pictorial Presentation

to be a part of annual report.





the given statement. 7% of the respondents strongly

disagree with the given statement. Hence, Majority of

the investors believe that Summary of the company

should be a part of annual report.








Majority of the investors strongly believe that

Graphical and Diagrammatical Presentation should be

a part of annual report.







Majority of the investors strongly believe that it is

necessary for a company to disclose the Main Product

with its Picture and / or Photographs. So, it should be

a part of annual report.

13- The study reveals that the investors want more

and more non-statutory information including both

accounting and non-accounting information as they

were agreeing strongly with various statements. It is

found that in non-statutory financial information,

investors want Comparative Statistical information for

the past 5 to 10 years, financial performance and

operation & significant accounting ratios to understand

the financial performance of their company in a better

way. In case of non-statutory non-financial

information, they want summary of the company’s

activity at a glance, graphical and diagrammatical

presentation of various information and information

about the main product, sale territory and production

center. Non-statutory non-financial information in the

annual reports is more desirable by the respondents as

compared to the non-statutory financial score. The

perception of respondents regarding non-statutory

accounting and non-accounting information does not

change significantly as per their profession. However,

it changes significantly in case of non-statutory non-

accounting information as per their education.

REFERENCE

1. Changyun, W. (1992). “Information, Trading

Demand, and Futures Price Volatility”, Journal of

Banking and Finance Vol. 23,797-823.

2. Cohen, Z. & Ziekel. “Investment Analysis and

Portfolio Management”, Dow Jones Irwin Co. Pvt. Ltd.

3. Eichenbaum (2001). “Stock market, Banks and

economic growth”, Review of Economics and Statistics

Vol. 75, 545-570.

4. Fred Mason (2002). “Stock market, Banks and

economic growth”, Journal of Econometrics, Vol.

45,185-200.

5. h ttp : / / m i ts lo a n . m i t . e du / j a e / p df /

Session_IV_Beyer_Cohen_Lys_Walther.pdf

6. http://www.b1ackwell-synergy.com/doi/

abs/10.1111/j.1467

7. http://www.deakin.edu.au/buslaw/aef/

workingpapers/papers/2006-01aef.pdf

8. h ttp : / / w w w. i n d i a n j o u r n a ls . c o m /

ijor.aspx?target=ijor:jims8m&volume=13&issue=2&article=002

9. http://www.mimts.org/journals-jims8m/

Non-Statutory%20Disclosure%20in%20 India%20-

% 2 0 A n % 2 0 A n a l y s i s % 2 0 o f %

20Selected%20Companies-29.pdf

10. KimWai Ho, & Kueh Hwa Ik. “The Wealth Effect

of New Product Introductions on Industry Rivals”,

Journal of Business, 2005, Volume 78, pages 969-996.

11. Lobo,.J. “Interest rate surprises and stock

prices”, the financial Review, Blackwell Publishing Vol.

37 No. 1, Feb 2002, pp 73-91(19).

12. Mark Bagnoli And Susan G. Watts, “Financial

Reporting and Supplemental Voluntary Disclosures”,

Journal of Accounting Research, Volume 45 Issue 5

Page 885-913, December 2007.

13. Mohammad, N. (2002). “Forecasting Stock

Index Futures Price Volatility: Linear vs. Nonlinear

Models, Researches of econometrics de Louvain”, Vol.

50, 349-369.

14. Robert, E. H. & Charles, I. J. (1997, May) “Levels

of Economic Activity Across Countries” The American

Economic Review, Vol. 87, No.2, Papers and

Proceedings of the Hundred and Fourth Annual Meeting

of the American Economic Association, pp. 173-177.


CORPORATE SOCIAL RESPONSIBILITY [CSR] - INDIAN SCENARIO

DR. MANOJ V. DAVE

In this article an attempt has been made to conceptualize the corporate social responsibility

and its scenario in India. The researcher had explained the Brief histological scene of CSR, CSR

practices in India, CSR attitude and values begins with an assessment of the following aspects of

each business, Annual Reports of the selected companies in regards to CSR practices.

Commerce


Dec.- 2012 -30

ISSN No.

1. INTRODUCTION –MEANING:

The meaning of the term “Corporate” relates

to the companies or concerns formed into legal bodies

which are functioning with commercial in nature under

the roof of public-private sector and also following

the guidelines of companies act and other relevant laws,

with plural aspects according to the culture and

financial environment in the nation.

The meaning of the term “Social” has

concerned to living community with different aspects

of the societal activities and behaviors’. This word is

totally and often used with the civilization, change

and development of human race and needs of the

society. In spite of it is different from individuals it

present mass or collection of them.

The meaning of the term “Responsibility”

itself express the reaction or response in civilized

nature. This word generally speaks to explain the

charge, the thing for the care of one or others and

understandability of individuals or groups in contrast

to perform assigned or unassigned duties and works.

This word is also used to acquire the answers of the

questions, “What is right?”, “What is proper?” and

“What is just?” This word also concerns to fulfillment

the liability and accountability. Liability is used in the

sense to fulfill the responsibilities according to

account, financial and legal, while accountability is the

term to express the responsibility in an ethical and

welfare way.

The term “corporate social responsibility” is often

used interchangeably with corporate responsibility,

corporate citizenship, social enterprise, sustainability,

sustainable development, corporate ethics, and in some

cases corporate governance. CSR can not only refer to

the compliance of human right standards, labuor and

social security arrangements, but also to the fight

against climate change, sustainable management of

natural resources, and protection of consumers as well

as other people of the society.

The strategic definition of the CSR encompasses

not only what companies do with their profits, but

also how they make them. It goes beyond charity,

donations, humanity, and benevolence. It also

observance and addresses how companies manage their

economic, social, and environmental impacts, as well

as their relationships in all key spheres of influence:

the workplace, the marketplace, the supply chain, the

community, and the public policy realm. Companies

are facing new demands to engage in public-private

partnerships and are under growing pressure to be

accountable not only to shareholders, but also to

stakeholders such as employees, consumers, suppliers,

local communities, policymakers, and society-at-large.

Thus, according to above explained terminologies, the

discussion of Corporate Social Responsibility [CSR]

has been covered here in connection to performance

and criticism of Financial and Economical analysis,

relying on impersonal market forces, Legal analysis,

relying on impersonal social forces, and Ethical

analysis, relying on personal moral values.

2. BRIEF HISTORICAL SCENE OF CSR:

There is an impressive history associated with the

* Associate Professor & Head, Department of Accountancy, Shri P. D. Malaviya College of Commerce,

Rajkot


evolution of the concept and definition of corporate

social responsibility. The evolution of the CSR

constructs beginning in the 1950s, which marks the

modern era of CSR. The CSR concept was first

mentioned 1953 in the publication ‘Social

Responsibilities of the Businessman’ by William J.

Bowen. Definitions of CSR expanded during the 1960s

and proliferated during the 1970s. In the 1980s, there

were fewer new definitions, more empirical research,

and alternative themes began to mature. These

alternative themes included corporate social

performance (CSP), stakeholder theory, and business

ethics theory. In the 1990s, CSR continues to serve as

a core construct but yields to or is transformed into

alternative thematic frameworks. But the term CSR

became only popular and point of awareness in the

1990 decade, when the German Betapharm, a generic

pharmaceutical company decided to implement CSR.

The generic market is characterized by an

interchangeability of products. In 1997 a halt in sales

growth led the company to the realization that in the

generic drugs market companies could not differentiate

on price or quality. This was the introduction for the

company to adopt CSR as an expression of the

company’s values and as a part of its corporate

strategies. By using strategic and social commitment

for families with chronically ill children, Betapharm

took a strategic advantage. In July 2001, the European

Commission decided to launch a consultative paper on

Corporate Social Responsibility with the title

“Promoting a European Framework for Corporate

Social Responsibility”.

During 2002 to 2009 many attempts have been made

for a business to take responsibility for its actions,

that business must be fully accountable. Social

Accounting and Reporting and Social Audit as the new

concept describing the communication of social and

environmental effects of a company’s economic

actions to particular interest groups within society and

to society at large, is thus an important element of CSR.

A report from global accounting and consulting firm

Grant Thornton that used data collected in late 2010

and early 2011 noted that CSR activities across the

world have increased dramatically in recent years as

“businesses realize their value not only commercially,

but also in terms of boosting employee value, attracting

staff and cutting costs.”

Since last four to five years CSR has become a

fundamental business practice and has gained much

attention from the management of large national-

international companies. They understand that a strong

CSR program is an essential element in achieving good

business practices and effective leadership. Companies

have explored that their impact on the economic, social

and environmental sector directly affects their

relationships with investors, employees and

customers. Recently scenario shows that in most

cases CSR is a result of a variety of social,

environmental and economic pressures.

3. CSR PRACTICES AND ISSUES IN INDIA:

The Indian Ministry of Corporate Affairs (MCA) came

into the limelight because of the corporate fraud

scandals of public utilities, government authorities,

related ministries and public -private companies and

other cases of corporate crime in India, which all had

made headlines in recent few years. India becomes the

world’s first country to make corporate social

responsibility mandatory according to the new

companies bill-2012 is passed after endorsing all the

propositions made by the Parliamentary Standing

Committee on Finance. Thus, Corporate Social

Responsibility (CSR) is become mandatory for the first

time in the world in any country. Now, as per the

guideline which will become legal provision under the

new companies bill 2012, India incorporation may

not be able to introverted and shy away from their

responsibility towards the society any more the

government may make it mandatory for companies to

set aside and deposit two percent of their average net

profit for CSR activities. The statement advocates that

those companies with net worth above Rs. 500 crore,

or an annual turnover of over Rs. 1,000 crore, shall

allocate two percent of average net profits of three

years towards CSR.

In the draft Companies Bill, 2009, the CSR clause was

voluntary, though it was mandatory for companies to

disclose their CSR spending to shareholders. It also

suggested that company boards should have at least

one female member. The CSR measures are actually

part of a new Companies Bill that has been in the works

for several years. The Companies Act of 1956, which

is currently the rule of law, has several clauses

inappropriate to the current business and economic

environment. A revision process was started in

October 2003 and a Companies Bill 2008 was tabled in


Parliament. That legislation lapsed with the dissolution

of the LokSabha (the lower house of Parliament) in

2009. Finally the bill has been passed as new company

bill-2012 and now the legislative Act procedure is going

on.

The first government paper on CSR has been released

by the ministry of corporate affairs in 2009 discussing

about the health, cultural, social welfare, and education

under the CSR head. Indeed, just about everyone sees

CSR through a different lens. When Bill Gates and

Warren Buffett came to India earlier this year, they

told Indian companies that the effort was not CSR but

CSC means Corporate Social Compulsion. An Ernst &

Young white paper also titled, that “The Emerging Role

of Business, Not Just for Profit,” offers other options:

“. CSR could be and is used synonymously with terms

like Corporate Responsibility, Corporate Citizenship,

sustainable responsible business, corporate social

performance and corporate sustainability.”

CSR is now a very common term in India and most of

the corporate houses are trying to give something to

help less privileged human beings in India and abroad.

Currently the three terms based questions are going to

become more important in the future than in the past,

particularly in the field of industry-business-

commerce-science and technology. The above three

questions have also created such complex and critical

problems for the people concern with business and

industry such as chair person, directors, executive,

manager, etc. whose decisions can affect so many

people in the ways that are outside their own control.

Business organizations have walked up to the need

for being committed towards CSR. But still majority

have just been taking up some form of humanitarian

activities for its stakeholders. Nurturing a strong

corporate culture which emphasizes CSR values and

competencies is required to achieve the synergistic

benefits.

CSR is not new to India companies like TATA and BIRLA

have been imbibing the case for social good in their

operations for decades long before CSR become a

popular cause. Organizations in India have been quite

sensible in taking up CSR initiatives and integrating

them in their business processes. In spite of having

such life size successful examples, CSR in India is in a

very emerging stage. It is still one of the least

understood initiatives in the Indian development

sector.

Presently in India, it is hard for one sole entity to bring

about change, as the gauge is vast. Organizations have

the know-how, strategic thinking, manpower, and

financial strength to enable widespread social

transformation. Operative partnerships between

corporations, NGOs and the government will place

India’s social development on a developing mode.

Companies now have specific departments and teams

that develop specific policies, strategies and goals for

their CSR programs and set separate budgets to support

them. Most of the time, these programs are based on

well-defined social beliefs or are carefully aligned with

the companies’ business domain.

Organizations in India have been quite sensible in

taking up CSR initiatives and integrating them in their

business processes. It has become progressively

projected in the Indian corporate setting because

organizations have recognized that besides growing

their businesses, it is also important to shape

responsible and supportable relationships with the

community at large.

Recently, the government also sought to include

vocational training for employees as part of CSR.

Successful and dominant CSR plans take organizations

ahead to fulfillment with legislation and lead them to

respect moral values and respect people, communities

and the natural environment. Corporate social

responsibility is sustainable involving activities that

an organization can maintain without negatively

affecting the business goals.

CSR attitude and values begins with an

assessment of the following aspects of each

business:

1. Customers’ awareness

2. Suppliers’ awareness

3. Environmental and ecological balance

4. Community protraction and sustain

5. Employees’ welfare management

Under the CSR the following rules should be

required for companies to comprise information

on a series of topics in their annual report, such

as:

§ Status of employees

§ Mobility of staff

§ Work hours

§ Environment protection steps


§ SR awareness to HR

§ Industrial Relations

§ Social Relations

§ Health and Safety steps

§ Training

§ Health policy

§ Profits distribution

§ Outsourcing

§ Overall Welfare steps

Companies’ management must also illustrate their

manners when it comes to communities who are

concerned by their activities in the countries where

they have offices. They must explain the ways in which

their sub-contractors respect International Labor

Organization agreements. They must also report on

ecological issues such as the measure of progress in

terms of energy effectiveness and dipping

environmental impacts; conditions on use of land, air

and water; and documentation obtained in the area of

environmental safety.

People, sustainability, and the environment are

positioned at the heart of corporate strategy. Certain

solutions that defend the environment while ensuring

financial expansion and social progress. Company

should engage in providing a major contribution to

global sustainable development. Generally under the

CSR activities the company can expect the cooperation

of the local communities and people in the countries

they are working.

Following are the certain studies derived from the

Annual Reports of the selected companies in

regards to CSR practices.

Tata Group of companies limited

Tata Group in India has a range of CSR projects, most

of which are community improvement programs. For

example, it is a leading provider of maternal and child

health services, family planning, and has provided 98

percent immunization in Jamshedpur. The company

also endorses sports as a way of life. It has established

a football academy, archery academy, and promotes

sports among employees. It offers healthcare services

all over the country with programs like rural health

development. Tata Group also has an organized relief

program in case of natural disasters, including long-

term treatment and rebuilding efforts. It did laudable

work during the Gujarat earthquakes and Orissa floods.

It also supports education, with over 500 schools, and

also is a benefactor of the arts and culture. It has done

abundant work in improving the environment and local

populations around its industries.

Aptech limited

Aptech is a leading education player with a global

presence that has played a broad and continued role to

encourage and nurture education throughout the

country since its inception. As a global player with

complete solutions-providing capabilities, Aptech has

a long history of participating in community activities.

It has, in association with leading NGOs, provided

computers at schools, education to the deprived, and

training and awareness-camps.

Infosys limited

Infosys is aggressively involved in a variety of

community growth programs. In 1996, the company

created the Infosys Foundation as a not-for-profit trust

to which it contributes up to 1 percent of profits after

tax every year. Moreover, the Education and Research

Department at Infosys also works with employee

volunteers on community development projects. The

management team at Infosys continues to set examples

in the area of corporate citizenship and has involved

itself vigorously in key national bodies. They have

taken initiatives to work in the areas of research and

education, community service, rural outreach

programs, employment, healthcare for the poor,

education, arts and culture, and welfare activities

undertaken by the Infosys Foundation.

Mahindra & Mahindra limited

Mahindra & Mahindra limited is an auto manufacturing

company. The K. C. Mahindra Education Trust was

established in 1953 with the purpose of promoting

education. Its vision is to renovate the lives of people

in India through education and financial assistance

across age groups and across income strata. The K. C.

Mahindra Education Trust undertakes a number of

education plans, which make a difference to the lives

of worthy students. The Trust has provided more than

Rs. 7.5 crore in the form of grants, scholarships and


loans. It promotes education mostly by the way of

scholarships. The Nanhi Kali (children) project has

over 3,300 children under it and the company aims to

increase the number to 10,000 in the next two years

by reaching out to the underprivileged children,

especially in rural areas

Unitech Limited

Unitech is amongst India’s leading business groups,

having an outstanding track record in large scale,

integrated real estate development with ac well

diversified product portfolio comprising residential,

commercial, retail, hospitality, entertainment, IT Park

and Special Economic Zone (SEZ) developments. The

company conducts its business in a way that creates

Social Environmental and Economic benefits to the

communities in which it operates and the Company

has always been earnest for contributing towards the

betterment of society through various welfare

initiatives viz. providing education, skill development

and healthcare for the underprivileged section of the

society. Some other CSR initiatives such as Safety

measure at the Construction Site, Rainwater Harvesting

projects in townships’, Social Forestry for

environmental sustainability etc. The company’s brand

is associated with GREEN and company ensures

Plantation on a continuous basis in and around all their

locations.

MIC Electronics limited

MIC Electronics limited is delivering world-class

products of True Colour LED Video Display Systems.

The company is proactively practicing the guidelines

laid down. The operations of the company are not

energy intensive. However, adequate measures have

been taken to conserve and reduce the energy

consumption by using energy efficient hardware and

other equipment, such as use of AC. The company

believes that energy saved is energy produced. Health,

Safety and environmental protection and acquired an

ISO-14001 for its environment management system.

Company attempts to achieve internationally

recognized production and quality control with high

level of customer satisfaction.

Ranbaxy Laboratories limited

Ranbaxy Laboratories limited is internationally

functioning company, engaging in global

pharmaceutical-medicine production and market with

high quality of research and development in global

pharma-health medical industry. Under Environment,

Health, and Safety steps the company always acts in a

totality manner so that the employees, the community

at large and the environment including the natural

resources’ are well protected. “Touching life with

intensive care” is the CSR motto of the company.

Access to Medicine (ATM) Foundation, a Netherlands-

based non-profit organization, ranked Ranbaxy as the

world-wide industry leader under the generics category

for improving access to needed medicines.

4. CONCLUSION:

Corporate Social Responsibility Practices in India sets

a realistic agenda of grassroots development through

alliances and partnerships with sustainable

development approaches. At the heart of solution lies

intrinsic coming together of all stakeholders in shaping

up a distinct route for an equitable and just social

order. The survey on CSR- Practices is timely and

appropriate. The survey is expected to facilitate

formation of an alliance of CSR initiatives so that such

initiatives can be further stream lined, focused and

converged to a powerful force of intervention. One of

the major objectives of the survey is to bring out in

open the current status of CSR thereby giving both the

NGOs and the common man an understanding of the

various initiatives undertaken by corporate and the

role that is played by the government in the field. The

survey also underlines the various issues - current

CSR policies, major stakeholders - their current and

future plans, geographical areas covered, role of civil

society and government, challenges, recommendations

etc.

How to define CSR, particularly in India, is clearly a

tricky question. CSR can mean different things to

different people and in many cases, companies engage

in a portfolio of “responsible” activities. In India, many

companies support health and education in their local

communities, and increasingly companies are looking

to mitigate harm by establishing Health, Safety and

Environment (HSE) guidelines. As, today’s typical

company is not seeing the full potential of CSR but is

instead looking through a very narrow lens that

concentrates only on its ability to extend financial

support to socially relevant projects.

How to govern both CSR and the BUSINESS? It is a fatal

combination in India? On one hand in this competitive


world, running a business itself is a challenge. It can be

compared with sitting on a lion. If you get down, the

lion will eat you. If you keep riding, there is constant

fear. If you govern the lion, it either has to be caged or

has to be in the open forest with imprisonment and

grounds otherwise it could be in the circus. After all

the company it will have to select such options of good

CRS.

It is important for companies to minimize harm caused

to society and the environment from business

operations and fulfilling obligations to the community

through charitable acts is a critical component of most

corporations’ CSR portfolios. Thus traditional forms

of CSR will continue to have a place in the toolkit of

most companies in India and elsewhere. Yet there is

another form of CSR that has the power to generate

deeper and more long-lasting social change while also

strengthening India for competitive advantage. These

opportunities tend to be strongest where business

opportunities, social needs, and corporate assets

interconnect. Thus, providing jobs to many is also CSR.

The Institute of Chartered Accountants of India (ICAI)

as the accounting regulator has set up a subcommittee

to identify what should come under the CSR Accounting

and Reporting and Auditing norms and what shouldn’t

in coming days of CSR authorization by companies’

legislation.

Ultimately we should accept that, “CSR is a journey

and not a destination.” A lot of ethical steps are needed

actually to fulfill it rather legislative.

REFERENCES:

Ashish Urkude, opinion on CSR in India, July, 2011

Y. C. Deveshwar- ITC Chairman - noted in a recent

speech to shareholders.

Sudhir Singh KPMG partner (development sector

practice) Dungarpur

KPMG and the Associated Chambers of Commerce

and Industry of (ASSOCHAM)

Carroll -Business Ethics and Corporate Governance

and CSR (2009)

India knowledge Wharton WEB (2012)

The Oxford Handbook of Corporate Social

Responsibility (2008)

Mathur, Corporate Governance and Business

Ethics: Text & Cases, McMillan India, Ltd. (2007)

Philip Kotler and Nancy Lee, Corporate Social

Responsibility-Doing the most Good for Your

Company, John Wiley and Sons, Inc. New Jersey

(2005)

Companies bill 2009, twenty first report by ministry

of corporate affairs (2009)

Michael E. Porter and Mark R. Kramer - Harvard

Business Review (2010)

Annual reports -2011-12 of the,

-Tata Group of companies limited

-Aptech limited

-Infosys limited

-Mahindra & Mahindra limited

-Unitech Limited

-MIC Electronics limited

-Ranbaxy Laboratories limited


EMPLOYER BRANDING IN MODERN BUSINESS

Dr.Mahesh.M. Barad

Employer branding represents a firm’s efforts to promote, both within and outside the firm,

a clear view of what makes it different and desirable as an employer. In recent years employer

branding has gained popularity among practicing managers. Given this managerial interest, this

article presents a framework to initiate the scholarly study of employer branding. Combining a

resource-based view with brand equity theory, a framework is used to develop testable propositions.

