Significance of Value Added Concept in Inter-firm Comparison of ...

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Vol. 7, No. 1 & 2, July - December, 2012 ISSN 0973-8231

Contents

Workforce Diversity Management as an Antecedent to 5 - 13Expatriate Adjustment: An Empirical studyDr. Sheetal Sharma, Associate Professor, IILM-AHL, Lucknow

Significance of Value Added Concept in Inter-firm Comparison of 14 - 20Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation LtdDr. Shilpi Jauhari, Assistant Professor, IET, Lucknow

Entrepreneurship Development in Tea Industries 21 - 28Prof. L. S. Yadav, Dean (Planning & Development), North Eastern RegionalInstiture of Science and Technology, Nirjuli, Arunachal Pradesh

Microfinance and Women Empowerment: A Case Study 29 - 35Stanley Xavier Elango, Deputy Director, Institute of Co-operative Management, HyderabadU.Homiga, Lecturer, Regional Institute of Co-operative Management, Bangalore

Buying Behaviour of Consumers in respect of the ‘Aavin’ Milk and 36 - 48Milk Products of Cooperative Milk Producers’ Unions: A studyDr.S.Velanganni, Assistant Professor, PG Department of Co-operative,SRMV College of Arts and Science, Coimbatore, TamilnaduDr.B.Tamilmani, Professor and Head, Department of Co-operation,Gandhigram Rural University, Dindigul, Tamilnadu

Women Entrepreneurship: Challenges and Opportunities 49 - 54(A Case Study on Women Entrepreneurs in Andhra Pradesh)Dr. Y.V.S. Subrahmanya Sarma, Head and Associate Professor, Department ofCommerce, PG Courses & Research Centre, DNR College, Bhimavaram, Andhra Pradesh.Dr. A.Kondaiah Swamy, Lecturer in CPP, Government Polytechnic for Women,Nandigama, Krishna District, Andhra Pradesh.

Health Care Sector in India: An Analytical Review 55 - 61Dr. Ram Milan, Associate Professor, Department of Commerce, University of Lucknow.Dr. Shishir Srivastava, Associate Professor, Goel Institute of Higher Studies, Lucknow.

Book Review : Payal Mehra, Business Communication for Managers 62 - 64Reviewed by : K. Anbumani, Associate Professor, ICCMRT, Lucknow

a journal for the managers in making

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From the Chief Editor’s Desk

It gives me immense pleasure to bring the latest issue of ‘The Manager’; a bi-annual

management journal of the ICCMRT in the hands of the readers once again.

The Indian economy has been witnessing a phase of transformational growth with

multiple business opportunities in the recent times. This has posed on the business

managers a greater compulsion to be vigil and proactive to such opportunities and

to suitably adapt themselves to the changing conditions and challenges so as to

ensure their survival and prosperity.

This adaptation largely and equally suits to the institutions of higher education also

where the business minds are groomed with much needed skills and ability enabling

them to manage the challenges of the business. Hence the management institutions

hold the direct need and responsibility to work consistently towards knowledge

creation, up-gradation and its dissemination.

As you know well, ICCMRT has been constantly engaged in providing contemporary

education in the field of management, where one of its primary functions is to

disseminate the high quality knowledge through its management journal ‘The

Manager’. The current issue has seven research papers/articles along with a book

review that would provide you interesting and useful reading.

I take this opportunity to sincerely thank the people who made the publication of

‘The Manager’ possible, especially the authors and editorial board members, without

whose contribution the journal would not have been a reality.

With best wishes,

L.M. Chaubey

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Executive Editor Speaks ....Greetings!

It is a matter of delight for me that the successful journey of ‘The Manager’ has completed sixyears of continued patronage and good wishes of its readers and contributors. The humblebeginning of our efforts has given us rich dividends which have undoubtedly put our journalas a valuable asset in the eyes of our readers. The present issue contains seven research papers/articles from different areas and a book review. I trust the issue will provide valuable academicinput to the researchers and practioners and also directions for the future research.

In the fast changing phase of globalization people management has become the most challengingtask in accomplishing the organizational goals. The empirical study on Workforce DiversityManagement critically examines the economic asymmetries and globlization from HRperspective.The article on Value Added Statement, which is the part of the social responsibilityaccounting and reporting emphasizes the necessity and explores the implied benefits ofpreparing VAS by companies over the conventional financial reporting system.

