Referred Journal of CMR College of Engineering & Technology · 2013-09-17 · Dr. Mohammed Jahangir...

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Quality of Work Life: An Application of Factor

Analysis

A Study on “User’s Behaviour Towards Mosquito

Repellent Liquids” in Tirunelveli City

A Study on the Passengers Perception towards Share

Auto as an Intermediate Public Transport Vehicle

in Madurai City

Price Discovery in Indian Commodity Market

A Study of Red Chilli Futures

An Empirical Study of Perception and Awareness about

Sustainability

Reporting in Indian Chemical Industry

Microfinance: A Tool of Poverty Alleviation with

Bank Linkage

Programme in Himachal Pradesh

Profitability Performance of State Co-operative

Banks in India

Whither Real Interest Rates in India?

A Study on the Role of Consumer Service on

Consumer loyalty in Indian Grocery Retailing

A Study on Female Adolescents Attitudes towards

Depiction of Women in Indian Advertisement

Dr. Godina Krishna Mohan &

Kota Neela Mani Kanta

Dr. C. Thilakam &

T. Samson Joe Dhinakaran

Dr.S.Yaaminidevi

& S.Sabitha

Dr.C.S.Basavaraj &

Dr. G.Prahlad Chowdri

Pradip Kumar Mitra &

Dr. Aurobindo Ghosh

Mr. Rishi Kant,

Mr. Suyash Mishra

& Ms. Swati Singh

Dr. Vijay Singh

Dr. T. Satyanarayana Chary &

Dr. K. Rumulu

Dr. Y. Ramakrishna Prasad

B. Divya Priya &

M. Revathibala

CMR College of Engineering & Technology is Sponsored by MGR Educational Society, which has established in 2002. The College is situated on Hyderabad - Nagpur National Highway (Medchal Road), Andhra green and free of pollution. The college endeavors to impart Quality Technical Education and to meet the challenge imposed on, by being in tune with the fast changing Technology & Globalization.

Since 2006, Department of Master in Business Administration at CMR has been building individuals with the capability to think act and lead in an increasingly complex business world. CMR Strongly believes in the change that individuals can bring about in the world and in themselves, when empowered with the knowledge to analyze the world the confidence to act on their decisions and perseverance to lead others in pursuit of change. It provides a platform to building a strong society and nation.

About Sumedha Journal of Management aims at promoting and disseminating relevant, high quality research in the field of management. It is a double blind reviewed referred academic quarterly journal focuses on publishing scholarly articles from the areas of management, management principles, recent inventions in management, company management, financial management, human resources, accounting, marketing, operations management, human resource management, statistics, international business, information technology, environment, risk management, globalization and related areas. Asian journal of management research seeks original manuscripts that identify, extend, unify, test or apply scientific and multi-disciplinary knowledge concerned to the management field. The journal endeavors to provide forum for academicians, scholars and practitioners.

The following types of Papers are considered for publication:1. Original research works in the above-mentioned fields.2. Surveys, opinions, abstracts and essays related to Operations research.3. Few review papers will be published if the author had done considerable work in that area.4. Case studies related to management domain.

Submission of Articles Authors are invited to submit their research articles, review, papers, case studies in a properly formatted file as per the author guidelines to [email protected] mentioning the name of the journal or through the submission.

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Indexed in ProQuest DataBase

Vol. 2 No. 3 July - September 2013

Referred Journal of CMR College of Engineering & Technology

ISSN : 2277-6753

Indexed in ProQuest DataBase, Indianjournals.com

Patrons Chairman CMRGICh Malla Reddy, Vice-Chairman CMRGICh Narasimha Reddy,

Secretary & Correspondent CMRGICh Gopal Reddy,

Advisory Board Director - (Academics), CMRGIDr N Satyanarayana,

Principal - CMRCETDr M Ramalinga Reddy,

Chief EditorMr A Kotishwar,

Associate Professor & HOD, Dep of MBA, CMRCET

Managing EditorMrs. P Hima Bindu

Associate Professor, Dept of MBA, CMRCET

Editorial Board

Prof. Mohd Akbar, Ali Khan Honorable Vice-Chancellor. Telangana University, Nizamabad, Andhra Pradesh

Prof. Ramesh Bhat

Dr. G.Y. Shitole

Prof. Ranjan K. Bal

Dr. Mohammed Jahangir Ali

Dr. P T Choudhary

Dr. Sudershan Kuntluru

Prof. Ramadhandra Aryasri

Prof. T.L.N Swamy

Former Professor of Finance at the Indian Institute of Management, Ahmedabad & Consultant ministry of HRD, Government of India, Delhi

Prof.& Head, Dept. of Commerce, SNDT Women’s University, Mumbai

Dept, of commerce, Utkal Univesity, Bhuvaneshwar, Odisha

Head & Associate Professor, AL Buriami University College, Oman

Executive Vice President, All India commerce Association & Head, Dept of commerce, M J College, Jalgaon.

Associate Professor, Indian institute of management Kozhikode, Kerala

Director & Professor of Management Studies, JNTU Hyderabad., A.P.

Principal, Nizam college, Osmania Univeristy.

Dr S Gurusamy Professor & Head, Department of Commerce, Univeristy of Madras Chennai

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Volume 2 Number 3 July- September 2013

RESEARCH PAPERS

1. Quality of Work Life: An Application of Factor Analysis 4– Dr. Godina Krishna Mohan & Kota Neela Mani Kanta

2. A Study on “User’s Behaviour Towards MosquitoRepellent Liquids” in Tirunelveli City 13

– Dr. C. Thilakam & T. Samson Joe Dhinakaran

3. A Study on the Passengers Perception towards Share Auto as an 19Intermediate Public Transport Vehicle in Madurai City

– Dr.S.Yaaminidevi & S.Sabitha

4. Price Discovery in Indian Commodity Market 30A Study of Red Chilli Futures

– Dr.C.S.Basavaraj & Dr. G.Prahlad Chowdri

5. An Empirical Study of Perception and Awareness about Sustainability 38Reporting in Indian Chemical Industry

– Pradip Kumar Mitra & Dr. Aurobindo Ghosh

6. Microfinance: A Tool of Poverty Alleviation with Bank Linkage 52Programme in Himachal Pradesh

– Mr. Rishi Kant, Mr. Suyash Mishra & Ms. Swati Singh

7. Profitability Performance of State Co-operative Banks in India 65– Dr. Vijay Singh

8. Whither Real Interest Rates in India? 75– Dr. T. Satyanarayana Chary & Dr. K. Rumulu

9. A Study on the Role of Consumer Service on 85Consumer loyalty in Indian Grocery Retailing

– Dr. Y. Ramakrishna Prasad

10. A Study on Female Adolescents Attitudes towards 102Depiction of Women in Indian Advertisement

– B. Divya Priya & M. Revathibala

Chief Editor Message

As SUMEDHA Journal of Management its seventh issue, I would like toreiterate our commitment to bridging the distance the academic world of teachers andresearchers and the world of practitioners in the private, the public, the governmentand the civil society sectors. I look forward to the momentous growth of our Journal,increasing in their appeal, readership and relevance to the fast-changing world of BusinessManagement. During these two years our journal has been critically evaluated by variousinstitutions with similar line of interest and faculty fraternity. We have been consistentlyseeking advice from experts to continuously improve the quality of the journal. Ourjournal has been indexed in Indianjournals.com and ALL India Commerce AssociationJournal Database. . On behalf of the Management, Editorial Board and Editorial Team,I express my profound gratitude to all our authors, reviewers, readers and patrons foroffering their overwhelming support and I anticipate a continued and lively partnershipfor years to come.

The present issue deals with Quality of Work Life:, A Study On "User's BehaviourTowards Mosquito Repellent Liquids" , A Study On The Passengers Perception TowardsShare Auto As An Intermediate Public Transport Vehicle, Price Discovery in IndianCommodity Market- A study of Red Chilli Futures, An Empirical Study of Perceptionand Awareness about Sustainability Reporting in Indian Chemical Industry, Microfinance:A Tool of Poverty Alleviation with Bank Linkage Programme, Profitability Performanceof State Co-operative Banks in India, Whither Real Interest Rates In India? A Study onthe role of consumer service on consumer loyalty in Indian grocery retailing , A StudyOn Female Adolescents Attitudes Towards Depiction Of Women In IndianAdvertisement.

All of us recognize the necessity for change, which results in progress. It gives wayto new ideas and perspectives reflecting the current and emerging environment, whichbuilds on the solid foundations of the past.

Last but not least valuable would be your response and suggestions on this issue.Kindly send us your views so that we can keep on upgrading our journal.

A KotishwarChief Editor

SUMEDHA Journal of Management

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Abstract

Quality of Work life is paramount importance in understanding the socio-psychological needs of the employees and development of competencies, growth andsecurity. It refers to understanding of favorableness or un- favorableness towardsvarious organizational factors. The study examines number of variables that play avital role in influencing the quality of work life in various selected manufacturingorganizations and attempts to group variables using factor analysis. The study exploresthe interrelationship between variables of quality of work life and analyzes theirexistence in the selected organizations in the present scenario.

IntroductionQuality of work life has evolved as a vital concept, which affects organizational

efficiency and productivity. Quality of work life (QWL) is critical input for existenceand success of any corporate enterprise. Employees feel comfortable to work with theorganization that promote Quality of work life and stay with the organization. So,Retention and engagement of talented employees becomes easier for the organization,which in turn arrests attrition. It is a comprehensive programme, to motivate employeesperform better and become adoptable to change and transition.

QWL provides an opportunity to the individuals to self-direct and achieve self-actualization status. The individuals involved treat it as worthwhile activity. QWL hasalso been perceived (a) as a movement (b) as a set of organizational interventions and (c)as a type of work life by employees. QWL refers to the strengths and weakness in thetotal work environment.

"Quality of work life has been defined as the workplace strategies, operations andenvironment that promote and maintain employee satisfaction with an aim to improvingworking conditions for employees and organizational effectiveness for employers." Thesuccess of any organization depends on how well it manages its human resources,motivates, improves levels of commitment and provides high standard work life.

* Principal, KSRM College of Management Studies, Kadapa, Andhra Pradesh. E-mail:[email protected]** Asst Professor, KSRM College of Management Studies, Kadapa, Andhra Pradesh. Email: [email protected]

Quality of Work Life: An Application of Factor Analysis

- Dr. Godina Krishna Mohan*- Kota Neela Mani Kanta**

Vol.2, No.3, July - September 2013

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Quality of work life means providing good conditions at work place to motivateemployees to perform to their fullest potential. Motivating work environment makesthe employee to have a positive attitude towards their job and the organization. Satisfyingwork environment includes good interpersonal relations and proper communicationamong employees, superiors and subordinates leading to teamwork. The teamwork inturn enhances the organization's capability to perform better and excel in intensivecompetition. Accepted levels of working conditions, good interpersonal skills, andtransparency in the system make the employee fell better and contribute to the best ofhim for the growth of organization. The environment encouraging autonomy andfreedom for doing a job will increase employee's creativity and innovative skills so thatthey can adopt different optimal methods to best utilize the resources.

The organization, which is able to implement policies and procedures effectively,will fix up the proper norms for employees to perform their job without any confusionand generating the clarity of tasks. The employees are satisfied towards that job whichprovides them stimulating tasks, opportunity for learning and personal growth and achance to be responsible and accountable for results. Reward system plays a prominentrole in determining the quality of work life. Adequate, fair and equitable rewards havea greater impact on employee's attitude towards the job and organization.

Organizational features such as policies and procedures, leadership style, operations,and general contextual factors of setting, all have a profound effect on how staff viewsthe quality of work life. Dissatisfaction with quality of work life is a major problem forthe firm, which affects all employees of the firm regardless of position or status. Theorganization tries to fill the gap between existing condition and expected condition toincrease the employee satisfaction towards organization.

Review of LiteratureGrayson,(1973) & Ghosh(1992) has stated QWL as a vital factor that enhances the

morale of employees and increasing their performance ultimately leading to the improvedorganizational performance. Gardon (1984) explored that Quality of work life has twoobjectives: to enhance the productivity and to achieve the satisfaction of employees.Chander and Singh, (1993) defined the QWL as a dynamic multidimensional constructthat include reward systems, training, career advancements opportunities, participationin decision-making, employment conditions, employment security, income adequacy,profit sharing, equity and other rewards, employee autonomy, employee commitment,social interaction, self- esteem, self- expression, democracy, employee satisfaction,employee involvement, advancement, relations with supervisors and peers and jobenrichment. Serey (2006) expressed "QWL facilitates the role clarity and a feeling ofbelongingness and pride associated with what one is doing and doing it well. Walton


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(1973) emphasized on adequate and fair compensation, safe and healthy workingconditions, development of human competencies, growth and security, social integration,total life space and social reliance as major determinants of QWL.

Katzell et. al, 1975 opine Quality of work life as the quality of the content ofrelationship between employees and their total working environment. An employeemay enjoy a high quality of working life when he has positive attitude towards his joband its future growth prospects that are motivating him to stay on the job and to performwell. In addition, when he feels there is a work life balance. Shalini Sheel, et al (2012),reviewed the past studies and established a relationship between QWL, employeeperformance and career growth opportunities.

According to Lau, Wong, Chan and Law (2001), QWL is the favorable workingconditions that support and increase satisfaction by providing employees with equitablerewards, job security and career growth opportunities.

Objectives of the Study• To asses various variables that influence QWL in selected manufacturing organizations

• To identify the important factors that contribute to the QWL using factor analysis

Methodology of the StudyThe Study examines the variables that play a vital role in influencing the quality

of work life in the organizations. The study explores different variables from the existingliterature and analyzes their existence in the selected organizations in the present scenario.The variables selected for the study are Working conditions, inter personal relations,trust among employees, autonomy and freedom, decision making, training, careeradvancement, superior support, top management support, conflict management, safetyconditions, amenities, performance linked pay system, communication, implementationof organizational policies, transparency system, participative management, nature ofjob, rewards and recognition, value system and job satisfaction.

The study adopts both primary and secondary data. Primary data collected byadministering structured questionnaire to 200 selected employees of differentmanufacturing organizations in the Rayalaseema Region of Andhra Pradesh. Tabulationmade only to 195 respondents as five questionnaires invalidated due to incompleteinformation. In addition to the primary data, number of working papers, books andother literary material reviewed to get into the insights of information.

The form of scale is 7-point likert scale; in which all-21 items are described by 1 ~7 grade semantic differential score from strongly disagree to strongly agree. The study


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is descriptive in nature and uses convenience-sampling approach to select therespondents. The data is analyzed using descriptive statistics and data is reduced usingfactor analysis.

Table 1 : The scale of factors influencing Quality of work life

Number Items Quality of Work life

Y1 I am happy with my job Y2 I am proud to work in this organization Y3 I feel enthusiastic in working with this organization

Factors Influencing Quality of work Life

X1 I believe in and take pride in my work and my workplace. X2 I am aware of workplace hazards and my role and

responsibility of protecting health and safety X3 I feel in control of my work and capable of competently

carrying out my daily tasks. X4 I feel accepted and valued by my colleagues. X5 Presence of communication and cooperation between

group members is highly appreciable X6 I receive constructive feedback in a way that emphasizes

positives, rather than negatives from my superior X7 Top management provides an environment in which I feel

safe and secure. X8 Every employee in the organization have clear

understanding of goals and committed to find win- win situations.

X9 I am provided with excellent learning environment X10 I am encouraged to develop multi skill set through Job

rotation and training X11 I have enough opportunities in the organization for career

advancement X12 I receive Performance based pay system from the

organization that allows us to work with commitment X13 I receive compensation, which is equivalent to work X14 My achievements are recognized and rewarded from time

to time X15 People in this organization ask each other how they are

doing in reaching their goals.


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Number Items Factors Influencing Quality of work Life

X16 This organization encourages employees to exercise their own initiative.

X17 The management runs a people-oriented organization. X18 Members keep themselves informed on many topics

besides their immediate job-related activities.

Data AnalysisThe data collected among the respondents 128 are male and 66 are female. The

age group of respondents are 82 in between 25-35, 54 in between 36-45 and 59 inbetween 46-55. The data is collected among the employees of surronding organizationsin rayalseem region of Andhra pradesh.

Table 2 : Respondents profile

Item Category Sample Age Group 25-35 82

36-45 54 46-55 59

Gender Male 128 Female 66

The majority of the items are minimally skewed or kurtotic. An examination ofcorrelation matrix states that all the items exceed 0.3 and thus the items are appropriatefor factoring. The Bartlett's Test of Sphericity (x2=1.366E3,df =266, p= .000) is significantand Kaiser-Meyer-Olkin Measure of Sampling Adequacy yielded a value of 0.638 whichjustifies in proceeding with factor analysis.

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .638 Bartlett's Test of Sphericity Approx. Chi-Square 1.366E3

df 276 Sig. .000

Six factors were initially extracted with Eigen values > 1, the factor structuregenerated from orthogonal varimax rotation of matrix presented in Table: 3 with loading< 0.3 are omitted for ease of interpretation. The extraction of six factors explained 63.018%of variance. According to research standards, the factor load should be bigger than 0.5in one dimension and smaller than 0.4 in others, and should kept at least 3 items in adimension. Thus, 21 items are reserved.


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Table 3 : Total Variance Explained

Component

Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings Total % of Variance Cumulative % Total % of Variance Cumulative %

1 3.567 16.986 16.986 2.623 12.490 12.490 2 2.575 12.260 29.246 2.515 11.978 24.468 3 2.271 10.813 40.059 2.464 11.735 36.203 4 2.080 9.905 49.964 2.287 10.892 47.095 5 1.599 7.616 57.580 2.140 10.191 57.286 6 1.142 5.438 63.018 1.204 5.733 63.018 Extraction Method: Principal Component Analysis.

Table 4 : Rotated Component Matrix

Com po nent Cro nbach’s Alp ha Total Cronbach ’s Alpha 1 2 3 4 5 6

Y1 .826 Y2 .846 0.76 Y3 .780 X1 .82 1 X2 .72 4 0.82 X3 .67 3 X4 .757 X5 .807 0.90 X6 .806 X7 .818 0.8 2 X8 .644 X9 .78 5

X10 .79 7 0.76 X11 .68 3 X12 .7 02 X13 .6 19 0.84 X14 .7 42 X15 .7 91 X16 .5 10 X17 .7 74 0.72 X18 .7 39


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Extraction Method: Principal Component Analysis.Rotation Method: Varimax with Kaiser Normalization.Rotation converged in 6 iterations.

The scale's validity tests the internal consistency of the item, whether all the itemsin a factor are perceived same. The internal consistency can be tested by Cronbach'sAlpha. See Table: 4 Cronbach's for each variable is bigger than 0.6; Cronbach's for 21items are 0.82, and this shows the data is good in internal coherence.

The Table:5 shows the factor naming, when the grouped items were observedbased on the factors, the following names have been mentioned for each factor. Thefollowing section explains the variance explained by each factor.

Factor 1: Quality of Work life Y1 to Y3, which accounts for 16.9 % of variance.

Factor 2: Working Environment XI, X2, X3, which accounts for 12.26% of variance.

Factor 3: Group dynamics X4, X5, X6, X7, X8, which accounts for 10.813% ofVariance.

Factor 4: Personal growth and Advancement X9, X10, X11, which accounts for9.905 % of Variance

Factor 5: Motivation X12, X13, X14, which accounts for 7.616 % of Variance.

Factor 6: Organizational Climate X15, X16, X17, X18, which accounts for 5.438 %of variance.

Table 5 : Factor Naming

Factors Variables Name F1 Y1,Y2,Y3 Quality of Work life F2 XI,X2,X3 Working Environment F3 X4,X5,X6,X7,X8 Group Dynamics F4 X9,X10,X11 Personal Growth and Advancement F5 X12,X13,X14 Motivation F6 X15,X16,X17,X18 Organizational Climate

ConclusionThe factors influencing quality of work life are working environment, group

dynamics, personal growth and advancement, motivation and organizational climate.All these factors need consideration by the organizations to build quality of work life.Improvement of working conditions, proper care on safety and provision of basic


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amenities at the work place can improve working environment and enhance quality ofwork life. The better interpersonal relationships, among employees trust developmentamong employees, enhanced superior support and top management support canimprove the employee morale and in turn generates a sense of positive feeling on qualityof work life. The support of the organization to the employees to ease the performanceon the job through training activities, development of multi skill set and facility forcareer advancement are prerequisites of personal growth. Employees expect theorganization to adopt performance linked pay along with appropriate reward andrecognition policies. Development of appropriate two-way communication, promotionof value system, adoption of participative management and transparency improvesorganization climate. Organizations can look into these factors and adopt appropriatemeasures to improve quality of work life. Quality of work life rewards the organizationin the form of improved productivity, reduced cost and higher returns.

References1. Chan, Ka Wai and Thomas A. Wyatt (2007), “Quality of Work Life: A Study of

Employees in Shanghai, China”, Asia Pacific Business Review, Vol: 13, No. 4, (Oct),pp. 501-517

2. Chander, Subash and Singh, Parampal (1983), “Quality of work life in a University:An Empirical Investigation”, Management and Labour Studies, Vol.18, No.2, pp.97-101.

3. Davis Louis F, Cherns. Albert B. (1975). The Quality of Working life II New York:The free press. P 349.

4. Gani , A ( 1993), Quality of Work Life ( QWL) in a State Setting : Findings of anEmpirical Study . The Indian Journal of Labour Economics. 36(4) pp 817823.

5. Gardon, Herman (1984), “Making sense of Quality of work life programmes”,Business Horizons.

6. Gosh, Subratesh (1992), “Quality of Work Life in Two Indian Organizations”Decisions, Vol.19, No.2, pp- 89- 102.

7. Grayson, C.J (1973), “Management Science and Business Practice”, HarvardBusiness Review, Vol.51, No.4.

8. Kanungo , R. N. (1982) Work Alienation - an Integrative approach Prager Publisher,New York , USA.

9. Katzell, R.A., Yankelovich, D., Fein M., Ornate, D.A. & Nash, A. (1975), “Work


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10. Normala and Daud (2010), ”Investigating the Relationship Between Quality ofWork Life and Organizational Commitment Amongst Employees in MalaysianFirms”, International Journal of Business and Management, Vol: 5, No. 10.

Productivity and Job Satisfaction”, The Psychological Corporation, New York.

11. Rethinam, Gunaseelan and Maimunah Ismail (2008), “Constructs of Quality ofWork Life: A Perspective of Information and Technology Professionals”, EuropeanJournal of Social Sciences, Vol: 7, No. 1, p.58

12. Walton (1982): International Labour Organization: recommended from theNational Seminar on improving Quality of Work Life, Productivity, 22 (4), pp7983.

13. Walton, R. (1973), “Quality of Work life Indicators- Prospects and Problems- APortigal Measuring the Quality of working life, pp-57-70, Ottawa.

14. Yousuf A. S. M. (1996) Evaluating the Quality of Work life, Management andLabour Studies, 21 (1), pp 515.


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Abstract

Mosquitoes spread many diseases like malaria, yellow fever, dengue,chikungunya etc., Which are harmful to human beings people want disease freeand more importantly they need sound sleep. But mosquitoes come to playtheir role in disturbing people's sleep and provide many diseases. Hence peoplerealize the need of having some tools against those mosquitoes. There arevarious types of mosquito repellent such as mats, creams, coils, liquid, mosquitonets, bats etc., But now-a-days, usage of mosquito repellent liquids has becomemuch familiar and it dominates with its considerable share in mosquitorepellent industry. Though mosquito repellent liquids are safer than mats andcoils, it is not free from problems such a health oriented problems, low qualityrefills etc.,

Keywords: mosquito, diseases and health

IntroductionMosquitoes are found all over the world, expect in Antarctica. To develop,

mosquitoes require an environment of standing water. As a group, they have adaptedto complete their life cycle in diverse aquatic habitats, including fresh water; orwater found in containers, old tires, or tree holes. Only female mosquitoes bite. afemale mosquitoes prefer to feed at twilight or night time; others bite mostlyduring the day There are about 3500 species of mosquitoes found throughout theworld. In some species of mosquito, the females feed on humans, and aretherefore vectors for a number of people per year. During the summer months,mosquito control is a must almost anywhere. They are annoying, numerous andresilient. They have been known to spread diseases including the West Nile Virus.Even worse, they are notorious however. With the right tools and a bit of effort, it'spossible to control mosquito populations in many different situations and climates.