The article discusses the relationship between employer branding and organizational career

management. Finally, it outlines research issues that need to be addressed to develop employer

branding as a useful organizing framework for strategic human resource management. Employer

attractiveness is defined as the envisioned benefits that a potential employee sees in working for a

specific organization. It constitutes an important concept in knowledge-intensive contexts where

attracting employees with superior skills and knowledge comprises a primary source of competitive

advantage. In this paper, we identify and operationalise the components of employer attractiveness

from the perspective of potential employees. Specifically we develop a scale for the measurement of

employer attractiveness. Implications of the research are discussed, limitations noted and future

research directions suggested. In today’s highly competitive job market, employer branding is a

crucial tool for attracting and retaining the right kind of talent. It helps you recruit highly-skilled

and promising new employees and it enhances their loyalty by increasing their identification with

the company. It also raises an organization’s visibility in the job market and makes it stand out

from the competition.

* Sheth S.V.Arts & Commerce College – Mandvi, Kachchh

COmmerce


Dec.- 2012 -34

ISSN No.

EMPLOYER BRANDING:

v Definition & importance of employer branding:

“There is no truth. There is only

perception.” — Gustave Flaubert

This is through the culture, personality, and

image. Culture broadly represents how it is to work in

company. Personality and image represent the mental

image that people have about any organisation. For

example, Google might represent a youthful, technology

driven individual. It may also symbolises freedom,

enterprise, and innovation for current or prospective

employees.

Employer branding has external and internal

aspects. The internal factors are the culture, HR

practices, and the overall employment experience that

a current employee has. The external factors are what

a prospective employee feels about the organisation.

Accordingly to Richard Mosley, who is an

employer branding guru, the critical aspect is to have

consistency between your internal employer brand and

external employer brand.

If what the organisation promises to the

external world is inconsistent with what is happening

in the organisation, it can create conflict with the new

joiners who expects what was promised through

branding. While the current employees on the other

hand might feel cheated by the practices followed.

Instead of supporting the organisation in retaining and

attracting talent, it will leave both the current and future

employees unhappy.

In developing and managing an employer brand, the

critical aspect would be the development of “Employer

Value Proposition”. Employer Value Proposition speaks


about the direct and indirect benefits of working with

the brand. It also speaks about the core aspects of the

association.

In today’s highly competitive job market,

employer branding is a crucial tool for attracting

and retaining the right kind of talent. It helps you

recruit highly-skilled and promising new

employees and it enhances their loyalty by

increasing their identification with the company.

It also raises an organization’s visibility in the job

market and makes it stand out from the

competition.

Determine how employer branding is

viewed inside your company

You should define what employer branding

means to your company.Your employer brand is “the

image of your organization as a ‘great place to work’

in the mind of current employees and key stakeholders

in the external market (active and passive candidates,

clients, customers, and other key stakeholders).”

Employer branding is therefore concerned with the

attraction, engagement, and retention initiatives

targeted at enhancing your company’s employer brand.

If you take too narrow a focus on employer branding,

it is likely to end up as a departmental project that’s

not aligned with the overall business strategy. For

example, if you believe employer branding is only

about recruitment, it is likely your organization will

have already closed up shop on employer branding as

a result of the economic downturn while competitors

who understand the concept are continuing to invest

resources as part of a long-term employer branding

strategy to attract and retain talent.

DIMENSIONS OF ATTRACTIVENESS IN

EMPLOYER BRANDING:

fact that current employees enjoy an ‘insider’

role and want information in advance of marketing

communications (Gilly & Wolfinbarger 1998) and that

future employees can be influenced by mainstream

advertising (Ewing et al. 2002).

· Internal branding:

Employees are becoming central to the

process of brand building and their behavior can either

reinforce a brand’s advertised values or, if inconsistent

with these values, undermine the credibility of

advertised messages. It is therefore important to

consider how employees’ values and behavior can be

aligned with a brand’s desired values (Harris & de

Chernatony 2001). Internal branding, according to

Bergstrom et al. (2002), refers to three things:

communicating the brand effectively to the employees;

convincing them of its relevance and worth; and

successfully linking every job in the organization to

delivery of the ‘brand essence’. Coca-Cola’s renowned

former chief marketing officer, Sergio Zyman (2002,

p. 204) concurs: ‘Before you can even think of selling

your brand to consumers, you have to sell it to your

employees.’ He goes on to argue that how a brand is

positioned in the minds of consumers is heavily

dependent on a company’s employees.

· Employer branding:

Employer branding has been described as the

‘sum of a company’s efforts to communicate to existing

and prospective staff that it is a desirable place to work’

(Lloyd 2002). Advertising may become a critical tool

in the efforts that firms make to identify, acquire and

retain skilled employees. Increasingly, it is likely to

also be used to create what has in the popular business

press recently been referred to as ‘employment brands’

(Sherry 2000) – building and sustaining employment

propositions that are compelling and different. The

moniker ‘employer brand’ appears to have first been

coined by Ambler and Barrow (1996), who defined it

as ‘the package of functional, economic and

psychological benefits provided by employment, and

identified with the employing company’. just like a

traditional brand, an employer brand has both

personality and positioning. Employment branding is

therefore concerned with building an image in the

minds of the potential labour market that the company,

above all others, is a ‘great place to work’(Ewing et al.

2002). According to human resources consultants

HewittAssociates,2 there are five steps to developing

a strong employer brand:-

(i)understand your organization,

(ii) Create a ‘compelling brand promise’ for employees

that mirrors the brand promise for customers,

(iii) Develop standards to measure the fulfillment of

the brand promise,

(iv) ‘Ruthlessly align’ all people practices to support

and reinforce the brand promise, and

(v) Execute and measure.

Moreover, it is posited that companies with

strong employer brands can potentially reduce the cost

of employee acquisition, improve employee relations,

increase employee retention and even offer lower


salaries for comparable staff to firms with weaker

employer brands(Ritson 2002).Collins and Stevens

(2002), confirming prior research, suggest that early

recruitment activities are indirectly related to

intentions and decisions through two dimensions of

employer brand image: general attitudes towards the

company and perceived job attributes. Examples of

employer brands, and indeed employer advertising, are

becoming increasingly common. Ewing et al. (2002)

classify existing approaches to employment branding

by identifying three basic types of employment

advertising strategy, and provide numerous examples

of each. Lloyd (2002) cites the example of an Australian

bank’s TV commercial, clearly aimed at existing and

potential employees. While there are numerous

examples of’ employer advertising’, few are as explicit

as a recent DaimlerChrysler ad, which appears to target

potential employees as the primary audience. The

double-page spread advertisement in Figure 1 shows a

number of DaimlerChrysler vehicles, positioning them

not as consumer products but as company cars (i.e. a

potential benefit for prospective employees). The copy

is even more direct: ‘As successful car companies there

are many things that make working for us an attractive

prospect. In addition to a diverse range of career

possibilities.

* 4 STEPS FOR ENPLOYER BRANDING PLAN:

· Step 1: Define your key target audience

· Step 2: Define your Employer Value Proposition

· Step 3: Define your Message (external and internal

branding)

· Step 4: Develop a communication strategy and toolkit

* EMPLOYER BRANDING IN INDIA:

Just like any other brand, an Employer Brand

has value and positioning. Employer branding is

critical to build an image in the minds of potential

employees and market the company as a ‘great place

to work’.

The objective of Employer Branding is quite

simple. It is a strategy employed by an organisation to

create an Employer Value Proposition (EVP) that

conveys to desired current and prospective employees

why the organisation is unique, appealing and a

fantastic place to work in.

Employer Branding gains tremendous

importance in times when the talent pool is shrinking

and is becoming increasingly difficult to attract and

retain talent. It then becomes critical to position the

organisation in the minds of the target audience to give

it every possible advantage in attracting employees with

superior skills and knowledge - a primary source of

competitive advantage for any organisation.

Is Employer Branding widely prevalent in the

Indian Industry? What are organisations’ attitudes and

preparedness towards Employer Branding? What are

the challenges that they face in its implementation?

In a survey conducted by TJinsite the research site of

TimesJobs.com it is revealed that Employer Branding

is not very prevalent in the Indian industry. However,

they do believe that companies with strong employer

brands can potentially reduce the cost of employee

acquisition, improve employee relations and also

helps increase employee retention.

The Latest TJinsite Research Report throws

light on this fact - Overall, only 24% say that they

have a clear Employer Branding strategy. More than

40% claim that, yes, they have a strategy, but it could

be developed further; and another 26% who say that

do not have one, but they are working on it; which

could be interpreted as ‘such a strategy is not priority,

we have more pressing matters on our hands!’ A lack

of vision and clarity is seen as the primary challenge

in realizing Employer Branding. This is strongly felt

in the BFSI and the BPO sectors, where 75% state this

as a problem.

A ROAD MAP AHEAD: Future research:

In today’s increasingly globalised economy,

organizations are constantly attempting to recruit the

best talent from all over the world. Thus, they need to

understand the impact of different cultures and

nationalities on the perceptions of potential

employees with regard to their employer brand. An

allied avenue for future inquiry is that of country-of-

origin (COO) employer brands (EB). So-called ‘brain

drains’ (diasporas) are seriously affecting many


countries around the world particularly in the

antipodes (Australia, New Zealand, South Africa). For

example, Australia is experiencing a mass exodus of

mainly young, professional or graduate workers of

about 120,000 per year (from a population of almost

19 million). In fact, more than 5% of the Australian

population work overseas, compared with 20% of New

Zealanders and only 2% of Americans (Fray 2003).

Another direction researchers might consider is how

the so-called

‘employment brand’ affects post-employment

dissonance. For product purchases, the brand is used

to assure consumers that they have made the right

product or service choice to increase consumer

satisfaction and decrease post-purchase dissonance.

Similarly, there is a need to determine whether the

employer brand can increase job choice satisfaction

and decrease post-employment dissonance once an

employee begins his/her job. A longitudinal study of

the perceptions of final-year students before and after

entering the workforce would assist in gauging whether

their perceptions of importance with regard to job

attributes would change over time. Final-year students

may have more naive perspectives of job attributes, as

they have not yet experienced ‘real’ working life.

Finally, the relatively underexplored (at least by

marketers) area of employee branding may hold some

research potential. Recent attention in the business

press to ‘pitching oneself ’ (Faust & Faust 2003;

O’Reilly 2003) builds on Bolles (1997) best-selling job-

hunters’ guide, What Color is your Parachute?. Nobel

Prize-winning economist Michael Spence’s (1973)

work on signalling theory could provide a rich

theoretical foundation to explore the notion of

‘employee branding’ in a contemporary marketing

context.

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Ambler, T. (2000) Marketing and the Bottom Line.Pearson Education Ltd, UK.Ambler, T. & Barrow, S. (1996) The employer brand.Journal of Brand Management,4(3), pp. 185–206.Babbie, E.R. (1992) The Practices of Social Research.Belmont, CA: Wadworth.Bentler, P.M. (1990) Comparative fit indexes instructural models. Psychological

Bulletin (March), pp. 238–246.Bergstrom, A., Blumenthal, D. & Crothers, S. (2002)Why internal branding matters:

the case of Saab. Journal of Communication

Management, 5(2/3), pp. 133–142.Berry, L.L. (1981) Perspectives on the retailing ofservices, in Stampfl, R.W. &Hirschman, E.C. (eds), Theory in Retailing: Traditional

and Non-traditional Sources.Chicago, IL: American Marketing Association, pp. 9–20.Berry, L.L. & Parasuraman, A. (1991) Marketing

Services. Competing Through Quality.New York: The Free Press.Biel, A.L. (1999) Exploring brand magic, in Jones, J.P.(ed.), How to Use Advertising to

Build Strong Brands. Thousand Oaks, CA: SagePublications, pp. 157–176.Bolles, R.N. (1997) What Color is your Parachute?

Berkley, CA: Ten Speed Press.Calder, B.J., Philips, L.W. & Tybout, A.M. (1981)Designing research for application.Journal of Consumer Research, 8 (September), pp. 197–207.Carman, J.M. (1990) Consumer perceptions of servicequality: an assessment of theSERVQUAL dimensions. Journal of Retailing, 66(1),pp. 33–55.Carmines, E.G. & Zeller, R.A. (1988) Reliability and

Validity Assessment. Beverly Hills,CA: Sage.Churchill, G.A. Jr (1979) A paradigm for developingbetter measures of marketingconstructs. Journal of Marketing Research, XVI, pp. 64–73.Collins, C.J. & Stevens, C.K. (2002) The relationshipbetween early recruitmentrelatedactivities and the application decisions of new labor-market entrants: abrand equity approach to recruitment. Journal of

Applied Psychology, 87(6),pp. 1121–1133.Cronbach, L.J. (1951) Coefficient alpha and the internalstructure of tests.Psychometrika, 16(3), pp. 297–333.Economist, The (2003) Economic and financialindicators, 17 May, 367(8324), p. 112.Ewing, M.T. & Caruana, A. (1999) An internalmarketing approach to public sectormanagement: the marketing and human resourcesinterface. International Journal

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171


Commerce


Dec.- 2012 -38

ISSN No.

TOOLS AVAILABLE TO ENTERPRISES FOR RISK

MANAGEMENT: AN SIMPLIFIED APPROACH

DR. YAGNESH DALVADI* & MS. ANU VERMA **

Enterprises operate in a dynamic environment. Hence the future remains uncertain to a

large extent, allowing for fate to play a part in the results that are achieved by the enterprises.

Therefore enterprises exposed with risk. Risk is a situation involving exposure to danger. Risk

management is concerned with the outcome of future events, whose exact outcome is unknown,

and with how to deal with these uncertainties. In general, outcomes are categorized as favorable or

unfavorable, and risk management is the art and science of planning, assessing, handling, and

monitoring future events to ensure favorable outcomes. Thus, a good risk management process is

proactive in nature. For better risk management, we need to use various tools of derivatives. We can

compare Derivatives with aircraft: In the right hands, they are wonderful vehicles, but in the wrong

hands, or incompetently handled, they are dangerous.

In this paper, an attempt has been made to simplify the various tools available to enterprises

for its risk management.

* Asst. Professor, P G Department of Business Studies, S.P. University, Vallabh Vidyanagar

** Research Scholar, P G Department of Business Studies, S.P. University, Vallabh Vidyanagar

INTRODUCTION

Due to change in business environment, enterprises

exposed to risk. To decrease the impact of enterprises

using risk management tools. For risk management,

companies uses Financial Derivative products.

Financial derivatives enhance the abil ity to

differentiate risk and allocate it to those investors most

able and willing to take it. Financial markets are

generally volatile, and hence the concern of all the

financial agents is to hedge the risk factors. The concept

of derivatives comes into frame to reduce the price-

related risks. In less than three decades of their coming

into vogue, derivatives markets have become the most

important markets in the world. They came into the

spotlight along with the rise in uncertainty post-1970.

Today derivatives have become a part and parcel of

day-to-day life of ordinary people.

Derivatives were originally designed in India to hedge

food products and some precious metals. Starting from

a controlled economy, India has moved towards a world

where prices fluctuate every day. The introduction of

risk management instruments in India gained

momentum in the last few years due to the liberalization

process. Hence, Derivatives are an integral part of the

liberalization process to manage risk. NSE gauging the

market requirements initiated the process of setting

up derivatives market in India. Indian capital market

finally acquired the much awaited international

flavour when it introduced trading in futures and

options on National Stock Exchange (NSE) in 2000 and

on Bombay Stock Exchange (BSE) in 2001.

CONCEPT OF DERIVATIVES

Any financial instrument that is derived from an

underlying asset like index, event, value or condition

is known as a derivative. Derivative traders enter into

an agreement to exchange assets or cash over time

based on the underlying asset.

Derivatives are highly leveraged - a small movement

in the value of underlying asset can lead to a large

difference in value of the derivative.

Investors can use derivatives to speculate and earn

profit if the value of the underlying asset moves in the

expected way. Else wise, traders can use derivatives to

mitigate or hedge the risk in the underlying, by entering

into such a derivative contract whose value moves in


the opposite direction to their underlying position and

cancels either part or all of it.

Derivatives are broadly categorized depending on:

• Relationship of the underlying asset with the

derivative

• Type of underlying

• Market in which they trade

Derivatives in general refer to contracts that derive

from another - whose value depends on another contract

or asset. Derivatives are essentially devised as a

hedging device to insulate a business from risks over

which a business has no or little control, but in practice,

they are also used as yield-kickers.

Accounting standard SFAS 133 defines a derivative thus:

A derivative instrument is a financial instrument or

other contract with all three of the following

characteristics:

a. It has (1) one or more underlying, and (2) one or

more notional amounts or payment provisions or both.

Those terms determine the amount of the settlement

or settlements... and in some cases, whether or not a

settlement is required.

b. It requires no initial net investment or an initial net

investment that is smaller than would be required for

other types of contracts that would be expected to have

a similar response to changes in market factors.

c. Its terms require or permit net settlement, it can

readily be settled net by a means outside the contract,

or it provides for delivery of an asset that puts the

recipient in a position not substantially different from

net settlement.

SOURCES OF RISK

Interest rate risk:

Banks and financial institutions face the risk of

changes in interest rates. If a bank has liabilities

carrying floating costs and assets having fixed rates, it

faces the risk of an adverse movement, that is, a decline

in interest rates. This risk can be sheltered by writing

an interest rate swap - that is, swapping the floating

rate for fixed rates.

Associated with interest rate movements is the basis

risk, that is risk of unpredicted changes in the basis

on which interest rates float. Let us say, a business

has loans which are floating with reference to the

LIBOR or EURIBOR, whereas the assets of the business

are floating with reference to US treasuries. To cushion

against this risk, the business may like to swap the

basis by entering into a basis swap.

Foreign exchange risk:

If a business has assets or liabilities denominated in

foreign currency, there is a risk of adverse changes in

exchange rates. This risk is sheltered by foreign

exchange futures or forward covers.

Commodity risks:

A business having any position on commodities faces

risk of changes in commodity prices. Such risks are

also sheltered by futures and forwards in commodities.

Risk on capital market instruments:

If someone holds equity shares, there is a risk that

prices of equity shares will move up or down. To

manage this risk, there are various futures and options

available.

Credit risk:

Yet another risk in all financial transactions is credit

risk. Credit derivatives are used to hedge against credit

risk.

Weather risk:

Even something like risk of changes in weather is

hedged and transferred. There is a variety of weather

derivatives, that is, instruments that pay off based on

weather changes.

PARTICIPANTS IN DERIVATIVES MARKET

Three broad categories of participants - hedgers,

speculators, and arbitrageurs - trade in the derivatives

market.

• Hedgers face risk associated with the price of

an asset. They use futures or options markets to reduce

or eliminate this risk

• Speculators wish to bet on future movements

in the price of an asset. Futures and options contracts

can give them an extra leverage; that is, they can

increase both the potential gains and potential losses

in a speculative venture.

• Arbitrageurs are in business to take advantage

of a discrepancy between prices in two different

markets. If, for example, they see the futures price of

an asset getting out of line with the cash price, they

will take offsetting positions in the two markets to

lock in a profit.

TOOLS AVAILABLE FOR RISK MANAGEMENT

Derivative instruments are classified as:

• Forward Contracts

• Futures Contracts


• Options

• Swaps

Derivatives can also be classified as either forward-

based (e.g., futures, forward contracts, and swap

contracts), option-based (e.g., call or put option), or

combinations of the two. A forward-based contract

obligates one party to buy and a counter party to sell

an underlying asset, such as foreign currency or a

commodity, with equal risk at a future date at an agreed-

on price. Option-based contracts (e.g., call options, put

options, caps and floors) provide the holder with a right,

but not an obligation to buy or sell an underlying

financial instrument, foreign currency, or commodity

at an agreed-on price during a specified time period or

at a specified date.

Forward Contract:

Forward contracts are negotiated between two parties,

with no formal regulation or exchange, to purchase

(long position) and sell (short position) a specific

quantity of a specific quantity of a commodity (i.e.,

corn and gold), foreign currency, or financial

instrument (i.e., bonds and stock) at a specified price

(delivery price), with delivery or settlement at a

specified future date (maturity date). The price of the

underlying asset for immediate delivery is known as

the spot price.

Forward contracts may be entered into through an

agreement without a cash payment, provided the

forward rate is equal to the current market rate.

Forward contracts are often used to hedge the entire

price changed of a commodity, a foreign currency, or a

financial instrument. irrespective of a price increase

or decrease.

Futures Contract:

Futures are standardized contracts traded on a regulated

exchange to make or take delivery of a specified

quantity of a commodity, a foreign currency, or a

financial instrument at a specified price, with delivery

or settlement at a specified future date. Futures

contracts involve U.S. Treasury bonds, agricultural

commodities, stock indices, interest-earning assets,

and foreign currency.

A futures contract is entered into through an organized

exchange, using banks and brokers. These organized

exchanges have clearinghouses, which may be

financial institutions or part of the futures exchange.

They interpose themselves between the buyer and the

seller, guarantee obligations, and make futures liquid

with low credit risk. Although no payment is made

upon entering into a futures contract, since the

underlying (i.e. interest rate, share price, or commodity

price) is at-the-market, subsequent value changes

require daily mark-to-marking by cash settlement (i.e.

disbursed gains and daily collected losses). Similarly,

margin requirements involve deposits from both

parties to ensure any financial liabilities.

Futures contracts are used to hedge the entire price

change of a commodity, a foreign currency, or a

financial instrument since the contract value and

underlying price change symmetrically.