The article on Enterpreneurship Development in Tea Industries, which is based on the fieldstudy conducted on the north bank of Brahmaputra describes about market share, consumptionof tea, growth of farm equipment and potential of enterpreneurship development in the teaindustry.

The case study on Micro Finance and Women Empowerment analyses the trend and progressof women and their socio-economic empowerment through micro finance mainly throughSHGs in Combatore district of Tamilnadu. The article on Women Enterpreneurship : Challengesand Opportunities discusses about the social origins of women enterpreneures and their socialdevelopment in West Godavari district of Andhra Pradesh.

The research paper on Buying Behaviour of Consumers analyses the demand pattern of AavinMilk and Milk products, the popular Co-operative brand of Tamilnadu and sheds light onvarious marketing related facts especially for cooperative products. The article on the HealthCare Sector in India explores the role, development, future prospects and need of the healthcare sector. The journal also contains a review on the book Business Communication forManagers authored by Payal Mehra.

I take this opportunity to express my sincere thanks to all the scholars who have contributedquality and informative research papers/articles. I also extend heartfelt gratitutde to the membersof the Editorial Board and faculty members of the Institute for reviewing the articles and thuscontributing immensely in making The Manager a resourceful journal.

I have an ardent hope that the readers will like the issue, give their valued feedback/commentsand also help and support in sending quality research work/articles, book reviews etc. forpublication in the forthcoming issues of The Manager.

Prof. Ajay Prakash

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Workforce Diversity Management as an Antecedent to ExpatriateAdjustment: An Empirical study

Dr. Sheetal Sharma*

ABSTRACT

People management in the globalised market, has been ever challenging task for the accomplishment ofany organizational goal. Understanding the dynamics of multicultural domestic and international workplacesthe cross cultural and workforce diversity issues are gaining importance. The workforce diversity managementhas indeed emerged as one of the biggest HRM challenge in examining the economic asymmetries andglobalization influencing the international trade and development .This paper attempts to examine theeconomic asymmetries and globalization influencing international trade and development from HRperspective It also study various issues of workforce diversity management through a critical review of therelevant literature and an extensive survey of expatriates of a few identified organizations in Lucknow, UP.This research also provides some relevant recommendations to the practicing HR Managers for viewingdiversity as an opportunity that can be utilized to compete more effectively in the local and global markets.

Key words: Diversity, Asymmetries

* Associate Professor, IILM AHL, Lucknow.

Introduction

Workforce diversity management is one of the mostimportant challenges faced by managers and theirorganizations. In today’s global work environment,co-workers are likely to be of different gender, age,religion, cultural background, race and ethnicity. Thedifferences are also in terms of lifestyle, skills, choicesavailable, perspectives, attitudes, value system,beliefs, behaviors, expectations and experiences.These issues are not just about discriminatory practicesbut they also influence the nature and demands placedon management and leadership for bringing intoprominence the concept of diversity. The researchfindings of Kandola and Fullerton (1995) claim thatharnessing and nurturing these differences promotesa productive environment in which everybody feelsimportant and valued and ensure optimum utilizationof the talents and in which organizational goals aremet. The extent to which managers are prepared toinvest in the concept of diversity, will impact not juston work issues but also on sensitivity to customer’sneeds, legal compliance, business’ ethical issues,profitability and even social cohesion. Rodrigued(2007) presented a strategic outlook to diversitymanagement practices in the organization suggestinga strong need for tap into the creative, cultural andcommunicative skills of employees in order toimprove policies, products and customer experiences.

An organization’s success and competitivenessdepends largely upon its ability to embrace diversityand realize its benefits. Work force diversitymanagement can create a competitive advantage andthe potential benefits of this diversity includes betterdecision making, higher creativity and innovation,greater success in marketing to foreign and domesticethnic minority communities, and a better distributionof economic opportunity. Workforce diversitymanagement is also considerably important forminimizing the expatriate failure. It has been seenthat international transfers can fulfill a number of veryimportant functions in MNCs. Unfortunately, thereare increasing signs that act as barriers to mobility,expatriate adjustments can lead to expatriate failure.For this reason, international human resourcepractitioners and management researchers areparticularly interested in understanding how, best, topredict individual’s adjustments and performance incross national settings. Review of available literatureon the expatriates indicates that, “expatriate failure”is a term encompassing a broad range of themes suchas premature return, low performance, adjustmentproblems etc .but a systematic understanding of theconcept of expatriate failure is still lacking. There aredifferent viewpoints proposed and establishedhowever, the international assignment cycle providesbetter understanding of expatriate failure. Theinternational assignment cycle is commonly

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considered to encompass three distinct phases (seeFigure 1.0: the pre-assignment stage (selection andpreparation), the actual assignment and the post-assignment stage referred to as repatriation (Bonache,Brewster, & Suutari, 2001).