* Prof and Head Dept of Commerce, MS University, Tirunelveli.** Asst. Prof of Commerce, St. Johns College, Palayamkottai, Tirunelveli.

A Study on “User’s Behaviour Towards MosquitoRepellent Liquids” in Tirunelveli City

- Dr. C. Thilakam *- T. Samson Joe Dhinakaran**


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Nowadays we can find in market many different forms of mosquito repellents.Mosquito coils, Mosquito mats and the liquid form of mosquito repellent areavailable in the market. Most used mosquito repellents are coils, mats mosquitorepellent liquids. Some popular brands are All Out, Good Knight and Morteinhaving active technique for faster reaction in short span on mosquitoes. It is nodoubt to say that above said all forms of mosquito repellents are capable ofmaking some health problems as we are using them throughout the night i.e. Forabout 10 hours. Many sensitive people are suffering from respiratory problems andthe condition will be severe among asthmatic patients. Mosquito repellents arethese days essentially required in almost all parts of the world. Hence, this studyis undertaken to analyse the problems faced by users of mosquito repellent liquid.

Objectives of the Study• To analyse the brand preference of mosquito repellent liquid users.

• To identify the factors influencing the preference of mosquito repellentliquids by users.

• To study the satisfaction level of users towards mosquito repellent liquids.

• To analyse the problems faced by users in using mosquito repellent liquids.

Operational DefinitionsProduct

A product is anything that can be offered to a market for attention,acquisition, use, or consumption and that might satisfy a want or need;

Brand

A brand is name, term, sign, symbol, or design, or a combination of theseintended to identify the goods or services of one seller or group of sellers and todifferentiate them from those of competitors.

Trade Mark

It has been defined as "any sign, mark, symbol, word or words, whichindicate the origin or ownership of a product as distinguished from its quality,and which others have not equal right to employ for the same purpose".

Slogans

A slogan is a short, simple, clear catchy and colourful word which is usedto attract and hold attention of the customer. The slogans should be short, sweet


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easily pronounceable, easily remembered, time proof and yet pleasing to the ear.They should be built on a big sales idea, on self interest, and on the buyer'sbenefit because the substance is more important than its style.

Image

A brand image may be defined as, "the impression of a particular productthat has formed in the consumers mind"

Distribution Channels

A set of interdependent organisations involved in the process of making a productor service available for use or consumption by the consumer or industrial user.

MethodologyThe present study is an empirical research based on survey method. Primary data

were collected directly from the customer and retailer by using a well framedquestionnaire. The relevant secondary data have been collected from the journals andinternet. The collected data were coded, calculated and analysed with the help of statisticaltools like measures of Central Tendencies, Ranking, Chi-Square Test, Anova Table,Percentiles and Tabulation were used. The researcher has made the convenient randomsampling of 75 respondents in his report.

Area profileTirunelveli district was formed in 1790 by the East India Company, later came

under the direct control of the British crown queen Victoria. The name Tirunelveli hasbeen composed from the three Tamil words i.e. 'Thiru-Nel-Veli' means sacred paddyhedge. Tirunelveli district having geographical area of 6823 sq.kms, in the south-easternportion of Tamilnadu is triangular in shape. It lies between 8°.05' and 9°.30' of theNorthern latitude and 77°.05' and 78°.25' of eastern longitude. The district is located inthe southern part of Tamilnadu and surrounded by Virudhunagar district on the north,Western Ghats on the west, Kanniyakumari district on the south, Tuticorin district onthe east. The lifeline of the district river Tamiraparani feeds the district and quenchesthe thirst of Turicorin district too.

Age and Satisfaction Level of Mosquito Repellent LiquidThe researcher used chi-square test to find out the significance difference

between the respondents satisfaction level and age.

H0 : There is no significant difference between the respondents satisfactionlevel and age of using mosquito liquid repellent.


16

H1 : There is significant difference between the respondents satisfaction leveland age of using mosquito liquid repellent.

For calculating the chi-square test the researcher considered the factors ofSatisfaction level (Highly satisfied, Satisfied, Neutral, Dissatisfied and HighlyDissatisfied) and Age (15-25, 26-35, 36-45, 46-55 and 56 & Above)

Calculated value Tabled value

Chi-square 1.484 5.991

Hence the researcher Accepted the Null Hypothesis because the calculatedvalue is less than the table value. So, there is no significant difference between therespondents age and satisfaction level of mosquito liquid repellent.

Year of using and Price Level of Mosquito RepellentThe researcher used Anova table to find out the significance difference

between the respondents Year of using and price level of mosquito repellent liquid.

H0 : There is no significant difference between the respondents Year of usingand Price level of using mosquito repellent liquid.

H1 : There is significant difference between the respondents Year of using andPrice level of using mosquito repellent liquid.

For calculating the Anova table the researcher considered the factors of Year ofusing (Less than 1 year, 1-2 years, 3-5 years and 5 years and above) and Price level(Very high, high, Appropriate, low and Very low) of using mosquito repellent liquid.

ANOVA Table

Option Sum of Squares

Degree of freedom

Mean Square

F Ratio

F Test @ 5%

Sum of Squares between column 239 4 59.75 60 3.26

Sum of Squares Between Row 100 3 33.33 33 3.49

Residual 270 12 22.50 23 Total 609 19

Hence the researcher Accepted the Null Hypothesis because the calculated


17

value is less than the table value. So, there is no significant difference between therespondents year of using and price level of mosquito liquid repellent.

FindingsThe respondents on the basis of their Gender, Out of 75 respondents 51

percentage of the respondents belong to the Male segment. On the basis of theeducational status, 33 percentage of the respondents are Graduate. All the respondentsare using the repellent liquid regularly. On the basis of awareness of the product 80percentage respondents were know the mosquito liquid repellent throughAdvertisement. Mosquito liquid repellent is used by 50 percentage of the respondentsfor 5 yrs & above. On the basis of performance 52 percentage of respondents asgood. On the basis of satisfaction level 74 percentage of respondents are satisfied. Onthe basis of use of the liquid as 61 percentage of respondents were using Nighttime only. The frequency of purchasing as 29 percentage of respondents as 16 to30 days using. More than 25 percentage of respondents are affected by Healthproblems.

SuggestionIt is found that the users of mosquito repellent liquids are considering powerful

MMR as the major factor influencing them to buy their brand. Hence, it is suggestedthat the respective manufacturers of the brands selected for the study may focus onkeeping the Mosquito Mortality Rate of their brand presented as at present, with noside effects. It is found that majority of the sample respondents are suffering from thehealth problems such as head ache, eye irritation, breathing problem, cough, cold andsneezing, asthma etc., Hence, it is suggested that the manufacturers of mosquitorepellent liquids may take necessary steps to reduce the chemical mixing and otherthings which cause health problems there by making it more health friendly. It isfound that majority of the sample respondents are using all out brand. Hence, it issuggested that manufacturers of All Out brand may still improve their product featuresand reduce its ill effects which ultimately leads to increased market share. It is foundthat 90% of the respondents are highly satisfied regarding their brand of mosquitorepellent liquids. Hence, it is suggested to the manufacturer of various brands such asAll out, Good knight, Maxo, Mortein and Carenite that they may have to maintain andimprove the satisfaction level of their customers which would also increase the marketshare. It is found that the problem of low quality refills is considered as the secondmajor problem faced by mosquito repellent liquid users. Hence, it is suggested thatmanufacturer may try to rectify this problem by making suitable remedies.


18

ConclusionAs people are realizing the disadvantage of using coils and mats the market for

liquid A repellent (vaporizers) is expected to grow given faster. Liquid Repellents aresafer than coils since they just have to be switched on. They are, for more convenient aswell. Consumers have to bear the initial cost which is a one- time cost and per day costof the refill is even lower than the coils. In this study the brand preference of mosquitorepellent liquid users, factors influencing them to prefer a particular brand, their problemsand satisfaction toward mosquito repellent liquid were considered. Based on the findingsof the study various suggestions were given. If those are carefully considered, a desirableresult would be attained.

Bibliography

Books1. Bagavathi and Pillai R.S.N, "Modern Marketing", New Delhi, S.Chand & Company

limited , 1997,2. Kathiresan S. and Radha.V, "Marketing", Chennai, Prasanna Publishers.3. Kothari C.R, "ResearchMethodology",New Delhi, New age international

publications.4. MRC, New Delhi, malaria research5. Philip Kotler, "Marketing Management", Prentice Hall of India Pvt. Ltd. New

Delhi.6. Sherlekar S.A, "Marketing Management", Bombay, Himalaya Publishing House.7. Subbi Reddy T, "Marketing Management", New Delhi, S.Chand

&CompanyLimited.8. V.P.Sharma, Malaria Research Centre (ICWR),No.22, Shamnath Marg, New Delhi,

110054, India.

Internet9. www.godrejsaralee.com10. www.google.com11. www.indiainfoline.com

Newspaper12. The Economic Times


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Abstract

The researcher has done a study titled "A study on the Passenger's Perceptiontowards Share auto as an Intermediate public transport vehicle in Madurai city". Inthe current scenario, Maduraiites started to commute by share autos and it is reportedin Newspapers and face book that share auto drivers violate traffic rules and are thecausation of accidents in Madurai city.Therefore researcher attempted to study thepassenger respondents opinion on the safety of share auto as it is considered as publictransport vehicle. The Primary Objective is to study the Passenger's perception towardsshare auto as an Intermediate public transport vehicle in Madurai city.

The study was focused on the opinion of the passenger respondents and thedrivers of the share auto. The sample size of the passenger respondents was 100 andthe share auto drivers were 50 in number. The opinion was obtained through directand indirect interview and questionnaire method. The study revealed that 57% of thepassenger respondents feel that share autos are not safe to travel though 53% of thepassenger respondents commute in share auto on a daily basis. Suggestions weregiven for the District administration to ensure passengers travel in the share auto in asafe manner.

Keywords: Perception, Intermediate transport vehicle, share auto,safety, publictransport

IntroductionMadurai is a major tourist destination visited by a lot of domestic and foreign

tourists every day and also a historical city. Madurai Municipal Corporation covering147.977 Km area has a total population of 14, 62,420 persons (2011 Census) whereasthe Madurai Urban Agglomeration comprising the city and surrounding settlementsaccommodates a population of 11,94,665 persons. Madurai district comprises of thirteen

* Guest Faculty, Department of Management Studies, Madurai Kamaraj University, Palkalai Nagar, Madurai - 625 021.Email:[email protected]

** MBA I Year, Department of Management Studies, Madurai Kamaraj University, Palkalai Nagar, Madurai - 625 021.Email: [email protected]

A Study on the Passengers Perception towards Share Auto asan Intermediate Public Transport Vehicle in Madurai City

- Dr.S.Yaaminidevi *- S.Sabitha **


20

talukas and revenue blocks. Madurai has very high number of low socio - economichouseholds which constitute almost 50% of the City's Population.

Auto rickshaws are a common means of public transportation in many countriesof the world including India. An auto rickshaw is a usually three-wheeled cabin cycleand as a vehicle for ire. It is a motorized version of the traditional pulled rickshaw orcycle rickshaw. Auto rickshaws have been modified in India to carry more passengersand are called share-autos. Office commuters, Laborers find this version more economicalas the fare is shared by more people. Modern auto rickshaws run on CNG and areenvironmentally friendly. There are two types of auto rickshaws in India. In older versionsthe engines were situated below the driver's seat. In newer versions, engines are in therear. They are normally run on petrol, CNG and diesel. Auto rickshaws are used in citiesand towns for short distances; they are less suited to long distances because they areslow and the carriages are open to air pollution. Auto rickshaws (often called "autos")provide cheap and efficient transportation. Modern auto rickshaws run on CNG andare environmentally friendly.

Shared autos play an important role of transport both in Rural and Urban India,where state-organized public transport is congested to a point of extreme unreliabilityand heavy rush especially during peak hours and also in connecting the sub-urbanareas where state owned transport facilities are very few and infrequent. Not restrictedto cities, auto rickshaws are also prevalent in large numbers in Indian villages and in thecountryside. As a mode of transport, Share auto rickshaws are turning out to be amajor employer in India. All major nationalized banks of India offer loans to buy oneunder self-employment schemes. Auto rickshaw manufacturers in India include BajajAuto, Kumar Motors, Kerala Auto Limited, Force Motors (previously Bajaj Tempo),Mahindra & Mahindra, Piaggio Ape and TVS Motors.

ObjectivesPrimary Objective

To find out the Passengers' perception towards share auto as an Intermediate publictransport vehicle in Madurai city

Secondary Objective

To study the profile and attitude of the share auto drivers in Madurai city.

Need For StudyTo study whether passengers of the share auto rickshaw have a safe means of

travel.


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Review of LiteratureAuto rickshaws in India

A majority of Indian auto rickshaws have no doors or seatbelts. They are generallyblack or green in colour and have a yellow roof on the top. However the design normallydepends on the location (state) of the patrol, and so does the color. For example thesides of an auto in Delhi are green (to signify their running on compressed natural gas),while in Hyderabad and Chennai they are yellow. Their design varies considerably fromplace to place. In some locations, they have an extra plank on the seat to accommodatea fourth passenger. In reality it is not uncommon to see 6-8 passengers in an auto rickshawwith such an ad hoc setup, although, in theory, autos risk fines for carrying more thanthree passengers in many places. Auto rickshaws that are used for driving children toschool have two extra seats/planks like narrow ledges, one facing the main seating spaceand one to the side. Such auto rickshaws may transport up to 20 children to school. Asa mode of transport, the auto rickshaw is turning out to be a major employer in India.All major nationalized banks of India offer loans to buy one under self-employmentschemes. Major auto rickshaw manufacturers in India are Bajaj Auto, Piaggio Greaves,Force Motors (previously Bajaj Tempo), Atul Auto and Kerala Automobiles. A two-wheelermajor, TVS Motor Co., has announced it will enter the auto rickshaw market with atechnologically updated and a less polluting vehicle, in early 2006. Not restricted tocities, auto rickshaws are also prevalent in large numbers in Indian villages and in thecountryside. There is an initial charge at the beginning of a ride then the price normallyincreases in proportion to the distance. It is mandatory that the initial charge be set at avalue given by the government. For rainy conditions, some autos have plastic coverings.

Sharing little responsibility (The Hindu April 22,2006)There seems to be no limit on the number of passengers share-autos carry in this

city. Parking in no-parking zones, over-speeding in narrow lanes and picking/droppingpassengers at will and pleasure. This is a common sight when it comes to share-autos.Despite several accidents, including one that resulted in the death of a conductor, shareauto drivers do not seem to be in a mood to re-organise or regulate operations. "Thoughoperations have to be confined to stipulated routes, they often tend to move to otherplaces depending on the patronage. Besides over-speeding, there are other visibleviolations, such as overload and overtaking. They have to compete with State-ownedbuses, mini-buses and auto-rickshaws," says a Tamil Nadu State Transport Corporationofficial. According to him, several complaints were forwarded to the Road TransportOfficer regarding Motor Vehicles Act violations. "The share-auto concept is basically tocarry passengers heading for a common destination. But the vehicles are operating like


22

stage-carriers. This is affecting the revenue of the TNSTC. Though the police are imposingspot fines, cancellation of permits will be the only solution to curb such violations." TheDeputy Commissioner of Police, A. Davidson Devasirvatham, says at least 20 cases arebeing registered on an average in a day against share-auto drivers. "We have also writtento the Collector and the RTO explaining the violations resorted to by share autos. In aspecial drive on Monday, we booked 61 cases and collected a fine of Rs. 10,000." Theproblem of share autos picking up passengers at bus stops is causing traffic congestionin many parts of the city, particularly the Palanganatham-Kaalavaasal stretch. "We haveformed special teams to minimise this menace. Stern action is being taken on shareautos carrying passengers more than the actual capacity. We have also asked the trafficpolice to keep a watch," Mr. Davidson adds. Police officials have taken steps to adviseheads of educational institutions not to encourage students to use share autos duringrush hours and when they are overloaded.

Overloaded auto claims Madurai schoolgirl's life (The New Indian ExpressAugust 4, 2012)

The incident comes barely 10 days after Class II girl Sruthi slipped to death througha hole on the floor of her school bus in Chennai. Negligence of transport authorities inenforcing rules for ferrying school children led to another loss of life here on Friday.Jayalakshmi (6), a Class I student, lost her balance and fell off a crowded share autorickshaw on the road and was crushed by the vehicle's rear wheels. The incident comesbarely 10 days after Class II girl Sruthi slipped to death through a hole on the floor ofher school bus in Chennai. Jayalakshmi, a private school student in Karumathur, wasreturning home in the share auto rickshaw in which around 15 students were perilouslyseated. When the vehicle was nearing Chinnavagaikulam, Jayalakshmi who was seatednext to the driver holding on to the iron rods of the auto, lost balance and fell on theroad. She came under the rear wheels of the auto and was instantly crushed to death,police said. Sindhupatti police arrested auto driver Karthik and booked him underSection 304 IPC for culpable homicide not amounting to murder. MaduraiSuperintendent of Police V Balakrishnan said parents had hired the share auto rickshawto pick up and drop their children from school daily. Balakrishnan advised parents notto send their children to schools in crowded vehicles.Madurai Collector Anshul Mishrasaid he would instruct transport officials to crack down on overloaded share autos inrural areas.

Seminar emphasizes the need for compliance of rules (The Hindu dated 19August 2012)

Madurai being a major tourist destination visited by a lot of domestic and foreign


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tourists every day, autorickshaw drivers should guarantee a safe ride for them and helpin the growth of tourism, said Collector Anshul Mishra. Addressing a road safetyawareness seminar for autorickshaw drivers in the city, he said that a vast majority ofthe drivers had no idea about safe driving. They stopped the autorickshaws at will all ofa sudden without an iota of consideration for fellow road users who were caughtunawares. Since many autorickshaws did not have rear view mirrors, overtaking, taking'U' turns and left and right turns by the drivers proved dangerous and led to accidents.These were details shared by many on the district administration's Facebook page. Statingthat the objective of the seminar was to ensure accident-free city roads for pedestriansand motorists, Mr. Mishra asked the drivers to compulsorily have rear view mirrors onboth sides of their vehicle. Footage on how accidents occurred owing to unsafe drivingwas shown. The Collector asked the drivers to follow rules and said that certificateswould be given to best drivers.

Officials have geared up to contain the menace posed by share auto drivers(The Hindu dated 9 Feb, 2013)

Transport department officials, in coordination with the Traffic Police, aredetermined to regulate passengers travelling in auto rickshaws and share autos. In a'novel' effort, all the three RTOs (Regional Transport Officers), namely Madurai North,Central and South, have started the practice of having the permitted number ofpassengers painted on the vehicles. "Three passengers only," will be displayed on thevehicles in the hope that it would raise public awareness of the hazards of overloading.Motorists and road users have expressed concern over rash driving and over loading byrickshaws on the Facebook page of the district administration. According to officials,out of 10 complaints received every day, at least four to five pointed to the share automenace. The civic issues, which normally dominates Facebook, were pushed to thesecond spot, they pointed out. Surprise checks and impounding vehicles for repeatedviolations was stepped up in every nook and corner. However, the mushrooming numberof autos on the roads is a challenge to the authorities. Autorickshaws will not be eligible toreceive Fitness Certificates unless they abide by the three-passenger rule, officials said.

Madurai police tighten grip on menacing share autos (The Times of Indiadated Dec 23, 2012)

In the wake of the accident near Mattuthavani where a medical college studentand her father were run over by a truck on Friday, police along with regional transportofficials raided share autos plying in the city limits.Sharmila, 22, a first-year medicalstudent at the Government Homeopathic Medical College and Hospital inThirumangalam and her father Sivaprakasam, 55, of Therku Theru in Melur fell down


24

on the road and were mowed down by a tanker lorry. Eye witnesses at the spot said thereason for the accident was that a share auto suddenly came in front of the motorcycleon which the father and daughter were travelling.

Research MethodologyResearch Design : Descriptive Research

Data : Primary data collected from passengers of Shareauto and drivers using questionnaire and directinterview method

Sampling Technique : Non-Probability (Convenience Sampling

Technique)

Sample Size : 100 Passengers and 50 Share auto drivers

Survey Area : Madurai Urban and Rural areas

Statistical Tools : • Percentage Analysis

• Chi-Square Test

Questions : • Dichotomous Questions

• Multiple Choice Single Response Questions

• Direct Questions

The tools mainly used for analysis of data were as follows:

• Percentage Analysis

• Chi-Square Test

Limitations of StudyThis study depends upon the information furnished by respondents and it is subject

to personal bias. Since some of the passengers of the share auto were busy with theirwork and the duration of project was short larger sample size could not be taken forstudy. The major constraint was that the study covered its survey only in Urban andRural Pockets of Madurai city in the areas of Goriapalayam, (Madurai North) Kaalavasal,(Madurai South) Chekkanoorani, (Madurai West), Nelpettai (Madurai East).


25

Analysis(i) Occupation of the passenger respondents Vs Frequency of travel in share

auto

Observed Frequency

Occupation Vs Frequency of travel

in share auto Daily Frequently Occasionally Total

Service 10 10 8 28 Business 15 3 2 20 Housewives 0 2 6 8 Student 24 10 3 37 Others 4 2 1 7

Expected Frequency

Occupation Vs Frequency of travel

in share auto Daily Frequently Occasionally Total

Service 14.8 7.56 5.60 28 Business 10.6 5.40 4.00 20 Housewives 4.24 2.16 1.60 8 Student 19.6 9.99 7.40 37 Others 3.71 1.89 1.40 7 Null Hypothesis: There is no significant difference between Occupation of the

Passengers and the Frequency of travel in share auto

Alternate Hypothesis: There is significant difference between Occupation of thePassengers and the Frequency of travel in share auto

Calculated Value = 27.4

Degrees of freedom= 8

Table value @ 5% level of significance =15.507


26

Solution :

Calculated value is greater than the Table value rejects the null hypothesis andaccept alternate hypothesis

(ii) Age of the passenger Vs opinion on the safe travel in share auto

Observed Frequency

Age of the passenger Vs

opinion on the safe travel in share auto

Safe Neutral Not safe Total

Less than 25 years 20 1 16 37 25-40 10 5 24 39 40-55 5 0 15 20 Above 55 1 1 2 4 Expected Frequency

Age of the passenger Vs

opinion on the safe travel in

share auto

Safe Neutral Not safe Total

Less than 25 years 13.3 2.59 21.1 37 25-40 14.0 2.73 22.2 39 40-55 7.20 1.40 11.4 20 Above 55 1.44 0.280 2.28 4 Null Hypothesis: There is no significant difference between Age of the Passengers

and the Opinion on safe travel in share auto

Alternate Hypothesis: There is significant difference between Age of thePassengers and the opinion on safe travel in share auto

Calculated Value = 14.0

Degrees of freedom= 6

Table value @ 5% level of significance =12.592


27

Solution :

Calculated value is greater than the Table value rejects null hypothesis and acceptsalternate hypothesis

FindingsPassenger Respondents

• 57% of the passenger respondents were male and 43% were female.

• 57% of the passenger respondents belonged to urban area and 43% from ruralarea.

• 39% of the passenger respondents were in the age group between 25 - 40 years

• 50% of the passenger respondents belonged to middle class category.

• 8% of passenger respondents were housewives, 37% students, 20 % business ,28%service and others 8%.

• 10% of passenger respondents preferred share auto owing to speed, 20% toconvenience, 26% to comfort, 35% easily availability, 19% cheaper fare.

• 58% of passenger respondents travel in share auto on a daily basis, 26% frequentlyand 16% occasionally.

• 76% of passenger respondents are of the opinion that share auto drivers treatthem in a harsh manner, 11% friendly manner, 13% in an indecent manner.

• 50 % of passenger respondents strongly agree that share autos are the need of thehour.

• 20% of the passengers opined that Share auto drivers engaged in rash driving26% in playful driving, 24% in erratic driving.

• 75% of the passengers are of the opinion that the Share auto drivers violate trafficrules.

• 60% of passenger respondents are of the opinion that share auto drivers need tobe trained on Human resources and also on traffic rules.

• 65% of passenger respondents feel that share auto drivers do not care for thesafety of the passengers.

• 57 % of the passenger respondents are of the opinion that share autos are not safeto travel 7% neutral and 36 % safe to travel.