Options Contract:

Options are rights to buy or sell. For example, the

purchaser of an option has the right, but not the

obligation, to buy or sell a specified quantity of a

particular commodity, a foreign currency, or a financial

instrument, at a specified price, during a specified

period of time (American option) or on a specified

date (European option). An option may be settled by

taking delivery of the underlying or by cash settlement,

with risk limited to the premium.

The two main types of option contracts are call options

and put options, while some others include stock (or

equity) options, foreign currency options, options on

futures, caps, floors, collars, and swap options.

• American call options provide the holder with

the right to acquire an underlying product (e.g., stock)

at an exercise or strike price, throughout the option

term. The holder pays a premium for the right to benefit

from the appreciation in the underlying.

• American put options provide the holder with

the right to sell the underlying product (e.g., stock) at

a certain exercise or strike price, throughout the option

term. The holder gains as the market price of the

underlying (stock price) falls below the exercise price.

• An interest rate cap is an option that allows a

cap purchaser to limit exposure to increasing interest

rates on its variable-rate debt instruments.

• An interest rate floor is an option that allows

a floor purchaser to limit exposure to decreasing

interest rates on its variable-rate investments.

Generally, option contracts are used to hedge a one-

directional movement in the underlying commodity,

foreign currency, or financial instrument.

Swaps Contract:

A swap is a flexible, private, forward-based contract or

agreement, generally between two counter parties to


exchange streams of cash flows based on an agreed-on

(or notional) principal amount over a specified period

of time in the future.

Swaps are usually entered into at-the-money (i.e. with

minimal initial cash payments because fair value is

zero), through brokers or dealers who take an up-front

cash payment or who adjust the rate to bear default

risk. The two most prevalent swaps are interest rate

swaps and foreign currency swaps, while others include

equity swaps, commodity swaps, and swaptions.

• Swaptions are options on swaps that provide

the holder with the right to enter into a swap at a

specified future date at specified terms (stand-alone

option in a swap) or to extend or terminate the life of

an existing swap (embedded option on a swap).

Swap contracts are used to hedge entire price changes

(symmetrically) related to an identified hedged risk,

such as interest rate or foreign currency risk, since

both counter parties gain or lose equally.

CONCLUSION

The variety of derivatives instruments available for risk

mitigation and minimization to the enterprises now

days like Forward Contracts, Futures Contracts, Options

and Swaps etc. There are many upcoming instruments.

The company that can use it wisely can excel its

financial and overall performance. However the

Companies should use it cautiously. The product

should be used for hedging against the financial risk

and not for profit making. India is one among the few

countries which has a long trading experience in one

form or the other of derivatives. In terms of growth of

derivatives market, and the variety of derivatives users,

the Indian market has equaled or exceeded other

markets.

REFERENCES

1. Arditti Fred D., (1996), “Derivatives: A

Comprehensive Resource for Options, Futures, Interest

rate” Island Press.

2. Durbin Michael (2010), “All About Derivatives”

McGraw-Hill Professional.

3. Kennedy J. E., Hunt Philip James (2004) “ Financial

Derivatives in Theory And Practice”, John Wiley and

Sons.

4. www.bizzfunds.com/funds-matter/importance-role-

of-financial-derivatives/

5. www.business.mapsofindia.com/investment-

i n du s tr y / p a r t i c i p a n ts - a n d- f u n c t i o n s - i n -

derivatives.html

6. www.financial-dictionary.thefreedictionary.com/

underlying+asset

7. www.india-accounting.com/derivbasics.htm

8. www.tax4india.com/derivatives.html


Dividend Practice, Leverage analysis, and Capital structure analysis of

Abuja Cement Ltd.”; a case Study

Dr. Butalal C. Ajmera*

This paper has given more emphasis on Capital structure (D/R Ratio) of the company

wider variances in shareholders earning (EPS) has come due to changes in capital structure of the

company during the study period, for that analysis has made to know all variables impact on EPS,

whereas variables are taken EPS, EBIT, DPS, D/E, etc.A study found that capital structure made

effect on market price of share during the study period.

* Assistant professor, Department of Business Administration, M.K. Bhavnagar University, Bhavnagar

INTRODUCTION:

The important decision of a firm is its dividend

policy. The financial manager must decide

whether the firm should distribute all profits or

retain it in the firm or distribute part and retain

the balance. The dividend decision should be

taken in terms of its impact on the shareholders’

wealth. The optimum dividend policy is one,

which maximizes the market value of share.

Thus, if the shareholders are not indifferent to

the firm’s dividend policy, the financial manager

must determine the optimum dividend-payout

ratio. Another important aspect of the dividend

decision is the factors determining dividend

policy of the firm in practice. Concepts of

financial and operating leverages are important

for evaluating business and financial risk of a

firm. Operating leverage refers to the use of fixed

costs in operations and it is related to the firm’s

production processes. The greater the operating

leverage the higher is the risk in operations. At

the same time, a high degree of operating

leverage causes profits to rise rapidly after the

break-even point is reached. Financial leverage

refers to the use of debt in financing non-current

assets. If the return on assets exceeds the cost of

debt, the leverage is successful i.e., it improves

returns on equity. While this being so, a high

financial leverage magnifies financial risk. At

some degree of financial leverage the cost of debt

rises because of increased risk with the higher

fixed charges. When this happens, riskiness of

the firm also increases in the eyes of equity

investors who start expecting a higher return to

compensate for the increased risk burden.

Financial leverage and operating leverage are

related with each other. Both have similar effects

on profits. A greater use of either i.e., operating

or financial leverage leads to following results

· The break-even point is raised

· The impact of change in the level of sales

on profits is magnified.

Operating and financial leverages have

reinforcing effects. Operating, or first-stage

leverage affects earnings before interest and

taxes (i.e., net operating income) while financial,

or second-stage leverage affects earnings after

interest and taxes (i.e., net income available to

equity shareholders). Operating and financial

leverages are measured in relative terms to

assess their Impact on profitability of a firm.

These measures are given by the degrees of

operating and financial leverage. A combined

degree of financial and operating leverage can

also be calculated to evaluate effects of changes

in sales on net-income or earnings per share.

Financial leverage and risk are related variables

and the statistical measures known as coefficient

of variation can be computed to estimate the

Management


Dec.- 2012 -43

ISSN No.


risk of the firm at different levels of leverage or

debt ratio.

REVIEW OF LITRETURE:

(1) Dr Sunil Kumar (2010) this paper has

described financial decision which about Capital

structure and financial leverage and dividend

policy of the corporate firm. This study reveals

that and efficient use of debt in capital structure

will enhance the return of shareholders and

stakeholders on the contrarily it will enhanced

cost of capital if it not properly used, in the study

attempt has been made to know the practices of

dividend of unit and how financial leverage

affect on profitability(EPS) of firm. Present

study examines dividend practices being

followed by corporate firm.

(2) Dr Asha Sharma (2012) Steel Industry

in India is on an upswing because of the strong

global and domestic demand. India’s rapid

economic growth and soaring demand by sectors

like infrastructure, real estate and automobiles,

at home and abroad, has put Indian steel industry

on the global map. According to the latest report

by International Iron and Steel Institute (IISI),

India is the seventh largest steel producer in the

world. This paper attempts to make an analytical

study of application of optimum capital

structure, financial leverage, earnings per share

and dividend per share of steel industry with data

for the period of 2006 to 2010. For the purpose

of analysis, ratio techniques and to test

hypothesis other statistical tools have been used

for the research purpose. The result of the study

indicates that there is a correlation between DFL

and EPS & DFL and DPS & EPS and DPS.

OBJECTIVES OF STUDY:

· To study the operating ,financial and

combine leverage of Ambuja cement ltd during

the period of june 2002 to December 2011 and

to that impact of fixed charges on

EPS,EBIT,andEBT.

· To understand the capital structure

policies and practices in Ambuja cement and its

impact on MPS

· To know about the dividend policy of

the company and its impact on P/E and MPS.

· To know correlation between MPS and

DPS.

RESEACH METHDOLOGY:

The present study is based on the secondary type

of data which were collected from capitaline data

database and company‘s published financial

statements as a annual reports. Other data like

MPS of the company are taken from BSE website.

This study covering full ten years analysis where

period of time is 2002 June to 2011 dec, financial

ratios are used for analysis of the companies and

relevant statically test also used to measures the

depth of research.

ANALYSISI OF LEVERAGE:

In the financial management leverage is

important term which mean firm used fixed

nature bearing capital like debt, preference share,

and other for giving benefits to equity

shareholders and stakeholders. It provides

framework of financial decision of company

where as leverage can be divided in three

form(1)operating leverage(2)financial

leverage(3) combined leverage.

Operating Leverage: Operating leverage refers

to the use of fixed costs in the operations of a

firm. Its studies the sensitivity of EBIT to sales.

From safety point of view, the operating leverage

should be low.

Table-1

Analysis of Leverage with reference to

Ambuja Cement Ltd.

Components of EBIT (Cr)

YEAR SALES EBIT INTEREST EBT EPS(RS)

2-Jun 1,383.79 486.83 117.67 369.16 12.02

3-Jun 1,734.72 551.52 126.62 424.9 13.4

4-Jun 1,958.34 666.33 114.22 552.11 17.75

5-Jun 2,597.95 805.72 91.77 713.95 3.27

6-Dec 6,220.39 2,280.95 113.23 2167.72 6.32

7-Dec 5,597.91 3,024.54 75.85 2948.69 11.03

8-Dec 6,167.71 2,261.66 32.06 2229.6 8.84

9-Dec 7,076.87 2,122.72 22.43 2100.29 7.59

10-Dec 7,390.21 2,097.75 48.69 2049.06 7.83

11-Dec 8,514.52 2,200.65 52.63 2148.02 7.5

(Source-Capitaline.com)


Table-2

Operating Leverage of Ambuja Cement

Ltd.


If the firm is operating with high leverage a

proportionate change in sales will brings a more

than proportionate change in EBIT. In the above

table in 2006 and 2008 the firm is operating with

moderate operating leverage. In 2007 it is very

high as a result a little change in sales i.e. 304.53%increase, brought 521.27 % increase in EBIT.

However, when the firm is operating with high

leverage if sales decrease, EBIT also decreases

with more than proportionate change in sales.

2002 is being taken as base year. Leverage is

calculated by taking the difference between the

values in 2002 and 2003. To be clear except in

2007 the company has maintained less degree of

operating leverage. But during all these years the

company has recorded an increasing trend in its

sales. So the adverse affects of high operating

leverage can’t hit its earnings. At the same time it

is observed from the table -that the company is

not particular about its operating leverage

because throughout the period’ operating

leverage has more ups and downs. From safety

point it is suggested that the firm should maintain

with low operating leverage as it has done in 2003.

Table-2

Financial Leverage of Ambuja Cement Ltd.

YEAR EBIT EBT DFL D/E EPS(Rs)

2-Jun 486.83 369.16 1.32 1.1 12.02

3-Jun 551.52 424.9 1.30 1.1 13.4

4-Jun 666.33 552.11 1.21 0.83 17.75

5-Jun 805.72 713.95 1.13 0.57 3.27

6-Dec 2,280.95 2167.72 1.05 0.35 6.32

7-Dec 3,024.54 2948.69 1.03 0.15 11.03

8-Dec 2,261.66 2229.6 1.01 0.06 8.84

9-Dec 2,122.72 2100.29 1.01 0.04 7.59

10-Dec 2,097.75 2049.06 1.02 0.02 7.83

11-Dec 2,200.65 2148.02 1.02 0.01 7.5


It is clear that above table-3 shows decreased in

financial leverage is less than decline in D/E with

began of the study it is found that D/E was 1.1

and at the end of the study it is found 0.01it means

it is sharply decreased during the study period.

Where in case DFL is noted in 2002 1.32 it is

highest amongst all years, but it is lower in 2008,

and2009. D/E is decline trend and DFL is ups

and down trend mean after 2007 D/E has

decreased. There is correlation between D/E and

DFL is 0.99, it means capital structure is affected

in grater by financial leverage of firm.

Table-3

Combine Leverage of Ambuja Cement ltd

YEAR DOL DFL DCL

2-Jun 0 1.32 0

3-Jun 0.52 1.3 0.68

4-Jun 0.89 1.21 1.08

5-Jun 0.75 1.13 0.85

6-Dec 1.05 1.05 1.10

7-Dec 1.71 1.03 1.76

8-Dec 1.05 1.01 1.06

9-Dec 0.82 1.01 0.83

10-Dec 0.76 1.02 0.78

11-Dec 0.68 1.02 0.69


Combine leverage shows an affect of both

leverage viz DFL, and DOL on EPS of the firm in

a given situation.Table-3 shown DCL which is

YEAR

% change

in SALES

% change

in EBIT DOL

2-Jun 0.00 0 0

3-Jun 25.36 13.29 0.52

4-Jun 41.25 36.87 0.89

5-Jun 87.74 65.5 0.75

6-Dec 349.52 368.53 1.05

7-Dec 304.53 521.27 1.71

8-Dec 345.71 364.57 1.05

9-Dec 411.41 336.03 0.82

10-Dec 434.06 330.90 0.76

11-Dec 515.30 352.04 0.68


mixed trend still 2007,but than it is decreased

,and becomes 0.69 in 2011. Where as a lowest

DCL found in 2003 it was 0.68 because DOL also

found low in same year, the correlation between

DOL&DCL is 0.99 which very strong positive

relation between them during the study period.

ANALYSIS OF CAPITAL STRUCTURE:

Table-4

Analysis of Capital Structure in Ambuja

Cement ltd.

YEAR DEBT IN

NET

WORTH D/E

EBIT

IN( CR)

INTEREST

IN (CR)

INTEREST

COVERAGE

(Number

of time)

2-Jun 1783.16 1449.32 1.1 486.83 117.67 4.14

3-Jun 1751.28 1461.25 1.1 551.52 126.62 4.36

4-Jun 1269.68 1842.29 0.83 666.33 114.22 5.83

5-Jun 1127.45 1908.01 0.57 805.72 91.77 8.78

6-Dec 865.38 3187.21 0.35 2,280.95 113.23 20.14

7-Dec 330.42 4356.39 0.15 3,024.54 75.85 39.88

8-Dec 288.67 5368.35 0.06 2,261.66 32.06 70.54

9-Dec 165.70 6165.92 0.04 2,122.72 22.43 94.64

10-Dec 65.03 7022.79 0.02 2,097.75 48.69 43.08

11-Dec 49.36 7730.45 0.01 2,200.65 52.63 41.81


The company is following conservative debt

policy except in 2002, 2003 its debt equity ratio

is around1:1. The debt equity ratio varies

between 0.01 and 1.1 during this period. If we

observe the past eight years the management

doesn’t allow its debt equity ratio to fluctuate

more. The debt equity ratio is very high at 1.1 in

2003 later it touched 0.01 in 2011. In remaining

years it lies below 1. If we observe the table, it is

very clear that the debt equity ratio and interest

coverage are negatively correlated it was -0.88.

As the debt decreases the interest coverage

improves and vice versa the conservative debt

policy of the company is reflected in its interest

coverage also. The interest coverage ratio is

around 33.32 times on an average during the

years. It is clear that interest burden decreased

after year 2006.

Table-5

Capital Structure and Market price of

Ambuja Cemant Ltd.

YEAR D/E AVG MPS

2-Jun 1.1 NA

3-Jun 1.1 175.76

4-Jun 0.83 141.49

5-Jun 0.57 254.17

6-Dec 0.35 108.69

7-Dec 0.15 130.19

8-Dec 0.06 131.05

9-Dec 0.04 87.32

10-Dec 0.02 122.77

11-Dec 0.01 139


The capital structure of the consists with debt

and equity capital where as D/E and MPS of the

company has shown in above table-5, D/E ratio

represents Capital structure and MPS represents

average market price of share in the beginning

of the year AVG has taken in considering period

1/4/2002 to 31/3/2003, where as in 2006 it is

computed 1/1/2006 to 31/12/2006. Analysis of

capital structure shown there moderate

correlation it is only 0.51 during the study period

which says wider fluctions in market price but

not in D/E ratio, in 2005 D/W is noted only 0.57

where as market price of share is noted 254.17

which highest amongst all. It means firm’s debt

becoming less and less year by year during the

study period. It varied from Cr 1783.16 to Cr.

49.36

Table-6: Dividend policy of the Abuja

Cement Ltd

YEAR DPS EPS

2-Jun 6 12.02

3-Jun 7 13.4

4-Jun 8 17.75

5-Jun 1.8 3.27

6-Dec 3.3 6.32

7-Dec 3.5 11.03

8-Dec 2.2 8.84

9-Dec 2.4 7.59

10-Dec 2.6 7.83

11-Dec 3.2 7.5



From the above table -6 it is cleared that dividend

policy of the company is strongly correlated with

earning of the share holders it is 0.91 during the

study period. As per EPS &DPS analysis it is clear

that both variables going in one and same

direction, it mean as soon as dividend

announcement decided by company EPS

fluctuated according to that dividend decision.

CONCLUSATION:

A study is giving highlight about financial

variables effect on investment decision like

Dividend policy, EPS, Leverage and capital

structure. In this study leverage is not much effect

on earning but due to D/E (capital Structure)

which made huge effect on EPS during period of

study.

REFERENCES:

1. Dr.Sunil Kumar (2010) “Leverage Capital

Structure and Dividend Policy Practices in

Indian Corporate-A case study Vol-1, Issue-1 Pg-

105-110.

2. Stein, J. (1992) “Convertible Bonds as

Backdoor Equity Finance” Journal of Financial

Economics Vol.32pp.7-12

3. Financial Management My Khan-2007

Edition

4. Bae Gil S., Cheon Youngsoon S. and Kang

Jun-Koo. 2008. Intra-Group Propping: Evidence

from the Stock-Price Effects of Earnings

Announcements by Korean Business Groups,

Working Paper Series at Social Science Research

Network.

5. Eriotis Nikolaos, Vasilliou Dimitrios and

Zisis Vasileios. 2007. A Bird’s Eye View of the

Dividend Policy of the Banking Industry in

Greece, International Research Journal of

Finance and Economics, Issue 11:1-9.

6. Hazak Aaro 2007. Dividend Decision

Under Distributed Profit Taxation: Investor’s

Perspective, International Research Journal of

Finance and Economics, Issue 9:1-19.

7. Henry Elaine 2006. Market Reaction to

Verbal Components of Earnings Press Releases:

Event Study Using a Predictive Algorithm,

Journal of Emerging Technologies in Accounting,

Vol. 3:1-19.

8. Kanniainen Juho. 2007. On Dividend

Expectations and Stock Return Volatil ity,

International Research Journal of Finance and

Economics, Issue 12:1-17.

Zhu PengCheng and Malhotra Shavin. 2008.

Announcement Effect and Price Pressure: An

Empirical Study of Cross-Border Acquisitions by

Indian Firms, International Research Journal of

Finance and Economics, Issue 13:1-18


Introduction

India’s economic reforms were an outcome of

an immediate response to an exceptionally

severe balance of payments crisis during 1990-

1991. BOP crisis in fact triggered the economic

reforms since not many deliberations were

undertaken about the pros and cons. A newly

elected Congress government was instrumental

in bringing the economic reforms. India’s

economic liberalisation was much debated with

opposition from both, the left and the right. The

responses to these reforms are based on

subjective considerations rather than any

specific ideology. The opposition to these

reforms are generally based on the denial of

certain benefits to the affected parties. For e.g.,

entrepreneurs often oppose reforms which

announce withdrawal of concessions, subsidies,

protection etc. Hence, the only million dollar

question raised is: What does liberalisation offer

to us /specific segment? The broad outline of

the reforms was very similar to the ones

undertaken by the developing countries in the

1980s. The only difference was the pace at which

these reforms were implemented. Though there

was a sufficient consensus across disparate (and

often very vocal) interests still the pace of

India’s Liberalisation and Dalit Entrepreneurship:

A Factual Discussion

Dr. Vilas Z. Chauhan*

Based on literature review, the paper begins with an attempt to provide a critical assessment

of India’s economic reforms. Based on previous studies, an attempt is made to review the relationship

between caste and entrepreneurship. Further, linkage of Dalits with the entrepreneurial process is

likely to highlight some multilevel perspectives of a possible unifying framework. Finally, the paper

concludes relating liberalisation and social justice.

* Assistant Professor, Department of Commerce and Business Management,

The M.S. University of Baroda, Vadodara.

reforms was frustratingly slow.

Rethinking on economic policy had begun

earlier in the mid-1980s by which time the

limitations of a development strategy based on

import substitution, public sector dominance,

and pervasive government control over the

private sector had become evident. But the

policy response at the time was limited to

liberalizing particular aspects of the control

system without changing the system itself in any

fundamental way.

India’s Economic Reforms

The reforms initiated in 1991 were

different precisely because they recognized the

need for a system change, involving liberalization

of government controls, a larger role for the

private sector, and greater integration with the

world economy. Jayati Ghosh records that, prior

to the crisis, “there was already a significant

lobby within India and even within the Indian

government, in favour of decontrol and more

market-friendly policies”.1

1(Jayati Ghosh, “Liberalisation Debates” in

Terence J. Byres, ed., The Indian Economy: Major

Debates Since Independence (New Delhi: Oxford

University Press, 1998), p. 322.

Management


Dec.- 2012 -52

ISSN No.


Private enterprise was allowed and

encouraged to expand into areas of economic

activity that were previously not open to it.

Some scholars are of the opinion that the growth

of private capital in India began to accelerate

during the early 1970s, but, it was during the

post-1991 period that the private capital in India

experienced expansion at an unprecedented rate.

This expansion was not merely in terms of

growth rates and profits, India also experienced

an important ideological shift during the 1990s.