Table - 1

Although the literature has dealt with all three phases,the majority of studies have focussed on culturaladjustment during the actual assignment (Harrison,Shaffer, & Bhaskar-Shrinivas, 2004).

WFD has emerged as an upcoming trend in theinternational staffing. It is well expected from theorganization to be prepared proactively to manageexpatriate thereby reducing the expatriate failure andensuring success of the international assignments.

The concept of Workforce Diversity Managementbecomes even more crucial in the context of expatriatemanagement and should be seen as an integral partof MNC’s international strategy. This paper attemptsto identify various determinants of work force diversitymanagement essential for the organizations inmanaging and promoting expatriate adjustments onthe international assignments. Finally, this paperconcludes with the identification of future directionsfor research on workforce diversity initiativesinfluencing expatriate success.

LITERATURE REVIEW

The expatriate adjustment research literature hasgrown enormously since the late 1970s, and the trendseems to be continuing as the field moves into thenew millennium. Thus, it seems both timely andprudent to pause and take stock of the nature of thisgrowth and the implications that it holds for futureresearch and practice in the field. Those scholars whobegan conducting research on expatriate adjustmentin the late 1970s and early 1980s (especially those inthe field of human resource management andorganizational behavior), find themselves, ironically,in a new, vastly different professional culture. Theyare no longer pioneers, but part of a worldwide cadreof scholars who are actively engaged in conductingresearch in the area of expatriate adjustment and

international human resource management. However,despite this progress, challenges remain in the field.

Organizational scholarship has devoted little attentionto understanding the attributes and processes thoseare required for diversity initiatives to foster greaterdiversity in organizations. Since the presence ofdiverse employees in organizations has been foundto lead to a number of challenges, including increasedintergroup conflict, and constrained communications(Pelled & Adler, 1994; Cox, 1991). Research ondiversity in organizations has focused on exploringhow workforce diversity influences organizational life(Jehn, Northcraft, & Neale, 1999; Williams & O’Reilly,1998).

The issues of workforce diversity managementbecomes even more relevant when linked to theexpatriate adjustment on the International assignmentsas they are increasingly becoming a strategicinstrument for MNCs to successfully competeinternationally. The key challenge for MNCs will thenbe to link international assignments more directly totheir organizational career paths in order to be ableto capitalize upon the experiences and skills thatassignees develop during their transfers in the longrun. Given the strategic importance multinationalcompanies (MNCs) place on global assignments (e.g.,high-level negotiat ions, foreign subsidiarymanagement, new market development), the harman unsuccessful expatriate may cause in the hostcountry can be detrimental to an MNC’s future globalbusiness (Gregersen & Black, 1990; Zeira & Banai,1985) .

According to the available literature it can beestablished that expatriate adjustment can be wellrelated to the expatriate failure usually measured as apremature return from an international assignment.‘Success’ in an international assignment is seen as theabsence of ‘failure,’ which is usually taken to be‘premature return’ (see, e.g., Ashamalla 1998; Festingand Mueller, 2007; Simeon and Fujiu 2000). The needfor multinational organizations to improve their abilityto predict success on global assignments iscompounded by the fact that many global assignmentsare not successful _ (Black, Gregersen, & Mendenhall,1992; Tung, 1981). Mendenhall and Oddou (1985)have reviewed empirical studies that directlyinvestigated the adjustment patterns of expatriatemanagers in foreign assignments. They revealed fourdimensions that were related to successful expatriate

Workforce Diversity Management ...

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acculturation; the self-oriented dimension, the others-oriented dimension, the perceptual dimension, andthe cultural-toughness dimension

• The self-orientation dimension: activities andattributes that serve to strengthen the Expatriate’sself-esteem, self-confidence, and mental hygiene.

• The other’s orientation dimension: activities andattributes that enhance the expatriate’s ability tointeract effectively with host nationals.

• The perceptual dimension: the ability tounderstand why foreigners behave the way theydo, the ability to make correct attributions aboutthe reasons or causes of host nationals’ behaviour.