28

• 35% of passenger respondents strongly agree that share auto drivers are concernedonly on hiring more number of passengers.

• 60% of the passenger respondents opined that overloading happens in share autoduring peak hours.

• 32% of the passenger respondents are of the opinion that share autos are analternative to public transport.

Share auto drivers• 70% of the share auto drivers were in the age group of 20-30 years.

• 34% of the share auto drivers had their own vehicle 66% rented.

• Among the share auto drivers who own the vehicles, 32% availed loan fromBanks and 68% from Non Banking Finance Companies, Money lenders.

• 28% of the share auto drivers are satisfied with their occupation and 72% aredissatisfied

• 24% of the share auto drivers are aware of traffic rules.

• 60% of the share auto drivers take rest between trips.

• 62% of the share auto drivers refresh between trips.

• 70% of the share auto drivers entered into this business as accident.

• 64% of the share auto drivers are willing to quit the job if they get better jobs.

• 80% of the share auto drivers felt that they face competition from Ace magic, 18%from Public transport and 2% from normal autos.

• 50% of the share auto drivers claim their business is steady and 50% claim it asseasonal.

• 66% of the share auto drivers are of the opinion that they find it difficult to copewith petrol hike.

• 32% of the share auto drivers strongly agree that they violate traffic rules.

Suggestions• To ensure safety of the passengers, share auto drivers need to be given orientation

training on the road safety, traffic rules during the issue of license.

• Government should exercise stringent punishment on the violation of traffic rulesby share auto drivers.


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• The permitted levels of Passengers in a share auto need to be restricted.

• District Administration should make regular checks on the overloading, extrafittings, accommodation of passengers in driver seats, not wearing uniforms.

• Share autos need to be fitted with rear view mirrors on both sides of the vehicles.

• Video clippings on how accidents occur owing to unsafe driving should be shown.

• The District Administration should motivate the share auto drivers who arefollowing traffic rules by giving prizes and certificates.

• Government need to insist on the wearing of uniforms with Identification card.

ConclusionThis study brings out the passengers perception of Share auto as an Intermediate

public transport vehicle in Madurai city. Based on the research it was identified thatShare auto is considered as an Intermediate public transport vehicle by Maduraiites asmost of the passengers prefer share auto on a daily basis and consider them as an easilyavailable mode of transport and are travelling in the share autos without safety. Therefore,District Administration should take measures to ensure the safety of the passengers.

References1. Business Research Methods - Donald Cooper& Pamela Schindler, Tata McGraw-

Hill Education 2003.2. The New Indian Express Madurai edition, dated August 4 20123. The Hindu Madurai edition dated August 19 20124. The Times of India dated Dec 23 20125. The Times of India dated Dec 28 20126. The Hindu Madurai edition dated 9 Feb 20137. www.google.co.in8. www.pinnaclejournals.com/setup/business/paper65.pdf9. www.bajajauto.com10. www. newmducorp/general.htm11. www.scjsw.info/273/share-auto, Share Auto12. www.en.wikipedia.org/wiki/Auto_rickshaw13. www.blip.tv/swajana-our-people/share-auto-rickshaw-409932


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Abstract

The research article tested the efficiency of chilli futures market in India withrespect to price discovery and price stabilization. Various tests employed indicatethere is long run equilibrium relation exists between spot and future price in chillcommodities. Future market for red chilli in India is leading the spot market inimpounding future expectations about the future spot price. The results alsocorroborates that similar relationship is exists in case of other agro commodities asper the studies conducted by others.

IntroductionOrganized commodity markets have been existing in India for centuries. The more

easily understood markets are those that trade in agricultural commodities. The physicalmarket is the traditional market and is usually referred to as the "cash and carry market"or the "spot market". The inherent characteristic of the physical market is that thetransactions in this market are subject to price risk. The main problems of the physicalmarket in general and 'agricultural markets in India' in particular are:

• Lack of proper price dissemination and transparency in price discovery process,

• Fragmented, isolated and unorganized markets,

• Lack of proper certification and standardization of commodities,

• Long chain of intermediaries,

• Cartelization of intermediaries with multiple levels of intermediation,

• Processors are not allowed to buy directly from cultivators (in most states),

• High volatility of prices.

* Professor, Department of P.G. Studies and Research in Commerce, Gulbarga University, Gulbarga** Assistant Professor in Commerce in Commerce, Government First Grade College, Agara, HSR Layout,

Bangalore - 560102.

Price Discovery in Indian Commodity MarketA Study of Red Chilli Futures

- Dr.C.S.Basavaraj *- Dr. G.Prahlad Chowdri **


31

Cash and forward contracts are the two important instruments in physicalcommodity markets. Cash transactions involve immediate delivery or sometime in thefuture. A forward contract is a bilateral agreement in which a buyer and seller agreeupon the delivery of a specified quality and quantity of an asset on a specified futuredate at a pre-determined price. While the forward transactions have the advantage ofbeing customized, they have the following limitations:

• The contracts are private and negotiated, bilaterally, between two parties. Therefore,there are no exchange guarantees.

• The prices are not transparent as there is no reporting requirement.• There are no regulations for establishing market stability and protection of market players.• Lack of standardization leads to illiquidity in the absence of a secondary market.• The profit or loss is realized only on the maturity date.• Settlement is only through actual delivery or offsetting by cash delivery.

The above said limitations have necessitated the need for futures contracts incommodity markets. Futures contracts are evolved out of forward contracts. The futurecontracts are exchange-traded versions of forward contracts. The futures contractsprovide benefits such as price discovery, liquidity, price risk management, pricedissemination, absence of counter party risk as against cash and forward contracts.

The reintroduction and expansion of the commodity futures trading in India, hasopened discussions on concept, development and issues associated with it. The liberaleconomic policy and opening up and integration of Indian financial and commoditiesmarkets with world markets have certainly necessitated studies vis-à-vis derivativetrading in commodities. This is supported by other reforms in agricultural marketingsector such as amendment to APMC Act by many state governments, setup of electronicspot commodity exchanges, etc. Futures contracts perform two important functionsviz., price discovery and price risk management with reference to the given commodities,which are useful in various segments of the economy. It is useful to producers becausethey can get an idea of the price likely to prevail at a future point of time and therefore,decide between various competing commodities. It enables the consumer to get an ideaof the price at which the commodity would be available at a future point of time. Indiabasically an agrarian country has a long history of commodity derivatives as back in18751. But this sector remained underdeveloped due to constant government interventionin many commodity markets to control prices.

1 The Bombay Cotton Trade Association set up the first commodity exchange in India and formal organized tradingstarted in cotton in 1875.


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Derivative trading in commodities in India is growing at rapid pace in recenttimes. This growth is attributable due to establishment of various commodity exchangesand Indian government policy to encourage futures trading in commodities. Governmentof India has set up Forward Markets Commission (FMC), headquartered at Mumbai,in 1953 under Forward Contracts (Regulation) Act, 1952. FMC is a regulatory authoritywhich regulates, recognizes or withdraws the recognition of commodity exchanges inIndia. The FMC, also monitors and supervises the activities of commodity exchanges inIndia.

There are, at present 26 commodity exchanges, working in India, engaged inderivative trading in both agricultural and non agricultural commodities. The prominentcommodity exchanges are, the Indian Pepper and Spice Trade Association, Kochi,National Multi Commodity Exchange of India Ltd., Multi Commodity Exchange ofIndia Ltd., National Commodity and Derivatives Exchange Ltd., etc.

Initially, the Indian futures markets for agricultural commodities were not muchdeveloped and matured in terms of price discovery and price risk management comparedto non-agricultural commodities such as gold, copper, silver, crude oil, etc. This is evidentfrom the high volumes being recorded in non-agricultural commodities compared toagricultural commodities in futures markets in India.

Objective of the StudyThe basic objective of this study is to test the price discovery of an agricultural

commodity, the price of which is volatile and subject to demand and supply constraintsalong with other factors such as free from government restrictions, export/importopportunity, storability for reasonable period, etc. The study also intends to knowstakeholders' view on agricultural commodity futures in India.

Literature ReviewJian Yang, David A. Bessler and David J. Leatham2 in their article have examined

that the price discovery performance of futures markets for storable and non-storablecommodities in the long run, allowing for the compounding factor of stochastic interestrates. The evidence shows that asset storability does not affect the existence of co-integration between cash and futures prices and the usefulness of future market inpredicting future cash prices. Jian Yang, R. Brian Balyeat and David J. Leatham3 in

2 ‘Asset Storability and Price Discovery in Commodity Futures Markets: A New Look’, published in The Journal ofFutures Markets, Vol.24, No.3, pp 279-300(2004).

3 ‘Futures Trading Activity and Commodity Cash Price Volatility’, published in Journal of Business Finance & Accounting,32 (1) & (2), January/March 2005, 0306-686X.


33

their paper examined that the lead-lag relationship between futures trading activity(volume and open interest) and cash price volatility for major agricultural commodities.Granger casualty tests and generalized forecast error variance decompositions showthat an unexpected increase in futures trading volume unidirectionally causes anincrease in cash price volatility for most commodities. R. Salvadi Eswaran andP. Ramasundaram4 in their paper examined the Bartlett's test on price discovery in asample of four agricultural commodities traded in futures exchanges which haveindicated that price discovery does not occur in agricultural commodity futures market.The econometric analysis of the relationship between price, return, volume, marketdepth and volatility has shown that the market volume and depth are not significantlyinfluenced by the return and volatility of futures as well as spot markets. Sunil Kumar5

in his study has conducted an investigation into the futures markets in agriculturalcommodities in India. The results obtained from regressions for a sample of fivecommodities traded in six exchanges reveal that these futures exchanges fail to discoverprices and provide efficient hedge against the risk emerging from price volatility. Thefutures markets in these commodities are not efficient and futures prices are not unbiasedpredictors of the future ready rates. Gurpreeth Singh Sahi6 in his article 'Influence ofCommodity Derivatives on Volatility of Underlying Asset' studied the impact ofintroducing commodity futures contracts on the volatility of the underlying commodity,in the Indian context. Empirical evidence from GARCHX methods suggests that inwheat, turmeric, sugar, cotton, raw jute and soybean oil, the nature of spot price volatilityhas not changed with the onset of futures trading. Granger casualty tests show that anunexpected increase in futures trading volume unidirectionally causes an increase incash price volatility for wheat, turmeric, sugar, raw jute and soybean oil.

Data and MethodologyThe study is based on secondary data, spot and future prices of a popular

agricultural commodity i.e., 'Red Chilli' were collected from NCDEX for the period of2006 to 2011. Augmented Dicky Fuller Test (ADF)7 is used to check the stationary of the

4 ‘Whether Commodity Futures Market in Agriculture is Efficient in Price Discovery? – An Econometric Analysis’published in Agricultural Economics Research Review, Vol.21, (Conference Number) 2008, pp-337-344.

5 ‘Price Discovery and Market Efficiency: Evidence from Agricultural Commodities Futures Markets’ published inSouth Asian Journal of Management, April-June 2004 edition.

6 ‘Influence of Commodity Derivatives on Volatility of Underlying Asset’ published in The ICFAI Journal of DerivativeMarkets, Vol. IV, No.3, July-2007 (ISSN 0972-9119) JEL Classification: C22, G13, G14

7 In statistics and econometrics, an augmented Dickey–Fuller test (ADF) is a test for a unit root in a time seriessample. It is an augmented version of the Dickey–Fuller test for a larger and more complicated set of time seriesmodels. The augmented Dickey–Fuller (ADF) statistic, used in the test, is a negative number. The more negative itis, the stronger the rejections of the hypothesis that there is a unit root at some level of confidence.


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series. Johansen Trace Test8 is used to know the co-integration between stationaryvariables. Unrestricted Co-integration Rank Test (Maximum Eigen value) to know long-run equilibrium relationship between spot and futures prices. Granger Causality9 testis conducted to know the lead-lag relationship between series. To conduct these tests,the researcher has used SPSS and E-View software.

The Study: India is the largest producer, consumer and exporter of chillies in theworld. India also has the largest area under chillies in the world. Chillies are the mostcommon spice cultivated in India. The major producing states are Andhra Pradesh,Karnataka, Madhya Pradesh, Orissa, Maharashtra and Tamil Nadu. Andhra Pradeshalone commands around 53.27% of the chilli production in India. The major chillygrowing districts of Andhra Pradesh are Guntur, Warangal, Khammam, Krishna andPrakasham. Chilli has well established spot markets. Guntur, Warangal, Khammam inAndhra Pradesh; Raichur, Bellary, Byadagi in Karnataka are the major spot markets atthe production centers. Guntur is Asia's largest market for chillies. Normally, about 80lakh to one crore bags of chillies (each bags carries approximately 30 to 50 kgs) is tradedduring the season in Guntur market alone. India's chilly exports are on a positive noteand currently rank first when compared to other spices. The exports of chillies hasincreased significantly from 2003-04 onwards. Indian chili is mainly exported to USA,Sri Lanka, Bangladesh, the Middle East and the Far East.

The Chilli Futures Trading In India, NCDEX is offering futures contracts in Chilli. At present Chilli (Paala)

traded as LCA 334 with Guntur as delivery centre with Warangal in Andhra Pradesh asadditional delivery centre. The commodity displays high volatility, with the prices heavilydependent on season, production in different producing tracts spread across the country,demand from exporters and the stock available at the cold storages. The prices of themajor chilly varieties sold in the country are correlated with each other. As a result, theplayers in other varieties can also hedge their risks through this single variety (LCA-334) being traded in futures contracts.

8 In statistics, the Johansen test named after Søren Johansen, is a procedure for testing co-integration of severalI(1) time series. This test permits more than one co-integrating relationship so is more generally applicable than theEngle–Granger test which is based on the Dickey–Fuller (or the augmented) test for unit roots in the residuals froma single (estimated) co-integrating relationship.

9 A time series X is said to Granger-cause Y if it can be shown, usually through a series of t-tests and F-tests onlagged values of X (and with lagged values of Y also included), that those X values provide statistically significantinformation about future values of Y.


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The AnalysisAnalysis of Spot and Future Prices of Chilli for the Period of April 2006 to August 2011

To check the stationary of the series - ADF Test

Table 1 : ADF Test

Augmented Dickey Fuller Test Statistic Spot and Future Price

Stationary Diagnostic – ADF Test Augmented Dickey-Fuller test statistic

Spot Price Future Price t-Statistic Prob.* t-Statistic Prob.*

-17.23 0.00 -16.83 0.00 Test

critical values

N=393 1% level -2.57 -2.57 5% level -1.94 -1.94 10% level -1.62 -1.62

*MacKinnon (1996) one-sided p-values.

The table 1, clearly shows that null hypothesis of no unit roots for both the timeseries are rejected at their first differences since the ADF test statistics values are lessthan the Critical Value at level of 1%, 5% and 10%.. Thus the variables are stationaryand integrated for same order. i.e. I(1).

To know the cointegration between stationary variables - Johansen Trace test:

Table 2 : Unrestricted Cointegration Rank Test (Trace)

Unrestricted Cointegration Rank Test (Trace) Hypothesized Trace 5 Percent 1 Percent No. of CE(s) Eigen value Statistic Critical Value Critical Value None ** 0.04 23.51 15.41 20.04 At most 1 ** 0.02 8.02 3.76 6.65 *(**) denotes rejection of the hypothesis at the 5%(1%) level Trace test indicates 2 cointegrating equation(s) at both 5% and 1% levels


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Table 3 - Unrestricted Cointegration Rank Test (Maximum Eigen value)

Unrestricted Co integration Rank Test (Maximum Eigen value) Hypothesized Max-Eigen 5 Percent 1 Percent

No. of CE(s) Eigen value Statistic Critical Value Critical Value None ** 0.04 15.49 14.07 18.63 At most 1 ** 0.02 8.02 3.76 6.65 *(**) denotes rejection of the hypothesis at the 5%(1%) level MaSpot-eigenvalue test indicates 2 cointegrating equation(s) at the 5% level

In the Table 2 Trace Test indicates the existence of two integrating equations at 5%level of significance. Also, the table 3, Maximum Eigen Value test makes the confirmationof this result. Thus, the two variables of the study have long-run or equilibriumrelationship between them.

To know the lead-lag relationship between series - Granger Causality test:

Table 4 - Granger Causality Test

Granger Causality Test Lag-5

Null Hypothesis N F-Statistic Probability @ 5% Future does not Granger Cause Spot 388 4.41 0.00 1 Spot does not Granger Cause Future 0.99 0.43 1 The table 4 shows the result of Granger Causality Test; calculated F values are

significantly greater from the critical value at lag of 5. This indicates null hypothesis isrejected and the alternative hypothesis is accepted. This shows that there is causalityfrom futures to spot market in impounding the information in its prices. This makesclear that any changes in future price causes change in spot prices. But model twoindicates that, any change in spot prices does not lead to changes in future prices. Thisis supported by statistically, since F value < than critical value and P value is >.05. So,there exists only unidirectional causality from future market to spot market but notvice versa.

ConclusionThis study tried to attempt to answer the research questions. They are; does long

run equilibrium relation exist between spot and future price of chilli commodities anddoes lead-lag relation exists between spot and future price of chilli commodities. Toprove the former, Johansen Co-Integration Test is employed and proves the latter one;


37

Granger's Causality Test is employed. From the table 2 and 3, the result showed thecalculated values are greater than table value and it indicating there is long runequilibrium relation exists between spot and future price in chill commodities. Sincethere exists long run relationship between spot and future prices of chilli, there will becausal relationship between these series. In other words, existence of lead-lag relationshipbetween them is possible. To prove this, Granger's causality test is conducted. This willshow which market lead and which market lag in impounding the information in itsprice. The result of test which showed in Table 4, that Future market are leading thespot market in impounding future expectations about the future spot price. But in viceversa is not supported. By and large we can conclude that future markets for red chilliare more efficient in discovering the future spot prices.

References1. John C. Hull, 'Options, Futures and Other Derivatives', Prentice - Hall of India

2. www.mcxindia.com, website of Multi Commodity Exchange of India

3. Susan Thomas, Agricultural commodity markets in India; Policy issues for growth,May 21, 2003.

4. www.ncdex.com, the website of National Commodity and Derivative Exchangeof India,

5. Wikipedia, the web dictionary

6. Spices Board, India

7. www.fmc.gov.in, the website of Forward Market Commission of India, theregulator of commodity derivatives in India.


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Abstract

The concept of Sustainability Reporting is getting familiar nowadays amongthe different industries. With growing attention amongst the stakeholders and theemergence of increasing number of foreign investors in India the sustainability reportingis gaining its momentum. Chemical industry in India where 100 % FDI limit is allowedhas witnessed some interesting development over the past years and also will growby manifolds in the years to come both at National and International Level. Theindustry is majorly held by SMEs and very prone to environmental and social hazards.So Sustainability Reporting has become the need of the hour to report theenvironmental social and economic performance of the industry. But on the contrary,the number of companies reporting as per the available sustainability reportingguidelines is very less in number which needs to be improved. This paper tries tounderstand the present status of the reporting in Chemical Industry of India and theperception and belief the industry keeps in mind on the sustainability reporting front.

Keywords: Sustainability, Sustainability Reporting, Sustainable Development

Introduction and Literature ReviewThe sustainability movements have taken a changed outlook as it moves from

growth orientation towards the road of conservation. An individualistic way of thinkinghas changed when they think of localizing consumptions, buy environment friendlyproducts, reduce wastes and recycle their consumables. The most important questionarises whether an organization has adopted the same sustainability paradigm andshowing a concern towards the changes. The fundamental definition of sustainabilitywas first developed by the Brundtland Commission of 1987 and is widely accepted bythe researchers across the world. Sustainability is a process of development that meetsthe needs of the present without compromising the ability of future generations tomeet their own needs (WCED, 1987:43).The sustainability revolution as argued by

* Asst. Professor, Faculty of Management, Marwadi Education Foundation Group of Institution, Gujarat.Email : [email protected]

** Ex-Principal, Faculty of Management, ICFAI and MIMS, Gujarat. E-mail : [email protected]

An Empirical Study of Perception and Awareness aboutSustainability Reporting in Indian Chemical Industry

- Pradip Kumar Mitra *- Dr. Aurobindo Ghosh**


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Edward (2005) is having a profound impact, shaping everything from the places we liveand work to the foods we eat and the endeavours we pursue as an human andcommunities (p.2). Today consumers and other stakeholders are more environmentallyconscious and are showing increased interest towards environmental issues (Andersonand Skjoett-Larsen, 2009; Defee et el. 2009). Financial performances are no longer anexclusive driver of business. Economic, Environmental and Social factors are also playinga major role in its growth. Principles of social responsibility are being incorporated intosustainability guidelines compiling the three pillars of environment society and economy(Sean Milmo-Chemical Market Reporter, 2005). A sustainability report must containqualitative and quantitative information to the extent to which the company has managedto improve its economic, environmental and social effectiveness and efficiency in thereporting period and integrate these aspects in a sustainability management system(Daub et al, 2003, 23).

The development of a chemical industry is very significant when describing theindustrialisation process in the Southern countries of the world. It is very much integratedin our life in many ways. The mankind use synthetic garments, thermoplastic furnitureand also consume different drugs. So, one can not think his life without the use of theproducts prepared by the industry. Not only that the influence percolates down the linein several industries like automotives, consumer durables, engineering and foodprocessing etc. So it is actually meeting the daily need of a common man as well asputting a significant contribution towards the economy of any nation. It includes basicchemicals, petro chemicals, fertilisers, paints, pesticides, bulk drugs etc a well diversifiedindustry with more than 70000 commercial products on its credit. So the position ofthe chemical industry is crucial in the functioning of the Modern World. When anindustry grows in many folds it generates many positive and negative effects and themore walk it makes with public life it becomes obligatory to prove their presence insociety. A company should be seen as a multifunctional and thus pluralistically legitimisedvalue adding entity that fulfils socioeconomic functions on behalf of various stakeholdergroups (Ulrich/Fluri 1995, 60). This kind of thoughts lead to the concept of publishingthe sustainability report be it in strictest or broadest sense of the firm (Daub, 2005). Agrowing awareness has come out both internally and externally that the long termsurvival of the industry depends upon improving its economic, social and environmentalsustainability (CIA, 2004; Chemistry Leadership Council, 2005). "Sustainability is apath of continuous improvement, wherein the products and services required bysociety are delivered with progressively less negative impact upon the Earth" asdefined by AIChE Institute for Sustainability November '04-July '05 Grassroots Project,Earl Beaver, Chair IFS. Morhardt, Baird, and Freeman (2002, 215 f) name the followingprinciple reason for sustainability reporting.


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The attempt to meet regulatory requirements and reduce the potential cost offuture regulations by adopting a proactive approach;

The effort to bring operations into line with environmental codes;

The effort to reduce operating cost;

The attempt to improve stakeholder relations.

The Indian Chemical industry is playing a crucial role in the Indian Economy. It isone of the oldest industries in India which is 6th largest in the world and 3rd largest inAsia contributing a lot towards its economic progress (Source: Report by DCPC, 2012).In an attempt to depict the potential of the industry Ministry of Environment andForests with Central Pollution Control Board has given some interesting facts. Thecontribution to the Indian GDP by the industry is 6.7 % and it is growing at about11.5% (FY2009-10) also. The industries present turnover is about $108 billion andaccounts for 3.3% in terms of total volume of the world (Source: FICCI,2012). As perthe report prepared by KPMG the chemical industry shares 17.6% of manufacturingoutput , 13 to 14% of total exports , 8 to 9 % of total imports and 18 to 20% contributionto National Revenue by ways of various taxes. As mentioned in the report also theindustry is concentrated in places like Gujarat, Maharashtra at the most and these arethe two states situated on the western part of India. The industry has seen a sea ofchanges and moved with dynamism. It is a highly regulated industry on the front of theenvironment. It was a major producer of basic chemicals but slowly shifted towardsspeciality and knowledge chemical. Before WTO regime India was a protected economyand serving the domestic needs only. The process of globalization was initiated in early1990s. Before that the industry were majorly held by Indian corporate specifically thepublic sector enterprises of Govt of India .With the open up of economy for the 100%FDI (Foreign direct investment ) and FII (Foreign Institutional investors ) the monopolyenjoyed by those Govt. Enterprises got curtailed to some extent. The flow of capitals ledto increase maximum number of SMEs (Small and Medium Sized Enterprises) in Indiaespecially in Gujarat and Maharashtra. When the industry gets populated by SMEs itstarts feeling pressure of more environmental performance and the managers mustdevelop an understanding of the circumstances that influence the success ofimplementing and promoting organizational changes that fosters superior environmentalperformance among SMEs (Mark Cordano Et al 2010).