The Nehruvian idea of planned development lost

its charm. Markets and middle classes started

occupying the centre stage of India’s cultural

landscape, displacing the emblematic ‘village’ and

its poor peasants. The Nehruvian state had its’

own way of dealing with marginalised

communities of the Indian society. The quotas

or reservations in government sector jobs and

state funded educational institutions was the core

of the state policy for the development of

Scheduled Castes (SCs) and Scheduled Tribes

(STs). Moreover, the reforms were outward-

looking in the sense the response was meant to

instil confidence among international financial

institutions and other lenders.2

India has witnessed rapid economic

growth rate over the past couple of decades.

Whatever could be the reasons for such faster

growth – wider opening of the Indian economy

to foreign goods and capital, reaping dividends

from the large and growing young workforce,

or the greater liberalization of economic activity

within the country in the mid-1980s3 — There

is concern that not all sections of society have

benefited equally from economic growth, with

inequality steadily rising over the past decade.4

A narrative that the rich have benefitted more

than the poor, the towns and cities more than

the villages, the upper castes more than the lower

castes has acquired salience in several quarters

(Varshney 2007). Concentrating on the needs of

“Dalit entrepreneurs” ,under the sponsorship of

Digvijay Singh, the then Chief Minister of the

state, some leading Dalit intellectuals argued that

“the imagination of the post-Ambedkar Dalit

movement has been shackled …within the

discourse of reservations” (Nigam 2002: 1190).

Questioning the adequacy of reservations for

Dalit welfare in contemporary India, these

intellectuals had articulated an important

challenge faced by the Dalit community in a

rapidly growing Indian economy.2The then finance minister, Manmohan

Singh, announced most important of decisions

pertaining to reforms at international lenders’

conferences in Bangkok, Singapore, Tokyo, etc.,

to “restore the confidence of the global lending

and investing community”, see A. K.

Bhattacharya, “The Finance Ministry of the

Nineties”, Margin (New Delhi), April-June 2003,

Volume 35 (3), p. 14.3See, among others, Ahmed and Varshney

(forthcoming), Ahluwalia (2002), and Rodrik

and Subramanian (2004).4 India’s Gini coefficient of income inequality

increased from 29.6 in 1990 to 36.8 in 2004,

based on data from the World Income Inequality

Database 2010

The old slogans of reservations were questioned

in context of growing privatization and the

shrinking public employment. Will Dalits

continue to seek employment in the enterprises

owned by others? Will they be allowed to play

for their own stakes by making room for

themselves? No doubt, Dalit millionaires are

increasingly visible today. The Planning

Commission invited Dalit businessmen in

January 2011, for discussing both, opportunities

and constraints faced by businesses owned by

Dalits. A new Dalit Indian Chamber of Industry

and Commerce has been formed. Records and

case studies provide evidence that the growth of

Dalit entrepreneurship took off during the 1980s

and more vigorously after the 1990s (Jodhka

2010:43).

Thus, on one hand India’s post-1991 reforms

surface the rising economic inequalities, but at

the same time have paved way for the

emergence of Dalit entrepreneurship.

Caste and Entrepreneurship

Mysterious in its workings, caste is one

of the deepest of Indian realities. Yet from the

egalitarian standpoint of a modern democracy, it

is also its most abiding and persuasive fiction,


one that must be pulled up from the roots. Caste

is in some ways an anthropologist’s dream and a

democrat’s nightmare. Caste is a social and

political reality that haunts the Dalit

entrepreneurs and not mere past tradition or

value-system that is found incompatible with

contemporary market economy. The caste

system not only represents a scheme of social

stratification, but also a division of labour. Each

caste was traditionally attributed to a specific

profession. Historically, there was undoubtedly

some flexibility in the system (Srinivas 1966),

but the flexibility was limited. It is only with the

rise of democratic politics that the process of

change was considerably spurred. Substantially

because the lower castes constituted a majority

of India’s populace, democratic politics has been

a forceful ally of the lower castes in the 20th

century (Rudolph and Rudolph 1967; Varshney

2000; Weiner 2001). Not all of the changes have

been benign (Mehta 2003), but there is no doubt

that as far as representation in state assemblies

and parliament is concerned, India has gone

through an OBC revolution (Jaffrelot and Kumar

2009), while the reservations for SCs and STs

have ensured that the SC and ST share is

substantial in representative assemblies. There

are very few studies focussing on the relationship

between caste and entrepreneurship. Some

studies, for example, have shown an increasing

convergence in habits and rituals across caste

categories (Kapur et al 2010), but others

document persistent differences in important

development outcomes like consumption

expenditure, education levels and access to

public goods (Desai and Dubey 2011; Banerjee

and Somanathan 2007). Political reservations

have lead to greater social expenditures and more

jobs for SCs but not for STs (Pande 2003).

Damodaran (2008), Thorat, Kundu and Sadana

(2010), Jodhka (2010) and Varshney have

studied some aspects of the relationship between

role of caste differences and the ownership of

enterprises across the country.

A study conducted by Iyer, Khanna and Varshney

(2011) revealed some insightful findings of this

relationship. This study concluded that since

1990-2005, there was a significant under-

representation of Schedules Castes and Scheduled

Tribes in the ownership of private enterprises,

and the employment generated by the private

enterprises. During this period, there was a

minimal increase in the share of SCs and STs in

the firm ownership and employment generation.

This under-representation was noticed across

the large states of India in rural as well as urban

settings. Findings revealed that the enterprises

owned by members of SCs and STs were smaller

and more or less employed labour from within

the family. Such enterprises belonged more to

the informal or unorganized sector. All these

differences across caste categories are more

pronounced in urban areas compared to rural

areas, suggested that these results cannot be

attributed purely to social discrimination which

was expected to be higher in rural areas.

· The Scheduled Castes accounted for

16.4% of India’s population in 2001, but owned

only 9.8 % of all enterprises in 2005 which

employed 8.1% of all non-farm workers. Since

the majority of such enterprises are single-

person enterprises, this measure of enterprise

ownership is highly correlated with the extent

of self-employment, and as such, might be a

relatively crude measure of entrepreneurship

(Ghani et al 2011).

· A similar pattern of under-representation

was observed for Scheduled Tribes, whose

members

constituted 7.7% of the nation’s population but

owned only 3.7% of non-farm enterprises,

employing 3.4% of the non-farm workforce.

· As far as OBCs are concerned, they

appeared to be making significant progress in

playing an important entrepreneurial role. In

contrast to the under-representation of SC and

ST communities in entrepreneurship, we find

that members of the Other Backward Castes

(OBC) are well represented. OBC members

owned 43.5% of all enterprises in 2005, and

accounted for 40% of non-farm employment.

Their share in the overall population was about

41%. In most states, the share of the workforce

employed in OBC-owned firms was quite close

to their overall population share. Further, OBCs

made significant progress over the period 1998-


2005, increasing their share of firm ownership

from 37.5% to 43.5%, and their share of

employment from 33.8% to 40%

· Despite the success of Dalit movements

in Ambedkar’s native Maharashtra, which has

made Dalits quite prominent in the political life

of the state and pushed all political parties after

independence to include Dalit issues in their

platforms (Ahuja 2008), they remained

underrepresented in entrepreneurship in the

state as late as 2005. Politics and economics

remained mismatched.

· A significant finding of this study was

that SC and ST entrepreneurs face significant

obstacles in entering entrepreneurship, and in

expanding the scale of their enterprises, though

these differences in entrepreneurship are not

significantly correlated with demographic or

economic characteristics.

· In case of Gujarat, there were mixed

findings. Gujarat, had an extremely high

economic growth rate over the past decade

(8.5% growth in gross state domestic product

over 1999-2008, compared to 7.2% nationwide),

and also showed a large increase in the share of

the workforce employed in OBC-owned

enterprises over the period 1998-2005 (from

22% to 39%), suggesting that caste barriers

were breaking down rapidly in this state.

However, the share of the workforce employed

in SC-owned enterprises remained at 7% in both

1990 and 2005, and only 3 districts showed an

increase in this share over the period 1990-

2005, suggesting that SCs are unable to

overcome the barriers to entrepreneurship

which OBCs are able to surmount.

The latest i.e., 4th All India Census of Micro, Small

& Medium Enterprises was conducted with

reference year 2006-2007. The annual report

2010-11 published by the Ministry of Micro,

Small and Medium Enterprises also revealed data

on enterprises owned/managed by women, SC/

ST and OBC.

· The size of the registered MSME sector

is estimated to be 15, 63,974. Of the total working

enterprises, the proportion of micro, small and

medium enterprises were 94.94%, 4.89% and

0.17% respectively. This comprises of 67.10%

manufacturing enterprises and 32.90% services

enterprises. About 45.23% (7.07 lakh) of the units

were located in rural areas.

· Of the total 15.64 lakh registered units,

67.10 % (10.49 lakhs) of the enterprises in the

registered MSME sector were engaged in

manufacturing / Assembling / processing,

whereas 16.78 % (2.62 lakhs) of the units were

engaged in services activities. The remaining

16.13 % (2.52 lakhs) of the enterprises were

engaged in the repair and maintenance.

· It was found that 13.72% (2.15 lakh) of

the units in the registered MSME sector were

women enterprises, whereas the share of

enterprises actually managed by females was

also 13.72%

· From the angle of community status,

7.60% of the enterprises were owned by

Scheduled Cast (SC) entrepreneurs, 2.87% by

Scheduled Tribe (ST) entrepreneurs and 38.28%

by entrepreneurs of Other Backward Classes

(OBCs). Thus, 48.75% of the working units in

the registered MSME sector were being owned

by socially backward classes.

Unarguably, many questions still remain

unanswered. The collective traditional

prejudices has not only crippled the prospects

of Dalit entrepreneurs in the markets but have

also shaped their self-image and identification.

It is argued that while the available data provides

broader indications of the employment patterns

yet questions related to the patterns of their

social and economic mobility, kinds of barriers

encountered in the process of setting up their

enterprises remain unanswered. Indeed, it

becomes important to explore the issues of how

and in what ways caste matters in business and

entrepreneurship, specifically in subtle

mannerism and bias; varying from difficulty in

getting enough supplies on credit, lack of social

networks, absence of kin groups in the business

and control of traditionally dominant business

caste groups. The differences in

entrepreneurship have persisted across space

and time. The share of SCs and STs in

entrepreneurship is even lower in urban areas,


where one expects to have lower caste-based

discrimination. These along with other social

variables such as lack of social capital, make the

Dalit situation in India more complicated and

vulnerable to homogeneous categorization.

Thus, one gets a feeling that the caste differences

in entrepreneurship have not disappeared over

a period of time.

Dalits and the Entrepreneurial Process

The entrepreneurial action is a rational

manifestation of willingness to create an

enterprise taking “primary responsibility for

mobilizing people and other resources to initiate,

give purpose to, build, and manage a new

organization” (Pettigrew, 1979). The

entrepreneur has always been studied as

someone who finds a new use for something

already existing in nature (Drucker 1985) or as

someone inspired to make profit out of a new

idea (Shane 2000, Sørensen & Sorenson 2003,

Adner & Levinthal 2008). In spite of a bulk of

literature existing, the debate over ‘who is an

entrepreneur’ continues. Most of the studies on

entrepreneurship have been occurred in

homogeneous contexts, where entrepreneurs are

not highly constrained in their freedom. We are

likely to gain insightful considerations in an

attempt to how entrepreneurship develops in

contexts of deep poverty in rural India. Hence,

an observation of the entrepreneurial process

of a person who is severely constrained not only

by precarious economic conditions but also by

the historical absence of legitimacy, freedom, and

dignity that he and all the members of the lower

cast – the Dalits, becomes more crucial.

In the Indian caste system, Dalits are lying at the

bottom of the pyramid. Being a Dalit has many

concrete limitations. The hierarchal structure of

the Indian society and the psyche of the so called

upper classes do not allow Dalits to change their

social status. Right from the childhood, the kind

of treatment that a Dalit receives from the upper

sections of the society, leads to the developing of

a personality confined to his status. In such a

situation, embarking on an entrepreneurial

venture seems to be a dream far away from

reality. Despite a series of Governmental attempt

to reduce discrimination towards them,

stratification based on castes still exists in the

majority of rural and sub-urban areas of India.

Since the economic liberalization of 1991 an

increasing number of Dalits have obtained a

relative success; in January 2011 the Indian

government begun discussions with Dalit

entrepreneurs on what can be done to promote

business ventures set up by members of their

community.

Dalits do venture into entrepreneurial activities.

Even they are ready to take the primary

responsibility for mobilizing people and

resources to initiate, give purpose to, build, and

manage a new organisation. Dalit entrepreneurs

though resemble traditional entrepreneurs, are

still very different. Born as untouchables, their

self-perception is highly influenced by their past

and a feel of impossibility to change their future.

This certainly has a concrete impact on the

entrepreneurial process. It is almost impossible

to conceptualize all the possible contextual,

structural, and psychological factors affecting

the actions of the Dalit entrepreneur.

A study conducted by Federica Foce Massa

Saluzzo (2011), has suggested a unifying

framework based on the observation of the

entrepreneurial process and the entrepreneur in

the context of deep poverty (Dalits). Following

are the four perspectives in context of an

entrepreneurial process:

1. The realisation of contingent conditions

(There is no one best way to organize business;

creation of a fit between the organisational

structure and its performance)

- Define the environment (sharing

business ideas with those who can support the

entrepreneur with any type of resources)

- Formalization of interactions

(relationship between the resource provider and

entrepreneur - micro-credit institutions, family

or friends providing capital, supplier of materials

or labour etc.)

- Activating the first transaction and

Routinization of the operations.

2. Conceptualizing the type of dependence

(Resource dependence)


- Instructive phase (Information

dependency)

- Persuasion phase (persuade those who

can provide resources for starting the venture)

- Multi-dependence phase (business

dependency on various actors, thereby

influencing the sustainability of the business)

3. Conceptualizing the type of relationship

(Economic exchanges embedded in social

relations; Ties evolved in content and type of

communication with specific actors )

Based on the type of information shared,

following are the entrepreneurial phases:

- Subdued phase (high information

asymmetry due to limited and non-specific

information; information will not be fine

grained and tacit but rather explicit and dense

with prescriptions)

- Exchange phase (selecting specific

actors who will provide resources; more of

technical information and the type of

relationships with the provider of resources will

be less asymmetric due to the expectation of

something in exchange from the entrepreneur;

more fine-grained information sharing oriented

towards problem solving and cooperation)

- Embedded phase (some relationships

will be consolidated and others will be dropped;

rate of new relationships will diminish; more

stability of relatively symmetric relationships)

4. Conceptualizing the type of legitimacy

acquired (Legitimacy of obtaining societal

support)

- Cognitive phase (Cognitive legitimacy

towards the entrepreneurial idea; rationalising

the venture as feasible)

- Moral phase (moral form of legitimacy;

those whose attention is captured and have

witnessed the formation of venture will express

some form of moral judgement over the firm,

whether the entity really promotes social

welfare or not)

- Pragmatic phase (the routines are set;

and the interactions justify a more classic

power-dependence relation; audience evaluating

its self-interest)

Characteristics of Dalit entrepreneurs

interacting with the entrepreneurial

process:

Following are some typical and most relevant

characteristics of Dalit entrepreneurs that could

interact with the above mentioned

entrepreneurial process:

1. An increasing demand for the de-

specialized labour by the multinational

companies in the developing countries

subsidiaries has resulted into a cultural shift of

the self-perception of Dalits. Also, the

employment provided by these multinationals in

alternative duties against the traditional ones

have increased the motivational maturity of

Dalits thereby claiming fair and equitable

treatment in society. The desire to improve the

human standard of living is slowly and gradually

surfacing.

2. Absence of education in the form of

technical competencies and etiquettes. Being

removed from the public education system,

Dalits have limited chances to learn the building

blocks of their national culture and any technical

job.

3. A restricted size of social network due

to the absence of education. The family and the

geographically constrained friend circle is the

‘Universe’ for Dalits. Even the size of his

network’s network is limited thereby creating

an isolation effect confining the world of Dalits.

4. Realisation of social empowerment and

thereby attempt to live life with grace and

dignity.

5. Being a woman Dalit will further worsen

the entrepreneurial challenges making her

vulnerable to a superior attacks and prejudices.

Liberalisation and Social Justice

As observed in some liberalised countries,

liberalisation is compatible with social justice,

but it does not guarantee social justice. The only

hope to infuse social justice component into

liberalisation is through democracy. There is a

need to evaluate the successes and failure of the

State in fulfilling its constitutional obligation of


assuring every citizen a life with dignity. The

overarching concern of the

paper is whether socio-economic progress made

since independence has been fair, fast and

equitable in everybody’s experience -

particularly of those belonging to the weaker

sections of society like women, children, Dalits

and Adivasis. Indian economy has grown

considerably since independence. Introduction of

new technologies, modernisation of agriculture,

rapid industrialisation, and the production of a

whole new range of goods and services have led

to a significant expansion of the economy. India

can continue to enjoy GDP growth of 7% or

more but still will remain poor. Economic

growth and prosperity does not automatically

ensure social justice or ‘balanced regional

growth’. The term ‘Human development’ needs

to be re-defined in a wider sense focusing on the

equalities in human development across space

and groups. Fundamentally, there is something

wrong with a system

in which a large section of excluded groups and

groups which are discriminated against, viz. the

Scheduled Castes (SCs), the Scheduled Tribes

(STs) and the Other Backward Castes (OBCs),

which constitute almost half of India’s

population, are deprived. In spite of specific

Constitutional provisions, legal safeguards and

reservation policies, the Indian state has failed

to discharge its police functions to defend the

human rights of the marginalised communities.

Liberalisation will flourish in real sense only

when the state succeeds in equanimity in

implementing law of land and puts rigorous

efforts to ensure capacity-building among the

discriminated sections. Efforts should be

directed to understand the process of exclusion

and discrimination, societal inter-relations and

the institutions of exclusion, the forms of

exclusion, and their consequences on the

deprivation of the marginalised groups.

Ensuring social justice to the marginalised

communities:

Social justice to the marginalised communities

can be ensured through following ways:

· Understanding exclusion linked

deprivation and discrimination

· Understanding the iniquitous and

hierarchal character of the Indian society

· A group focus approach in the

development policy (in terms of recognition of

their specific problems, provision of legal

safeguards, reservations and various other

affirmative action policies)

· Reduce the gaps in human development

and human poverty

· Analyse the economic and social factors

for high deprivation of socially disadvantaged

groups in terms of lower access to resources,

human capital, social needs and also the lack of

freedom to development through restrictions (or

non-freedom) to civil, social, cultural, political

and economic rights, which are closely linked

with societal processes and institutions of caste

and untouchability.

· Private sectors which are using the

financial resources (which are at the command

of the state) should be made responsible to

promote social justice.

Conclusions

The term ’Liberalisation’ seems to be deceptive.

In the present context, it simply means

‘economic’ liberalisation. The general perception

of the term liberalisation can be linked with

liberalism. But still, elements like individual

liberty, rule of law and equality, fair and just

treatment, doing away with exclusion and

deprivation of the marginalised communities

etc. are missing. During Independence, Dr. B.R.

Ambedkar rightly said,”Political democracy did

not contain social democracy” and this

statement has not changed much even today,

after 64 years of independence! India is still a

slave of the deeply rooted traditional beliefs,

narrow-mindedness, caste discrimination

practices, gender inequality etc.

Based on literature review, the paper has put an

effort to observe the entrepreneurial process

from a different perspective. We have observed

that the SCs, STs and especially the OBCs have

made significant progress at the level of political

representation in independent India. Reports and


studies provide evidence that the OBCs have

made progress in entrepreneurship, but SCs and

STs are considerably under-represented in the

entrepreneurial sphere. That is, for SCs and STs,

political gains have not manifested themselves

in greater entrepreneurial prowess. An increase

in the number of Dalit millionaires, driven in part

by newer economic freedoms, do not act as a

sample representative of the broader swathes of

the SC/ST population. Such under-

representation appears to persist even in states

with very progressive policies towards SCs and

STs, in states where OBCs have made considerable

progress in enterprise ownership, and in urban

areas where outright discrimination is lower

than in rural India. A long term research agenda

of empirical studies over entrepreneurship

among the marginalised communities in India

will certainly help to understand the linkage of

caste and entrepreneurship and thereby

ensuring social justice.

Despite the elimination of the traditional caste

system, old attitudes still remain and continue to

influence the hierarchical structure of business

practices in India today. Because of the caste

system people born into specific groups, trades

or castes are unable to escape from the stigma of

their background or their origins. Though the

Indian caste system is less visible in large cities,

overall it still remains deeply rooted in society,

strengthened by a blend of social perceptions and

divisive politics.

Concluding Facts:

· Credit disbursements to dalit

entrepreneurs through 20-odd schemes run by

the Ministry of Social Justice have dropped

33.8% to Rs1,670 crore between April and

October, 2011, according to data released by the

Reserve Bank of India.

· A series of stories done by The ET earlier,

profiled a dozen such dalit businessmen who had

built large companies. But credit problems still

continue to haunt dalit entrepreneurs, even

more so than other businessmen, members of

the community claim.

· Disbursement from many schemes —

crafted intentionally to provide credit to dalit

businessmen — is slowing down.

· Dalit entrepreneurs are entitled to get

loans up to Rs30 lakh under the National Schedule

Caste Finance and Development Corporation,

but only if they get a guarantee from

government servants.

· The quantum of loans given by the

NSFDC is too low to start a business. And

nationalised banks lend to small business only

on the basis of credit ratings. And for someone

starting a new business, getting a rating is not

always possible.

· The banks feel what would a dalit know

about the business, and this attitude prevails in

smaller towns, irrespective of what the policies

or guidelines suggest.

· Banks typically lend to only those dalit

business, which symbolises their caste identity,

says Aseem Prakash of Institute of Human

Development, a think tank.

· Chandra Bhan Prasad, one of the leading

Dalit thinkers in the country says that although

there are many Dalit businessmen in the country,

they are weighed down by negative perceptions

and most are unable to grow their businesses

beyond Rs. 50 crore. Most Dalit entrepreneurs

end up becoming third party suppliers in large

businesses. “They don’t get a direct first party

contract,”

· “We want to be job givers, not job

seekers,” says Adhik Rao Sadamate of Sadamate

Industries, as he complains against the continuing

stereotyping of Dalits as incapable of delivering

quality.