• The cultural toughness dimension: this dimensioncan modify the importance of the first threedimensions. In culturally tough countries(countries that are culturally very different fromthe home country), the first three dimensionsbecome even more important than in culturallysimilar countries.

The existing expatriation literature concentrates onwhat individuals need to do (or characteristics theyneed to have) to perform successfully in aninternational assignment, but it neglects what theygain from their foreign work experience (cf.,Dickmann, Doherty, and Brewster, 2006). Theliterature was reviewed to identify the factors whichare affecting the expatriate adjustments. Bolino (2007)noted that relatively little research has sought tounderstand how organizational expatriate assignmentsmight be related to career success. Respondents cited“career aspirations” third (after “family concerns,” and“spouse’s or partner’s career”) as a reason for refusingto accept an assignment (GMAC, 2007) and havetaken up a very prominent position in literature onexpatriate management. In this regard we would alsofocus on ‘The Framework of International Adjustment’by Black, Mendenhall, and Oddou (1991) whichproposed a model suggesting number of factors suchas family-spouse adjustment influences the expatriate’swork, interaction, and general adjustment . Furtherthe Model of Intercultural Adjustment by Parker andMcEvoy (1993) distinguished between individual,organizational and contextual antecedents that mayinfluence the expatriate’s work, general living, andinteractions in the host country. These two modelshad limitations as both were not empirically tested.Further empirical studies by Tung (1984) and Harvey

(1985) showed that the spouse’s adjustment problemsand family-related problems were among the majorcauses of international business assignment failures.Fukuda and Chu (1994) attempted to identify reasonsfor expatriate failures by examining the selectioncriteria and training programs commonly adopted byJapanese firms. They examined the impact ofrelocation of expatriate family members in relation tothe failure of expatriate assignments. Fukuda and Chu(1994) also identified family situation as a factor thatactively contributed to the expatriate’s failure. In thisregard, Shay and Baack (2004) show that themanagement development motive positively relatesto an assignee’s personal change whereas the controlmotive is directly related to organizational change.

The key point that companies should realize is thefact that expatriation is a strategic tool to achievespecific organizational goals and needs to be used assuch. More recent research has highlighted the linkbetween the reason for the international assignmentand different dimensions of success ( Bolino, 2007).

The above mentioned researches tried to propose andanalyze different aspects of expatriate management.This paper attempts to analyze and discuss theexpatriate adjustment from the perspective oforganizational preparedness for Work force diversityManagement .For this purpose an extensive surveyboth onsite and online was performed on 92expatriate employees working in few identifiedorganizations in Lucknow and also expatriatesworking on international assignments, but belongingto Lucknow city, UP .

PURPOSE OF THE RESEARCH

This research study aimed at:

• Identifying the critical organizational concernsand issues of workforce diversity managementwhich affect the expatriate adjustments.

• To analyze the importance of the variousorganizational factors of workforce diversitymanagement for expatriate adjustment.

RESEARCH METHODOLOGY

Target Population and sample

The sample of expatriates was drawn from the list oforganizations selected according to the convenienceof the authors to ensure the accurate data collectionin the given time frame available. A convenience

Dr. Sheetal Sharma

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random sampling procedure was employed. Theselection of respondents using this technique involvesa complete list of multinationals (MNCs) having theiroperations at Lucknow. A total of 92 respondents(expatriates) were approached over a three-monthperiod out of which complete information from 65could be obtained, which represent 71% as a responserate. The sample consists of expatriates from theexpatriate working in few identified organizations inLucknow and also expatriates working oninternational assignments, but belonging to Lucknowcity, UP.

Profile of the Respondents

Respondents were asked about their job position, age,marital status, duration on the internationalassignment, educational qualification, gender,whether family accompanied on the internationalassignment etc. The demographic profile of therespondents is given below in percentage:

Table - 2

Questionnaire Development

Since this research is not a replication of any previousstudies, the structured questionnaire was developedthrough literature review and a mix and matchapproach was undertaken to modify the sentence orcomplete withdrawal wherever necessary to suit thelocal context.

The opinion of respondents was collected on the Likertfive point scale i.e, 1 being “Strongly disagree” to 5being “strongly agree”. The demographic profile ofthe respondent’s such as age, gender, status whetherfamily is accompanied, etc was also gathered throughthe questionnaire. The questionnaire consisted of 26

items measuring the various constructs oforganization’s workforce diversity managementpractices essential for expatriate adjustments.