Sustainability reporting in India is still at a nascent stage. But over the last decadesthe reporting initiatives has been taken by different firms. Presently of the 712,719Indian Companies at work only 68 have ever developed a sustainability report. It shows


41

that a very small only 0.0094% of the existing companies have stepped towards thesustainable business where as their international counterparts have moved significantlyahead in this area and gained significant advantage. Number of chemical companiesreporting the Sustainability Reporting is only 14(Source: Trends of Sustainabilityreporting in India). Sustainability reporting is a disclosed fact to the stakeholders aboutthe organization's environment , social and economic performance basically a reportdescribing all facets of performance made by the organization. Information process hasbecome faster and organizations need to cater all the stakeholders instead of onlyshareholders with relevant information about their social environmental and economicperformance. The present companies reporting on sustainability are basically eitherfacing stiff reactions from their international clientele or they want to improve theircorporate image. The sustainability reporting is not a mandatory affair it is a voluntarydisclosure at present. So the development of a deep thought and believe andunderstanding of sustainability reporting is necessary. Since it is a voluntary disclosurea common framework and consensus over reporting from the industry is the need ofthe hour. Voluntary initiatives can foster industry and firm specific innovations to achieveenvironmental performance goals (Koski and May, 2006)

In this study the researchers try to find out the state of understanding andperceptions and believe of sustainability issues and reporting in context of Indian chemicalindustry... the way industry is looking at the sustainability reporting across the boardand what is the mindset they preserve for its future progress.

Research MethodologyThe research is based on collection of primary data. A literature survey was

conducted to prepare the questionnaire. The questionnaire mainly focussed on gettingthe opinion and views from higher level managers who are decision makers in thesefronts from different chemical industry across Gujarat. The state of Gujarat was chosenas it is basically a chemical hub of India and it accounts for more than 50% of chemicaland petro chemical manufacturing in India and has the possibility to create US$150billion business by 2020 (Ministry of Chemical and Fertilizers).The chemical units arelargely concentrated in Ahmedabad, Baroda, Bharuch Surat and Valsad Districts.Thesurvey was carried out with 520 respondents with a wide geographical and sectoralspread across Gujarat. Respondents had wide variety of background and representationfrom Inorganic Chemical, Pharma, Dye and Printing, and Petrochemical industry. Theresearchers mainly focus on the turnover of the organisation and tried to identify theperception and belief across the board about the sustainability reporting issues.


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Hypothesis Framed

Hypothesis I

H0: Knowledge about Sustainability Reporting aspects and Gross Turnover of anOrganization are independent of each other.

H1: Knowledge about Sustainability Reporting aspects and Gross Turnover of anOrganization are not independent of each other.

Hypothesis II

H0: Belief about Sustainability Reporting aspects and Gross Turnover of anOrganization are independent of each other.

H1: Belief about Sustainability Reporting aspects and Gross Turnover of anOrganization are not independent of each other.

Hypothesis III

H0: Perception about Sustainability Reporting as a part of framework of CorporateGovernance process and Gross Turnover of an Organization are independent of eachother.

H1: Perception about Sustainability Reporting as a part of framework of CorporateGovernance process and Gross Turnover of an Organization are not independent ofeach other.

Hypothesis IV

H0: Perception about issues relating to Sustainable Development and Reportingare relevant in the Indian context and Gross Turnover of an Organization are independentof each other.

H1: Perception about issues relating to Sustainable Development and Reportingare relevant in the Indian context and Gross Turnover of an Organization are notindependent of each other.


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Data analysis and interpretation

Does your company Know

About Sustainability

Reporting Aspects?

Total Yes No Gross Turnover – In Lakhs

5-25 Count 12 16 28 Expected Count 5.9 22.1 28.0 % within Gross Turnover - In Lakhs 42.9% 57.1% 100.0%



More than 1000

Count 41 51 92 Expected Count 19.5 72.5 92.0 % within Gross Turnover - In Lakhs

44.6% 55.4% 100.0%

Total Count 110 410 520 Expected Count 110.0 410.0 520.0 % within Gross Turnover - In Lakhs 21.2% 78.8% 100.0%

H0: Knowledge about Sustainability Reporting aspects and Gross Turnover of anOrganization are independent of each other.

The cross tabulation shows the observed and expected frequencies of differentcategories of gross turnover and Knowledge about Sustainability Reporting. From the


44

table, The Pearson Chi-Square calculated value at 3 degree of freedom is 50.277 and itsassociated significant (2 sided) value is 0.000. So at 5 per cent level of significance thenull hypothesis is rejected. Hence it can be concluded that Knowledge aboutSustainability Reporting aspects and Gross Turnover of an Organization are notindependent of each other.

Chi-Square Tests Value Df Asymp. Sig. (2-sided)

Pearson Chi-Square 50.277a 3 .000 The Phi and Cramer's V are used to identify the strength of association of two non-

metric variables. The value of 0.311 indicates that there is a weak association betweenKnowledge about Sustainability Reporting aspects and Gross Turnover of an Organization.

Symmetric Measures Value Approx. Sig. Nominal by Phi .311 .000 Nominal Cramer's V .311 .000 N of Valid Cases 520 H0: Belief about Sustainability Reporting aspects and Gross Turnover of an

Organization are independent of each other.

Gross Turnover - In Lakhs * Does your company believe on sustainabilityreporting? Cross tabulation

Does your company believe on

sustainability reporting?

Total

Yes No Gross Turnover - In Lakhs

5-25 Count 24 4 28 Expected Count 25.6 2.4 28.0 % within Gross Turnover - In Lakhs

85.7% 14.3% 100.0%



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Does your company believe on

sustainability reporting?

Total


More than 1000

Count 87 5 92 Expected Count 84.2 7.8 92.0 % within Gross Turnover - In Lakhs

94.6% 5.4% 100.0%


The cross tabulation shows the observed and expected frequencies of differentcategories of gross turnover and Belief about Sustainability Reporting. From the table,The Pearson Chi-Square calculated value at 3 degree of freedom is 3.943 and its associatedsignificant (2 sided) value is 0.268 So at 5 per cent level of significance the null hypothesisis accepted. Hence it can be concluded that Belief about Sustainability Reportingaspects and Gross Turnover of an Organization are independent of each other.

Chi-Square Tests

Value Df Asymp. Sig. (2-sided)

Pearson Chi-Square 3.943a 3 .268

H0: Perception about Sustainability Reporting as a part of framework of CorporateGovernance process and Gross Turnover of an Organization are independent of eachother.


46

Gross Turnover - In Lakhs * Should Sustainability Reporting be a part offramework of Corporate Governance process? Cross tabulation

Should Sustainability

Reporting be a part of framework of

Corporate Governance process?

Total Yes No Gross Turnover - In Lakhs




More than 1000

Count 79 13 92 Expected Count 68.3 23.7 92.0 % within Gross Turnover - In Lakhs 85.9% 14.1% 100.0%


The cross tabulation shows the observed and expected frequencies of Perceptionabout Sustainability Reporting as a part of framework of Corporate Governance process


47

and Gross Turnover of an Organization. From the table, The Pearson Chi-Squarecalculated value at 3 degree of freedom is 20.259 and its associated significant (2 sided)value is 0.000 So at 5 per cent level of significance the null hypothesis is rejected. Henceit can be concluded that Perception about Sustainability Reporting as a part of frameworkof Corporate Governance process and Gross Turnover of an Organization are notindependent of each other. The Phi and Cramer's V are used to identify the strength ofassociation of two non-metric variables. The value of 0.197 indicates that there is aweak association between Perception about Sustainability Reporting as a part offramework of Corporate Governance process and Gross Turnover of an Organization

Chi-Square Tests Value df Asymp. Sig. (2-sided)

Pearson Chi-Square 20.259a 3 .000 Symmetric Measures

Value Approx. Sig. Nominal by Phi .197 .000

Nominal Cramer's V .197 .000 N of Valid Cases 520

H0: Perception about issues relating to Sustainable Development and Reportingare relevant in the Indian context and Gross Turnover of an Organization are independentof each other.

Gross Turnover - In Lakhs * Do you consider issues relating to SustainableDevelopment and Reporting are relevant in the Indian context? Cross tabulation

The cross tabulation shows the observed and expected frequencies of Perceptionabout issues relating to Sustainable Development and Reporting are relevant in theIndian context and Gross Turnover of an Organization. From the table, The PearsonChi-Square calculated value at 3 degree of freedom is 13.663 and its associated significant(2 sided) value is 0.003 So at 5 per cent level of significance the null hypothesis is rejected.Hence it can be concluded that Perception about issues relating to SustainableDevelopment and Reporting are relevant in the Indian context and Gross Turnover ofan Organization are not independent of each other. The Phi and Cramer's V are used toidentify the strength of association of two non-metric variables. The value of 0.162indicates that there is a weak association between Perception about SustainabilityReporting as a part of framework of Corporate Governance process and Gross Turnoverof an Organization.


48

Do you consider issues relating to

Sustainable Development and

Reporting are relevant in the Indian context?

Total Yes No Gross Turnover - In Lakhs



500-1000 Count 78 14 92 Expected Count 79.6 12.4 92.0 % within Gross Turnover - In Lakhs

84.8% 15.2% 100.0%

More than 1000

Count 70 22 92 Expected Count 79.6 12.4 92.0 % within Gross Turnover - In Lakhs 76.1% 23.9% 100.0%


Findings and ConclusionWhen the respondents were asked regarding the knowledge about sustainability

reporting aspects. Majority (78.8 percent) of the companies are not aware aboutsustainability reporting aspects. Only 21.2 percent of the organizations are aware


49

regarding sustainability reporting aspects. But when the respondents were askedregarding the belief of sustainability reporting. Majority (91.5 percent ) of the respondentsreported that their company do believe on sustainability reporting. 8.5 percent of theorganizations does not believe on sustainability reporting. As also we have seen thatacross the board the majority of the managers believe in sustainability reporting and itis true at all level of turnovers.

When the respondents were asked whether sustainability reporting be a part offramework of corporate Governance process .Majority (74.2 percent ) of the respondentsreported that it should be a part of framework of Corporate Governance. It was alsofound out that Majority (91.7 percent ) of the respondents agreed that a sustainablereport should disclose both favorable as well as unfavorable results. Only 8.3 percent ofthe respondents did not agree to it. The respondents also agreed that sustainabilityissues are relevant in Indian Scenario. Majority (86.5 percent) of the respondents considerthat sustainable development reporting are relevant in the Indian context. 13.5 percentof the respondents do not consider these issues relevant in the Indian context.

While asked whether the sustainability reporting may create adverse effect to theindustry due to its complications of implementation majority of the respondents didnot consider such issues to have an adverse effect on the growth of this industry. Only29.6 percent of the respondents consider that such issues have an adverse effect on thegrowth of this industry.

Given a chance would they like to include sustainable development in the missionstatement of their company majority (81.9 percent) of the respondents felt that themission statement of their company should cover Sustainability Development. Only 18.1percent of the respondents reported that it should not cover sustainable development.

From the above data analysis we may draw the following final conclusionsKnowledge about Sustainability Reporting aspects and Gross Turnover of an

Organization are not independent of each other.

Belief about Sustainability Reporting aspects and Gross Turnover of anOrganization are independent of each other.

Perception about Sustainability Reporting as a part of framework of CorporateGovernance process and Gross Turnover of an Organization are not independent ofeach other.

Perception about issues relating to Sustainable Development and Reporting arerelevant in the Indian context and Gross Turnover of an Organization are not independentof each other.


50

So to conclude we can say that so far as knowledge about the sustainabilityreporting is concerned the industry does not have much of the knowledge of it. Theprocess of reporting framework, guideline etc are not familiar with them. But when theperception and understanding of sustainability issues and sustainable development ofthe industry came into discussion it was found a wide range of acceptance .The industryis in strong opinion that sustainability is a major issue and they believe that sustainabilityreporting must be done and should be aligned with its corporate objectives. So theneed of the hour is to find out the problems and solutions for successful implementationof sustainability reporting and how to induce the industry for sustainability reportingby creating a common framework through consensus.

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h t t p : / / w w w . t s m g . c o m / d o w n l o a d / a r t i c l e /Indian%20chemical%20industry%20Road%20ahead.pdf

5. Chemical industry in India: Interesting Facts , Retrieved 07/01.2013 from

http://www.cacci.org.tw/ACC%20Newsletter/May05/Katiyar2.pdf


52

Abstract

Microfinance sector has traversed a long journey from micro savings to microcredit and then to micro enterprises and now entered in the field of micro insurance,micro remittance and micro pension. This gradual and evolutionary growth processhas given a great opportunity to the rural poor in India to attain reasonable economic,social and cultural empowerment, leading to better living standard and quality of lifefor participating households. Financial institutions in the country continued to playa leading role in the microfinance programme for nearly two decades now. They havejoined hands proactively with informal delivery channels to give microfinance sectorthe necessary momentum. During the current year too, microfinance has registered animpressive expansion at the grass root level. This paper tries to find out the contributionof commercial banks, regional rural banks and cooperative banks in strengtheningmicrofinance sector by participating in Self Help Group bank linkage programme.Researcher tried to establish the relation between spread of non-governmentorganizations and growth in microfinance sector in Himachal Pradesh.

Keywords : Microfinance, Self-help group, Bank linkage programme, Growth.

IntroductionIndia is a developing country where banking plays a vital role in the economic

development. On 19th July, 1969, fourteen major commercial banks were nationalizedby RBI for strengthening the financial structure so that country can have balanced regionaldevelopment. RBI has also focussed on priority sector. After this focused strategy thebanking sector witnessed an expansion stage all over the country by reaching to ruralpopulation. Credit needs of the people is very small in rural India and it involve high

* Research Scholar, Department of Marketing & Supply Chain Management, School of Business & ManagementStudies, Central University of Himachal Pradesh, Dharamshala. Email-id:[email protected],

** Research Scholar (Fellow-U.G.C.), Department of Management Studies, School of Law, Governance, Public Policyand Management ,Central University of Haryana, Mahendergarh. Email-id: [email protected]

*** Research Scholar, Department of Accounting and Finance, School of Business & Management, Central Universityof Himachal Pradesh, Dharamshala. E-mail id: [email protected]

Microfinance: A Tool of Poverty Alleviation with BankLinkage Programme in Himachal Pradesh

- Mr. Rishi Kant *- Mr. Suyash Mishra **- Ms. Swati Singh ***


53

risk and high transaction cost for the banks. It creates hurdle in smooth flow of credit toneedy people. Loan disbursement involves lengthy documentation process which isproblem for the rural public. Due to such problems involved in formal banking, it hasforced the poor and needy to borrow money from informal lenders and be a part ofvicious cycle of poverty. Poor have inadequate supply of money. They need money inthe form of credit but due to the lack of it, they are unable to raise their income levelsand standards of living. That is why weaker section of the society remains poor in thecountry like India. There are certain main reasons because of that poor are unable toaccess these services as people do not have collaterals to mortgage. Even the banksfound the cost of screening and monitoring of these loans is very high in order to makethis loan profitable to borrowers. This showed that efforts of the banks were insufficientand unsuitable for fulfilling the expectations and needs of the poor clients. Thusgovernment of India has made many efforts for providing formal financial services tothe rural people by setting up NABARD (National Agriculture Bank for RuralDevelopment) and Regional Rural Banks. Government of India has made a remarkableeffort by setting up NABARD. These banks have helped to provide credit at low interestrate as compared to interest rate charged by informal lenders. These efforts of governmenthave led to growth and emergence of microfinance. Microfinance is considered as apoverty alleviation tool for the poor. It is not only the provider of credit but also otherfinancial and non-financial services like saving, insurance, technical assistance andtraining facility. Commercial banks, RRBs and NGOs are making a great contributionin this field. Most of the NGOs are involved in formation Self Help Group (SHG) whichis linked to banks for providing financial help to poor. Microfinance institutes are themainstream institute for providing microfinance. Some of the MFIs have organised asnon-banking finance companies are also making contribution. But these MFIs needcollateral and high documentation procedure like that of banks in which lot of time isconsumed during the processing of loan. Due to certain limitation banks can never fillthe gap thus microfinance plays strong and vital role. Poor are thrown into the viciouscycle of poverty by informal financial institutions. So microfinance is a way to get rid ofthat. It acts as an intermediary for bridging the gap by providing the facility of savingand getting credit so as to become socially and economically independent. In order toget the poor household free from the shackles of informal credit system microfinancehas contributed a lot. Micro financing through SHG is one of the best methods followedby government. Not only the government but also the NGOs are doing their part byformulation of self-help groups.

Microfinance and its Growth in IndiaMicrofinance is considered to be recent concept in India. It is a concept of providing


54

small loan or financial help to poor and the needy people who are unable to access theservices of formal banking sector. Microfinance is the provision of thrift, credit andother financial services and products of very small amounts to the poor for enablingthem to raise their income levels and improve their living standards. It is very importantfor the growth of priority sector in India. Microfinance is a broader topic and must notbe confused with microcredit which includes micro saving, microcredit and microinsurance and other non-financial services. Microfinance programmes has a positiveimpact on the life of poor as the main motto behind these programmes is to serve thepoor by making them economically empowered. Microfinance has already made apositive impact on the quality of life of millions of poor. People by providing greateraccess to credit, savings, insurance, transfer, remittances and other financial serviceswhich would otherwise are unreachable. Micro finance is a financial service of smallquantity provided by financial institutions to the poor. These financial services mayinclude savings, credit, insurance, leasing, money transfer, equity transaction, etc. thatis, any type of financial service provided to customers for meeting their normal financialneeds (SHG-bank linkage programme in Karnataka, 2005-2006). In 1969 major bankswere nationalised to have balanced regional development as private sector was moreconcerned about profit and not about the people. Then on 2nd October, 1975 the firstRegional rural bank was established in order to concentrate more on rural area i.e. themost neglected area. These banks were established on the recommendation of theNarasimhan committee and promoted by government of India, state government andcommercial banks. Prathama bank, the first Regional Rural Bank was established with50% ownership of government, 35% share of Syndicate bank and rest 15% of UttarPradesh government. This bank was the leader in the field of microfinance and followedits own model of microfinance i.e. Prathama model. The main objective of behindestablishing these banks is to provide credit to rural sector for various purposes. SelfEmployed Women Association (SEWA) was registered in 1974 as trade union withpurpose of empowering women in Gujarat. Mahila SEWA Sahkari bank was also openedand registered as a cooperative bank. Government also started the Integrated RuralDevelopment Programme which was formulate to target the poorest section of ruralpopulation by providing them facilities at subsidized rate in 1978 but it was not asuccess. Number of research projects were conducted by NABARD in eighties andMysore Resettlement Agency (MYRADA), The Asia Pacific Regional Agricultural CreditAssociation (APRACA) encouraged the agricultural and rural development financeinstitute to inculcate the saving behaviour and provide credit to poor household. Itproved to be success in countries which had some informal self-help groups. NABARDin association with some institution of APRACA started a survey to study the functioning


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of SHG and promotion of linkage of SHGs with banks. Thus SHG bank linkageprogramme was launched as a pilot project in 1992. SHG bank linkage program isdominating the microfinance sector with the help of NGOs and banks. It is one of thecost effective tool of providing subsidised and concessional financial services. Accordingto NABARD, there are only two models of microfinance in India i.e. SHG bank linkagemodel and MFI bank linkage model. The self-help group are linked to banks likecommercial banks, regional rural banks and cooperative banks in SHG bank linkagemodel. These groups pool resources in monetary form and deposit these resources inbank by opening account in these banks and loan is granted as per need of group.Under MFI bank linkage model, mainstream MFI are linked to banks. Banks providefinancial assistance to MFI so that these MFIs can further provide financial assistance toSHG and other marginal borrowers.

Review of LiteratureVarious studies are made to know the concept of Microfinance and researchers

have gone through the different studies on Microfinance. Few studies which are relevantto the study are as follows: Dahiya et al. (2001) made an analysis of the working of SHGsin industrial district of Himachal Pradesh i.e. Solan district of Himachal Pradesh. Thestudy revealed that members were mainly involved in small business. The interest ratecharged on internal lending ranged from 24 to 60 per cent and the bank interest ratewas 12.5 per cent. Investigation showed that there was a significant increase in annualincome in post- SHG period. This significant raise was very high for the newly formedgroups. Gurumoorthy (2000) enlightened the SHGs as a main option to achieve thegoal of rural development and to get society contribution in all rural developmentprogrammes. It was an ordered set up to make available micro-credit to the rural womenon the strength of the group savings without insisting on any collateral security for thepurpose of cheering them to enter into entrepreneurial activities. Study by Basu andSrivastava (2005) highlighted the inadequacies in rural access to formal finance and theexploitative terms of informal finance, which provided a strong need for innovativemicrofinance approaches. The study took a survey of rural households from two bigstates of India-Andhra Pradesh and Uttar Pradesh. Investigation showed that 66 percentof the big farmers had a deposit account and 44 per cent had access to credit. Only, 30per cent of the marginal/landless farmers had a bank account and 87 per cent had noaccess to credit from a formal resource. So, they had to depend on informal resources offinance .International Labour Organization (1998) concluded that microfinance hadsuccessfully increased micro-enterprises and self-employment. ILO has surveyed in 24different countries and investigated 46 Microfinance Institutions (MFIs) which showed


56

that 74 per cent of MFIs had the self-employed as clients, 17 per cent had mainly self-employed in their patrons and just 9 per cent had only a minority of self-employedamongst their clients. This survey has cleared the picture of different countries. Mishraet al. (2001) deliberated the effect of rural SHGs on income among the beneficiariesidentified the major problems faced by the SHGs and suggested measures for overcomingthese problems in Faizabad district of Uttar Pradesh which is close to the capital of U.P.i.e. Lucknow. The results of the survey showed that SHGs have helped to increase theincome of the participants by 10 to 15 percent. The foremost problems that the SHGsfaced were need of training facility. It was suggested by the researchers to involveCommercial Banks, RRBs and agricultural co-operative societies to provide liberal creditat cheaper interest rate through SHGs in this study.

Objectives of the Study• To study the status of self-help group bank linkage programme in Himachal

Pradesh.

• To find out the role of self-help group bank linkage programme in growth anddevelopment of microfinance sector in the state of Himachal Pradesh.

MethodologySecondary data published by NABARD has been taken regarding the status of

microfinance in Himachal Pradesh. Statistical and econometric tools like mean,coefficient of variance etc. are applied. The period for study is five years i.e. 2007-2008to 2011-2012. Growth rate is calculated to see the growth of self-help group banklinkage programme in Himachal Pradesh.

Status from Himachal PradeshIn northern region of India, Himachal Pradesh is on second place after Rajasthan

with 65641 self-help groups linked with banks in 2011-2012. Out of these 65641, 29621SHGs are linked to commercial banks, 7101 are linked to regional rural banks and28919 are linked to cooperative banks. During this year 4269 SHGs were disbursedbank loans of 5324.46 lakh. In the year 2007-2008, 38591 SHGs were linked to bankshaving savings of 2822.21 lakh and Himachal Gramin Bank and Parvatiya Gramin Bankare two regional banks which has disbursed loan of 690.91 lakh to 782 SHGs during2011-12.Growth rates for SHGs and the growth rates of the saving amounts of thoseSHGs with banks is calculated in this research paper.


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Progress under Microfinance Savings of SHG with Bank in Himachal Pradesh

Table 1 : Status of Microfinance Saving of SHGs with Commercial banks(Amount in lakh in Indian rupees)

Commercial Bank

Year No of SHG

Saving Amount

Growth rate of SHG

Growth rate of Saving Amt.