References

Audretsch, D., Meyer, N. (2009): “Religion, Culture

and Entrepreneurship in India”, International

Public Affairs Conference, Indiana University,

Bloomington

D. Shyam Babu (August, 2004): “India’s

Liberalisation and the Dalits”, The Royal Institute

of International Affairs-Asia Programme

Working Paper


Foce Massa Saluzzo Federica (2011): “Social

Class and Venture Features: How Dalits Eradicate

Poverty and Hunger”, Oikos Foundation

Iyer, L., Khanna, T., and Varshney, A., (October,

2011): “Caste and Entrepreneurship in India”,

Working Paper, Harvard Business School

Jodhka, S.S. (2010): “Dalits in Business: Self-

Employed Scheduled Castes in Northwest India”,

Indian Institute of Dalit Studies-Working Paper

Series, Vol.4, No.02

Lennox, C., “Dalits and Norm Entrepreneurship

on Caste-based Discrimination”, Institute of

Commonwealth Studies, University of London

Thorat. S, M. Mahamallik, and S. Venkatesan,

(January, 2007): “Human Poverty and Socially

Disadvantaged Groups in India”, Human

Development Resource Centre-Discussion Paper

Series- 18

Other References/Reports

· Annual Report 2010-11, MSME,

Government of India, Ministry of Micro, Small

and Medium Enterprises

· “Entrepreneurial Challenges for SC

Persons in India”, Bhartiya Shishu Evom Mahila

Vividh Vikas Samiti, New Delhi

· The Economic Times (News / Articles

published in newspaper)


A CASE STUDY ON KINGFISHER AIRLINES

Ankita H. Vaidya*

Airlines industry has always been a very challenging one to operate in. Very few companies are

actually earning profit in this industry. Airlines industry has always been a very challenging one to

operate in. Very few companies are actually earning profit in this industry. Kingfisher Airlines, a

dream venture of Vijaya Mallya also stepped into this industry to create a difference and to redefine

the experience of flying. Kingfisher Airlines Limited is an airline group based in India. Its head

office is in Andheri (East), Mumbai and Registered Office in UB City, Bangalore. Kingfisher Airlines,

through its parent company United Breweries Group, has a 50% stake in low-cost carrier Kingfisher

Red. The airline has been facing financial issues for many years. Until December 2011, Kingfisher

Airlines had the second largest share in India’s domestic air travel market. However due to a severe

financial crisis faced by the airline at the beginning of 2012, it has the lowest market share since

April 2012.Kingfisher Airlines Ltd is the largest charter aviation company in India. Their principal

activity is to provide commercial passenger airline and private helicopter and airplane chartering

services in India. Their business unit Air Deccan is India’s low cost carrier. Kingfisher Airlines Ltd

was incorporated in June 15, 1995 as a private limited company with the name Deccan Aviation.

The company was promoted by G R Gobinath, K J Samuel and Vishnu Singh Rawal. In January 2005,

the company was converted into a public limited company.In September 1997; the company opened

their first base at Jakkur and launched their first Helicopter. In June 1998, they opened their second

base in Hyderabad and in December 1998, they commenced offshore flying operations. In June

2001, the company introduced first fixed wing aircraft and in November, they introduced the second

fixed wing aircraft.

* M.B.A, SEM – III (GIA), Department of Business Administration, M K Bhavnagar University,

Bhavnagar.

Management


Dec.- 2012 -59

ISSN No.

History: Kingfisher Airlines was established in

2003. It is owned by the Bangalore based United

Breweries Group. The airline started

commercial operations in 9 May 2005 with a

fleet of four new Airbus A320-200s operating a

flight from Mumbai to Delhi. It started its

international operations on 3 September 2008

by connecting Bangalore with London. News of

Kingfisher Airlines; May 2009: Kingfisher Airlines

carried more than 1 million passengers, giving it

the highest market share among airlines in India.

March 2010: „5-STAR AIRLINE CROWN FOR

KINGFISHER AIRLINES, Top global recognition

for India’s premium carrier AGAIN for 3rd

consecutive year. November, 2010: Kingfisher

Airlines King Club Program awarded the „Best

Program of the Year in the Middle East and sia/

Oceania region by The Frequent Traveler Awards

December 2011: Kingfisher Airlines had the

second largest share in India’s domestic air travel

market.2011: Kingfisher Airlines crowned the

„Best Indian Airline in UK.2012:By early 2012,

the airline accumulated losses of over 7,000

crore (US$1.4 billion) with half of its fleet

grounded and several members of its staff going

on strike because of their unpaid salaries.

Kingfisher’s position in top Indian airlines on the

basis of market share slipped to last from second

because of the crisis. March 2012: Government

may cancel Kingfisher Airlines license: Ajit Singh


(Indian Aviation Minister) Kingfisher airlines

once the king of sky is fighting for the sky.

How Problems started at Kingfisher Airlines:

Kingfisher Airlines had been reporting losses

since 2005, as it never reached its break-even

and the situation aggravated in 2007, when

Kingfisher acquired Air Deccan after which the

former suffered a loss of over 1,000 crore INR

for three consecutive years. By early 2012,

Kingfisher had accumulated losses of over 7,000

crore INR with several flights grounded and staff

going on strike due to non-payment of salaries.

The market share of Kingfisher Airlines slipped

to last from second due to this crisis. The start of

the crisis was the freezing of the bank accounts

of the airline by the Income Tax Department.

How all it started and what were the difficulties

faced by Kingfisher during this have been

highlighted as follows:

Fuel Dues; Since past several years, Kingfisher

Airlines was defaulting in making fuel bill

payments and in July 2011, HPCL (Hindustan

Petroleum Corporation Limited) expurgated the

fuel supply for around 2 hours to Kingfisher

Airlines in lieu of non-payment of overdue fuel

bills.Bharat Petroleum Corporation in 2009 filed

a case against Kingfisher airlines again for non-

payment of fuel dues. High Court in its order

directed Kingfisher to pay the entire due amount

(INR 245 crore) by November 2010 and

Kingfisher obliged the Court order by paying the

dues in installments.

Aircraft lease rental dues: Since 2008, it has been

reported that Kingfisher Airlines has been unable

to pay the aircraft lease rentals on time.GECAS:

In Nov 2008, GE Commercial Aviation

Services threatened to repossess 04 leased

planes in lieu of default. Kingfisher Airlines

initially denied that it missed the

payments. GECAS had filed a complaint

with DGCA saying Kingfisher had defaulted on

rentals for four Airbus A320 aircraft, and sought

repossession of the planes. In Jan 2009,

The Karnataka High Court rejected petition by

Kingfisher Airlines to restrain GECAS from taking

any step to deregister and repossess the

04 aircraft in dispute. As a result, Kingfisher had

to return the A320 aircraft to GECAS. DVB: In

Jul 2010, DVB Aviation Finance Asia Ltd (a lessor

from Singapore), sued Kingfisher Airlines for

lease rental default. Case was filed in a UK court

on Jul 16, 2010 after Kingfisher did not pay for

three month lease rental for A320 aircraft it leased

from DVB.Kingfisher Airlines has grounded 15

out of 66 aircraft in its fleet as it was unable to

meet the maintenance and overhaul expenses

Delayed Salary: Owing to dearth of funds,

Kingfisher Airlines didn’t paid salaries to its

employees from October 2011 to January

2012.Kingfisher in its report to DGCA (9th Jan,

2012) stated that the salary dues has been paid

to 60% of its employees and the remaining due

salary will be paid latest by 31st January 2012.

In between, Kingfisher pilots, protesting against

the non-payment of salaries started making in-

flight announcements quoting “It is their sense

of duty towards the guest that is making them

fly despite not being paid salaries for the past

two months”. Kingfisher also defaulted in paying

Tax Deducted at Source from the employees

income to the tax department.

AAI Slams Notice: Kingfisher Airlines was

functioning on a cash & carry basis for the past

6 months, with daily payments amounting to 0.8

crore INR. As a result, Airports Authority of India

on February 2012 slammed notice to Kingfisher

regarding accumulated dues of 255.06 crore

INR. The airline was operating on a cash and

carry basis for the last six months, with daily

payments amounting to 0.8 crore INR.

Dues of Aircraft Lease Rent: Kingfisher Airlines

was making default in aircraft lease rentals. As a

result, in Nov 2008, GE Commercial Aviation

Services (one of the lessor to Kingfisher Airlines)

cautioned Kingfisher to retrieve 04 leased A320

planes in lieu of default. Kingfisher Airlines

initially denied regarding any default in payment.

GECAS in return filed a complaint with DGCA

seeking repossession of four A320 aircrafts. To

this, Kingfisher Airlines in Jan 2009 made petition

with Karnataka High Court that to refrain GECAS

from repossessing the aircrafts, but the Court

rejected the same and Kingfisher had to return

aircrafts to GECAS

Kingfisher Airlines – A NPA


Till December 2011 end, the bank dues of

Kingfisher Airlines were around INR 260 crore

to INR 280 crore. Lenders refused to lend any

more money to Kingfisher till the previous dues

are clear. If the dues were not paid in time,

Kingfisher Airlines would automatically have

been treated as NPA (Non-performing asset) in

the accounts of banks. So, the airlines paid one

month interest amount to the banks on the last

working day of 3rd quarter of financial year

2011-12 to avoid turning Kingfisher Airlines

account into NPA. But, State Bank of India (SBI),

the largest creditor to Kingfisher Airlines and the

leader of consortium of banks in DRP (Debt

Recast Package) declared Kingfisher Airlines a

NPA on 5th Jan 2012. SBI had an exposure of

INR 1,457 crore in Kingfisher Airlines. By Feb

2012, many more banks declared Kingfisher

Airlines as NPA. Those were SBI, Bank of Baroda,

PNB, IDBI, Central Bank, BOI and Corporation

Bank.

Other Problems: Kingfisher Airlines suffered

many other problems like, Erosion of its net

worth; Frozen bank accounts; Much of its fleet

grounded; and Suspension of ticket sales by IATA

on March 7, 2012 on account of non-payment

of dues. All these problems further graved the

situation.

Measures taken by Kingfisher Airlines During

Crisis

Key Revenue Initiatives

1. One world alliance Membership: to drive

inbound domestic passenger growth

2. Co-branded credit cards: introduced King

Club ICICI co-brand card

3. Kingfisher Express: DTD Cargo Express

service to tap under penetrated air-cargo delivery

service.

Key Cost Reduction Initiatives

1. Rationalizing distribution channels:

Reduction of S&D costs by reviewing

distribution channels, negotiating GDS contracts

2. Renegotiating vendor agreements:

i. Additional airport and fuel discount

ii. Additional discounts from airports

iii. E&M costs to reduce with new vendor

iv. Renewal of operating leases at a discount

to existing rates

3. Control discretionary Spend

i. Reduce rentals, cost of transportation,

local conveyance and communication

ii. Optimize space

4. Operational efficiency

5. Reduce fuel consumption for Airbus and

ATR operations

6. Target E&M spend reduction (in house

C-checks, Controlled re-delivery)

Capital Recast

§ Debt Re-schedulement

§ Equity Infusion

Kingfisher Airlines capitalizing its Expenses:

Kingfisher Airlines moved from expensing to

capitalizing in its Financial Statements in 2011.

Capitalizing: When the company distribute the

cost of acquiring asset over a period of years.

Expensing: When cost of acquiring is shown in

one year as a current expense. The benefit of

capitalizing costs is that both the EBITDAR and

the EBITDA metric – dear to KAIR – are inflated

and remain unaffected by the subsequent

increase in amortization that flows below the

EBITDA/EBITDAR line, which was highly

criticized by Veritas, a Canadian research

Company.

Effects of Capitalization on Key Figures:

company may follow expensing or capitalizing

method to record some items in its financial

statements. And both the methods affect

company’s balance sheet, income statement and

cash flow statement in a different manner. Apart

from this, the company’s financial ratios also

depict different picture based on the method used.

The impact of capitalizing over expensing on

various ratios has been summarized below: Net

Income: A company capitalizing its expenses will

report higher profit initially as compared to

expensing where higher profits will be shown in

the later years. Stockholders’ Equity: Expensing

firms will have lower stockholders equity in the

initial years, lesser profits and thus slighter

retained earnings vis-à-vis capitalizing. Assets

Reported on the Balance Sheet: A company that

capitalizes its costs will report higher total assets

as compared to the case when company

expenses the same costs.

Debt Recast by Kingfisher Airlines


In addition to these issues, 9,700,000 units of 6%

Redeemable Preference Shares of INR 100 each

issued to United Breweries (Holdings) Ltd.

(Promoter Company) were converted to

97,000,000 units of 6% Compulsorily Convertible

Preference Shares of INR 10 each. The loans

given by the banks to KAIR were impaired and

therefore under the pretext of a debt recast, the

banks have converted some of these unpaid

principal and interest amounts into cumulative

convertible preferred shares and cumulatively

redeemable preferred shares. The banking

consortium was now both an owner and a

creditor to the airline. Kingfisher Airlines, in Nov

2011 tried for a second debt recast, but was ruled

out by Government of India. Recast Pledge:

Kingfisher Airlines has pledged its brand as

collateral with its lender consortium for 4,100

crore INR. The brand valuation being done by

Grant Thorton in 2010. The Brand was valued

and loan raised worth triple the carrier’s market

value. On July 6, 2011, pursuant to requirements

prescribed under the Debt Recast Package

Kingfisher Airlines’ founder companies, United

Kingfisher Airlines in 2010 was allowed to recast

its debt in lieu of ongoing crisis. By Nov 2010,

Kingfisher has restructured 8000 crore INR

worth of debt in which all of its 18 lenders agreed

to cut interest rates and convert part of their

loans given to Kingfisher into equity. Lenders

converted 650 crore INR of debt into preference

shares which further was to be converted into

equity when the airline lists on the Luxembourg

Stock Exchange by selling global depositary

receipts (GDR). Shares were to be converted into

ordinary equity at a price at which the GDRs are

sold to investors. Besides the 1,400 crore INR

debt which was converted into preference

shares, another 800 crore INR debt was

converted into redeemable shares for 12

years.As a part of debt recast, Promoters and

Bank debt which were converted to Compulsory

Convertible Preference Shares were further on

31st March 2011 converted into equity at INR

64.48 which was higher than the then market

price of INR 39.90. After the Recast Airline’s

average interest rate came down to 11%, helping

the airline save 500 crore INR every year on

interest cost. Consortium of banks, who were

lenders to Kingfisher and a part of debt recast,

was represented by SBI Capital Markets.

The salient features of the DRP thus include:

1. Conversion of debt of up to 1,355 crore

INR from lenders into share capital.

2. Conversion of debt of up to 648 crore

INR from promoters into share capital.

3. Reschedulement of repayment of the

balance debt to lenders over 9 years with a

moratorium of 2 years.

4. Reduction in interest rates.

Sanction of additional fund and non-fund based

facilities by the lenders.


CCPS: Commulative Convertible Preference Shares

CRPS: Commulative Redeemable Preference Shares

OCDS: Optionally Convertible Debentures

WCTL: Working Capital Term Loan

FITL: Funded Interest Term Loan

RTL: Rupee Term Loan

Breweries (Holdings) Ltd and Kingfisher Finevest Ltd have pledged their entire stake in the airline

with certain of its lenders. United Breweries Holdings Ltd held 199,598,555 shares (representing

40.1% of total outstanding shares) in the airline and pledged all the shares to lenders. At the same

time, Kingfisher Finevest Ltd held 63,478,570 shares (representing 12.75% of total outstanding

shares) pledged its entire holding to the lenders.


Current Affairs: NEW DELHI: The lockout

at Kingfisher Airlines (KFA) has stepped up

pressure on lenders, who have a combined

exposure of Rs 8,000 crore, to hasten action

against the Vijay Mallya-promoted carrier.

Bankers are considering a recall of loan or

encashing securities to minimize their losses. For

the lenders, the lockout is another loud warning

that recovering their funding to the beleaguered

carrier may not be easy. KFA has looked a

“doubtful asset” and, in any case, almost all the

banks would have been forced to hike this

quarter the provisioning, or the funds they set

aside for a potential loss. The “doubtful asset”

categorization marks the steady downgrading

of the credit-worthiness of a once marquee

airline. Last year, the “sub-standard” tag was

slapped on KFA after it failed to settle dues once

bank guarantees were invoked. The latest

categorization would mean the doubling of

provisioning to 30%. (October 3, 2012)Banks

to lend to Kingfisher on humanitarian grounds:

SBI on Friday said Kingfisher lenders Have

decided to release funds to the debt ridden air line


on “humanitarian grounds” considering that its

employees have not been paid for the past seven

months. Sources had said bankers after an

emergency meeting yesterday had agreed to

release funds from escrow accounts, which is

likely to fetch up to Rs 60 crore for the

carrier.(October 5, 2012)BANGALORE: The

suicide by the wife of a Kingfisher Airlines (KFA)

employee in New Delhi on Thursday has turned

the spotlight on the incredible financial distress

that the airline’s 4,000-odd employees have been

going through. Most of them have not been paid

for 6-7 months. Tales abound of unpaid rents,

credit card dues, and school and college fees,

threats of eviction from landlords, threats from

bankers on account of non-payment of car and

home EMI payments, and even marital problems.

Many KFA staffers are the only breadwinners in

their families. (October 6, 2012)Employees call

off meeting with KFA CEO: The meeting between

employees and the senior management of

Kingfisher Airlines was called off in Bangalore

and Chennai on Friday, after employees wrote

to the CEO telling him not to come. A KFA

employee in Bangalore said, “We wrote a mail to

the CEO in which we told him not to waste his

time coming until our salaries are paid.” The

meeting in Bangalore was scheduled to take place

in the afternoon at the Bangalore International

Airport. (October 6, 2012)

REFERENCES

1. http://en.wikipedia.org/wiki/

Kingfisher_Airlines

2. www.ijbmc.com

3. http://en.wikipedia.org/wiki/Kingfisher_

Airlines_ financial_crisis

4. Kingfisher airlines - the ‘funliner’ experience.

(2006).

5. Kingfisher: Banking imprudence, crony

capitalism, failed regulation & poor corporate

governance. (2012, February 22)

6. Monga, N. Veritas Investment Research

Corporation, (2011).A pie in the sky

7. Kingfisher: Banking imprudence, crony

capitalism, failed regulation & poor corporate

governance. (2012, February 22)

8. Trivedi, G. (2008, January 25). Case study:

Kingfisher takes flight with roving agents


A Comparative Study of Profitability Analysis of Selected Steel Industries

Dr. Ramesh Dangar *

Steel Ministry, at present, has 12 public sector undertakings (PSUs) including the Steel

Authority of India Limited (SAIL), National Mineral Development Corporation (NMDC), Kudramukh

Iron Ore Company Limited (KIOCL), Rastriya Ispat Nigam Limited (RINL), Metallurgical and

Engineering Consultants India Limited (MECON). these various steel companies are working in

India.

The profitability ratios are calculated to measure the operating efficiency of the business

enterprise. Besides management of the company, creditors and owners are interested in the

profitability of the firm. Investor wants to get reasonable return on their investments. This is only

possible when the company is having satisfactory profit. For this purpose researcher would like to

evaluate the profitability analysis with reference to various ratios like, PBDT to Gross Sales, PAT to

Gross Sales, PAT to Net Sales, PAT to Shareholders fund and PAT to Total Assets to examined the

financial result of selected steel industries in India. This research give us result of profitability with

reference to study period from 2006-07 to 2010-11.

Introduction

The history of Iron and Steel industry in India

is nearly 4000 years old. The Iron pillars at the

outskirts of Delhi prove that Indians were familiar with

iron and steel even during the Vedic age. But the father

of the modern Steel industry Sir Jamshedji Tata set up

the Tata Iron and Steel Company (TISCO) in 1907. The

first steel ingots were rolled in TISCO in 1911. This

was followed by the establishment of the Mysore Iron

and Steel Works in 1936, later renamed as

Visveswaraya Iron and Steel Works. In 1939, Indian

Iron and Steel Company (IISCO), now a subsidiary of

Steel Authority of India Limited (SAIL) was started. At

the time of Independence, India possessed a small but

viable steel industry with an annual capacity of 1.3

million tones. In 1951, India produced 1.1 million

tones of finished steel. In the era of planned economy,

iron and steel - a core and basic sector - received the

full attention of the government and with the foreign

assistance and own resources, many new steel plants

were set up.

Review of Literature

Few studies has been conducted in India are

summarized here: Dr. Bhayani (2004) has conducted

study on working capital and profitability of cement

industry and found that profitability is highly

influenced by working capital. Linkage between asset

management and profitability of Indian Industry has

been conducted by Narware P.C. (2004), Malik A.K.

and Sur D . (1998 & 1999) has conducted to study the

effect of working capital management on profitability

with case study. Conducting a survey among 94

Japanese companies in USA, Suk et al.(1992) found

that they differ in working capital management

practices from in the US and 39 terms of lower level of

inventory and higher levels of account receivable. The

study revealed that while the US firms piled-up their

inventories, Japanies firm had higher percentage of

receivable to total assets. Purvi Tibrewalla (Kolkutta)

Steel has facilitated our quality of life, underpinned

humankind‘s development and even helped us to

understand our planet

Research Methodology

The study is mainly based on secondary data. The

relevant information in this regard is collected from

* Associate professor, Bhalodiya women’s college of Management, Kalawad Road, Rajkot

Management


Dec.- 2012 -63

ISSN No.


various sources like annual reports of banks, speeches

of chairman & websites. The reference books have

been referred from libraries. Thus, various sources

have used to collect the relevant data. The data has been

collected from the annual report of Tata Steel, Goals,

J.S.W. Steels, Sail, Jindal Steel, and Uttam Steel for the

research year 2006-07 to 2010-11 to find out the better

profitability of steel industry

Hypothesis of the Study

(1) The Size of Profitability Trend Value of PBDT

(Net Operating Profit) to Gross Sales Ratio is uniform

(2) The Size of Profitability Trend Value of PAT to

Gross Sales Ratio is uniform

(3) The size of Profitability Trend Value of PAT to

Net Sales Ratio is Uniform


Shareholders Fund Raito is Uniform


Total Assets Ratio is Uniform

Technique of the Analysis

For the purpose of profitability Analysis of

the various Steel Industries Ratios are selected and

calculated through various Statistical Techniques and

Tools like, Mean and ANOVA Test, For that SS = Sum of

Square D.F = Degree of Freedom, MSS = Mean Sum of

Square F cal = Calculated value of F crit = Critical Value

of F Ratio at 5% Significant Level This Tools can be

analyzed the profitability trend of Major players of steel

industries.