Reliability and Validity

While academics assisted in assessing face validity,the managerial professionals in a multinationalcorporation verified content validity. A pilot surveywas carried on 20 expatriates and during interviewvarious issues of workforce diversity influencingexpatriate adjustment were discussed. This furtherhelped in improvising the questionnaire. Thereliability of the data collected was judged for all 26items through Cronbach’s Alpha which is 0.832 andthis confirms and indicates the stability andconsistencies of the instrument in measuring theconcept.

Data Collection & Participants

This study employed the survey method that allowfor broad coverage, flexibility and convenience withinputs on related populations or events. Collectionof data was self-administered to determine theimportance of workforce diversity management forexpatriate adjustment on the internationalassignments.

Participation was granted through prior appointmentsand consent via phone calls from the organization.Data was collected onsite and also online usingstructured questionnaire.

Data Analysis & Findings

According to the chosen methodological researchapproach, statistical package SPSS version 15 wasused. Factor analysis has been employed particularlyfor the statistical analysis.

Factor analysis is a data reduction statistical techniquethat allows simplifying the corelational relationshipsbetween number of variables. Various steps wereperformed to identify the critical factors/issues of Workforce diversity management influencing the expatriateadjustment.

Step1:

The correlation matrices were computed it revealedthat there is enough correlation to go ahead for factoranalysis.

Step2: To test the sampling adequacy, Kaiser-Meyer-Olkin Measure of Sampling Adequacy (MSA) was

Demo. Profile Categories Percent

AGE 20 - 30 YRS 62

31 - 40 YRS 37

41 -50 YRS 0

51 - 60 YRS 1

GENDER Male 95

Female 5

MARITAL STATUS Married 57

Unmarried 43

FAMILY ACCOMPANIED Yes 3

No 97


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computed and found to be 0.585. It indicates thatsample is good enough for sampling. (Table3).

Step3:

The overall significance of correlation matrices wastested with the Barlett Test of Sphericity providingsupport for the validity of the factor analysis of thedata set. (Table3)

Table - 3

KMO and Bartlett’s Test

Initiating with the factor analysis as a data reductionstatistical technique using SPSS to reduce the variablesinto smaller number of manageable variables byexploring common dimensions available among thevariables and eliminating or suppressing the variableswhich do not have any significant. After the standardsindicated that the data are suitable for factor analysis,Principal Components Analysis was employed forextracting the data, which allowed determining thefactor underlying the relationship between a numbersof variables. The factor analysis was performed onthe 26 items.

Loadings on factors can be positive or negative. Anegative loading indicative indicates that this variablehas an inverse relationship with the rest of the factors.The higher the loading the more important is thefactor. All the loadings in this research are positive.

Rotation is necessary when extraction techniquesuggest that there are two or more factors. The rotationof factors is designed to give an idea of how the factorsinitially extracted differ from each other and to providea clear picture of which item loads on which factor.

There are only seven factors, each having Eigen valueexceeding 1 for expatriate adjustment. The Eigenvalues for the seven factors are 7.412, 3.230, 2.468,2.203, 1.769, 1.522, 1.219. The percentage of thetotal variance is used as an index to determine how

well the total factor solution accounts for what thevariables together represents. The index for the presentsolution accounts for 76.240 percent of the totalvariations for expatriate adjustment. It is pretty goodextraction as it can economize on the number offactors (from twenty six factors to seven factors) .Thepercentage of variance explained by factor one toseven in expatriate adjustment are 28.510, 12.421,9.491, 8.473, 6.803, 5.853, 4.690respectively(Table5). Table 4 tells us that after sevenfactors are extracted and retained, the communalityis .708 for variable 1, .783 for variable 3 and so on. Itmeans that 71 percent of the variance of variable 1 iscaptured by the seven extracted factor together. Theproportion of variance in any one of the originalvariables, which is being captured by the factor, isknown as communality (Nargundkar 2002).Largecommunalities indicate that a large number ofvariance has been accounted for by the factor solution.