2007-08 26762 2213.32 0 0 2008-09 28658 2104.89 7.08 -0.49 2009-10 26908 2000.36 -6.11 -0.5 2010-11 28571 1881.9 6.18 -0.59 2011-12 29621 1362.48 3.68 -2.76

Source : Status of microfinance in India 2007-2008 to 2011-2012 from www.nabard.org

Table 2 : Status of Microfinance Saving of SHGs with Regional Rural banks(Amount in lakh in Indian rupees)

Regional Rural Bank

Year No of SHG

Saving Amount

Growth rate of SHG


2007-08 4369 401.28 0 0 2008-09 4616 578.4 5.65 44.14 2009-10 6660 849.28 44.28 46.83 2010-11 5955 852.19 -10.59 0.34 2011-12 7101 868.17 19.24 1.88


Table 3: Status of Microfinance Saving of SHGs with Co-operative banks(Amount in lakh in Indian rupees)

Co-operative Bank

Year No of SHG

Saving Amount

Growth rate of SHG


2007-08 7460 207.61 0 0 2008-09 8470 305.6 13.54 47.20 2009-10 16614 641.26 96.15 109.84 2010-11 18587 974.41 11.88 51.95 2011-12 28919 1057.97 55.59 8.58 Source : Status of microfinance in India 2007-2008 to 2011-2012 from www.nabard.org


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Table 4: Combined Status of Microfinance Saving of SHGs with Commercial banks,Regional Rural Banks and Co-operative Banks (Amount in lakh in Indian rupees)

Total

Year No of SHG

Saving Amount

Growth rate of SHG

Growth rate of Saving Amount

2007-08 38591 2822.21 0 0 2008-09 41744 2988.89 8.17 5.91 2009-10 50182 3490.9 20.21 16.80 2010-11 53113 3708.5 5.84 6.23 2011-12 65641 3288.62 23.59 -11.32 Average 49854.2 3259.82 11.56 3.52 Coefficient of variance 0.21 0.11 0.86 2.91


Graph 1: Combined Status of Microfinance Saving of SHGs with Commercial Banks,Regional Rural Banks and Co-operative Banks (Saving amount in lakh in Indian rupees)

0

10000

20000

30000

40000

50000

60000

70000

2007-08 2008-09 2009-10 2010-11 2011-12

No of SHG

Saving Amount


59

Graph 2: Combined Status of Growth Rate of SHGs and Saving Amounts

-15

-10

-5

0

5

10

15

20

25

30

2007-08 2008-09 2009-10 2010-11 2011-12

Growth rate of SHG

Growth rate of Saving Amount.

The growth rate of SHGs linked with commercial banks is decreasing from year2008-2009 to 2011-2012 and is also negative in year 2009-2010 i.e. -6.11% (Table-1).Growth rate of saving amount of SHGs with commercial bank is negative for all theyears. Growth rate of SHGs linked with regional rural bank is highest in the year 2009-2010 i.e. 44.28%. The growth rate for saving amount is decreasing from 2007-2008 to2011-2012 (Table-2). The growth rate of SHG linked with cooperative bank and savingamount of those SHGs is highest for the year 2009-2010 i.e. 96.15% and 109.84%respectively. The total growth rate for SHGs linked to banks mentioned above is increasinginitially but the growth rate of saving amount has decreased from 2008 to 2012 and isnegative for the year 2011-2012 (Table-3). This data shows that more and more self-helpgroups are linked to banks but saving of SHGs with banks is not increasing accordingly.Graphs also show the clear picture of it. So there is a need to develop a model by whichgrowth rate of saving amount may increase with SHGs in Commercial Banks, RegionalRural Banks and Co-operative Banks. It is clear from the above mentioned tables andgraphs that SHGs are the key concept for the growth of Microfinance sector in India.


60

Progress under Microfinance Bank Loan Disbursed to SHGS in Himachal PradeshTable 5: Status of Microfinance Loan Distribution by Commercial Banks

(Amount in lakh in Indian rupees)

Commercial Bank Year No of SHG Bank Loan Growth rate of

SHG Growth rate of

Bank Loan 2007-08 2532 2382.86 0 0 2008-09 2952 2204.04 16.59 -7.50 2009-10 1892 1948.48 -35.91 -11.60 2010-11 1801 2475.7 -4.81 27.06 2011-12 1274 1651.26 -29.26 -33.30

Source : Status of microfinance in India 2007-2008 to 2011-2012 from www.nabard.orgTable 6 : Status of Microfinance Loan Distribution by Regional Rural Banks

(Amount in lakh in Indian rupees)Regional Rural Bank

Year No of SHG Bank Loan Growth rate of SHG

Growth rate of Bank Loan

2007-08 1138 1188.13 0 0 2008-09 981 1219.65 -13.80 2.65 2009-10 255 289.05 -74.01 -76.30 2010-11 1200 1847.8 370.59 539.27 2011-12 752 690.91 -37.33 -62.61

Source : Status of microfinance in India 2007-2008 to 2011-2012 from www.nabard.orgTable 7 : Status of Microfinance Loan Distribution by Co-operative Banks

(Amount in lakh in Indian rupees)Co-operative Bank

Year No of SHG Bank Loan Growth rate of

SHG Growth rate of

Bank Loan 2007-08 627 545.59 0 0 2008-09 1024 1008.34 63.32 84.82 2009-10 1700 1584.07 66.02 57.10 2010-11 2292 3005.93 34.82 89.76 2011-12 2243 2982.29 -2.14 -0.79



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Table 8: Combined Status of Microfinance Loan Distribution by Commercial Banks,Regional Rural banks and Co-operative Banks (Amount in lakh in Indian rupees)

Total

Year No of SHG Bank Loan

Growth rate of SHG


2007-08 4297 4116.59 0 0 2008-09 4957 4432.03 15.36 7.66 2009-10 3997 3821.6 -19.37 -13.77 2010-11 5293 7329.43 32.42 91.79 2011-12 5269 5324.46 -0.45 -27.36

Average 4762.20 5004.82 5.59 11.66 Coefficient of variance 0.12 0.28 3.47 4.00


Graph 3: Combined Status of No. of SHGs. and Bank Loan by Commercial Banks,Regional Rural Banks and Co-operative Banks (Bank loan in lakh in Indian rupees)

0

1000

2000

3000

4000

5000

6000

7000

8000

2007-08 2008-09 2009-10 2010-11 2011-12

No of SHG

Bank Loan


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Graph 4: Combined Status of Growth Rates of SHGs and Bank Loans by Commercial Banks,Regional Rural Banks and Co-operative Banks

-40

-20

0

20

40

60

80

100

2007-08 2008-09 2009-10 2010-11 2011-12

Growth rate of SHG


This data shows the growth rate of bank loan disbursed to SHGs. Bank loan toSHGs are sourced through NABARD. Growth rate of SHGs linked to commercial banksis decreasing and negative in 2011-2012 i.e. -29.26%. So there is direct link between thegrowth rate of SHGs and loan disbursed to these SHGs. Growth rate of number ofSHGs as well as bank loan is negative in year 2011-2012. Growth rate of both SHGs andbank loan is very high in the year 2010-2011. But in year 2011-2012 the percentage ofgrowth has decreased drastically.

Table 9: SHGs linked with public sector commercial banks as on 31st March 2012 inHimachal Pradesh (Amount in lakh in Indian rupees)

Name of banks

Details of SHGs Saving Out of Total SHGs Out of Total SHGs linked with Banks Under SGSY Scheme Exclusive Women SHGs

No. of SHG

No of member

Saving amount

No. of SHG

No of member

Saving amount

No. of SHG

No of member

Saving amount

Allahabad Bank 14 140 1.2 14 140 1.2 14 140 1.2 Bank of Baroda 120 1200 12.22 0 0 0 1 10 0.5 Bank of India 58 485 11.85 51 485 11.85 0 0 0 Canara Bank 129 1540 5.2 70 680 1.89 120 1690 3.35 Central Bank of India 424 4371 50 350 3665 37 334 3483 35 Indian Bank 45 810 2.27 13 208 0.75 45 802 2.25 Punjab National Bank 18567 185670 603.24 468 4680 52.69 12807 128070 460.43 Punjab & Sind Bank 62 625 8098 12 122 1.39 40 408 5.62 State Bank of India 7222 86664 131 841 10096 14 5778 69341 105 State Bank of Patiala 1865 27975 144.26 805 12520 110.5 660 8615 102.5 Syndicate Bank 1 15 0.06 0 0 0 0 0 0 UCO Bank 1114 11742 392.2 696 7670 233.65 818 9255 329.6 Total 29621 321237 1362.48 3320 40266 464.92 20617 221814 1045.45 Source: Status of microfinance in India 2011-2012, NABARD


63

Table-9 shows the contribution of public sector banks towards the Self Help GroupBank linkage programme. Punjab National bank is linked to most of the SHGs out ofvarious banks. The data shows that the women play a vital role in formation of SHGsout of 29621 SHGs linked to public sector commercial banks, 20617 SHGs have womenas members in Himachal Pradesh. The second place is held by State Bank of India inwhich 7222 SHGs are linked to the bank having saving amount of 131 lakh with 86664members. Out of total SHGs 5778 are exclusively women SHGs with saving amount of105 lakh. Syndicate bank has the least contribution toward the Self Help Group BankLinkage programme with only one SHG linked to the bank in the year 2011-2012.NGOsare also acting as an intermediary for the promotion of SHGs and linking these to banksin Himachal Pradesh. 9987 Self-help groups are promoted during the year 2011-2012.Hence NGOs are also playing a vital role for the betterment of the poor people.

ConclusionNABARD is really playing a vital role in the growth of microfinance sector by

promoting self-help group bank linkage programme. Various innovative products andprogrammes are launched by NABARD for reaching poor and fulfilling their needs.SHG bank linkage programme is one of the most widely accepted microfinanceprogramme. As per the data available commercial banks are contributing the mosttoward the growth of SHG bank linkage programme in Himachal Pradesh. NGOs areacting as SHGs promotion institute for the benefit of poor household and makingaccessible to the financial services which were not available to them earlier.

References1. Basu , P. and Srivastava , P. (2005), “Scaling-up Microfinance for India’s Rural

Poor”, World Bank Policy Research Working Paper [ No. 3646] , World Bank,Washington, DC.

2. Dahiya , Prem Singh, Pandey, N.K. , and Karol , Anshuman (2001), “Socio-economicEvaluation of Self-help Groups in Solan District of Himachal Pradesh: Impact,Issues and Policy Implications”, Indian Journal of Agricultural Economics, Vol.56, No. 3, pp. 486-87.

3. Gurumoorthy, T. R. (2000), “Self-Help Groups Empower Rural Women”,Kurukshetra, Vol. 48, No. 5, pp. 31-37.

4. Hema , B. (2003), “SHG Bank Linkage Programme: An Overview”, Journal ofMicrofinance,Vol. 5, No. 1, pp. 21-49.

5. ILO (1998), “Enterprise Creation by the Unemployed: The Role of Microfinance”,


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Paper Presented in International Conference on Self-employment, 24-26September, Burlington.

6. Mishra, J. P., Verma , R. R. and Singh , V. K. (2001), “Socio-economic Analysis ofRural Self-help Groups Schemes in Block Amaniganj, District Faizabad (UttarPradesh)”, Indian Journal of Agricultural Economics, Vol. 56, No. 3, pp. 473-74.

7. NABARD (2006), SHG-Bank linkage programmes in Karnataka, Annual Report2005-2006.

8. Satish, P. (2005) , “Mainstreaming of Indian Microfinance” , Economic and PoliticalWeekly, Vol. 4, No.17 , pp. 131-139, Available at : http://www.jstor.org/stable/4416532 (Accessed on 2nd July 2013)

9. Websites (Electronic resources): www.rbi.org.in (Accessed on 1st July 2013)

www.nabard.org (Accessed on 25th June 2013)


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Abstract

"This study is an attempt to examine the profitability position of all 31 StateCo-operative Banks (StCBs) from 2002-2011. The level of profitability determines theoperational efficiency and strength of the organization. Profitability ratios areconsidered as reliable variables for judging the efficiency and effectiveness of anorganization. Besides achieving the objectives, two hypotheses pertaining to profitsare also tested. The study finds that profits of StCBs are going down. Though theaverage level of profitability in relation share capital is quite good but the amount ofcost of management in proportion to profits is matter of concern. Both hypotheseshas cleared that there is no significant relation between the growth in amount ofprofits and share capital and also working capital. Without compromising anddisturbing the compensation amount of employees, StCBs should take measures toreduce the cost of management so that the extent of profits may be increased."

Keywords: Profits, Co-operative Banks, State Co-operative Banks, Profitability

IntroductionRelative inefficiency and poor financial health of co-operative banks of our nation

is an accepted and well evaluated fact. But, if "you can't co-operate, you can definitelynot sustain and survive in an effective and efficient way." This statement holds true forthe role and importance of co-operative banks in the overall banking industry and alsofor economic development of our nation. Fault is not only on supply side i.e. servicesand performance of co-operative banks but demanding side is also not so aware aboutthe schemes, facilities and benefits of accessing the services of co-operative banking.Further, it is well recognized today that co-operatives have shown rapid growth indeveloping countries and also have been to be proved effective instruments of economicgrowth for improving the living standard of our people (Lakshmanan & Gowthaman,2008). They have been seen as an integral part of our national economy. (Rajkmuar,2008). Co-operative banks with their more than a century old existence have been playinga significant role in enlarging the ambit of institutional credit. The extensive network of

* Assistant Professor, Department of Commerce, I.G. Post Graduate Regional Centre, Meerpur Maharshi DayanandUniversity, Rohtak (Haryana)-India. Email: [email protected]

Profitability Performance of State Co-operative Banks in India

- Dr. Vijay Singh*


66

co-operative credit institutions makes these required instruments for greater financialinclusion (Singh & Singh, 2010) despite the wide expansion of banking network(commercial banks plus co-operative banks) in the country, a significant section of ourpopulation still is out of the ambit of formal banking system. To include the excludedpeople, co-operative credit institutions have played and will play significant role. Theyhave very rich network of outlets. Everyone can easily access the facilities of theseinstitutions. On 31st March, 2011, there were 31 State Co-operative Banks (StCBs)(with1028 branches), 371 District Central Co-operative Banks (DCCBs), 93413 PrimaryAgricultural Credit Societies (PACSs) under short term rural co-operative structure inIndia.

Justification of the StudyThough the objective of co-operative credit institutions is different from that of

commercial banks, in the present environment only profit earning organization cansurvive for long time and maintain the quality. The level of profitability determines theoperational efficiency and strength of the organization. Profitability ratios are consideredas reliable variables for judging the efficiency and effectiveness of an organisation. Mostof the stakeholders often consider only profits and profitability ratios to meet out theirrequirements without spending time and money on other fundamental variables. Thatis why the present study is conducted to highlight the profitability position of all apexbanks taking together. Further, extent of profitability of these banks can be consideredas an index of the performance of DCCBs and PACSs.

Contours of Previous StudiesState Co-operative Banks (StCBs) have not been studied much so far. There is

limited work on the performance of StCBs. Singh (1978) evaluated the performance ofGujarat State Co-operative Land Development Bank. The performance of the bankunder study was evaluated in terms of loan disbursement ,district wise membership,share capital, total advances, total overdues, recovery performance, and loans advancedfor different purposes. Govindarajan and Robindero Singh (2006) analysed theprofitability of the Tamilnadu State Apex Co-operative Bank Ltd. (TNSC Bank Ltd.). Hefound that the bank had not properly maintained the balance between procurement offunds and utilization of available resources. He also concluded that the profitabilityposition of the TNSCB Ltd. was poor and declining year by year. Ganesan (2006)examined the operational efficiency of 30 state co-operative banks in India for the year2002-03 and 2003-04 by using Data Envelopment Analysis technique.He observed that5 SCBs (Gujarat, Himachal Pradesh, Maharashtra, Tamil Nadu and West Bengal) werefound to be efficiency during 2002-03 and 6 StCBs (Andhra Pradesh, Delhi, Gujarat,


67

Himachal Pradesh, Maharashtra and West Bengal) were found to be efficient during theyear 2003-04. Pandey (2009) highlighted the role of Nagaland State Co-operative BankLtd. (NSCB). He found that NSCB was playing an important role in the overalldevelopment of the state with more emphasis on rural areas by providing credit facilitiesto various agencies. Hooda (2011) compared the performance of State Co-operativeBanks and Scheduled Commercial Banks in India by using three financial ratios viz.cash-deposit ratio, investment-deposit ratio and credit-deposit ratio. Hence, it may besaid that there is very little research work on StCBs. The present study is an attempt tobridge this gap.

Objectives of the StudyThe main aim of this attempt is to study profitability performance of all state co-

operative banks in India. For this purpose, the specific objectives are as follows:

• To highlight the amount of profits and to see the trend in profits of StCBs duringthe reference period

• To evaluate the profitability of StCBs with different financial ratios.

Data Base and MethodologyIn this study, all 31 StCBs have been considered. The study is purely based on

secondary data. The required data was collected form NAFSCOB publication. Apartfrom this publication, some other publications like RBI reports and various journalslike Management Accountant, The Co-operator, Indian Co-operative Review, IndianJournal of Finance were also considered. A period of ten years (from 2002 to 2011) istaken as reference time-period. The following ratios have been calculated and taken forevaluation of profitability of banks under study:

• Profit - Share Capital Ratio• Profit - Working Capital Ratio• Cost of Management(CoM ) - Profit Ratio• Cost of Management(CoM) - Working Capital Ratio

Hypotheses

To check and assess the profits in depth, two hypotheses were framed and tested.These are as:

1. H0 : There is no significant relationship between profits and share capital of StCBs.

2. H0 : There is no significant relationship between profits and total business(Deposits+Loans) of StCBs


68

To analyse the data, mean, standard deviation, minimum, maximum and KarlPearson's correlation method as statistical tools are applied. All financial data taken inthe study is the balance amount on 31st March for every year.

Limitation of the studyThere are many other factors which are not taken into consideration those affect

the profits and profitability of an organization i.e. qualitative aspects. This study is alsolimited to profitability i.e. liquidity performance should be considered to check out thepolicies regarding trade-off between liquidity and profitability of the banks under study.Poor database of StCBs is also main limitation.

Results and DiscussionAnalysis of Profits in Absolute Term

As per the set objective, the amount of profit of all StCBs for the years (2002-2011)is analysed. The profit is well accepted indicator for analysis the performance of an entity.Table 1 and figure 1 clear the amount and trend in profits during the reference period.

Table 1 : Profits of State Co-operative Banks : 2002-2011 (Rs. In Lakhs)

Years Amount Increase/Decrease Growth Rate(%) 2002 15124 - - 2003 41098 25974 171.74 2004 9451 -31647 -77.00 2005 9333 -118 -1.25 2006 17675 8342 89.38 2007 4637 -13038 -73.77 2008 319461 27309 588.94 2009 20692 -11254 -35.23 2010 -16567 -37259 -180.06 2011 -13139 3428 -20.69

Average 12025 Min -16567 -37259 -180.065 Max 41098 27309 588.9368

Source: NAFSCOB

Table 1 depicts that StCBs have earned profits from 2002 to 2009 i.e. eight years.But, in last two years - 2010 and 2011, they run on loss of Rs. 16567 lakhs and Rs. 13139lakhs respectively. The average amount of profits has been Rs. 12025 lakhs. The maximum


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amount of profits-Rs. 41098 lakhs was in 2003 and minimum ( loss of Rs. 16567 lakhs)in the year 2010. If we turn to see the increase and decrease amount from year to year,it is found that out of ten years, profits have been decreased for five years. The maximumincrease in profits in absolute term has been during the year 2007-08 and the maximumrate of growth- 588.94 percent was also in the same year. It means that during this year,StCBs had earned five times more profits as compared to that of the year 2007 (Rs. 4637lakhs). After one year in 2009-10, the profits have again gone down dramatically withthe speed of 180 percent.

Source: NAFSCOB

Further, figure 1 clears that after 2003, the profits of StCBs could not touch thatlevel of profits again during remaining eight years. Though in 2008, profits were goodbut after that year, it went down consistently. It is matter of concern for StCBs. Thereasons must be found out. Occurring of losses during 2010 and 2011 is more serioussignal for the stakeholders of these banks across the whole country.

Profitability Analysis with RatiosThe sole evaluation on basis of absolute figure may not give the real position of the

given concern. That is why the profitability of StCBs is also examined by analyzing fourfinancial ratios of profitability viz. Profits-Share Capital Ratio, Profits-Working CapitalRatio, Cost of Management-Profits Ratio and Cost of Management-Working CapitalRatio. Profit-share capital ratio is always treated as return on capital and profit-workingcapital is considered here as return on assets. Cost of management in proportion toprofits shows the operating expenses in relation to profit margin and cost of managementto working capital ratio is also helpful to determine the level of profitability of StCBs.Table 2 shows that return on capital, on an average, has been 12.33 percent during the


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reference period of time of the study with a variation of 15.71 percent. During twoyears- 2010 and 2011, it has been negative due to losses in these years. But, on average,it may be concluded that return on capital (12.33 percent) is showing good level ofprofitability.

Table 2: Profitability Ratios of State Co-operative Banks : 2002-2011(Figures in percent)

Years P-SC Ratio P-WC Ratio C-P Ratio C-WC Ratio 2002 17.86 0.27 715.49 1.91 2003 45.81 0.68 305.60 2.07 2004 10.22 0.14 1224.52 1.77 2005 9.41 0.13 1184.13 1.56 2006 16.15 0.24 515.98 1.22 2007 3.23 0.06 1454.15 0.81 2008 22.24 0.36 124.56 0.95 2009 14.88 0.20 633.85 1.24 2010 -10.17 -0.14 -596.88 0.81 2011 -6.36 -0.10 -910.57 0.92

Average 12.33 0.18 465.08 1.33 S.D. 15.71 0.23 769.37 0.47 Min -10.17 -0.14 -910.57 0.81 Max 45.81 0.68 1454.15 2.07

Source: Compiled from NAFSCOB publications, P-SC Ratio denotes Profits-Share Capital Ratio,P-WC Ratio denotes Profits-Working Capital Ratio, C-P Ratio denotes Cost of Management-Profits Ratio,

C-WC Ratio denotes Cost of Management-Working Capital Ratio

But, the value of profit-working capital ratio were always less than 1 percent i.e.profits of StCBs in proportion to working capital during the study period has been verylow. Further, very interesting finding is that cost of management(CoM) has always beenvery high in proportion profits. On an average, it was five times more than the amountof profits. Additionally, CoM - working capital ratio shows that this proportion has, onan average, been 1.33 percent. It also depicts that it has been around 2 percent and lessthan 2 during 2002-2011. So, it can be said that profitability of all StCBs in proportionto capital is found impressive and good but in relation to working capital i.e. assets hasbeen low. Moreover, high level of CoM is an alarming concern for these banks also forpolicymakers and other stakeholder. Now, the following section deals with testing ofhypotheses.


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Testing of Hypotheses

To test the framed hypotheses, Karl Pearson method of correlation has been usedand the co-efficients and their significance calculated by using SPSS software are asfollows:

H0 : There is no significant relationship between profits and share capital of StCBs.

Simply, figure 2 is showing there is not positive relationship between the profitsand share capital of StCBs during 2002-2011. Further, if co-efficient correlation is seen,the result is same.

Table 3: Correlation between Profits and Share Capital

Profits SC Profits Pearson

Correlation 1 -.429

Sig. (2-tailed) .249 N 9 9

Table 3 depicts that there is negative association(-0.429) between profits and sharecapital of StCBs. Hence, first hypothesis is accepted here. In fact, negative relationshipis there between these two variables but it is not significant statistically.

H0 : There is no significant relationship between profits and total business ofStCBs.

Figure 3 exhibits that total business of StCBs have been increasing consistentlybut profits are showing fluctuating trends during 2002-2011. Statistically, informationabout the association between these two is being shown in table 4.


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Table 4: Correlation between Profits and Business

Profits Business Profits Pearson Correlation 1 -.458

Sig. (2-tailed) .215 N 9 9

Again, there is negative correlation (-0.458) between profits and total businessdone by all StCBs. Hence, there is no significant association statistically between profitsand total business. So, the second hypothesis is also accepted.