Profitability Analysis

(1) Net Operating Profit Ratio / PBDT to Gross Sales:

This ratio explains the changes in the profit margin to

sales. This ratio is computed by dividing operating

expenses i.e. cost of goods sold plus selling expenses

and general and administrative expenses including

interest by sales.

Net Operating Profit = PBDT x 100

Gross sales

This ratio measures the efficiency of operations of

the company. This ratio is designed to focus attention

in the net profit margin arising from business operation

before dep. and tax is deducted. This convention is to

express profit before dep. and tax as a percentage of

sales.

Table-1 Net Operating Profit to Gross Sales

Years

TA

TA

JSW

SA

IL

JIN

DA

L

UT

TA

M

Av

er

ag

e

2007 35.83 25.96 27.14 32.86 6.06 25.57

2008 35.6 25.11 27.89 31.95 5.75 25.26

2009 30.88 9.92 21.96 28.89 4.29 19.188

2010 31.01 20.26 26.1 20.84 5.67 20.776

2011 34.24 16.56 21.84 24.62 4.37 20.326

Average 33.512 19.562 24.986 27.832 5.228 22.224

From the above table -1, it is revealed that as per

the Company Average 22.224; Only Tata, Jindal and

sail are maintaining the Ratio While JSW and Uttam

shows below trend in the Average.

Table-2 One Way ANOVA result of selected Sample

units

Sources of

Variance

Sum of Squares

Degree of Freedom

MSS Fc Ft

BSS 2295.35 4 573.84 31.29 2.87 ESS 366.863 20 18.34 TSS 2662.21

Above table Shows The calculated value ‘F’ is 31.29

which is more than the table value of ‘F’ at 5% levels of

significance which is 2.87. It indicates that there is

significant difference in the net operating profit to sales

ratio in the units undertaken for the study for the period

of the study.

(2) PAT to Gross Sales:

This ratio is overall measure of the firm’s ability to

turn each rupee sales into net profit.

Net Profit Margin = PAT x 100

Gross Sales

Table-3 PAT to Gross Sales

Year

TA

TA

TA

TA

TA

TA

TA

TA

JSW

JSW

JSW

JSW

SA

ILSA

ILSA

ILSA

IL

JIN

DA

LJI

ND

AL

JIN

DA

LJI

ND

AL

UT

TA

MU

TT

AM

UT

TA

MU

TT

AM

Ave

rage

Ave

rage

Ave

rage

Ave

rage

2007200720072007 21.36 13.90 15.83 18.03 4.02 14.628

2008200820082008 21.12 13.68 16.54 20.23 3.77 15.068

2009200920092009 19.38 3.02 12.68 18.23 2.22 11.106

2010201020102010 18.86 10.40 15.37 12.74 2.19 11.912

2011201120112011 21.52 8 10.43 14.76 1.44 11.23

AverageAverageAverageAverage 20.448 9.8 14.17 16.798 2.728 12.788


From the above table -3, it is revealed that as per

the Company Average 12.788; Only Tata, Jindal and

sail are maintaining the Ratio While JSW is nearest to

average But Uttam shows below trend in the Average.


units

Above table shows, The calculated value ‘F’ is 30.23





of the study.

(3) PAT to Net Sales

This ratio shows the relationship between net profits

to net sales. The net profit is overall measure of a

firm’s ability to turn each rupee of sales into profit. It

indicates the efficiency with which a business is

managed

Net Profit Margin = PAT x 100

Net Sales

Table -5 Net Profit to Net Sales Ratio

YEAR

TA

TA

JSW

SAIL

JIN

DA

L

UT

TA

M

AV

ER

AG

E

2007 24.06 14.93 18.28 19.81 4.39 16.30

2008 23.80 15.13 19.08 22.86 3.92 16.96

2009 21.39 3.27 14.31 20.08 2.29 12.27

2010 20.17 11.11 16.63 20.08 2.28 14.05

2011 23.35 8.68 11.48 21.56 1.52 13.32

AVERAGE 22.55 10.65 15.96 20.88 2.88 14.58

From the above table -5, it is revealed that as per the

Company Average 14.58; Only Tata, Jindal and sail are

maintaining the Ratio While JSW is nearest to average

But it shows fluctuation trend in Net Profit Ratio. While

Uttam shows decreasing trend in the Average.

Above table shows, the calculated value ‘F’ is 42.88





of the study.

(4) Profit After Tax to Shareholder’s Fund:

This is known as shareholders’ funds. Return on

shareholders’ fund is a very effective measure of the

profitability of an enterprise. These ratios measure

the return on the total equity of the shareholders. This

ratio is one of the most important relationships in

financial statement analysis.

Return on Shareholders’ Fund = PAT x

100

Shareholders’ Fund

Table-7 PAT to Shareholder’s Fund Ratio

Sources

of

Variance

Sum of

Squares

Degree of

Freedom

MSS Fc Ft

BSS 933.99 4 233.50 30.23 2.87

ESS 154.48 20 7.724

TSS 1088.46


units

Source of

Variance

Sum of

Square

D.f. MSS Fc Ft

BSS 1291.69 4 322.92 42.88 2.87

ESS 150.532 20 7.53

TSS 1442.22


Company Average 20.21; Only Jindal and sail are

maintaining the Ratio While TATA is nearest to average

But JSW and UTTAM Shows Lower trend in

Shareholder’s fund.

Year

TA

TA

JSW

SA

IL

JIN

DA

L

UT

TA

M

AV

ER

AG

E

2007 29.95 23.10 35.82 28.16 20.58 27.52

2008 17.17 22.51 32.68 32.93 17.41 24.54

2009 17.24 5.76 22.06 28.37 12.07 17.1

2010 13.65 20.84 20.27 21.93 11.41 17.62

2011 14.62 11.67 13.23 23.75 8.10 14.27

AVERAGE 18.53 16.78 24.81 27.03 13.91 20.21


Above table shows, The calculated value ‘F’ is 3.28





of the study.

(5) Profit After Tax to Total Asset Ratio

This ratio is computed to know the productivity of the

total assets. This ratio is indicates the efficiency of

utilization of assets in generating revenue.

PAT to Total Assets = PAT x 100

Total Assets

Table-9 PAT to Total Asset Ratio


Company Average 10.72; Only sail and Jindal are

maintaining the Ratio While TATA is nearest to average

But JSW and UTTAM Shows Lower trend in Total Asset

Ratio.

So

urc

es

of

Va

ria

nc

e

Su

m o

f

Sq

ua

res

De

gre

e o

f

Fre

ed

om

MSS Fc Ft

BSS 515.74 4 128.93 5.86 2.87

ESS 439.61 20 21.98

TSS 955.35

Table 8 One Way ANOVA result of selected Sample

units

Year

TA

TA

JSW

SA

IL

JIN

DA

L

UT

TA

M

Av

era

ge

2007 16.49 11.98 27.08 10.95 7.38 14.78

2008 9.96 10.49 27.23 15.24 7.04 13.99

2009 8.85 2.22 16.75 14 4.47 9.26

2010 7.86 8.70 13.18 9.34 3.40 8.50

2011 8.74 6.38 8.35 9.52 2.42 7.08

Average 10.38 7.95 18.52 11.81 4.94 10.72

Table-10 One Way ANOVA result of selected

Sample units

Above table Shows, The calculated value ‘F’ is 5.86





of the study.

Conclusion:

From the above tables It is revealed that the

profitability of Tata Steel Company is better, JINDAL

steel shows next to Tata Steel while major fluctuation

in profitability shown in JSW and SAIL But Uttam

shows decrease trend in profitability.

References:

1. Bhayani S.J. (2004), Working Capital and

Profitability Relationship (A Case Study of Gujarat

Ambuja Cements Ltd.), SCMS Indian Management,

April-June, pp. 98-111.

2. Mallick Amit and Debasish sur “Working

capital and profitability: A case study in interrelation”

November 1998

3 Purvi Tibrewalla (Kolkutta) 2010. E- Research

Paper on Indian Steel Industry.

4 Enders, Walter and Skilos, Pierre, 2001 “Co

integration and Threshold Adjustment” Journal of

Business and Economic Statistics, April, Vol.19, No.2

5 Foyil Securities Yearbook 2009 Foyil

Securities Report on Steel Industry “Weathering the

Crisis”, October 2008 – February 2009.

Sources

of

Variance

Sum

of

Squares

Degree

of

Freedom

MSS Fc Ft

BSS 609.66 4 152.415 3.28 2.87

ESS 930.05 20 46.50

TSS 1539.71


“Urban Poverty & Urban Health “(An Overview)

Dr.Manisha. M. Barad*

The World is increasingly becoming urbanized and the rate at which urban populations are

growing is indicative of high pace of social and economic change. With all global demographic

growth, urban sprawl is becoming a major feature. Useful as they nay be and are as demographic

absorbers, metropolitan regions by their sheer size, create complex and multifaceted problems on

scales never experienced before. The effects of this population dynamics in cities is producing

insurmountable miseries that are difficult to comprehend. Most of the cities are faced with the

problem of rapidly deteriorating physical and living environment. The deterioration manifests

itself in the form of slums, urban sprawl and squatter settlements, increasing traffic congestion,

flooding and erosion and deteriorating infrastructure and short alls in service delivery amongst

others.

Urban sprawl is a direct outcome of urbanization. This phenomenon is characterized by

haphazard housing and other structure needed to fulfill daily necessities in urban suburbs where

majority of these structures are without adequate building/planning permits in uncoordinated

layouts.

Often, these structures are products of squatter or slums that choose to settle at far away

suburbs due o their inability to afford residential space in the city. The improper co-ordination of

the physical development promotes high level of inaccessibility within the area. The area lacks

essential social and welfare infrastructure like water, electricity, health care and educational facilities

among others. The unsanitary conditions in the area that is dangerously unsafe for living because

of its associated social vices. Above all urban sprawl presents a repulsive culture of the city space

which calls for urgent attention.

Our cities and in particular, the newest ones, waste both land and energy; land better needed

for agricultural purposes and energy at a time when fuel is becoming expensive and scarce.

The area per inhabitant has doubled in many cities during the last decades exclusively

because the private automobile demands more space i.e., roads, parking areas and noise buffer

zones; each single car requires three parking spaces-one at work, one at home and one at other

activities. This is equivalent to 75 square meters or one normal apartment floor area.

Managment


Dec.- 2012 -70

ISSN No.

* Dept. of Commerce & Management Kutch University – Bhuj

INTRODUCTION:

By 2030, according to the projections of the

United nations Population Division, more people in

the developing world will live in urban than rural areas;

by 2050, two-thirds of its popQuation is likely to be

urban. The world’s population as a whole is expected

to grow by 2.5 billion from 2007 to 2050, with the

cities and towns of developing countries absorbing

almost all of these additional people. This demographic

transformation will have profound implications for

health. to understand these consequences, it is

important to set aside the misconceptions that have

prevented the health needs of urban populations from

being fully appreciated. The most urgent need is to

acknowledge the social and economic diversity of

urban populations, which include large groups of the

poor whose health environments differ little from those

of rural villagers. on average, urbanites enjoy an


advantage in health relative to rural villagers, but health

policies for an urbanizing world cannot be based on

averages alone. Disaggregating is essential if policies

are to be properly formed and health programs

targeted to those most in need. The supply side of the

urban health system is just as diverse as the urban

population. The private sector is a far more important

presence in cities than in rural areas, and urban health

care is consequently more monetized. even in medium-

sized cities, one can find a full array of providers who

serve various niches of the health care market, ranging

from traditional healers and sellers of drugs in street

markets to well-trained surgeons. In addition to the

socioeconomic and supply-side differences within any

given city, there are important differences across cities

that warrant attention. Much of the demographic and

health literature has concentrated on the largest cities

of developing countries, leaving the impression that

most urban residents are found in these huge

agglomerations. In fact, small cities and towns house

the vast majority of developing-country urban dwellers.

A number of studies suggest that rates of poverty in

these smaller settlements often exceed the rates in large

Table-1: The multiple dimensions of urban well being.

Health Consumption of : Freedom

from

violence

and crime

Personal

Efficacy

Collective

efficacy

and

political

voice.

Private

Goods &

Services

Leisure

Time

Shelter Health

related

Public

services

Crowding,

contagion,

and social

epidemiology

Costs and

quality of

private and

public health

services

Municipal

interventions

in traffic

control,

emergency

transport,

pollution

control,

and other

environmental

risks

Food and

nonfood

consumption

Variability

(over areas

and over

time) in

prices,

wages, and

demand

Provision of

electricity

Holdings of

consumer

and

producer

durables

Access to

savings and

credit

Access to

Land

Time costs

of

commuting

Security of

tenure

Use of housing

for informal

enterprises,

rental income

Exposure to

environmental

risks

Non dirt

flooring

Ventilation of

cooking space

Adequate

supply of

safe

drinking

water

Sanitary

disposal

of

human

waste

Drainage

Solid

waste

disposal

Access to

the

police and

judicial

system

Lighting of

walkways,

streets, and

bus stops

Safe spaces

for girls and

women

Counseling

and

intervention

services for

intimate

partner

violence

Personal

social

networks

Perceptions

and

interpretations

of urban

inequality

Local social

and political

organizations

(including

associations

of slum

dwellers)

Political and

institutional

accountability

Participatory

planning

Social

exclusion

cities, and in many countries small-city residents go

without adequate supplies of drinking water and

minimally acceptable sanitation. Rural shortages of

health personnel and services are receiving attention

in the recent literature, but similar shortages also plague

smaller cities and towns. As developing countries

engage in health-sector reforms and continue to

decentralize their political and health systems,

allowances will need to be made for the thinner

resources and weaker capabilities of these urban

areas. This paper provides a sketch of urban health in

developing countries, documenting the interurban

differences in health for a number of countries and

showing how the risks facing the urban poor compare

with those facing rural villagers. It begins with an

overview of the multiple dimensions of urban poverty

and a summary of internationally comparable evidence

on the urban health differentials associated with

poverty.

URBAN POVERTY: CONCEPTS AND MEASURES:

To Understand the concept of urban poverty and the

dimensions of urban health problems lets understand

the below table


Since the early 1980s, poverty has been

viewed as having multiple dimensions or

manifestations, each of which warrants consideration.

the theory underlying this approach is generally

credited to Amartya Sen., who put forward the core

ideas in his framework of capabilities and well-being.

Sen’s framework unifies elements of the familiar basic-

needs approach to poverty, extending that approach to

incorporate the concepts of relative deprivation,

inequality, and social exclusion. Our discussion of

poverty will be guided by the framework set out in

table 1, which is designed to highlight dimensions of

well-being that are of particular salience to urban health

and to indicate where conceptual and programmatic

linkages might be made across dimensions. What

insights or interventions are suggested by the multiple

dimensions approach that might otherwise have been

overlooked? Consider the first two columns of table 1,

which have to do with health and the consumption of

private goods and services, the latter providing the

basis for conventional, monetized measures of living

standards and poverty. A household whose

consumption expenditures put it above the

consumption poverty line is classified as “not poor”

according to such conventional definitions. if one

knows where a household stands in terms of its

consumption, what more can be learned by considering

health as an additional dimension of well-being?

Levels of health and consumption expenditures are

positively correlated, but so many other factors are

involved in their relationship that a household classified

as non poor in terms of its consumption might not

enjoy even minimally adequate levels of health. Non

poor households in urban neighborhoods lacking

drinking water and sanitation face a daily assault of

health threats that household income alone cannot

always fend off. Even those who can pay for health

care may receive services of such low quality that they

do little to restore health. When poverty is defined in

narrow monetized terms, policymakers may tend to

think of poverty alleviation mainly in terms of labor

markets, not realizing that there are government

agencies with no role in employment as such but whose

actions may nevertheless make a significant difference

to household income. For example, some health

interventions can expand a household’s capacity to

generate income: the provision of treated bed nets

reduces the number of days of adult work that would

otherwise be lost to malaria, and programs that rid

children of parasitic infections allow them to better

concentrate in school and grow to become more

productive adults. Likewise, policymakers may

underestimate the payoffs from successful employment

interventions by failing to appreciate how extra cash

income can produce health returns. By setting side-by-

side the different dimensions of household wellbeing,

the multiple-dimensions perspective thus underscores

the potential benefits from linking sectors,

encouraging an approach that has been termed “joined-

up” governance. the fact that a household is non poor

in terms of consumption provides no guarantee of

adequacy in other important aspects of well-being, as

outlined in the next set of columns in table 1.

Conventional poverty measures also ignore the

important dimension of crime and violence, risks that

threaten many city dwellers. The last two columns of

table 1 address the core issues of efficacy and agency

that most clearly separate Sen.’s capabilities

framework from the basic-needs approach to poverty.

Where health is concerned, a sense of personal efficacy

is fundamental since it energizes health-seeking

behavior. The mother of a sick child who lacks faith in

her own effectiveness may give up after a dispirited

search for care, whereas one with more confidence in

her abilities might persevere until help is located.

Whether a woman perceives her choices to be effective

can depend on the information and contacts that she

has acquired through her personal social networks.

Personal efficacy can differ depending on the specific

domain in which choice is exercised, but there are

summary measures of the lack of efficacy—anxiety,

depression, and related aspects of mental health—that

may be relevant across the board. the last column of

table 1 addresses collective efficacy—the ability of

individuals to act through groups to achieve the ends

they collectively desire. The groups in question can be

local, informal associations—such as associations of

slum dwellers—local political groups, or other groups

with links to resources outside the local community

(such as those with bridging social capital). in both

the personal and collective arenas, there is the

possibility of social exclusion to consider. Some poor

people may feel that avenues to upward mobility are

effectively blocked; a slum association may interpret

the absence of public services in the local community

as evidence of indifference at more powerful levels of


government. Sen.’s emphasis on the collective and

community dimensions of well-being thus provides a

natural bridge from the absolute poverty focus of the

basic needs perspective to considerations of

distribution, relative deprivation, and inequity. Much

of this discussion applies to rural as well as urban

environments, but there are features of city life that

give urban poverty a distinctive character. the

monetization of urban living; the spatial concentration

of the population in environments that are sometimes

but not always well supplied with protective public

services; the inescapable economic and social

diversity that confronts the urban-dweller in daily life;

and the geographic proximity of modern health care

institutions that may nevertheless lie beyond the reach

of the poor—these and similar factors are far more

prominent in urban than in rural settings. Popular

accounts of urban poverty, and too much of the

academic literature, tend to leave the reader with the

impression that “slum dwellers” and the “urban poor”

are one and the same. But this is not the case. One

study of urban India found that of all urban households

officially classified as poor in 2005, over 80 percent

lived in non slum neighborhoods. Also, slums may

contain significant percentages of households whose

expenditures would put them above the official poverty

line. Much more needs to be done to determine the

percentage of the urban poor living in slums. Without

this information, it is not clear whether poverty

alleviation programs should target poor places (slums)

or poor people (who may live in a variety of

neighborhoods). Thus above dimensions can be taken

as for the definition of urban poverty and the factors

leading to urban well being.

URBAN HEALTH SYSTEM:

A distinguishing feature of urban health systems is

the prominence of the private sector. Given the higher

average levels of income in urban populations and the

income diversity that establishes market niches,

private services tend to be more developed in cities

than in rural areas, especially in the larger cities. Fee-

for-service arrangements are generally characteristic

of urban health care, whereas rural services are often

sensibly provided free (or made available for nominal

fees) at public health-posts and clinics. In the more

monetized urban economy, the urban poor without

cash on hand can find themselves unable to gain entry

to the modern system of hospitals, clinics, and well-

trained providers. Urban health providers are well

aware of the effects of monetization on the health-

seeking behavior of the poor. They see poor clients

who present themselves in a more debilitated condition

than they would otherwise have been, having endured

their illnesses until care could not be put off any longer.

Health providers realize that the poor are likely to

abandon prescribed medication to save on the costs of

purchasing medicines, or economize by buying less

than what was prescribed. They are not all that

surprised when the poor fail to return as requested for

follow-up visits. On paper, at least, many countries offer

subsidies that allow the poor to purchase certain

medicines or types of care. But these subsidies often

require poor patients and their families to spend time

searching for and negotiating with a bewildering

variety of providers and suppliers. The poor can be

discouraged by the difficulties of finding affordable

transport, inconvenient hours of operation at clinics

or health centers, the frequent absence of key staff,

and long waits to receive care. A subsidy for the poor

that exists in theory may prove to be no subsidy at all.

When the poor succeed in receiving formal health care,

is that care likely to be of sufficient quality to make a

difference to their health? A recent quality-of-care

study in Delhi, India, raises serious doubts. The study

was set in both slum and non slum neighborhoods,

covering a range of household income levels. A full

inventory of the health providers who serve these

neighborhoods revealed that a short walk would bring

a typical neighborhood resident within reach of 70

health providers of some sort. Even for the poor, access

in the sense of geographic distance was not the problem

in this case. the study assessed the quality of health

care provision via a series of vignettes measuring

provider knowledge of the steps to take in making a

diagnosis and prescribing treatment or referral (rating

the provider responses in relation to examination

protocols), and by a follow-up in which many of the

same providers were observed as they interacted with

patients. the quality of care available in the poor

neighborhoods proved to be so low that the authors

could fairly describe it as “money for nothing.” Both

public-sector and private providers serving the poor

neighborhoods of Delhi know less about appropriate

care than the providers who practice in better-off

neighborhoods. Levels of provider knowledge were low


across all neighborhoods in the study, but were

especially low in the poor neighborhoods. These

findings suggest that even strenuous health-seeking

efforts on the part of Delhi’s poor would bring them no

assurance of reasonable quality health care.