The varimax rotated factor analysis results for factorsof Work force diversity management influencing theexpatriate adjustment is shown in the Table 6

DISCUSSION

The seven factors have been extracted shown howeverin the Table 6 it is clear that significant factor loadingscan be seen are only six factors thus the seven factorsare further reduced to only six, which are representingthe critical factors of WFD management leading tobetter expatriate adjustment. The factors are discussedbelow:

Factor 1: Training and development Initiatives forWFD Management

It is the most vital factor which explains 28.510percent of the variation and this factor has eightsignificant variables such as WFD trainingincorporated into all leadership programmes(.558),Financial support for cross cultural, language anddiversity skills training(.684) , Actionable plans foremployee retention and cross cultural moves (.812),Organization provide forum to articulate varied needsand interest of employees (.847), Establishing linkbetween diversity and work life activities(.507) ,Rewards linked performance for promoting WFD(.740)., Career planning for the diverse employees(.702), Emphasis on employee equity(.506) , emergewith the positive correlations which emerges asimportant factors of work force diversity managementinfluencing the expatriate adjustment.

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .585

Bartlett's Test of Sphericity

Approx. Chi-Square

1348.146

df 325

Sig. .000

Dr. Sheetal Sharma

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Factor 2: Organization Culture for Diversitymanagement

There are six loads to this factor WFD as importantHR issue (.855), Competitive advantage through WFD(.896), Diversity as Organization priority (.776),Organization belief in retaining world-class workforce(.619), Employee development initiatives (.580),Organization wide fair assessment and evaluation

systems to monitor diversity programmes (.121) andthis factor is extracted as the second most importantfactor which accounts for 12.421 percent variation

Factor 3: Individual empowerment

This factor has three significant variables which have9.491 percent of the variation .The variables areIndividual differences are well accepted and valued

Table - 4

Extraction Method: Principal component Analysis Communalities

Initial Extraction

Importance of WFD management 1.000 .708

Organization support for WFD 1.000 .783

WFD as important HR issue 1.000 .815

Competitive advantage through WFD 1.000 .908

Diversity as Organization priority 1.000 .738

Organization belief in retaining world-class workforce 1.000 .808

Employee development initiatives 1.000 .717

WFD support in Strategic directions 1.000 .726

WFD for improving business image 1.000 .850

Top management support in diversity management 1.000 .891

Employee participation viewed as diversity initiative 1.000 .729

Individual differences are well accepted and valued by the organization 1.000 .762

Individual development for greater responsibility and advancement 1.000 .834

Training and employee empowerment for WFD management 1.000 .877

WFD training incorporated into all leadership programmes 1.000 .767

Financial support for cross cultural, language and diversity skills training 1.000 .749

Actionable plans for employee retention and cross cultural moves 1.000 .707

Organization provide forum to articulate varied needs and interest of employees

1.000 .754

Establishing link between diversity and work life activities. 1.000 .547

Rewards linked performance for promoting WFD 1.000 .739

Career planning for the diverse employees 1.000 .719

Emphasis on employee equity 1.000 .732

Geocentric mode for promoting WFD 1.000 .757

Organization cares for balance of career and family issues 1.000 .662

Diversity management for change management 1.000 .747

Organization wide fair assessment and evaluation systems to monitor diversity programmes

1.000 .795

Extraction Method: Principal Component Analysis.


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by the organization (.838), Individual developmentfor greater responsibility and advancement (.782),Training and employee empowerment for WFDmanagement (729).

Factor 4: Strategic importance to Work forcediversity management

This factor has four significant variables which accountfor 8.473 percent of variation and the variables areWFD support in Strategic directions(.529), WFD forimproving business image(.879), Top managementsupport in diversity management(.879), Employeeparticipation viewed as diversity initiative(.597)

Factor 5: Global talent retention philosophy

This is the next important factor, which influence theexpatriate adjustment through work force diversitymanagement in the organizations This factor has threefactor loadings, namely Geocentric mode forpromoting WFD(.735), Organization cares for balanceof career and family issues(.774), Diversi tymanagement for change management(.739)