Conclusion and RecommendationsWhile co-operative banks compare well with commercial banks, there is much

scope for improvement. In order to maintain higher economic growth, it is essential tobring the excluded people into the basket of the formal financial system. Co-operativebanks have always shown their full existence in this regard i.e. in financial inclusion.But, their financial health, in fact operational efficiency has equally been big concern forRBI as well as NABARD. The time has come that the co-operative banks will have towork more efficiently in the present competitive banking environment. RBI now hasstarted to see all co-operative banks equal as commercial banks for almost in all concern.No doubt, the role of StCBs is very important to take-up, innovate and implement thenew and also the desired initiatives such new attractive schemes for unbanked peopleespecially in rural area, setting-up financial literacy cells at relevant places to aware thesociety about the benefits of services of co-operative banks, adoption and up gradationof technology. Co-operative banks have more business opportunities than their counterparts i.e. commercial banks especially in rural areas. The only need is commitment andcompetitiveness of policymakers and human resources of these banks. The supportand financial assistance from government is equally needful. Hence, co-operative banks


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must be considered significant and essential for the development of overall bankingsystem in particular and economy in general in the true sense. Further, the liability ofStCBs is more in taking above mentioned initiatives. With the active participation ofDCCBs and PACSs, StCBs can greatly strength and spread the banking and otherfinancial services in their respective states in effective manner. This study finds thatprofits of StCBs are going down. Though the average level of profitability in relationshare capital is quite good but the amount of cost of management in proportion toprofits is matter of concern. Both hypotheses has cleared that there is no significantrelation between the growth in amount of profits and share capital and also workingcapital. Hence, without compromising and disturbing the compensation amount ofemployees, StCBs should take measures to reduce the cost of management so that theextent of profits may be increased. Higher profits earn the confidence and attention ofcustomers. Additionally, StCBs should highlight those financial and also non-financialfacts on their websites or through any other types of advertisement on which they areforward and ahead. It will create good image in the eyes of customers. Co-operativetraining and education will also play meaningful role towards capacity building andprofessionalism of all stakeholders of cooperative credit institutions in India (The Editor,The Co-operator).

Scope for Future StudiesAnalysis of individual StCB and region-wise analysis of profits of StCBs can be

done. Trade-off between liquidity and profitability of StCBs and other factors determiningprofitability remain to be studied and examined in deep.

References1. Ahmed, Rais (2009), "Cooperative Management and Development Text & Cases",

Mittal Publications, New Delhi, Vol. I, II, III.

2. Balan, T.S. (1999), "Cooperation- Principles and Practice", United Publishers,Kanpur.

3. Das, Bishnu Mohan (2008), "Financial Inclusion through co-operative Banking : AVital Tool for Rural Development", Economic Affairs, Vol. 3, Qr. 2, pp. 113-120.

4. Ganesan, N. (2006), "A study on the Performance Analysis of the State Co-operativeBanks in India", Prajnan, Vol. 34, No. 4, pp. 311-321.

5. Goel, Promila (1984), "The Menacing Problems of Overdues of Credit Co-operatives: An Indepth study of Rajasthan", Indian Co-operative Review, Vol. 21, No. 3, pp.-

6. Govidrarajan, K. and Robindro, Singh N. (2006), "Analysis of the Profitability of


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The Tamil Nadu State Apex Co-operative Bank Ltd.", Indian Co-operative Review,Vol. 43, No. 4, pp. 676-685.

7. Hooda, Vijay(2011), "State Co-operative Banks and Scheduled Commercial Banks:A Comparison of Three Financial Ratios", International Journal of Computing andBusiness Research, Vol.2, Issue 2

8. Kothari, C.R. (2004), "Research Methodology - Methods and Techniques", NewAge International (P) Limited, Publishers, New Delhi.

9. Lakeshmanan, C. & Gowthaman, C. (2008) "Performance of UCB in Namakkal(UBCO)," Indian Co-operative Review, Vol. 46, No.1, pp. 44-52.

10. Madan, G.R. (2007), "Co-operative Movement in India", Mittal Publications, NewDelhi

11. Pandey, Sanjay Kumar (2009), "A Small Effort of Nagaland State Co-operativeBank Ltd. (NSCB) for Rural Development of Nagaland", IASSI Quarterly, SpecialIssue, pp. 27-41.

12. Rajkumar, S. (2008), "Co-operative Marketing of Cane-Furniture" pp. 66-70.

13. Satyasi and Badatyer (2000), "Restructuring Rural Credit Cooperative Institutions",Economic & Political Weekly, Vol. 35, No. 5, pp. 307-330.

14. Singh, Amarjeet & Singh, Parminder (2010), "Technical and Scale Efficiency inDCCBs of Punjab- A Non Parametric Analysis", ICR, Vol. 47, No. 3, pp. 181-201

15. Singh, R.B. (1978), "Performance of Gujarat State Co-operative Land DevelopmentBank", Indian Co-operative Review, Vol. XV, No. 3, pp. 333-353.

16. www.nafscob.org.


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Abstract

The Indian economy is creeping very slowly towards many troubles of economyin nature. It is due to the overheating policies and strategies without having anyintangibility towards real economic principles. Among various macroeconomicparameters the real interest is one, which a cause for even the dancing of inflation andexchange rate in recent past. The real interest rate in India is continues to be verynegative-in fact India's real interest rate (as computed by IMF) remains one of thelowest among emerging markets. This is intensified by the hugely negative fiscal balanceand inefficient policies of controlling the financial terrorism that is evident everywherein the economy. The present paper is a modest attempt to discuss on the concept,features. Determinants, relevance of positveness, trends and policy issues of real interestrate in India in an analytical way.

IntroductionInterest is essentially the price people pay to have resources now rather than later

and, interest is conventionally expressed as a percentage for one year. The interest ratethus expressed or reported is nominal interest rate, since it is without a correction forthe effects of inflation on the resources available for money, between now and later. Realinterest rate is the interest rate corrected for the effects of inflation. There is also a needto recognize the expected real rate of return which is the difference between nominalrate of interest and expected inflation.

The FeaturesThere are certain features of real interest rate, they are:

1. Real interest rate is not an observed phenomenon; it is computed by deductinginflation rate from the nominal interest rate.

2. An ex-post high real interest rate may reveal the difference between the expectedand actual inflation rate, rather than the factors which determine the real rate.

* Associate Professor and Chairman, BOS, Department of Commerce. Telangana University, Nizamabad,E-mail ID: [email protected]

** Assistant Professor, School of Management, University of Hyderabad, Hyderabad.

Whither Real Interest Rates in India?

- Dr. T. Satyanarayana Chary*- Dr. K. Rumulu**


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3. The real interest rate refers to return on investment net of various kinds of riskpremia.

4. Taxation of interest income creates a wedge between the interest earned and thepost-tax rate of return on investment. Since tax rates generally apply to nominalinterest income, the post-tax real rate of return is lower than that applied to the

Determinants of the Real Interest RateThe real interest rate can be determined on the basis of benchmark rate which is

a risk neutral rate. Government security rates are ideal candidates for the reference rate.An increase in the real interest rate in the government security market therefore transmitsto other segments of financial market. In the context of the economy as a whole, or inmacroeconomic policy, the sustainability of the real interest rate is critical. Ideally, theexpected real interest rate in the economy should reflect the potential rate of return onthe capital stock. If an economy is operating on the maximum attainable efficiency, therate of return on capital or the growth rate of real GDP should provide an indicator ofthe real interest rate in the economy.

In the case of advanced economies, which are more or less operating on the bestattainable efficiency level, the real growth rate sets the limit for the real interest rate inthe economy. It is interesting, therefore, to observe that the typical real interest rate ongovernment paper in some of the advanced economies vary from 3 to 4 per cent, whichis close to their growth rate of GDP. In the case of developing economies, the typical realinterest rates are higher than those of the developed economies which is perhaps due tothe higher rates of growth in these economies. It is possible that for a fast growing andhigh performing economy, the real rate of interest may in fact stay higher than the realgrowth rate, if the potential growth rate is higher than the actual growth rate and ifexpectation regarding the future growth rate is strong. However, a persistent high realinterest rate which exceeds the real growth rate is not sustainable in the long run as thisimplies that the service cost of the capital stock exceeds the rate of return from capital.

The real interest rate is significantly influenced by the efficiency of the financialsystem. A well functioning financial market helps reduce the cost of financialintermediation, and thereby brings down the spread between the interest rate on savingsand that charged on investment. Not only that, even, an unsustainable fiscal policy,with a high burden of public debt, provides a downward stickiness to the real interestrate.

In an open economy, with a high degree of capital mobility, the domestic realinterest rate is considerably influenced by the world interest rate. A fully convertiblecapital account without restrictions on cross-border capital movement implies full


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convergence of domestic interest rate with the world interest rate and any differencebetween the domestic and world interest rate is then attributed to the expected exchangerate changes. Similarly, a certain degree of imperfection in capital mobility can becomea desirable policy option for exercising control over the domestic interest rate and toenhance its effectiveness in the economy, but the desirability will depend on the efficiencyof policy intervention.

Review of LiteratureMany authors have empirically tested the trend and they dynamics of real interest

rate in global countries and India. Besides, many other studies also made by theresearchers on the impact of real interest rate on fiscal, and monetary policy and as wellthe other macro parameters of the economy. Some of the important studies are reviewedand discussed in the following lines.

Evans (1985), Tanzi (1985), Dalamagas (1987), Ahmad (1994), Kulkarni andErickson (1996) found no positive link between interest rate and deficit, while Cebula(1990), Correia and

Stemitsiotis (1995), Ostrosky (1979) did find evidence for the link between deficitand interest rates.

Evans (1985) found that Deficit does not have an impact on the interest rate inthe context of theUS for the period 1858-1950.

Tanzi (1985) stated that the snsitivity of the interest rate to fiscal deficit has decreasedin the recent years of the study (1980-84) in the context of the US. The entire timeperiod of the study was 1960-84.

Gupta (1992) RET is rejected for Sri Lanka, India, Indonesia, Philippines among10 Asian countries for the period of 1960-85.

Ahmad (1994) found that No variable except inflation is significant. Monetaryand fiscal policy variables do not have any impact in the context of Pakistan for theperiod 1970-91.

Balkan and Ero l (1995) found a significant and positive impact of governmentdeficit on the real interest rate in the context of the UK for the period 1960-84.

Kulkarni and Erickson (1996) identified that the deficit does not affect the interestrate in the context of India for the period of 1960-88.

Elmendorf and Mankiw (1998) found the Fiscal deficits (ceteris paribus) reducenational savings and increase aggregate demand. This creates an excess supply ofgovernment debt, leading to higher real interest rates.


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Objective and MethodologyThe main objective of the paper is to find out the relevance of positive real

interest rate, reasons for pressure, trends and policy issues of real interest rate in India.The paper is run on a descriptive and analytical method to the possible extent with thehelp of relevant data.

The Relevance of Positive Real Interest RateThe policy relevance of a positive real interest rate stems from several aspects,

although there is no conclusive evidence that a positive real interest rate is essential forpromoting economic growth in developing countries.

First, a positive real interest rate provides incentive for savings and allocatesinvestment more efficiently. This has been the main driving force behind the motivationof financial liberalisation in many economies.

Secondly, a positive real interest rate across a range of financial instruments ensuresgreater degree of integration of financial markets and improves the elasticity ofsubstitution among assets.

Trends in the Real Interest Rates in IndiaIn the Indian context, movements in the real interest rates were not a major concern

as long as the interest rates were highly regulated and the resource allocation was largelydetermined by plan framework. With the economic reforms, especially in the monetaryand financial sector which encompassed deregulation of interest rates, there has naturallybeen heightened concern about interest rate movements.

The real interest rates based on the actual inflation rate computed from theConsumer Price Index (average of weeks) show that, during 1993-94 to 2007-08 thereal interest rate is averagely 6.3794 per cent. Then after, declined to a lower level i.e.,3.901 per cent in 2008-09, 0.868 in 2009-10, and -3.739 per cent in 2010-11. In thecontext of the Indian economy the evidence points to backward-looking expectationbehaviour among investors given the wide divergence between the decline in inflationrate and the real interest rate. In the banking sector the movement of real deposit andlending rates are, more or less in tune with the developments in the government securitymarket. There could be a decline in the spread between the deposit and lending rate inthe recent years, partly due to the competitive rates offered by banks on deposits afterthe deregulation of deposit rates and the decline in the prime lending rate. Hence, inrecent past, besides the overheating the economy, raising international commodity pricesand industrial material prices as well as the flow of foreign capital into the Indian stock


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markets in terms of FIIs and Industry in terms of FDI made the prices of domesticmarkets to continuously rise and finally see the significant change in the inflation,however, in turn the impact on the total interest rate and finally on the real interest rate.

Reasons for Pressure on Real Interest RateWhat are the major factors that could have caused pressure on the real interest

rate in India? First, a significant part of the recent increase in real interest rate hasperhaps stemmed from a relatively high long-term inflation expectation. The currentlevel of expected inflation seems to be significantly higher than the actual inflation ratein the economy during the past two years. For example, the real interest rate hasstrengthened by about 3 percentage points in 1997-98 almost solely due to the declinein actual inflation rate. To the extent that the mind-set regarding the historical inflationrate in the Indian economy can be addressed, by credible policy measures, the nominalinterest rate should decline, in tune with the decline in current inflation rate, thusbringing down the pressure on real interest rate.

Secondly, the recent strengthening of real interest rate has a major of part of itsorigin in the government finances also. Although the ratio of the combined governmentsector fiscal deficit to GDP has by and large come down in recent years, the high absolutesize of fiscal deficit has exerted pressure on the real interest rate in the governmentsecurity market. With markets getting increasingly integrated, the demand pressure inthe government security market has repercussions on the entire gamut of interest ratesin the economy.

Thirdly, a major reason for the lack of sufficient downward flexibility in the reallending rates stems from the stickiness of spread in the banking sector. The spread inthe banking sector is influenced by two sets of factors, the efficiency factors and thepolicy factors. An increase in efficiency in financial intermediation is reflected on thelow operating cost and hence in a low spread maintained between the deposit andlending rate. Reducing the real interest rate would therefore require a significant reductionin the operating cost of the banking sector. There are, no doubt, a number of policyfactors also which influence interest income and the spread in banking sector but thestrongest influence on the spread comes from the operating cost.

Fourthly, there is an interest tax at the rate of 2 per cent which the banks load onto the borrowers in addition to the rate of interest charged. This goes on to add to thecost of borrowing, while increasing the difference between deposit rate and cost offunds to borrowers.

Fifthly, the high effective rate of return offered on some of the non-marketableborrowings of government such as small savings, relief bonds and provident funds has


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provided a competitive pressure on the real interest rate on bank deposits. The effectiverate of return on small savings after taking into account tax rebates on investment issubstantially higher than the nominal interest rate on bank deposits. Consequently, thereal effective interest rate on small savings is far higher than the real bank deposit rate.To the extent that investment in both these assets is mostly concentrated in the householdsector, and there is a significant substitution between them, a high post-tax real interestrate on small savings creates a competitive pressure on the real interest rate on bankdeposits.

Policy IssuesThis analysis of real interest rates points very clearly to certain major areas that

need attention. In fact, many of these areas have already been subjected to substantialpolicy initiatives though, more needs to be done.

(a) Government Borrowing Programme

A relatively large borrowing programme by government, as we had seen, is notconducive to moderation in real interest rates, especially in the light of persistingrevenue deficits. However, substantial progress is needed to eliminate revenuedeficit and achieve a much lower sustainable fiscal deficit.

(b) Bank Spreads

The spread between deposit rate and lending rate can be reduced through policymeasures, efficiency measures, and other measures. Firstly, the SLR stipulationshave been brought down to a statutory minimum of 25 per cent of NDTL. Somereductions in CRR have already taken place, and CRR needs to be reduced furthergradually to reach statutory minimum of 3 per cent, from the existing level.

Secondly, interest rate or other stipulations implying cross subsidy or inadequatescope for factoring in credit risk in spreads have a tendency to add to the interestcosts to many investors. With substantial deregulation, most, if not all of theinefficiencies on this account have been taken care of.

Thirdly, in regard to non-performing assets, substantial progress has been madein transparency, awareness and actual reduction.

Fourthly, the operating costs can be reduced only by a whole range of measuresthat would enhance competitive efficiency particularly of public sector banks whichaccount for a large part of financial intermediation. Here, the skills, the workingenvironment and incentive structures for officers and staff of banks are at least asimportant as the systems.


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Fifthly, as already mentioned, interest tax adds to the cost of borrowing apartfrom making intermediation through banking channels more expensive than otherchannels.

(c) Capital Inflows

During periods of large capital inflows, attempts are made by central bank tosterilize the accretion to reserves, and in the process there is a pressure on interestrates. In the recent past, there have been bouts of large capital inflows and excessivereliance on open market borrowings was avoided by using other measures alsosuch as reserve requirements. The policy in regard to appropriate level andcomposition of capital flows as also the measures to mitigate ill effects of largecapital flows that has served us well so far and hence needs to be pursued. To theextent that the economy can demonstrate higher absorption capacity of suchinflow, the need for sterilisation could be obviated by that extent, bringing downthe pressure on interest rate. This would, of course, need higher level of investmentin critical sectors. Needless to say, the interest rate policy must be coordinatedwith exchange rate policy as well as fiscal policy to avoid instability.

(d) Other Interest Rates

As we observed, there are instruments available for savers which give high yield,with some tax concessions also, such as relief bonds (10 per cent tax-free) andNational Savings Certificates (12 per cent tax-free). Mechanisms need to bemounted to ensure that these rates are reviewed and brought into alignment witha consistent interest rate policy framework.

(e) Market Reforms

Since April 1997, successive monetary policies have brought about a number ofstructural and institutional changes in the different segments of financial markets,especially in the government securities and money markets. The process of furtherenhancing the efficiency of financial markets will need to be continued. A trulyintegrated financial market is necessary for the emergence of a reference risk-freeinterest rate. For this, efficient price discovery in the primary market forgovernment securities is essential. An active secondary market is also necessary.An efficient payments and settlement system will go a long way in reducing theliquidity premium in this market. These measures will result in lower interestrates across markets.

(f) Inflationary Expectation and Price Stability

The most critical issue in regard to real interest rate is inflation or more importantly,


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the inflationary expectations. We should recognize that a cognizable inflationaryexpectation is built on a credible policy of price stability which in turn is possibleonly when there is a demonstrable national consensus on two issues, viz.,commitment to price stability and a reasonable fix on what constitutes price stability.

As demonstrated by various empirical studies and articulated by Dr. Rangarajan,former Governor of the Reserve Bank of India, the inflation rate threshold forIndia is at a level of about 6 per cent and a rate higher than this optimum level canhave adverse consequences for GDP growth. More recent internal studies in theReserve Bank confirm this view.

The next issue is, what should be the acceptable range, if it should not exceedabout six per cent and need not be as low as that in industrially advanced countries.Indeed, this is a very critical issue for the conduct of monetary policy. In fact, thelatest annual report of the RBI in the section on Assessment and Prospects states'History shows that successful monetary policy requires not only a high degree ofoperational freedom for the central banks but also a clear enunciation of thedominant objective of policy. In industrially advanced countries, inflation controlhas become the dominant if not the only objective of monetary policy. With thediscontinuation of the automatic monetization of Central Government deficit, amajor step towards functional autonomy has already been taken. However, therehas to be a general consensus on the need to keep the inflation rate around acertain level.

ConclusionReal interest rate has perhaps traveled in India from a relatively high long-term

inflation. The current level of expected inflation seems to be significantly higher thanthe actual inflation rate in the economy during the past two decades. The recentstrengthening of real interest rate has a major part of its origin in the government financesalso. An increase in efficiency in financial intermediation is reflected on the low operatingcost and hence in a low spread maintained between the deposit and lending rate. Reducingthe real interest rate would therefore require a significant reduction in the operatingcost of the banking sector. There are, no doubt, a number of policy factors also whichinfluence interest income and the spread in banking sector but the strongest influenceon the spread comes from the operating cost. Besides, the government of India shouldalso take initiatives through RBI properly and effectively in controlling the uncontrolledinflation, which is dancing over the surface of the economy and making the economyoften tremble itself in a gigantic manner.


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Table I : Trend of Nominal and Real Interest Rates and Inflation from 1992-2012

Year Nominal Interest Rates

Rate of inflation (Average Consumer Prices)

Real Interest Rates

1993-94 19 6.362 12.638 1994-95 15 10.212 4.788 1995-96 16.5 10.225 6.275 1996-97 14.5 8.949 5.551 1997-98 14 7.399 6.601 1998-99 14 13.24 0.76 1999-2000 12 4.658 7.342 2000-01 11.5 3.906 6.881 2001-02 11.5 3.671 7.829 2002-03 10.75 4.469 6.281 2003-04 10.25 3.713 6.537 2004-05 10.25 3.891 6.359 2005-06 10.25 3.97 6.28 2006-07 12.25 6.268 5.982 2007-08 12.25 6.373 5.877 2008-09 12.25 8.349 3.901 2009-10 11.75 10.882 0.868 2010-11 8.25 11.989 -3.739 2011-12 9.50 NA NA

Source: RBI and CMIE Reports from 1993-2011

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No. 134Washington, DC: International Monetary Fund. Perron, P. 1989. "The GreatCrash, the Oil Price Shock, and the Unit Root Hypothesis."Econometrica 57(6):1361-1401.

2. Pradhan, B.K., D.K. Ratha, and A. Sarma. 1990. "Complementarity between Publicand PrivateInvestment in India." Journal of Development Economics 33(1): 101-16.

3. Reserve Bank of India. 2002. Handbook of Statistics on the Indian Economy, 2001.Mumbai, India.


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4. Samuelson, P. A. 1947. Foundations of Economic Analysis. Cambridge, MA:Harvard University Press.

5. Sargent, T. J. 1969. "Commodity Price Expectations and The Interest Rate."Quarterly Journal of Economics 83(1): 127-40.

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7. Research, 2007; www.nber.org/papers/w13264.pdf. Romer, David H. AdvancedMacroeconomics. Third Edition. New York: McGraw-Hill, 2006.

8. Rose, Andrew K. "Is the Real Interest Rate Stable?" Journal of Finance, December1988, 43(5), pp. 1095-112. Said, Said E. and Dickey, David A. "Testing for UnitRoots in Autoregressive-Moving Average Models of Unknown Order." Biometrika,December 1984, 71(3), pp. 599-607.

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Abstract

The purpose of this paper is to investigate the effects of consumer service onconsumer loyalty in Indian grocery retail format. Based on a theoretical discussionregarding the relationship between product quality, a shopper shopping duration,store atmosphere, and consumer loyalty. An empirical research was conducted to testthe proposed relationships. Multiple-item indicators from previous studies were usedto measure the constructs. Results from the study provide empirical support, suggestingthat consumer service through three dimensions influences retail consumer loyalty.Research results suggest that consumer service in retail establishments can be viewedas a threshold factor in order to maintain satisfied and loyal customers. Additionally,managers should consider that loyalty depends on product quality, shoppers shoppingdurationand store attributes/ atmosphere. The present study provides usefulinformation on the relationship between consumer service and loyalty in Indian groceryretailing. The findings show that improvement in service quality can enhance customerloyalty. The service quality dimensions that play a significant role in this equationare reliability, empathy, and assurance. The results of this study confirm a significantrelationship between the consumer service elements within a retail establishment, thevalue given to those elements by consumers and loyalty. Given that consumers whoconsider themselves habitual clients of an establishment value positively the majorityof the establishment's aspects and services, it is reasonable to conclude that greaterknowledge of an establishment leads to an elevated positive effect on an establishment'sservice.

Keywords: Consumer service, Consumer loyalty, Product quality, Shoppersshopping duration, shopper attributes, and structural equation modelling.