Recognizing that private-sector health care will likely

be an enduring feature of the urban health system, a

number of program interventions have sought to foster

constructive engagement between the private and

public sectors, often with the participation of NGOs

in key intermediary roles.19 an analytic review

identified eight general types of public-private

interventions: social marketing, whereby commercial

marketing methods are used to increase demand for

health services; voucher systems that provide

subsidies for the poor or other groups; the

prepackaging of medicine kits to encourage proper

dosages and lengths of treatment; contracting out for

purchasing; franchising of health services to private

providers, usually with an NGO or government agency

in a monitoring role; accreditation to spread awareness

and standardize diagnoses and clinical practice;

targeted training; and system wide regulatory

interventions. Very few of the interventions in these

areas have had their health outcomes evaluated in

quantitative terms, and little is known yet about the

effects on the urban poor. Although much remains to

be learned about such public-private partnerships, they

will likely be increasingly important as developing

country health systems undergo decentralization.

Decentralization is placing more responsibilities for

the delivery and funding of health services with local

governments, meaning that municipal city

governments in particular must take on unfamiliar

roles in health for which they are seldom well prepared.

Lacking the capacity to deliver services directly,

municipal governments will no doubt turn to multiple

types of partnerships with the private for-profit and

not-for-profit sectors. Not-for-profit sectors. Health

insurance systems are also being reconsidered with

the poor in mind. Numerous countries have insurance

systems in place, but they typically cover only civil

servants and other formal-sector employees. In Latin

America, initiatives have been mounted to extend

coverage to the fraction of poor who are able to pay at

least some premiums, or whose care can be covered

by cross-subsidies using funds raised from those who

are less poor. in Colombia and Mexico, simplified

forms of proxy means testing. Health insurance is not

the only way to improve the access of the poor to the

cash they need for health care. Alternatives include

improving the ability of the poor to deposit their

savings in banks and other formal sector financial

institutions, and expanding access to short-term credit.

Financial institutions are not generally regarded as

outposts of the health sector, but they can have an

important role to play in improving the health of the

poor.

CONCLUSION:

Unlike the wealthier residents of cities and

towns, the urban poor live in health environments that

are often little better than the environments of rural

villages. Many of the poor live in slums, where they

are subjected to a barrage of health threats, but other

poor urbanites are dispersed across a variety of

neighborhoods. Geographic targeting may be an

effective health strategy for reaching slum dwellers,

but other approaches will need to be devised to meet

the needs of the poor who live outside slums. The

health needs of small-city residents—who account for

the vast majority of urban dwellers—cannot continue

to be neglected. A main theme in this paper is the need

for the public health sector to work in tandem with

other government agencies. Public health

professionals cannot mandate the provision of safe

water and adequate sanitation for the urban poor by

themselves; nor can they reorganize traffic flows and

pedestrian activities to reduce deaths and injuries, or

make cities ready to adapt to upcoming threats from

climate change. These priorities will require a strategy

of “joined-up governance,” whereby public health

agencies join with concerned actors in other sectors

of municipal, regional, and national government.

Because the urban health system is dauntingly complex,

with private for-profit and private nonprofit care a

significant presence in most cities, effective

partnerships are also likely to require engagement with

the private sector. With political and administrative

decentralization now underway in many countries,

creative partnerships will increasingly be forged at

the local and municipal level. Much remains to be

learned about how health expertise in national

ministries of health and international funding and

technical assistance can be redeployed to meet the

many health needs of cities and their neighborhoods.


Among the key issues that lie squarely within the

scope of the public health sector, the quality of urban

health care has received too little attention. Recent

studies of quality show that the poor can receive very

little in return for their fees; the care delivered by both

private sector and public-sector health providers can

be grossly inadequate. Given the monetization of the

urban system, the performance of subsidy schemes

to assist the poor also needs careful scrutiny. The

social capital of the urban poor has been emphasized

throughout this discussion—as embodied in their

personal networks and in the local political or

economic associations with which municipal

governments could engage as partners. in the well-

documented case of India, associations of slum

dwellers have provided the poor with an effective

“voice” in local bureaucratic and political circles, but

there are now examples of similar associations across

the developing world. A number of these associations

began as grassroots savings groups, but with assistance

from NGos have expanded their reach to improve local

sanitation. Among all the misconceptions that have

hindered work on urban health, perhaps the most

pernicious is the view that unlike rural villages, urban

neighborhoods somehow lack the social cohesion

needed to sustain community participation. in an

urbanizing era, there is every reason to design health

programs for the urban poor that take full advantage

of the social resources and resourcefulness of their

communities.

REFERENCES:

1 United nations, World Urbanization Prospects: The

2007 Revision (new York: United nations Population

Division, 2008).

2 Un, World Urbanization Prospects: The 2007 Revision;

and Mark R. Montgomery, “the Urban transformation

of the Developing World,” Science 319, no. 5864 (2008):

761-64.

3 Panel on Urban Population Dynamics, Cities

Transformed: Demographic Change and its

Implications in the Developing World, ed. Mark R.

Montgomery et al. (Washington, DC: national academies

Press, 2003).

4 Gilles Dussault and Maria Christina Franceschini,

“not enough there, too Many Here: Understanding

Geographic imbalances in the Distribution of the Health

Workforce,” Human Resources for Health 4, no. 12

(2006): 1-16. this review emphasizes urban-rural

imbalances in health personnel, but does not

differentiate among types of urban areas.

5 Amartya Sen, “Capability and Well-Being,” in The

Quality of Life, ed. Martha nussbaum and amartya Sen

(oxford, UK: Clarendon Press, 1993): 30-53.

6 trudy Harpham, “Background Paper on improving

Urban Population Health,” presented at innovations

for an Urban World, the Rockefeller Foundation’s Urban

Summit, July 2007.

7 S. Chandrasekhar and Mark R. Montgomery,

“Broadening Poverty Definitions in India: Basic needs

in Urban Housing,” Working paper, international

institute for environment and Development (2009).

8 the literature has not quite reached consensus on

how to label concepts, with agency, efficacy,

empowerment, autonomy, freedom, and similar terms

all being used. Sabina alkire, “Concepts and Measures

of agency,” Working Paper no. 9, oxford Poverty and

Human Development initiative (2008).

9 Chandrasekhar and Montgomery, “Broadening

Poverty Definitions in india: Basic needs in Urban

Housing.”

10 Panel on Urban Population Dynamics, Cities

Transformed: Demographic Change and its

Implications in the Developing World.

11 Mark R. Montgomery and Paul C. Hewett, “Urban

Poverty and Health in Developing Countries: Household

and neighborhood effects,” Demography 42, no. 3

(2005): 397-425.

12 Mursaleena islam, Mark R. Montgomery, and Shivani

taneja, Urban Health and Care-Seeking Behavior: A Case

Study of Slums in India and the Philippines (Bethesda,

MD: PHRPlus Program, abt associates, 2006).

13. For informative reviews of absenteeism in the

public health sector—for obvious reasons,

absenteeism as such is not a problem seen in the

private health sector—see nazmul Chaudhury et al.,

“Missing in action: teacher and Health Worker absence

in Developing Countries,” Journal of Economic

Perspectives 20, no. 1 (2006): 91-116; and Pieter

Serneels, Magnus lindelow, and tomas lievens,

“Qualitative Research to Prepare Quantitative analysis:

absenteeism among Health Workers in two African

Countries,” in Are You Being Served? New Tools for

Measuring Service Delivery, ed. Samia amin, Jishnu

Das, and Markus Goldstein (Washington, DC: World

Bank, 2008): 271-97.


14.ishnu Das and Jeffrey Hammer, “location, location,

location: Residence, Wealth, and the Quality of Medical

Care in Delhi, india,” Health Affairs 26, no. 3 (2007):

338-51; Jishnu Das and Jeffrey Hammer, “Money for

nothing: the Dire Straits of Medical Practice in Delhi,

india,” Journal of Development Economics 83, no.1

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income Countries,” Policy Research Working Paper no.

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“insurance for the Poor?” Global Poverty Research

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(2007).

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Health in São Paulo, Brazil,” Ph.D. thesis (london: South

Bank University, 1999).

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Depressive Disorders in Bahia, Brazil: interactions of

Gender, ethnicity, and Social Class,” Social Science and

Medicine 59, no. 7 (2004): 1339-53.

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“Mental Health and Social Capital in Cali, Colombia,”

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Care in low-income Women in Santiago, Chile: a

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and Prevention of Mental Disorders in low-income and

Middle-income Countries,” Lancet 370, no. 9591 (2007):

991-1005.

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Domestic Violence: A Multi-Country Study (Calverton,

MD: Measure DHS+ and oRC/Macro, 2004).

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Mitchell G. Weiss, “Contextualizing Mental Health:

Gendered experiences in a Mumbai Slum,”

Anthropology & Medicine 10, no. 3 (2003): 291-308.

23. World Health organization, WHO Multi-Country

Study on Women’s Health and Domestic Violence

Against Women: Summary Report of Initial Results on

Prevalence, Health Outcomes and Women’s Responses

(Geneva: World Health organization, 2005).

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Unsafe Abortion in Three Squatter Settlements of

Karachi (Karachi, Pakistan: Department of Community

Health Sciences, aga Khan University, 2002).

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in abidjan: a Possible Cause of the Fertility Decline,”

Population 12, no. 4 (2000): 197-214.

26. Clementine Rossier, Attitudes Towards Abortion and

Contraception in Rural and Urban Burkina Faso (Paris:

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427-42. Country profiles are available at

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Determinants of Capital Structure

A Case Study of Indian Aviation Industry

Satyaki Bhatt *

This paper is analysis the explanatory power of some of the theories that have been proposed in the

literature to explain variations in capital structures across firms. In particular, this study investigates capital

structure determinants of Aviation firms. An analysis of determinants of leverage based on total debt ratios may

mask significant differences in the determinants of long and short-term forms of debt. Therefore, this paper

studies determinants of total debt ratios as well as determinants of short-term and long-term debt ratios.

The results indicate that most of the determinants of capital structure suggested by capital structure

theories appear to be relevant for Aviation firms. But we also find significant differences in the determinants of

long and short-term forms of debt. Due to data limitations, it was not possible decompose short-term debt and

long-term debt into its elements, but the results suggest that future analysis of capital choice decisions should be

based on a more detailed level.

Managment


Dec.- 2012 -75

ISSN No.

*Lecturer, Shaswat B.B.A. College, Bhavnagar University, Bhavnagar

Introduction :-

How do firms choose their capital structures? In his

answer to this question, Prof. Stewart C. Myers, then

President of American Finance Association in 1984

said that “we don’t know”. Despite decades of intensive

research, and hundreds of papers after Modigliani and

Millers’ seminal work, surprisingly there is lack of

consensus even today among the finance experts on

this basic issue of corporate finance. In practice, it is

observed that finance managers use different

combinations of debt and equity. Academicians and

practitioners alike have found it difficult to find out

how a firm decides its capital structure in the perfect

capital markets of the west as well as in the imperfect

capital markets, as in India. This has led to an upsurge

in research on company finance, particularly aimed at

understanding how companies finance their activities

and why they finance their activities in these specific

ways. A practical question therefore is: What

determines the capital structure? There are three major

capital structure theories namely Trade off Theory

[Kraus, A., Litzenberger, R. (1973), Kim (1978)],

Pecking Order Theory [Myers (1984) and Myers and

Majluf (1984)], Agency Cost Theory [Jensen and

Meckling (1976)]. This paper undertakes study of firm

level data of 3 major companies listed in BSE, taken

from aviation sectors and attempts to identify main

determinants of capital structure for the period 2006-

07 to 2010-11 in the light of the above mentioned

theories. My purpose of this exercise is to verify

whether any particular theory can characterize Indian

corporate behavior in determining capital structure.

The central issue I will address is to examine

empirically the existence of inter firm and inter

industry differences in the capital structure of Indian

firms and identify the possible sources of such

variation in capital structure. Efforts will be made to

find out the factors that determine the financing pattern

of capital structure of Indian companies, particularly

in the private sector.

Review of Literature:-

In the light of the vast literature on capital structure

issues, we do not try to provide a comprehensive

review, and we do not discuss theory in detail. Rather,

as a starting ground, we will give a brief outline of the

major theoretical ideas and the corresponding

empirical implications, and present some empirical

studies on capital structure issues. The focus of our

discussion is on (subjectively) selected recent


empirical studies. Sound financing decisions of a firm

basically should lead to an optimal capital structure.

Capital structure represents the proportion in which

various long term capital components are employed.

Over the years, these decisions have been recognized

as the most important decisions that a firm has to take.

This is because of the fact that capital structure affects

the cost of capital, net profit, earning per share, and

dividend payout ratio and liquidity position of the firm.

These variables coupled with a number of other factors

determine the value of a firm. So, capital structure is a

very important determinant of the value of a firm.

Franco Modigliani and Merton Miller (hereafter called

MM) were the first to present a formal model on

valuation of capital structure. In their seminal papers

(1958,1963), they showed that under the assumptions

of perfect capital markets, equivalent risk class, no

taxes, 100 per cent dividend payout ratio and constant

cost of debt, the value of a firm is independent of its

capital structure. When corporate taxes are taken into

account, the value of a firm increases linearly with

debt-equity (D/E) ratio because of interest payments

being tax exempted. MM’S work has been at the center

stage of the financial research till date. Their models

have been criticized, supported, and extended over the

last 50 years. David Durand (1963) criticized the model

on the ground that the assumptions used by M M are

unrealistic. Solomon (1963) argued that the cost of

debt does not always remain constant. Once the leverage

level exceeds the accepted level, the probability of

default in interest payments increases by which the

cost of debt rises. Stiglitz (1969, 1974) proved the

validity of the MM model under relaxed assumptions

whereas Smith (1972), Krause and Litzenberger

(1973), Baron (1974, 1975), and Scott (1976, 1977),

supported the M M model, but only under the conditions

of risk free debt and costless bankruptcy. When

bankruptcy has positive costs, there exists an optimal

capital structure which is a trade off between tax

advantage of debt and bankruptcy costs.

Research Methodology:-

Objective of the Study:-

The proposed research is intended to examine the trend

and pattern of financing the capital structure of Indian

companies. The central issue we will address is to

examine empirically the existence of inter firm and

inter industry differences in the capital structure of

Indian firms and identify the possible sources of such

variation in capital structure in order to find out the

factors that determine the financing pattern of capital

structure of Indian companies, particularly in the

private sector.

Source of Data :-

For our study purpose, only secondary data is used

which is sourced from the annual reports of the

selected companies and websites

www.moneycontrol.com and www.bseindia.com. The

information relating to nature of industry, size, age,

state and region, company background, value of total

assets and annual financial statements of sample

companies for the period of 2006-07 to 2010-2011

have been obtained from the same.

Determinants of capital structure:-

Leverage:-

The use of fixed cost in production process also affects

the capital structure. The high operating leverage use

of higher proportion of fixed cost in the total costs

over a period of time can magnify the variability in

future earnings. Both the bankruptcy cost theory and

agency cost theory suggest the negative relation

between operating leverage and debt level in capital

structure. The bankruptcy cost theory contends the

higher operating leverage, the greater the chance of

business failure and the greater will be the weight of

bankruptcy costs on enterprise financing decisions.

Similarly, as the probability of bankruptcy increases,

the agency problems related to debt become more

aggravating. Thus, these theories suggest that as

operating leverage increases, the debt level in capital

structure of the enterprises should decrease.

Profitability :-

Financial leverage has a positive effect on the firm’s

profitability. Taub, Nerlove, Baker, and Petersen and

Rajan also found a positive relationship between capital

structure and profitability of the firm. In addition, Roden

and Lewellen found a positive relationship between

profitability and total debt. Champion describes that

the use of leverage is one way to improve the

performance of the firm.


Size :-

Many studies suggest that there is a positive

relationship between firm size and leverage. Marsh

indicates that large firms more often choose long-term

debt, while small firms choose short term debt. The

cost of issuing debt and equity is negatively related to

firm size. In addition, larger firms are often diversified

and have more stable cash flows, and so the probability

of bankruptcy for larger firms is less, relative to smaller

firms. This suggests that size could be positively related

with leverage. The positive relationship between size

and leverage is also viewed as support of asymmetric

information. Larger size firms enjoy economies of

scale and creditworthiness in issuing long term debt

and have bargaining power over creditors. These

arguments suggest that larger firms have tendency to

use higher leverage.

Debt-Equity :-

In financial terms, debt is a good example of the

proverbial two-edged sword. Astute use of leverage

(debt) increases the amount of financial resources

available to a company for growth and expansion. The

assumption is that management can earn more on

borrowed funds than it pays in interest expense and

fees on these funds.

Data analysis :-

The data has been analyzed using various statistical

tools like correlation, regression. The data has been

also analyzed using different test and statistical tools

like SPSS. The figures for the purpose of the analysis

have been collected from various available secondary

sources like annual reports of the company, journals

of the finance, and other periodicals.

Hypotheses:

Ho: There is correlation among the leverage ratio of

selected companies

H1: There is no correlation among the leverage ratios

of selected companies.

Level of significance: 5%

Test: t test

Degree of freedom: n-2

Here the t-test value is 3.46 and the table value

is

Leverage

Year Jet

Airways

King Fisher Spice Jet

2007 0.73 0.7 0.7

2008 0.73 0.82 0.95

2009 0.84 1.6 8.23

2010 0.84 1.96 4.56

2011 0.84 1.72 0.21

Correlation 0.56 0.49 1

t-test 1.41 1.12

Table Value @ 5 % 3.18

Table Value @ 10 % 2.35

Here the results show that t-test value is lesser than the

table value at both 5 % and 10 % level of significance.

So it can be concluded that the null hypothesis is

accepted and alternate hypothesis is rejected.

Correlation

Jet Airways Kignfisher Spicejet

Jet Airways 1

Kingfisher 0.97 1

Spicejet 0.56 0.49 1

Hypotheses:

Ho: There is correlation among the Profitability ratio

of selected companies

H1: There is no correlation among the profitability

ratios of selected companies.


Test: t test


Profitability

Year Jet Airways King Fisher Spice Jet

2007 85.08 -238.09 -93.73

2008 -48.99 -591.57 -201.11

2009 -90.39 -571.15 63.38

2010 5.64 -546.85 785.12

2011 40.45 -311.69 331.32

Correlation 0.14 -0.11 1

t-test 0.25 -0.19

Table value @ 5% 3.18


Here the results show that t-test value is lesser than

the table value at both 5 % and 10 % level of

significance. So it can be concluded that the null

hypothesis is accepted and alternate hypothesis is

rejected.


Correlation

Jet Airways Kingfisher Spicejet

Jet Airways 1

Kingfisher 0.89 1

Spicejet 0.14 -0.11 1

Hypotheses:

Ho: There is correlation among the size of selected

companies

H1: There is no correlation among the size of selected

companies.


Test: t test


Size


2007 4.85 4.25 3.81

2008 5.01 4.16 4.11

2009 5.12 4.72 3.67

2010 5.07 4.7 4.34

2011 5.16 4.8 4.47

Correlation 0.44 0.34 1

t-test 0.41 0.67

Table value @ 5 % 3.18


Here the results show that t-test value is lesser than

the table value at both 5 % and 10 % level of

significance. So it can be concluded that the null

hypothesis is accepted and alternate hypothesis is

rejected

Correlation

Hypotheses:

Ho: There is correlation among the Debt-Equity

ratio of selected companies

H1: There is no correlation among the Debt-Equity

ratio of selected companies.


Test: t test


Debt-Equity


2007 70.15 6.77 1.8

2008 139.18 6.88 2.24

2009 189.08 21.31 2.03

2010 160.98 29.79 1.81

2011 156.15 14.18 0.21

Correlation

Jet Airways Kingfisher Spicejet

Jet Airways 1

Kingfisher 0.67 1

Spicejet -0.08 0.001 1

Correlation coefficient results :-

Leverage Profitability Size Debt-Equity

2007 0.71 -82.25 4.3 26.24

2008 0.83 -280.56 4.43 49.43

2009 3.56 -199.39 4.5 70.81

2010 2.45 81.3 4.7 64.19

2011 0.92 20.03 4.81 56.85

Correlation 0.78 0.08 0.63 1

t - test 3.46 0.14 1.82



Here the results show that t-test value is lesser than the

table value at both 5 % and 10 % level of significance.

So it can be concluded that the null hypothesis is

rejected and alternate hypothesis is accepted.

Findings :-

• Jet Airways has concentrated leverage period.

It is positive sign for the company. On the other hand

Spice Jet and Kingfisher has fluctuating leverage period.

• In leverage correlation, every company has

positive relationship with each other.

• In profitability level, Jet airways and Spice jet

are on better position. King fisher has the worst

position.

• In correlation in terms of profitability level,

Kingfisher and Spice jet has negative correlation with

each other.

• In terms of size ratio, Jet airways have the

best position in every year.

• In size correlation all companies have

positive relationship with each other.

• In debt-equity once again Jet airways have the

best position.

• In correlation, Spice jet has negative

correlation with Jet airways.


Suggestion :-

• There is no particular suggestion as the

companies are performing well except Kingfisher.

• The company is facing financial crisis right

now also.

• It should try to improve its services. This will

result in increased market share and thus the financial

position will be automatically improved.