Factor 6: Importance and organizational support forWFD

There are two factor loads in this factor which have

Table - 5

Total Variance Explained

Component Initial Eigenvalues Extraction Sums of Squared

Loadings Rotation Sums of Squared Loadings

Total % of

Variance Cumulative

% Total

% of Variance

Cumulative %

Total % of

Variance Cumulative

%

1 7.412 28.510 28.510 7.412 28.510 28.510 4.667 17.952 17.952

2 3.230 12.421 40.931 3.230 12.421 40.931 3.752 14.430 32.382

3 2.468 9.491 50.421 2.468 9.491 50.421 2.850 10.960 43.342

4 2.203 8.473 58.895 2.203 8.473 58.895 2.720 10.460 53.802

5 1.769 6.803 65.698 1.769 6.803 65.698 2.429 9.343 63.145

6 1.522 5.853 71.551 1.522 5.853 71.551 1.720 6.616 69.761

7 1.219 4.690 76.240 1.219 4.690 76.240 1.685 6.480 76.240

8 .936 3.599 79.839

9 .812 3.121 82.960

10 .780 3.001 85.962

11 .682 2.622 88.584

12 .540 2.076 90.660

13 .440 1.692 92.352

14 .362 1.392 93.744

15 .330 1.269 95.013

16 .279 1.073 96.086

17 .214 .822 96.908

18 .189 .726 97.634

19 .148 .570 98.204

20 .106 .408 98.611

21 .098 .376 98.987

22 .080 .308 99.295

23 .071 .275 99.570

24 .051 .197 99.767

25 .044 .169 99.936

26 .017 .064 100.000

Extraction Method: Principal Component Analysis.

Dr. Sheetal Sharma

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5.853 percent of the variation .These variables areImportance of WFD management (.480), Organizationsupport for WFD (.857).This shows that importanceto WFD management and organizational supportpromotes expatriate adjustment.

CONCLUSIONS AND MANAGERIALIMPLICATIONS

From the available practitioner literature on expatriatemanagement, we certainly need to draw the attentionto the problems of expatriate adjustment. Theorganizations have felt the need to focus their attentionand resources on avoiding assignees’ prematurereturn, while failing to notice or manage other issuesthat are, in fact, far more important for assuring theindividuals’ and the company’s success. Thus thisresearch critically evaluated the issues of Work force

diversity management which influence the expatriateadjustment and introduces a multi-dimensionalcategorization of international assignment success byusing the Factor analysis. On the basis of the statisticalanalysis, it was concluded that the critical WFD factorswhich promotes the expatriate adjustment are:Training and development Initiatives for WFDmanagement .This is the most important factor asproper training on diversi ty, cross cultureunderstanding, language training, training to thespouse etc contribute significantly to the expatriateadjustment on the assignments. However a supportiveorganization culture is another important factor whichinfluences the success of any international assignmentas organizational clarity on the varied issues andbenefits of handling diverse work force is essential. Itwas also established that individual empowerment

Table - 6

Rotated Component Matrix (a)

Component

1 2 3 4 5 6 7

Importance of WFD management(1) -.002 -.349 -.284 .076 .292 .480 .430

Organization support for WFD(2) .175 .015 .107 .067 .018 .857 -.029

WFD as important HR issue(3) .158 .855 .171 .073 .105 -.097 -.069

Competitive advantage through WFD(4) .118 .896 .159 .118 .152 .172 -.006

Diversity as Organization priority(5) -.004 .776 .023 .274 -.153 -.072 -.180

Organization belief in retaining world-class workforce (6) .488 .619 -.039 .283 .241 -.029 .215

Employee development initiatives(7) .312 .580 -.020 .327 .153 -.354 .165

WFD support in Strategic directions(8) .301 .210 -.050 .529 -.008 -.451 .326

WFD for improving business image(9) .013 .186 .180 .879 .096 .016 .041

Top management support in diversity management(10) .082 .273 .159 .879 .065 .069 -.063

Employee participation viewed as diversity initiative(11) -.116 .105 .530 .597 .100 .168 -.170

Individual differences are well accepted and valued by the organization(12)

-.011 -.098 .838 .219 .036 -.014 -.025

Individual development for greater responsibility and advancement(13) .190 .209 .782 .172 -.087 -.024 .323

Training and employee empowerment for WFD management(14) .108 .420 .729 .136 -.019 .261 .265

WFD training incorporated into all leadership programmes(15) .558 .326 .528 -.190 .156 -.084 -.052

Financial support for cross cultural,language and diversity skills training(16)

.684 -.021 .366 -.106 .270 -.230 -.096

Actionable plans for employee retention and cross cultural moves(17) .812 .119 -.036 .101 .122 -.080 -.028

Organization provide forum to articulate varied needs and interest of employees(18)

.847 .033 .029 .005 -.027 .011 .182

Establishing link between diversity and work life activities.(19) .507 .376 .082 .166 -.086 .250 -.210

Rewards linked performance for promoting WFD(20) .740 .170 .011 -.037 -.259 .220 -.213

Career planning for the diverse employees(21) .702 .141 .046 .179 .281 .300 .049

Emphasis on employee equity(22) .506 .203 .141 .084 .470 .040 .431

Geocentric mode for promoting WFD(23) .452 .089 .046 -.032 .735 -.023 .037

Organization cares for balance of career and family issues(24) .147 .081 -.065 .118 .774 .011 .129

Diversity management for change management(25) -.394 .002 .074 .089 .739 .080 -.163

Organization wide fair assessment and evaluation systems to monitor diversity programmes(26)

.107 .121 -.241 .059 -.013 .056 -.839

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. a Rotation converged in 9 iterations.