IntroductionCustomer service is an extremely important part of maintaining on-going client

relationships that are key to continuing revenue. For this reason, many companies haveworked hard to increase their customer satisfaction levels. Consumer service is a

* Professor, Department of Management Studies, GRIET, Hyderabad. Email: [email protected]

A Study on the Role of Consumer Service onConsumer loyalty in Indian Grocery Retailing

- Dr. Y. Ramakrishna Prasad *


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significant factor towards causing loyal retail customers, and ultimately, successful retailbusinesses (Morey, 1980; Parasuraman et al., 1988). Defined as 'an activity thatsupplements or facilitates store sales' (Beisel, 1993, p. 501), consumer service includessuch items as free parking, gift wrapping, environment and delivery. Additionally, salespersonnel offer consumer service through their interactions and relationships withcustomers. Success of a service provider depends on the high quality relationship withcustomers (Panda, 2003) which determines customer satisfaction and loyalty (Jones,2002 as cited by Lymperopoulos et al., 2006). Research has shown repeatedly that servicequality influences organizational outcome such as performance superiority (Poretla &Thanassoulis, 2005), increasing sales profit (Levesque & Mc. Dougal, 1996; Kish, 2000;Duncan & Elliot, 2002) and market share (Fisher, 2001), improving customer relations,enhance corporate image and promote customer loyalty (Newman, 2001; Szymigin &Carrigan, 2001; Caruana, 2002; Ehigie, 2006). Furthermore, service quality and customersatisfaction were found to be related to customer loyalty through repurchase intentions(Levesque & Mc. Dougall, 1996; Newman, 2001; Caruana, 2002).Former studies inmarketing literature have seen a significantemphasis on both services marketing andrelationship marketing (Zeithaml, 2000; Sheth and Parvatiyar, 2002). In addition, servicemarketing scholars (Zeithaml et al., 1996) and relationship marketing scholars (Morganand Hunt, 1994) are interested in many of the same loyalty-related dependent variables.A number of researches have attempted to study the nature of service relationships,thereby merging two fields of study (Gwinner et al.,1998; Garbarino and Johnson, 1999;Pritchard et al., 1999; Gruen et al., 2000). From the relationship-marketing perspective,customer commitment is seen as being the key determinant of customer retention andloyalty (Morgan and Hunt, 1994; Gundlach et al., 1995). However, the services marketingliterature generally views service quality as the central construct that drives customerloyalty (Cronin and Taylor, 1992; Zeithaml et al., 1996; Zeithaml, 2000). Consequently,there is a significant opportunity to mergethese two fields of study to build a morecomprehensive understandingof organization-consumer relationships in serviceindustries (Gruen et al., 2000).

Parasuraman et al. (1985, 1988) have determined that customerexpectationsregarding the level of service offered are related to their level of satisfaction with theshopping experience. Previous researchers have investigated the relationships betweenstore type and service expectations (Dotson and Patton, 1992; Lee and Johnson, 1997),customer expectations and retail salesperson service (Stanforth and Lennon, 1997), andservice level and retail sales (Morey, 1980), while the relationship between consumerservice and loyalty in relation to retail formats had not beeninvestigated. Moreover,despite the dominant importance of services in many.


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Western economies, the emphasis of much of the research has tended to be onproducts as opposed to services (Mitchell, 1995), yet the latter may demand someadjustments in conceptualization and practice. For this reason, this paper focuses onretail services and consumer service. Hence, the main objective of this paper is to analysethe impact of consumer service on loyalty in retail establishments. Consequently, thepaper starts with a brief overview of nature of consumer service and loyalty accordingto literature on the matter. Then, the methodology used for the collection of the primarydata from consumers of retail Spanish establishments will be presented, followed bythe study's results. Finally, the conclusions and the main implications derived from thisstudy for the retail industry are considered, and directions for future research areproposed.

Objectives of the StudyThere is some lack of research specifically on examining the consumer service

quality impact on consumer loyalty in the Indian context. The retail formats are highlycompetitive with organized and unorganized sectors operating in each corner of thenation with more than six lakh outlets. In the context of such an intensifying competitionin the retail sector, customer retention is crucial to increased profitability and margins.Thus, empirical investigation aimed at measuring and validating specific consumer serviceelements which impacts on consumer loyalty is of utmost important for retail formatsto develop strategies to increase margins.

The primary purpose of this study is as follows

1. To study and identify different service quality elements in Indian grocery retailing

2. To study the impact of consumer service elements (i.e. product quality, shoppersshopping duration and store attributes/ atmosphere) on consumer loyalty in Indianretail formats.

Literature on Consumer ServiceConsumer service is a complex construct that is one of the most investigated

constructs in the marketing literature. It is generally viewed as an overall evaluation ofthe service provided (Taylor and Baker, 1994). It has also been viewed as amultidimensional construct formed from the consumer's evaluation of a number ofservice-related attributes (Parasuraman et al., 1988; Brady and Cronin, 2001a).Specifically, the service quality literature has seen a substantial debate on the nature anddimensionality of the construct (Parasuraman et al., 1991; Cronin and Taylor, 1992).The result of this debate was a general agreement that it is not necessary to measureconsumer expectations of service performance in measuring the service quality construct


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(Cronin and Taylor, 1994; Zeithaml et al., 1996). In addition, while service quality mayindeed have multiple dimensions, researchers were unable to resolve the questionssurrounding the dimensionality of the SERVQUAL scale (Cronin and Taylor, 1994;Parasuraman et al., 1994; Brady et al., 2002). Even though it is a widely used measure ofservice quality, one of the serious deficiencies of the SERVQUAL scale is that it capturesless than the full spectrum of issues and attributes on which consumers evaluate servicequality (Brady and Cronin, 2001b). In resolving this problem, an alternative position isthat there are three major dimensional antecedents of overall service quality (interactionquality, outcome quality and environment quality) and, in addition, each dimensionmay have a number of sub-dimensions. The nature of interaction quality is that whatgoes on in the service encounter between the customer and the service provider is a keydeterminant of the customer's evaluation of service quality (Brady and Cronin, 2001a).Environment quality relates to the extent to which the tangible features of the serviceplace play a formative role in consumer perceptions of overall service quality. Outcomequality is defined as the customer's evaluation of the result of the service act, includingthe punctuality of the service provider (Brady and Cronin, 2001a).

As a result of the review of literature of consumer service, one can posit that thethree dimensional antecedents of service quality (interaction quality, outcome qualityand environment quality) can be equated to variables associated with consumer service(interaction: Shopping duration; outcome: product quality; environment: storeatmosphere) (Zeithaml,1988; Lichtenstein and Burton, 1989; Katz et al., 1991; Kopalleand Lehmann, 1995; Finn and Louviere, 1996).

Product qualityThe empirical evidence suggests that consumers tend to use the product's attributes,

both intrinsic and extrinsic, in evaluating quality and service store (Zeithaml, 1988;Lichtenstein and Burton, 1989; Kopalle and Lehmann, 1995). Zeithaml (1988) definesperceived quality as the consumer's evaluation of a product's overall excellence. Thisevaluation is based on the information provided by the product's attributes (intrinsicand extrinsic). In addition, it is usual that the marketing literature establishes twostandards for product quality. The first is subjective, or quality as perceived by theconsumer. The second standard is real or objective quality, which can be quantified andverified from a technical point of view (Méndez et al., 2008). Diverse classifications ofthese attributes have been proposed in the literature. Cox (1967) and Dick et al. (1990)classify them as a function of their predictive value and confidence value. Lutz (1986)distinguishes between search and experience attributes according to the moment ofpurchase or consumption. Cox (1967) points out three intrinsicattributes: taste, textureor performance. Sawyer et al. (1979) emphasize the importance of extrinsic attributes -


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brand image and packaging. Extrinsic attributes take on greater importance forconsumers as indicators of quality.

In some studies, product quality has been found to have a positive direct effect onpurchase intentions (Carman, 1990; Boulding et al., 1993; Parasuraman et al., 1996;Sirohi and McLaughlin, 1998), whereas others report only an indirect effect throughsatisfaction (Cronin and Taylor, 1992; Sweeney et al., 1999). Moreover, there is noagreement as to whether there is an interaction effect between product quality andsatisfaction on purchase intentions. Some researchers have suggested that there is nointeraction effect (Bou-Llusar et al., 2001), whereas some have reported an interactioneffect between the two constructs on purchase intentions (Taylor and Baker, 1994).Thus, couching the concept of perceived or subjective quality in terms of the satisfactionof needs is considered a very important consumer service, hence the notion that productquality influences consumer service. Therefore, we have the following hypothesis:

H1: Product quality has a positive effect on consumer service.

Shoppers shopping durationShopping duration in a retail store is an experience that can lead to consumer

dissatisfaction (Katz et al., 1991), which in turn can result in negative effects on storepatronage behaviour (Hui et al., 1997). Previous studies on the effects of shoppingdurationhave tended to focus on consumer responses to delays under conditions ofactual or simulated waits (Chebat and Filiatrault, 1993; Chebat et al., 1993). Thus, thewait situation thereby simulates a critical phase of any purchase decision. A study byKumar et al. (1997) finds that wait length expectations influence satisfaction with thewaiting experience. It is also important to understand how consumer expectations of await influence their store patronage decisions. Taylor (1994) finds that greater consumersatisfaction is obtained with shorter shopping duration and periods. However, the timepressures that many people experience have a major effect on consumer behaviour;consumers perceive their discretionary time available as insufficient to accommodateall their desired uses of it. The results are continual choices among various activities andthe pursuit of efficiency-producing behaviours. Retail stores are devoting more resourcesto time-saving services, such as fast checkout (Lambert, 1979). Time saving for consumersis readily recognized and therefore likely to influence their retail choice (Bielen andDemoulin, 2007). Although understanding consumers' waiting for service (includingantecedents and consequences) is critical to retailers, previous models of store patronage(e.g. Baker et al., 2002) do not include this construct. Whereas researchers have longcalled for an investigation of how shopper shopping duration may moderate the influenceof situation factors on consumers' responses, very few studies have been conducted


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with this focus. This study fills a gap in the literature review by integrating the shoppershopping duration on consumer service in retail store. Based on the literature citedabove, we propose the following:

H2: Shopping durationhas a positive effect on consumer service.

Store AtmosphereStore atmosphere deals strictly with the physical store attributes. Research on

mall shopping has revealed that many consumers are prone to make a decision aboutwhere to shop on the basis of their attitude towards the shopping-centre environment(Gentry and Burns, 1977; Finn and Louviere, 1990, 1996). For example, recreationalshoppers who enjoy shopping as a leisure activity may shop impulsively and placehigher importance on store décor (Bellenger and Korgaonkar, 1980). Lambert (1979)similarly suggestsstores should provide rest areas and be at an appropriate storetemperature. Arousal induced by the store environment intensifies both pleasure anddispleasure, such that time and spending behaviour increase in pleasant environmentsand decrease in unpleasant environments (Donovan et al., 1994). According to inferencetheory, individuals assign meaning to and make inferences based on cues available tothem in a particular physical environment (Huber & McCann, 1982; Nisbett & Ross,1980). Such cues could range from music (Kellaris & Rice, 1993; Milliman, 1982, 1986;Yalch & Spangenberg, 1993), crowding (Bateson &Hui, 1992) and decor (Bitner, 1990)to number of salespeople (Baker et al., 1992), layout, lighting, noise and clear signage, toname a few. When combined, these constitute a 'servicescape' and have the capacity toinfluence customer responses and behaviors (Bitner, 1986, 1990, 1992).

Environmental psychologists have suggested that, even though they may perceivediscrete cues, people respond to a particular physical setting holistically (Bell, Fisher, &Loomis, 1978; Holahan, 1982). It is this cumulative effect of all the cues that comprisesa store's atmosphere. Since these tangible factors (music, layout, decor, etc.) arecontrollable by the retailer, their total impact on customer-patronage intentions is ofparamount importance to the successful management of customer retention. To fulfilcustomers' needs for memorable and enjoyable shopping experiences, retailers haveresorted to spectacular decor, interactive displays, multimedia stimulation and othercustomized details that evoke positive affect and make the shopping experience highlyentertaining. Such positive affective responses are essential to a retailer's success at brandbuilding and, ultimately, at retaining its customers (Kozinets et al., 2002).

Mehrabian and Russell (1974) suggest that behavioral responses to physicalsurroundings can take two different forms: approach or avoidance. In the context ofretailing, the former includes spending more time and money in the store, enjoying the


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shopping experience, more time spent browsing and so on (Donovan & Rossiter, 1982;Donovan, Rossiter, & Nesdale, 1994). Avoidance behaviors include not staying to shopat the store, expressing discomfort and displeasure or a shorter time spent in the store(Bitner, 1992). Obviously, retailers would like to encourage approach behaviors andminimize avoidance behaviors in customers. In order to accomplish these goals, retailersmust understand what leads to such approach or avoidance behaviors in the first place.Mehrabian, Russell and colleagues (Mehrabian & Russell, 1974; Russell & Lanius, 1984;Russell & Snodgrass, 1987) identify two key dimensions of emotional responses toenvironments - namely, pleasure and arousal. Their research indicates that positiveemotional responses can be produced by pleasant environments. Extending their findingsto retailing, we propose that overall store atmosphere will have a direct positive effecton store affect. Moreover, shoppers' evaluations of the store's atmosphere affect theirperceptions of value and their store patronage intentions (Grewal et al., 2003). Thus, theconceptual and empirical perspectives from the literature about store atmosphere ledto the following hypothesis:

H3: Positive store atmosphere has a positive effect on consumer service.

Consumer LoyaltyCustomer loyalty has been universally recognized as a valuable asset in competitive

markets (Srivastava et al., 1998). Some studies argue that repeat purchase alone is toosimplistic and does not capture the multidimensionality of the construct of loyalty (Kumarand Shah, 2004). In this sense, habitual buying as well as purchases induced primarilyby promotional incentives have been termed as false or spurious loyalty (Dowling andUncles, 1997). Customer loyalty is still a major focus for marketing managers in allservice industries, including retail services (Mauri, 2003). For the most part, practitionershave focused their efforts on the service quality construct in the view that service qualityimprovement efforts were keys to the improvement in customer loyalty rates (Zeithaml,2000). Despite this conventional wisdom, some question the extent to which servicequality improvement programmes effectively deliver the promise of customer loyaltyenhancement (Jones and Sasser, 1995; Rigby et al., 2002).

The enhancement of customer loyalty is a significant research focus among service-marketing scholars (Zeithaml, 2000). Loyalty can be viewed as a multifaceted behaviouralconstruct that includes customer retention, positive word-of-mouth communicationsand willingness to pay more for the service (Zeithaml et al., 1996). Customer retentionis perhaps the most investigated consequence of customer service quality evaluations(Zeithaml,2000). Many researchers have identified a positive link between service qualityand customer retention (Rust et al., 1995; Zeithaml et al., 1996; Bansal and Taylor, 1999;


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Roos, 1999; Brady et al., 2002; Fullerton and Taylor, 2002). Others have found thatservice quality is positively related to customer willingness to act as a reference customer(Zeithaml et al., 1996; Anderson, 1998; Fullerton and Taylor, 2002). Some have evensuggested that there may be a positive link between service quality and consumerwillingness to accept price increases (Anderson, 1996; Zeithaml et al., 1996; Fullertonand Taylor, 2002). Under service quality perspective of retail relationships, service qualityis the prime driver of consumer loyalty and loyalty-related behaviours. This is not to saythat other variables do not play a role, but service quality makes the most potent impacton customer loyalty. The conceptual foundation for this view lies in the assumption thatservice quality is an evaluative, attitude-like construct that drives behavioural intention(Zeithaml et al., 1988; Cronin and Taylor, 1992).

While products have been the focus of attention in research aimed at defining andmeasuring customer loyalty, the construct is also of importance for services (Dick andBasu, 1994). Indeed, Jacoby and Chestnut (1978), in their review of the literature, report53 different definitions of the construct. Even though the typically loyal customer canbe described as the one who repeats purchases, brand loyalty cannot always be measuredby purchase behaviour, as the decision to buy a brand can be influenced by othermoderating variables such as social norms (Ajzen and Fishbein, 1980) and situationalfactors (Smith and Swinyard, 1983). Similarly, a psychological dimension expressed inthe form of an attitude orpreference must also be included within the concept. In sodoing, this yields a more comprehensive view of loyalty. Indeed, Dick and Basu (1994),in their conceptual framework of customer loyalty, propose that loyalty is greatly affectedby the relative strength of the relationship between attitude and behaviour. Accordingto Sheth and Park (1974), it is preferable to analyse purchase behaviour that is repeatedin contexts where the customer experiences competitive pressures aimed at changingbuying habits. From this perspective, loyalty truly exists when the customer resistspressures to switch to another brand (Newman and Werbel, 1973; Woodside et al.,1980).

Engel and Blackwell (1982) defined true loyalty as the preferential attitudinal andbehavioural response towards one or more brands in a product category expressed overa period of time by a consumer. In addition, customer loyalty has been defined as abehavioural measure. These measures include proportion of purchase (Cunningham,1966), probability of purchase (Farley, 1964; Massey et al., 1970), probability of productrepurchase (Lipstein, 1959; Kuehn, 1962), purchase frequency (Brody and Cunningham,1968), repeat purchase behaviour (Brown, 1952), purchase sequence (Kahn et al., 1986)and multiple aspects of purchase behaviour (Ehrenberg, 1988; DuWors and Haines,1990). In the retailing context, the following measures of customer behaviour arecommonly applied by practitioners - share of purchase that measures the relative share


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of a customer's purchase as compared with the total number of purchases and share ofvisits that measure the number of visits to the store as compared with the total numberof visits (Magi, 2003).

Retail companies seek to maximize relationships with customers. The managerialvalue of customer relationship management (CRM) is in customer loyalty andrelationship building. Some researchers have postulated the causal relationship thatCRM implementation induces customer satisfaction. In this sense, Mithas et al. (2005)empirically tested the effect of CRM applications on customer knowledge and customersatisfaction. Customers are satisfied because CRM helps firms customize their offeringsfor each customer. Therefore, consumer service leads to customer loyalty, and thefollowing hypothesis is proposed:

H4: Consumer service has a positive effect on customer loyalty.

Accordingly, a structural model was developed to explain the relationship betweenconsumer service and customer loyalty. Figure 1 illustrates the proposed study model.

Consumer Service Quality

Consumer Loyalty

Product Quality

Shoppers shopping duration

Store attributes / Atmosphere

H1

H2

H3

H4

Figure: 1 - Proposed conceptual model to explain the relationship between the consumerservice quality and consumer loyalty

MethodologyGiven the limited amount of information available on consumer service and loyalty

in grocery retailing, this study has been conducted in two stages. First, an exploratorystudy was carried out to identify the consumer service factors, which affecting consumerloyalty. The extensive literature review was undertaken to identify service customervariables in retailing. The exploratory interview with store managers and extensive


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discussion with academicians helped us to identify the prominent factors such as productquality, shoppers shopping duration and store attributes/atmosphere to be affectingconsumer loyalty. In the Second stage, a non-experimental survey method (mallintercept) was adopted for collecting data by administering structured questionnaire tofive hundred and eight respondents from thirty five grocery stores (both organized &unorganized) in the twin cities of Hyderabad and Secunderabad. To ensure randomnessin the sampling, the survey team approached every third adult shopper leaving theretail store. The design of the questionnaire was based primarily on multiple itemmeasurement scales taken from previous research. Statements were adapted to suit thespecific characteristic of a retailing study. It included questions regarding differentconsumer service, loyalty, length of time as a client at an establishment, purchasefrequency, purchase amounts and socio-demographic variables. The statements werecomposed of a series of aspects referring to possible consumer service perceived by thecustomers as a result of the maintenance of relationship with their habitual establishment.These items were measured on a five-point Likert scale ranging from strongly disagreesto strongly agree. To measure the internal consistency of a constructed scale, typicallythe Cronbach's alpha is calculated, which indicates how reliable the combinations ofitems are as a proxy for the conceptual variable under homogeneous weighting.

Table 1 : Reliable Integrative Model

Factors Mean SD n of items

PQ SSD S A Loy alty

Cronbach’s alpha

Composite reliability

AVE

PQ 2.78 2.03 3 1.000 - 0.876 0.856 0.665 SSD 3.83 1.29 3 0.562 1.000 0.897 0.863 0.678 SA 3.32 1.69 3 0.687 0.653 1.00 0.899 0.831 0.623 LO 3.72 1.47 2 0.579 0.613 0.552 1.00 0.912 0.833 0.714 Source: Primary Data, SD -standard deviation; PQ - product quality; SST- Shoppers shopping duration SA-

store attributes / atmosphere; LO - loyalty; AVE - average variance extracted

Product quality: variety, acceptable prices and quality. Cronbach's alpha for thescale was 0.876. Shoppers shopping duration: comfort in the store, appearance anddecor of the store, and shopper waiting time for service. Cronbach's alpha for the scalewas 0.897.Store attributes/ atmospheric: customer density, playing music /environment,and sales force quality. Cronbach's alpha for the scale was 0.899. With regard to loyaltywith the establishment, a multiple-item scale was developed based on marketing andretail literature (Jacoby and Kyner, 1973; Fornell, 1992; Dick and Basu, 1994; Beatty etal., 1996; Fornell et al., 1996). Therefore, consumers' loyalty was assessed by askingrespondents if they intended to recommend this store to relatives and to choose thesame store in the future (on a five-point semantic scale ranging from certainly not to


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certainly). These variables represent the behavioural-intention dimension of loyalty.Cronbach's alpha for this scale was 0.912.

Statistical Results and DiscussionsThis section will provide results of the analysis on the variables described. This

will be followed by subsequent analyses of the relationship between dimensions ofservice customer and loyalty. In addition to descriptive statistics, multivariate analysistechniques were used in the data with the objective of contrasting the relationshipproposed and to verify the possible results, in agreement with the hypothesizedrelationships. Anstructural equation model is proposed to analyse the impact ofconsumer service antecedents on loyalty. Before going deeper into the relationshipsmentioned above, the fit of the scales in relation to the data was analysed. The reliabilityof the measures was examined through a confirmatory factor analysis and the calculationof Cronbach's alpha coefficients. According to Anderson and Gerbing (1988),confirmatory measurement models should be evaluated and re-specified beforemeasurement and structural equation models are examined simultaneously. Aconfirmatory factor analysis was used to test the reliability and validity of the dimensionsidentified. After that, the confirmatory factor analysis provided an acceptable fit to thedata.

Using the criterion set forth by Hair et al. (1999), an examination was carried outto establish whether the average variance extracted and the composite reliability for themeasures were greater than 0.5 and 0.7 respectively. The average variance extracted andcomposite reliabilities in all cases exceed the respective threshold values (Bagozzi andYi, 1988), which provide evidence of convergent validity (Anderson and Gerbing, 1988).Similarly, evidence of discriminant validity was found through Fornell and Larcker's(1981) test, which recommends comparing the average variance extracted with thevariance shared between the construct and other constructs in the model. This wasconfirmed for all pairs of constructs. In addition, as mentioned previously, the surveyinstrument was pre-tested to improve content validity. To sum up, the data showedsatisfactory empirical support for our conceptualization of the constructs of dimensionsof consumer service and loyalty in the reliable integrative model table.

Given the nature of the hypothesized relationships, the proposed relationshipswere tested simultaneously using structural equation modelling (SEM). This techniqueallows the existing causal relationships between consumer service (Product quality,shoppers shopping duration and store atmosphere) and loyalty to be assessed. Themeasurement scales used for each concept are the result of the evaluation processdescribed. In particular, the model paths were estimated using EQS 6.1 (Multivariate


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Software, Inc., 15720 Ventura Blvd., Encino, CA, USA) following the recommendationsof Gerbing and Anderson (1988), Bentler (1995) and Byrne (1994). The standardizedpath coefficients of the structural model as estimated by EQS are given in Fig. 2.

There are several tests to ascertain whether an SEM model fits the observed data.The chi-square statistic provides a measurement of how well the model fits the data.Therefore, chi-square was used to test the relationship proposed. In addition to the chi-square test and its associated P-values, the comparative fit index (CFI), the normed fitindex (NFI), the non-NFI (NNFI) and the root mean square residuals (RMRs) are usedas tests of model fit. The overall fit of the measurement model are chi-square = 1923.3(P = 0.00),CFI = 0.958, NFI = 0.943, NNFI = 0.955 and RMR = 0.051. Bentler (1995)indicates that CFI, NFI and NNFI values of above 0.9 suggest adequate fit. In addition,RMRs were lower than 0.08 (Hair et al., 1999). As illustrated in Figure 2, the globalgoodnessof- fit statistics indicate that the structural model represents the data structurewell. Standardized parameter estimates for themodel is shown in Figure 2.

Consumer Service Quality

Consumer Loyalty

Product Quality

Shoppers shopping duration

Store attributes / Atmosphere

0.489

0.659

Figure: 2 - The structural model of the consumer service and consumer loyalty

Thus, the results allow testing the hypotheses of the study formulated. Figure 2reports the factor loadings of the constructs. H1, H2 and H3 state that product quality,shoppers shopping duration, and store atmosphere will be positive indicators of theconsumer service in retail sector. The results provide support for these hypotheses inthat each is estimated to be significantly associated with consumer service. Therefore,this supports the hypotheses that three factors are positively linked to the consumerservice because the estimatedparameters between constructs are positive and significant.