Conclusion :-

The study indicates that service sector companies

relies more on the equity and less on the debt, and vice

versa in case of manufacturing companies. To sum up,

Indian companies prioritize their sources of financing

(from internal financing to equity) according to the

law of least effort, or of least resistance, preferring to

raise equity as a financing means “of last resort”. Hence

internal funds are used first, and when that is depleted

debt is issued, and when it is not sensible to issue any

more debt, equity is issued. Equity capital as a source

of fund is not preferred across the board. This shows

that somewhere or other, the financing pattern of Indian

private sector companies’ is in line with the packing

order theory as propounded by Myers and Majluf

(1984). This gives a redeeming signal about the Indian

corporate behavior which is found out to show more

dependence on their internally generated funds than

on external sources of finance.

Reference :-

Books and Journals :-

• Grossman, S., and Hart O. (1982): Corporate

Financial Structure and Managerial Incentives, in:

McCall, J. (ed.), The Economics of Information and

Uncertainty, University of Chicago Press.

• Harris, M., and Raviv A. (1991): The Theory

of the Capital Structure, Journal of Finance.

• Myers, S. (1977): The Determinants of

Corporate Borrowing, Journal of Finance.

• Titman, S., and Wessels R. (1988): The

Determinants of Capital Structure Choice, Journal of

Finance.

Websites :-

• www.moneycontrol.com

• www.bseindia.com

• www.nseindia.com


“ Green shoe option and its impact –

a comparative study on IPOs in India”

Saroj Vats *

New ideas and innovations have always been thehallmark of progress made by mankind. At every stageof development, there have been two core factors thatdrive man to ideas and innovation. These are increasingreturns and reducing risk, in all facets of life. Thefinancial markets are no different. The endeavor hasalways been to maximize returns and minimize risk.A lot of innovation goes into developing financialproducts centered on these two factors. It has spawneda whole new area called financial engineering.

We have been listening the term green shoe optionsince last many years. Many experts commented aboutthe theory green shoe option and said that markets areinterdependence on the new issues, news andperformance of the particular stock.

Here the green shoe option is a key element to

stabilize the particular security price Introduced in

2003, Green Shoe Option is an overallotment

mechanism permitted by the Securities and

Exchange Board of India (SEBI) for stabilizing the

prices of newly-listed shares of companies

immediately after listing. A commonly used tool

international capital market transactions, Green Shoe

Option is used by investment bankers, acting as

stabilizing agents, to provide share price support to

companies for a certain small period after their

public offering.

Stride Rite was founded in Boston, Massachusetts in1919, as the Green Shoe Manufacturing Company(“Green Shoe”). Green Shoe became a publiccompany in 1960 and was listed on the New York StockExchange. It adopted the Stride Rite Corporation namein 1966 to emphasize the brand name of one of itsbest-known products The name was purchased fromanother shoe manufacturer in 1933. In 1968, the sonof a Lithuanian immigrant, Arnold Hiatt, becamepresident of the firm, and sales were $35 million. Hiattpursued a policy of acquisitions to keep the firm intune with consumer preferences.

* Assisstant Professor, Sahajanand Institute of Management, Bhavnagar

Management


Dec.- 2012 -80

ISSN No.

Three times in a row in the last two decades there havebeen major changes in the consumer taste in footwear,and he’s been there every time with a new acquisition.

Steven Nichols, a Stride Rite alumnus.Stride Rite’s first retail store was opened in 1972.The Sperry Top-Sider and Keds brand names werepurchased from Uniroyal in 1979. Stride Rite purchasedToddler University in 1994. During 2005 Stride Ritecompleted its acquisition of Saucony and in 2006 StrideRite purchased Robeez.Hiatt was instrumental in bringing in sociallyconscious business methods such as opening a daycare center in 1971, banning smoking in 1986, andsponsoring 40 inner-city youth to attend HarvardUniversity, Hiatt’s alma mater. In 1992, Hiatt steppeddown as chairman to pursue philanthropy through thecompany’s foundation, and he has become a staunchadvocate for electoral reform. He contributed $500,000to the Democratic Party in 1996, and at a privatemeeting with then-president Bill Clinton and othersizeable campaign contributors, urged the president toget money out of politics, but was rebuffed. Later, hewas praised by Harvard LawSchool professor Lawrence Lessig for his advocacy ofelectoral reform.There has been a lot of research on IPO pricing;however, very little research has focussed ontheinclusion of GSOs in IPO programmes. The underpricing of IPOs seems to have receivedgreater attentionthan the phenomenon of overpricing. Aggarwal et al.(2002) Su and Fleisher(1997), and Hunger (2003)found that underpricing was rampant in the US during1981–2000, reaching its peak during the dot-combubble. Chowdhry and Nanda (1996) providedajustification for the aftermarket stabilization of IPOsby underwriting syndicates, and showed thatstabilization dominates under pricing as a means ofcompensating uniformed investors ofthe adverseselection that they face. Lewellen (2003) studied theprice effects and cross sectional terminents of pricesupport, and found price stabilization to be extensivein theUS, inducing significant price rigidity at andbelow the offer price. The pricing mechanismand thephenomenon of under pricing in Indian IPOs were


analysed by Madhusoodanan and Thiripalraju (1997)and Jegadeesh et al. (1993).

GSO mechanism in india-

Norms of SEBI are quite clear to the companies from

INDIA

Regulatory Body Securities Exchange Board of India (SEBI)

GSO Window Period Mandatorily, 30 calendar days from the listing day

Necked Sort Position Not allowed

Penalty Bids Not allowed

Extent of Over Allotment 15% of the issue size

Retention of Profit Not Allowed

IPO is always critical as the company is new to

the market .investors have their own interest or

better say greed of less price i.e. par value of share.

But big companies play tricks too inspite of rules

and regulations. The information flow is very large

so we couldn’t evaluate each. And companies have

opted for the GSO is only written in their public

document but we Indians never cross verify if it is

amended later. GSO in India still needs a strong base so

that the whole market and investors both can be

benefited by this.

Objective of study is-

To study the impact of green shoe option in equity

market

To study the interdependence of green shoe option in

initial public offering programmes

To Compare the performance of GSO opted company

with only IPO opted company

To Measuring the returns of the share from very first

day to GSO window period

Nature of research for this paper –

Here i use exploratory research .It attempts to discover

or establish the existence of a relationship/

interdependence between two or more aspects of a

situation.

Data collection is totally secondary in nature. Books,

Article, case study and research paper from net.

SAMPLING DESIGN

Universe: All the company which is listed in NSE

and BSE.

Population: the company who opted the green shoe

and the company who did not opted green shoe

Technique: Deliberate and judgment Sampling

.companies those who are listed in BSE and NSE are

selected for this purpose. And issuing their IPO’s .right

issue is also discarded.

Time period is 2004 to 2012.

Data analysis:

There are total 398 companies who put their IPO’s on

floor and only 21 has opted for GSO

Data analysis tool- used mean and S.D. to find

variations.

Data analysis and interpretation-

Table 1- no of companies who went for ipo and

companies who opted for gso

Year IPO's Co opted for GSO %

2004 21 2 9.52

2005 43 3 6.98

2006 60 6 10

2007 86 5 5.81

2008 30 0 0

2009 17 1 5.88

2010 66 1 1.51

2011 39 1 2.5

2012 36 2 5.55

total 398 21 47.50%


Source- www. sebi .gov.in, offer document to checkthe validity of gso

Chart 1-

Table 2-

List of Companies that Opted for GSOs in their IPOs in India

year issue

price

closin

g

price

in

GSO

tradin

g days

closing

P/ no

of day

LDR % MDR

%

TCS LTD. 29 July - 25 Aug 2004 850 0 23 0 16.23% 0.83

Deccan Chronocle holdings 25th Nov - 22 dec 2004 162 17 22 77.77 4.44% 66.2

3

3I infotech 30 mar-22 apr 2005 100 20 21 95.24 -1.9 0.04

HT media 4th aug- 1 stsep 2005 530 19 21 90.48 5.06 27.7

9

shreeRenuka sugars Ltd 7th oct -1st sep 2005 285 0 21 0 95.37 1.91

Entertain network india

Ltd

23rd jan-22 feb 2006 162 0 20 0 63.4 1.59

jagranprakashan Ltd 25th jan -22 feb 2006 320 19 19 100

B.L. kashyap and sons litd 20th feb- 17th mar 2006 685 0 18 0 42.09 3

prime focus ltd 25th may -20 jun 2006 417 23 23 100 21.78 95.2

5

parsvnath developers ltd 6th nov- 30th nov 2006 300 0 21 0 75.47 2.03

cairn india ltd 11 dec-9jan 2007 160 21 21 100 14.13 95.2

5

house of perl fashions ltd 16 jan 19 feb 2007 550 20 20 100 17.31 94.9

2

Idea cellular ltd 12 feb - 9 mar 2007 75 0 19 0 14.27 1.24

HDI ltd 28 jun- 24 july 2007 500 4 22 18.18 11.87 0.12

omaxe ltd 17 july - 9 aug 2007 310 4 21 19 12.69 0.35

brigade enterprise ltd 10 dec- 31dec 2007 390 21 23 91.3 2.59% 17.4

5

indiabulls power ltd 12 oct- 30 oct 2009 45 20 20 100 13.33 60.81

electosteel steels ltd 21sep- 8 oct 2010 11 18 21 85.71 2.27 30.1

5

muthoot finance july 2011 175 4 20 20

MCX ltd march 2012 1032 32 30 93.75 24.3 19.4

5

thejoengg ltd sep 2012 402 -7.71


Source- http//www.bse.com/investorinfo, http//

www.nseindia.com/equity/historicaldata

From the above calculation we find the LDR and MDR

of GSO opted companies now we calculate the mean,

standard deviation and range on basis of sum of the

LDR and MDR.

Table-4

VARIABLE MEAN S.D. MINIMUM MAXIMUM

LDR 0.1547 0.4363 -0.2100 0.9537

MDR 9.0122 23.2204 0 66.2300

From the above calculation of mean standard deviation

and ranges, we can find the positive cash flow in very

first day and we calculate the mean of that day and it

also called the average returns of the company.

Considering the MDR returns of listing day to during

the window period is stable.

There is no change in returns if market fluctuates

during the window period. Now move further on range,

the returns of both performance measures is lies in

between the range so we say that it is stable over a

period of time and ranges also indicate that if any

market movement comes but the returns of the stock

is stable. The criteria of ranges change as per the market

volatility.

However in the next section when we analyse the

position of new IPO listed companies, who did not

opted for GSO have-

Table 5-Name year LDR - MDR-

indoco remedies ltd 2004 3.96 8

bharti ship yard ltd 2004 2.26 7000

ginni filament ltd 2005 9.31 6

jindal poly films ltd 2005 o.05 47.5

allsec technologies ltd 2005 4.17 52.7

union bank of india 2006 6.96 51.13

gitanajali gems ltd 2006 14.1 46.79

nitin spinners ltd 2006 1.35 4

unity infraprojects ltd 2006 30.23 48.5

akrutinirman ltd 2007 16.12 47.9

transwarranty finance ltd 2007 8.75 51.8

indian banks ltd 2007 3.46 94.61

asian gr anitaindia ltd 2007 12.45 9.7

dhanush technologies ltd 2007 4 96.21

empee distilleries ltd 2007 20.26 95.51

euro multi division ltd 2009 28.6 95.51

cantabil retail india ltd 2010 25.33 95.77

PTC India Fin 2011 14.24 25

Lovable Lingeri 2011 30.26 33

FineotexChem 2011 28.8 22

SudarIndustrie 2011 16 18

Olympic Cards BCB Finance 2012 30 0

vks projects 2012 38 0

average 15.84591 345.6361

s.d. 6.81 28

Table 6-

From the above analysis we calculate the LDR and

MDR of GSO not opted company so we find that the

returns of those company were negative over a

period of time and also we find that there is high

volatility on both the measures. The analysis

indicates that the highly difference in close price of

each share may cause the window period

investment weakening. Listing day returns was the

below the market performance. Each year have

different fluctuation on the market due to created

circumstances. The mean and standard deviation which

ranges far so that we find the volatility of the each

stock. Through this we find the negative mean of

performance measures and also got the negative ranges

of each side here we can tell that if company not includes

the GSO in IPO programmes the basis of returns is

weaking from very first day .the phenomena is not

works all time there were many company includes the

GSO in IPO programmes they were also commence a

loss due to their internal capacity problem or we can

say it market down falls. The mdr is a average income

of company who earn in the window period if the

listing day returns is under the market performance it

automatically cause on the mean daily returns.

Sometimes it may happen the companies have

negative returns on the very first day but over a period

of time slowly gradually it becomes positive because

of the market fluctuation.

Findings of this study

There is a significance difference between LDR of GSO

opted company and LDR of GSO not opted company.

Here is a significance difference between LDR and MDR

of GSO opted company

There is a significance difference between LDR and

MDR of GSO not opted company as they met with

losses in the market. Due to safety net from the side of

sebi it is more difficult for these companies if they

come up with right issue in the near future.

VARIABLE MEAN S.D MINIMUM MAXIMUM

LDR -1.584 6.1189 -25.33OO -0.00054

MDR -3.1194 20.1046 -95.7700 -0.04000


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sOCIOLOGY


Dec.- 2012 Page 81-84

ISSN No.

N¼ #(³Z!@ YF P (N.S.S.O. S[ Z__% SL ;}lR VG];F¼f

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2001

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27.2

11.7

14.9

17.3

11.6

62.1

16.62

24.44

15.18

4.82

23.56

11.55

14.21

9.85

10.61

9.25

3.29

20.43

10.04

6.15

16.93

1.00

3.96

3.73

11.74

10.84

9.88

8.09

8.32

8.69

10.67

10.97

7.71

8.13

8.93

9.62

8.29

5.76

5.30

5.24

4.57

2.01

5.61

1.95

4.49

3.39

0.49

3.22

2.64

7.09

57.3

54.6

68.3

79.5

71.8

85.9

78.3

66.0

67.6

60.5

63.4

6.37

61.8

65.8

77.8

77.0

68.2

61.7

77.2

72.2

78.2

75.3

88.4

85.2

85.0

70.5

15

15

20

17

19

02

01

21

07

08

11

13

18

16

12

14

22

23

09

10

06

05

24

03

04

04

17

24

20

18

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03

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05

08

09

10

15

06

11

12

22

25

13

14

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09

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1.4

0.8

0.6

0.8

0.4

1.8

13.7

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2.8

1.9

0.65

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0.5

1.5

0.6

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0.4

0.2

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1951

1961

1971

1981

1991

2001

2011

21.82

31.47

36.95

44.92

61.29

69.14

79.31

30.32

42.49

47.60

55.95

73.13

79.66

87.23

12.87

19.74

25.56

33.20

48.64

57.80

70.73

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SF 5|E]tJ AC]T SD C{ P

;FDFlHS ;D}C VG];F¼ N[X D[\ HDLG SL DFl,SL;FDFlHS ;D}C VG];F¼ N[X D[\ HDLG SL DFl,SL;FDFlHS ;D}C VG];F¼ N[X D[\ HDLG SL DFl,SL;FDFlHS ;D}C VG];F¼ N[X D[\ HDLG SL DFl,SL;FDFlHS ;D}C VG];F¼ N[X D[\ HDLG SL DFl,SL

sZ__#fsZ__#fsZ__#fsZ__#fsZ__#f

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13.80

0.34

36.6

13.45

0.92

13.51

80.3

0.9

76.1

95.51

1.154

73.83

100.0

0.86

100.0

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Authors are requested to send their research articles strictly according to the format

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Research Zone India

GUIDELINES TO THE AUTHORS


* INTRODUCTION* STATEMENT OF THE PROBLEM* REVIEW OF LITERATURE* NEED/IMPORTANCE OF THE STUDY* OBJECTIVES OF THE STUDY* HYPOTHESES OF THE STUDY* RESEARCH METHODOLOGY* FINDINGS OF THE STUDY* RESULTS & DISCUSSION* RECOMMENDATIONS/SUGGESTIONS* CONCLUSIONS* SCOPE FOR FURTHER RESEARCH* REFERENCES* APPENDIX/ANNEXURE

It should be in 11 point Times New Roman Font, single spaced and justified. The manuscriptshould preferably not exceed 5,000 WORDS.

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BOOKS

* Bowersox, Donald J., Closs, David J., (1996), “Logistical Management.” TataMcGraw, Hill, New Delhi.

* Hunker, H.L. and A.J. Wright (1963), “Factors of Industrial Location in Ohio”Ohio State University, Nigeria.

CONTRIBUTIONS TO BOOKS

* Sharma T., Kwatra, G. (2008) Effectiveness of Social Advertising: A Study ofSelected Campaigns, Corporate Social Responsibility, Edited by David Crowther &Nicholas Capaldi, Ashgate Research Companion to Corporate Social Responsibility,Chapter 15, pp 287-303.

JOURNAL AND OTHER ARTICLES

* Schemenner, R.W., Huber, J.C. and Cook, R.L. (1987), Geographic Differences and the

Location of New Manufacturing Facilities, Journal of Urban Economics, Vol. 21, No.1, pp. 83-104.

ONFERENCE PAPERS


* Garg, Sambhav (2011): “Business Ethics” Paper presented at the AnnualInternational Conference for the All India Management Association, New Delhi,India, 19-22 June.

ONLINE RESOURCES

* Always indicate the date that the source was accessed with source link, as onlineresources are frequently updated or removed.

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* Garg, Bhavet (2011): Towards a New Natural Gas Policy, Political Weekly, Viewedon January 01, 2012 http://epw.in/user/viewabstract.jsp

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EDITORIAL POLICY:

♦ Reseach Zone India Journal of Multi Disciplinary (RZI) publishes papersthat are judged and reviewed by editorial team.

♦ Types of articles include original research papers, reviews, mini-reviews, shortresearch communications, synopsis and Case studies as per above mentionedinstructions.


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♦ Each manuscript will be primarily examined by the editorial body of RZI,and then forwarded to two referees for blind review. The research paper shall bepublished subject to recommendation of referees. The review process may taketwo months (Maximum three months in extra ordinary circumstances).

♦ The author/s shall be informed about the selection/rejection of the researcharticle by e-mail only. However, the journal shall publish the research articles of theauthors completing the formalities in stipulated time mentioned in the selectionletter by e-mail only. The rejected papers shall not be returned.

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PUBLICATION FEES:

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Zone India” payable at Bhavnagar; all authors are entitled to receive acomplimentary copy. Once paid, the amount will not be returned.

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SUBMISSION LINKS:

The author (s) can send their article:To,The Cheif Editor,Research Zone India,(A Journal of Multi Discipilines)15, Amardeep Society, Nr. Circuit House,Waghwadi Road, Hill Drive,Bhavnagar - 364002 (Gujarat )Mobile No. 09426868686Email: [email protected]: [email protected]

Contents - 1Research Zone India - 1, Vol. I(1) Nov.- 2010

EDUCATION

* U|FDMâFZ lJGF ZFQ8MâFZ GYLP 01

Dr. Manharbhai Thakar

* Construction and effectiveness of Yoga Education programme for

secondery school students 03

Dr. Jayant Vyas & Dr.Tarika Gohil

LAW

* Human Rights and Indian women 10

Dr. J. A. Pandya

PHYSICAL EDUCATION

* Health Sector in India - A reality 12

Dr.P.A.Gohil

COMMERCE

* Indian insurance companies in the present Global Scenario 16

Dr. Sailesh N. Ransariya

* Non-Statutory Disclosure by Indian companies : A Study of awareness and

perception of Investors 22

Dr. Yagnesh Dalvadi

* Corporate Social Responsibility [CSR] Indian Scenario 25

DR. Manoj V. Dave

* Employer branding in morden business 31

Dr.Mahesh.M. Barad.

* Tools available to enterprises for risk management : An Simplified approch 35

Dr. Yagnesh Dalvadi & Ms. Anu Verma

MANAGEMENT

* Dividend Practice, Leverage analysis, and Capital structure analysis of Abuja Cement Ltd.; 39

a case Study.

Dr. B.C. Ajmera

* India’s Liberalisation and Dalit Entrepreneurship: A Factual Discussion 44

Dr. Vilas Z. Chauhan

* A Case study on Kingfisher Airlines. 53

Ankita H. Vaidya

* A Comparative Study of Profitability Analysis of Selected Steel Industries 60

Dr. Ramesh Dangar

* Urban Poverty & Urban Health(An Overview) 64

Dr.Manisha. M. Barad

* Determinants of Capital Structure A Case Study of Indian Aviation Industry 71

Satyaki Bhatt

* Green shoe option and its impact – a comparative study on IPOs in India 76

Saroj Vats

SOCIOLOGY

* U]H¼FT D[\ Nl,TM SL X{l1FS l:YlT J AFWS ;JF, o ˆS ;DFHXFÜLI VwIIG 80

0F¶_ ˆR_ ˆ,_ RFJ0F0F ¶_ ˆR_ ˆ,_ RFJ0F0F ¶_ ˆR_ ˆ,_ RFJ0F0F ¶_ ˆR_ ˆ,_ RFJ0F0F ¶_ ˆR_ ˆ,_ RFJ0F

Research Zone India(A Journal of Multidisciplinary)

nnnnn Year : I (1) nnnnn December : 2012

Chief EditorDr. Digant D. Oza

OfficeThe Cheif Editor,

Research Zone India,(A Journal of Multi Discipilines)

15, Amardeep Society, Nr. Circuit House,Waghwadi Road, Hill Drive,

Bhavnagar - 364002 (Gujarat )Mobile No. 09426868686

E-mail : [email protected] : [email protected]

ISSN No.

Disclaimer

n All rights reserved. No. part of the publication can be used in any from or by anymeans, without prior permission in writing.

n The opinions and views expressed in the journal are based on personaljudgement of the author(s) : they do not represent the views of this Journal andassociated organization.

n We belive that the papers / articles given by the author(s) are original and havenot published in any. publication in part or full, is found so, this journal shall notbe responsible.

n While every effort is made to avoid mistake / error in the Journal. Share Study Hubshall not be responsible for eny error caused due to oversight nor shall it ownany reponsibility for the loss or damage caused to any individual / organizationdue to such omission or error.

n In case of any disputes, the place of jurisdiction will be Bhavnagar.

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