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Therefore, H1, H2 and H3 are fully supported. H4 is related to the relationship betweenthe consumer service and loyalty. This hypothesis states that higher levels of the consumerservice would lead to better consumer loyalty. The SEM lends support to the claim thatconsumer service and loyalty are both positive and significant (see Fig. 2). Thus, theresult supports the acceptance of H4. To summarize,all the hypothesized relationshipswere supported.

ConclusionsCompanies need to investigate what consumer services are more important for

increasing consumer loyalty in the context of their business. Most companies are verysuccessful out their resources through rewards programmes for all customers for theirpresent and past purchases irrespective of their attitude or purchase pattern. Loyaltyprogrammes are designed to award the maximum reward to customers who are thehighest spenders. Chances are a good majority of the top spenders may comprisecustomers that genuinely appreciate the company's products and/or services, and wouldhave continued to spend irrespective of the rewards (Kumar and Shah, 2004). Buildingand sustaining loyalty simultaneously seem to be the primary focus of 21st-centuryloyalty programmes. This study has reviewed the criticality of linking consumer serviceto loyalty (Reinartz and Kumar, 2002, 2003) and has developed a model based on impactof customer service on loyalty. The positive association between consumer service andloyalty has found considerable conceptual support in marketing literature. It isworthwhile to study empirically the nature of the consumer service-loyalty relationshipin retail supermarkets. This work has attempted to clarify the consumer service-loyaltylink. The results of this study confirm a significant relationship between the consumerservice elements within an establishment, the value given to those elements by consumersand loyalty. Given that consumers who consider themselves habitual clients of anestablishment value positively the majority of the establishment's aspects and services,it is reasonable to conclude that greater knowledge of an establishment leads to anelevated positive effect on an establishment's service. In interpreting the results of thisstudy, a number of limitations must be considered. From a theoretical point of view, theframework of this research is restricted to its own objectives. This study has ponderedthe relationship between consumer service and loyalty, while other antecedents orconsequences have not been considered. Another limitation is that different segmentsof customers might exist in term of loyalty. Finally, from a methodological perspective,the fact that this investigation covered one retail format alone could be considered alimitation, because the results from this study can only be generalized for supermarkets.


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Managerial implications and further researchBeing a habitual client of an establishment (retail format) may or may not generate

differences in the assessment of commercial service quality; thus, one may analyseconsumer characteristics as a function of loyalty to an establishment (retail format).Businesses should make an effort to know the interested public and to maintain a stablelong-term relationship with clients, as a key element in business profitability. Blanchardand Bowles (1993) promote the concept of enthusiastic and loyal customers, suggestingthat satisfied customers are not enough to ensure repeat and loyal business. They proposethat retailers and other companies must exceed customer expectations in order to haveenthusiastic customers who will remain loyal and contribute positively to the bottomline. As Carman (1990) suggests, customer service satisfaction can be increased whenexpectations are lowered. To gain long-term competitive advantage, retailers either needto reduce the expectations of their customers or identify effective ways to offer servicesthat meet - or exceed - the expectations of their customers. Paulins (2005) indicates thatretailers must be aware that a responsive service is particularly important to customersand can be a differentiating factor with competitors. Sales professionals should exhibitbehaviours such as offering prompt services, displaying a willingness to help customersand giving customers their full attention. Clear communication to customers regardingstore policies and services available is important to establishing positive customer servicerelationships. In addition, customer service behaviours that reflect assurance andempathy, such as offering courteous and individual attention and demonstrating thatyou have the customers' best interests at heart, will enhance customers' perceptions ofservice quality. Retailers should evaluate their policies in an effort to identify barriersthat prevent their associates from being responsive, offering assurance and demonstratingempathy.

Managing consumers' perceptions of waiting time is another strategy available toretail managers (Baker and Cameron, 1996). For this issue, when customers perceivethere are more employees visible in the store, their wait expectations are more positive.Customers believe that the employees will help them through the buying and checkoutprocess. Customers have more negative expectations of the wait if they think the storeis crowded. Finally, when customers' wait expectations are negative, their evaluationsof the store's atmosphere are lower. One comparatively inexpensive alternative for doingso and enhancing patronage intentions is to enhance the store's atmosphere.Atmospherics can make customers less aware of their wait because they are eitherdistracted and/or entertained. Retailers have an arsenal of available alternatives in thisregard (Levy and Weitz, 2004). Store employees can creatively use a store's layout ormethod of displaying merchandise to alter customers' perceptions of the atmosphere.


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Alternatively, they can enhance the store's atmospherics through visual communications(signs and graphics), lighting, colours and even scents. Music is also an importantcomponent of atmospherics. It is less expensive to pipe appropriate music into a storeto entertain and distract than it is to hire more service people.

In the future, researchers should look at the influence of music in different retailformats, as well as the impact of different atmospheric issues on store patronage intentions.Furthermore, perceptions of customer density had a negative effect on store atmosphere.In a service intensive setting in which customers must have help from salespeoplethroughout the shopping process, customer density (or crowding) must be proactivelymanaged. Therefore, it is important that store patronage models include waitexpectations. Furthermore, it is critical that consumer expectations towards the waitingtime to receive the service be carefully managed by retailers given the importance ofthese expectations for consumers' patronage decisions. Also, additional research shouldextend the proposed empirical analysis to other industries. Although data have beenobtained from several retail formats, further empirical analysis in other industries seemsnecessary.

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Abstract

Advertisements can be defined as the use of media to create positive productimagery or positive product associations or to connect the product with desirabletraits, activities or outcomes. Advertising is everywhere and has become a vehicle forideology - reflecting ideas, beliefs, and opinions that are a reflection of a society withinthe culture. The signs that are contained in the advertisements and its message generatethe ideology. Advertising are ever-present cultural form that both reflects and mouldsour lives. An advertisement does not transmit product information but also socialsymbolic information that facilitates the shaping of cultural tendencies within society.The study was focused on female adolescence attitude towards depiction of women inIndian TV advertisement. Adolescents are particularly chosen because they are new,inexperienced consumers and are prime targets of many advertisements. They are inprocess of learning their values and roles and developing their self-concepts. Theadolescents are first exposed to ad content (Ad Content refers to the types of appealsin Indian TV advertisements). The results indicate that majority of the respondentswanted to see women in different roles in future advertisements. They wanted advertisersto show women as independent, self-confident, empowered individuals thanfashionable and glamorous one.

Keywords: Advertisement, women, portrayal, adolescent, stereotype

IntroductionAdvertising has been defined as "a form of controlled communication that attempts

to persuade consumers, through use of a variety of strategies and appeals, to buy or usea particular product or service" and is a, "paid, non-personal communication from anidentified sponsor using mass media to persuade or influence an audience". But it isbecoming abundantly clear that although the central goal of advertising is still the same-

* Assistant Professor of Commerce, PG and Research Department of Commerce, Kongunadu Arts and ScienceCollege, Coimbatore.

** Assistant Professor and Head, PG and Research Department of Commerce, Kongunadu Arts and Science College,Coimbatore.

A Study on Female Adolescents Attitudes towardsDepiction of Women in Indian Advertisement

- B. Divya Priya*- M. Revathibala**


103

• to sign up new customers

• to increase use of goods

• help the customers to choose the items among competing brands

This holds true for all kinds of products and markets. Overall, these three purposescan be merged into a single purpose i.e., to persuade the customer to choose one brandover another and hold them for life. Therefore, it deals with capturing human feelingsand emotions.

Advertisement and SocietyAdvertising is everywhere - in magazines, on television, in movie theaters, on

countless web pages, on busses, in subways and on milk-cartons. In fact, advertisementsare so common in our times that we do not even realize we are looking at them anymore.They invade not only our mailboxes, but also our minds and in doing so, they contributeto the image in shaping our society.

Thus, Advertisements become a vehicle for ideology - reflecting ideas, beliefs andopinions that are a reflection of the society within the culture. The signs that are containedin the advertisement and its message generate the ideology.

Advertising are ever-present cultural form that both reflects and moulds our lives.An advertisement does not transmit product information but also social symbolicinformation that facilitates the shaping of cultural tendencies within society.Advertisements are not created in a cultural void; they are affixed within a culture andall its sub-culture.

Every day we are flooded with advertising messages, which are loaded with theimages of gender, type of people, social classes and other groups that help to shape oursocial learning process. Advertising has the potential to mould opinions, attitudes, andbehaviour, and is therefore regarded as a major agent of social reinforcement.

Women and AdvertisementWomen are an important component of our society. The issue of the empowerment

of women is a matter of serious concern and thought. Efforts are being made to establishthe significant role that she can play to uplift herself, her family and the society at large.Women play an important role to make society progressive and lead it towarddevelopment. They are vital assets of a vibrant society required for national development.There can be no denying the fact that women play a key role in shaping the societyprovided they are given the right and equal opportunities at the right time. The efficacyof television advertisement as a means of communication is very high vis-à-vis women.


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It has changed its themes to 'move with the times.' This research paper highlights theportrayal of women in advertisement over decades and adolescents attitude towardsdepiction of women in Indian TV advertisements. Adolescence, who are below 18 yearsof age, which is commonly defined as the interval between the onset of puberty and thetransition to adult roles. They are particularly chosen because they are in process oflearning their values and roles and developing their self-concepts.

Objectives of the StudyThe study has the following objectives:

1. To study about the portrayal of women in advertisement over decades

2. To study about the impact of commercial advertisements on female adolescentstowards depiction of women in Indian advertisement

3. To offer suggestions based on the findings of the study

MethodologyThe study was conducted with a sample size of 100 female adolescents as

respondents. Both Primary and Secondary data were used for the study. ConvenientSampling method was used for the study.

Indian and global advertisement portrays women in domestic role or as decorativesex object. Thus, we can say, because media loves to see women as homemakers. Inaddition, it loves to see her as a fervent consumer. Therefore, here, we see the differentroles that women are shown to fill, and in some aspects they are representative; thereare domestic women, career women, mothers, beautiful women etc.

Portrayal of Women In Indian AdvertisementIndian Women in Advertising

IN 1970s'In 1970, a magazine revealed that magazine advertisements presented the following

cliches about women's role:

1. A women place is in the home

2. Women do not make important decisions

3. Women are dependent and need men's protection

4. Men regard women primarily as sexual objects


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In 1970s, advertisement often shows women as dependents requiring men tosolve their problem with no individuality of their own.

The Surf and the Tajmahal advertisement of 1970's are the examples that depictedwomen in house hold activities. In addition, her role was limited only to cleaning, washingclothes, cooking, taking care of her children, husband etc. "a perfect home maker". Shewas confined only to these works in order to please her husband. Studies have shownthat advertisements portraying women as homemakers may activate the belief thatwomen are nurturing, communal and domestically minded. In addition, women in theadvertisements represent what Society, especially the men of society, holds as the idealimage for a woman. The image of woman in advertising underwent a great changefrom a mere homemaker to a professional during 1980’s.

IN 1980s'The feminist movement, which took place in America, had a great impact all over

the world including India. After the zenith of the feminist movement, women started toobserve all they had accomplished. Indian Women finally had the potential to portrayherself in society. They also realized that they have a separate world other than thekitchen. Advertisers quickly realized that their target audience would react best toadvertisements that portrayed women's power. "Changes in advertising are, of course,changing as society changes". Women began to strongly reject the traditional ideals.The Charlie advertisers were the first to realize that society had truly changed. In addition,they "introduced the attractive independent woman who needed no one else in her life.Women no longer responded to advertisement depicting them as housewives with nopotential. The marketers recognized that the new woman was the successfulbusinesswoman. Women were responding to products and advertisements that provideda better image of women. Marketers studied what women responded well too.

The Liril and the Sun film advertisements in 1980's introduced the attractiveindependent woman who was confident and free. After these advertisements werepublished, advertisements from perfume to jeans were all giving the same message:women could be successful. Indian Advertisements in 1980's were produced for womenas they viewed them. During 1990's and subsequently the advertisers worked hard tobuild multiple possible identities for woman in advertising who can sell their productsin a better way.

The famous advertisement of Lalita ji (surf add) bring women as independentindividual. Women in 1980s consider as: As independent individuals for example Lalitaji(who can forget surf ad). She was shown as supportive role for example Mayur suiting etc.


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IN 1990sHowever, in the post-feministic 1990s and subsequently, advertisers have been

attempting to construct multiple possible identities for women in an effort to changetheir stereotypical image and enhance their spending power. In Today's advertisements,women appear less frequently dependent upon men while men are less likely to bedepicted in themes of sex appeal, dominance over women and as authority figures.Advertisements have also started portraying women more frequently as career-orientedand in non-traditional activities and are constructing the persona of the 'new Indianwoman'. Where on one hand, the media is portraying this strong image of a modernday woman; the Ariel advertisement of 1990's portrayed woman as a confident,independent career oriented woman. In addition, a section is misusing this image.

There are advertisements that are displaying that if a woman wants to explore hertalent she has to display her physical attributes. In the advertising industry, whether awoman is promoting cosmetics, jewelers, fabrics, domestic gadgets or any other product;she is always projected as a sex object. The investigators and commentators have longspeculated that repeated exposure to such images in advertising and media contributeto a broad range of social problems, including sexist attitudes and beliefs, sexualharassment, violence against women, eating disorders etc.

As woman in advertising was portrayed as independent and fashionable, theadvertisers used her as decorative object and women in advertisements were used torepresent those products with which they were not at all concerned. Moreover, thepresent day advertisements are highly sexualized to look at.

Women were shown in following ways - In place of washing clothes with theirhands and brush they were shown soaking clothes. Women stepping out of the houseand beyond. They were seen more. This was turning point in the history of Indianadvertising.

Women of Today - 21st CenturyWomen now plays different role in advertising like

• Decorative role

• Recreational Role

• Independent Career Role

• Self Involved Role/Feminine Role


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• Carefree Role

• Family Role

Decorative Role PortrayalDecorative models are passive and non-functional and their primary activity is to

adorn the product/service as a sexual or attractive stimulus. They are like mannequinswith the least lifelike of roles. 'She' is in an artificial world, often obviously, so in the wayshe stands and looks (dummy poses and catalogue expressions). She is on exhibition incompetition with others. She is aloof, haughty, and ostensibly sufficient unto herself,while relying on others to reinforce her self-image. Her outdoor image tends to be exoticand her indoor one non-domestic.

Recreational Role PortrayalThe recreational portrayal is of models in a non-working activity of leisure (reading,

watching television) or of sports (hiking, jogging, swimming, and boating). Theimportance of these ads is that women are not shown in passive poses, a pattern portrayalthat every study on gender roles has shown to be prevalent. In the past, the Indianwoman was seen as someone very sensitive and delicate. Recreational activities were,therefore, not connected with women but with men.

Independent Career Role PortrayalThe independent career woman is the only woman involved in something that

does not have to do with social success, home and family, or even her own femininity.She has stability and a substantial nature. She is portrayed infrequently. Women inIndia are rapidly advancing towards becoming financially independent individuals byseeking higher education and opting for a career rather than remaining housewives forthe rest of their lives.

Self-involved Role PortrayalThe self-involved female is the woman who is literally and metaphorically wrapped

up in herself. Even when being seductive, she is aware of her femininity and sensualityrather than the presence of any potential lover. She may be portrayed in a haze ofromance, perhaps with a man, and is more bound up with aspirations and dreams ofher own than with the actuality of the man. The ubiquitous diamond engagement ringadvertisements are almost perfect examples e.g. De Beers. Here, attention is focused on


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the woman's feelings about herself where she has a typically soft expression and directsher attention and tactility towards herself. She is alone with herself, involved with herbody, thoughts and beauty.

Carefree Role PortrayalThe carefree woman is always a girl or a woman with a girlish look, which gives

one a sense of a short spell of deceptive freedom. She is like a fluttering butterfly, whichhas not yet decided where to settle. She is having fun while she is young. The carefreeness or friendliness is social in nature to some extent and outgoing as well. Yet, theexcitement and cheeriness are rarely directed towards anyone or anything in particularand are only held in the minds of the actor. It must be noted that since the 'carefree girl'is very much into herself and looking for some excitement in her life, she is mostlyshown on her own and very rarely with a man or a child.

Family Role PortrayalThe family or domestic management role is described in ads in which women are

shown performing household chores, taking care of children, or supervising homefurnishing or maintenance. An example would be in the home environment where thehouse, its furnishings, its decoration, and the food served in it are marks of a woman'ssophistication, fashion awareness, sense of good taste and status. She is proud of thisworld, which is her creation, but cannot possibly escape from it. Therefore, Indianadvertisements do portray women in their traditional roles till today, although becauseof the influence of western society, this trend is changing-more and more advertisementsportray women as career-oriented and persons who are not just expected to remain inthe confines of their homes but are outgoing and enjoy an active social life.

Adolescents Attitude towards Depiction of Women in Indian TvAdvertisementResults and Disscussion

The data were collected to obtain information regarding the opinions of theadolescents about the kind of impact the advertisements leave on them, opinion ofstereotype image of women in advertisements and changes needed for future portrayalof women in advertisements. Adolescence is a transitional stage of physical andpsychological human development generally occurring during the period from pubertyto legal adulthood (age of majority). Adolescents are particularly vulnerable because


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they are new and in experienced consumers and are prime targets of manyadvertisements. They are in process of learning their values and roles and developingtheir self-concepts. The influence of advertising on adolescents is hardly surprising;researches show that adolescents emulate the behavior of attractive models, especiallywhen the behavior is rewarded. Thus, adolescents are targeted for the study.

Table 1 : Advertisement and its Impact

Advertisement and its Impact Number of Respondents

Percentage of the Respondents

Left an Impact on them 84 84 Do not have an Impact 16 16 Total 100 100

Source: Primary Data

Table 1 depicts that, out of 100 respondents, majority of the respondents (84%)felt that advertisement left an impact on them. And the rest (16%) of the respondentswho felt that advertisement do not have an impact on them stated that they are matureenough to distinguish between right and wrong, and they are not easily fooled by theseadvertisements.

Table 2 : Kind of Impact on Respondents

Kind of impact on respondents

Number of Respondents


Consumption Pattern 22 22 Affect on body image 8 8 Dressing style 12 12 Emulate 7 7 Desire to be like models 30 30 Awareness 6 6 Model stay on mind 5 5 Influence liking 10 10 Total 100 100



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It is clear from Table 2 that, majority of the respondents (30%) desire to be likemodels and 22% of them felt that advertisement affected their consumption pattern ofthe product. Dressing style of the model in the advertisement has also left an impact on12% of the respondents, as it affected their fashion statement. 10% of the respondentsfelt that advertisement influence them for liking a particular product if an attractivemodel is shown in the advertisements, whereas 7% stated that they tried to imitate thecharacter shown in the advertisement. 6% of the respondents said that they are awareof the product and 5% represent that the model stay on mind and not the product.

Portrayal of Women aAs Stereotype in AdvertisementsThe stereotypical image of women in advertisements and found that women are

still seen as objects and women are expected to look and act like those portrayed in ads.The women in advertisements represent what society, especially the men of society,holds as the ideal image for a woman. The images of woman today are highly sexualizedto appeal to those looking. Women in the twenty first century are under the power ofgaze, the male gaze.

Table 3 : Portrayal of Women as Stereotype in Advertisements

Portray Stereotype Number of

Respondents

Percentage of

Respondents

Portray Stereotype 64 64

Do not portray stereotype 36 36

Total 100 100


Table 3 depicts that majority of the respondents (64%) agreed that advertisementsportray women in stereotype roles as they felt that woman is projected mostly ashomemakers or in glamorous roles. Advertisements depict women as a product userbut never as a product maker.

Changes Needed in AdvertisementThe dominance of advertising in our lives and its ability to persuade and shape

our beliefs give it power over our society and the influence of our basic thoughts.Advertising attempts to put forth an image of ideals to be obtained by society. The


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ideals they portray do not necessarily reflect society but may influence people's beliefsabout the world outside of their immediate environment. Therefore, some of the changesneeded in the advertisement are considered for the study and analyzed.

Table 4 - Changes Needed in Advertisement

Changes needed in advertisement Number of Respondents


Product oriented 20 20 No vulgarity 25 25 Less emphasis on the model 6 6 More educative 22 22 Comic 7 7 Content strong 8 8 Different roles of women 12 12 Total 100 100


Table 4 reveals that majority of respondents felt that a change is needed inadvertisements especially in the depiction of women. Majority of the respondents (25%)of the respondents stated that advertisements portraying women should not be vulgarwhereas 20% of them felt that advertisement should be more product oriented. 22% ofthe respondents suggested that advertisements should be more educative andinformative. 12% of the respondents suggested that women should be presented indifferent roles and in different career settings. 7% of the respondents felt thatadvertisements should be more comic and 8% of the respondents felt that the contentof the advertisements should be strong, rather than emphasis given on the femalemodel (6%).

Depiction Of Women In Future AdvertisementsWomen in India are increasingly exposed to education and participate in workforce;

gender demarcations are undergoing rapid change. They have now greater physical,cultural and social mobility than what their mothers and grandmothers used to have.Today's woman has the freedom to explore new ways of living, peer bonding, handlingrelationships, and so on. Since they are getting monetarily independent, their value at


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home is also increasing. This has reduced the commodity status of women and theirportrayal as sex objects in advertisements has witnessed a key change. Advertising issaid to be the mirror of the society and it stood show women in right sense and depictthe changing role of her in future advertisements.

Table 5 : Depiction of Women in Future Advertisements

Depiction of women in future advertisements

Number of Respondents

Percentage of the respondents

Fashionable and Glamorous 10 10 Simple 24 24 Independent/Empowered 30 30 Affectionate and Loving 16 16 Traditional and Conservative 8 8 Feminine 12 12 Total 100 100


Table 5 shows the depiction of women in future advertisements, out of 100respondents, 30% felt that women should be projected as independent and empowered.24% of the respondents wanted women to be shown as simple and domesticated withinthe family nucleus, 16% of them felt that women are known for bringing out love,affection and sacrifice and should be depicted in the same manner, whereas 12% ofthem felt that women are feminine in nature. 10% of the respondents like to see womenas fashionable and glamorous and the rest of the respondents (8%) said that womenshould be depicted as traditional and conservative.

SuggestionsThe following are the suggestions of the study:

1. Advertisements play an important role in influencing and shaping values andattitudes, particularly of adolescents; hence advertisers should ensure that it depictsa positive portrayal of women in advertisements.

2. Advertisements should show women working in a wide variety of career settings.They should be projected in diverse roles such as educated, decision maker,independent, confident and self-reliant.

3. It is necessary that society should be motivated and sensitized to the issues of


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portrayal of women in commercial advertisements on T.V., so that they can takenecessary steps for healthy projection of women in the media.

ConclusionAdvertising is a powerful medium designed to sell products and aspirations. The

repetition of commercials in the media though boring leaves an indelible mark on theminds of the people of the society. There has been a sea change in the depiction ofwomen in India during past two decades. They have kept pace with the changes in thesociety. One prominent example is role reversal. While it is common to use women inadvertisements to attract men, the reverse is also happening in few cases, though in asubtle way, i.e. the way women are depicted in advertisements changes with the times,reflecting the transformations taking place in society.

The present study entitled "adolescents attitude towards depiction of women inIndian TV advertisement" was conducted with the objectives, to ascertain the responsesof the adolescents regarding the image of women in advertisements on T.V and studythe impact of commercial advertisements on adolescents with special reference to theimages and role portrayal of women. The results of the study revealed that advertisementsleft an impact on them. It has affected the consumption pattern of the respondents.The presence of female model in the advertisement also influenced the liking of aparticular product. Thus, advertisements are influencing the adolescents in shapingtheir lives, values and attitudes, and therefore, the advertisers should take utmost carein depicting women in positive role in Indian TV advertisement.

Bibliography1. Philip Kotler, Marketing Management: Millennium Edition (Englewood Cliffs,

NJ: Prentice Hall, 2000

2. Ali HajiMohammadi, University of Tehran, Iran, "Critical Analysis of Women'sRepresentation in TV Advertisements from a Cultural Studies Perspective",International Journal of Women?s Research (2011) 1: 107- 122

3. www.hinduonnet.com

4. www.matchatter.blogspot.in

5. www.rb.com.

6. www.scribd.com.

7. www.isiswomen.org.

8. www.rb.com.

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