13

and opportunities for development and advancement,do play an important role in expatriate adjustment.Another prominent factor identified was the Strategicimportance given to the various workforce diversityinitiatives and understanding the importance ofdiversity management in the organization strategicplanning may certainly assist in expatriatemanagement. The Global talent Retention philosophyof the organizations, retaining the world classworkforce and effective management of the diversityneeds may even contribute to the expatriateadjustment. The research study statistically establishedthat organization support and understandingimportance of the Work force diversity managementis another important factor which promotes theeffective expatriate management for effectiveperformance.

Our findings have several important implications forthe practicing managers of MNCs. It is evident thatwhile formulating the HR policies for expatriate,prominence should be given to the training andindividual empowerment. A clear HR policy for careerplanning, work life balance issues, language and crosscultural training and aligning the organizationalgrowth with individual development may certainlypromote the expatriate adjustment on the internationalassignments.

DIRECTIONS FOR FUTURE RESEARCH

The scope for future research based on the findingsof the study includes:

1. As the survey conducted was only confined toLucknow therefore results may vary if conductedin different parts of the country.

2. Few more issues such as cross cultural issues,repatriates response can also be taken intoconsideration while taking up further researchwork.

3. For even better results, sample size may beincreased and organization specific tailor-mademodels can be also developed.

4. Relationship with the demographic variables canbe also assessed for better understanding.

REFERENCES

Ashamalla MH (1998), International human resourcemanagement practices: the challenge of expatriation,Competitiveness Review, 8(2): 54-65.

Barley S R (1989), Careers, identities and institutions, In ArthurMB, Hall DT, and Lawrence BS (Editors) (1989), Handbook of

career theory, Cambridge: Cambridge University Press, pp 41-65.

Black, J . S., & Gregersen H. B. (1991b) . The other half of thepicture: Antecedents of spouse cross-cultural adjustment.Journal of International Business Studies, 22, 461-477.

Black, J. S., Gregersen, H.’ B., & Mendenhall, M. E. (1992) .Globalassignments: Successfully expatriating and repatriating’international managers. San Francisco : Jossey-Bass.

Bolino MC (2007), Expatriate assignments and intra-organizational career success: implications for individuals andorganizations, Journal of International Business Studies, 38(5):819-835

Bonache, J., & Brewster, C. 2001. Knowledge transfer and themanagement of expatriation.Thunderbird InternationalBusiness Review, 43(1): 145-168.

Bonache, J., Brewster, C., & Suutari, V. 2001. Expatriation: Adeveloping research agenda.Thunderbird InternationalBusiness Review, 43(1): 3-20.

Festing M and Mueller B (2007), Managing expatriatepsychological contracts for global career development -theoretical framework and empirical evidence, Discussionpaper, Berlin:ESCP-EAP European School of Management

GMAC Global Relocation Services, LLC (2007), Global relocationtrends survey 2006, Oak Brook, IL: GMAC

Jehn, K. A., Northcraft, G. B., & Neale, M. A. 1999. Whydifferences make a difference: A field study of diversity, conflict,and performance in workgroups. Administrative ScienceQuarterly, 44(4): 741...

Kandola, R., Fullerton, J.Ahmed, Y. (1995): Managing Diversity:Succeeding where equal opportunities has failed, Equalopportunities Review, Vol.59, pp.31-36.

Malhotra N.K& Das Satyabhusan, Marketing research an appliedorientation, Pg 610-630,5th edition, Pearson Management,41(1): 21-28.

Mendenhall, M., & Oddou, G. 1985. The dimensions of expatriateacculturation: A review.Academy of Management Review,10(1): 39-47.

Pelled, L. H. & Adler, P. S. 1994. Antecedents of intergroupconflict in multifunctional product development teams: Aconceptual model. IEEE Transactions on Engineering

Rodrigue,Fontaine(2007):”Cross cultural management: Sixperspectives”, Cross Cultural Management-An Internationalmanagement,Vol 14,No.2, pp.125-135.

Simeon R and Fujiu K (2000), Cross cultural adjustment strategiesof spouses in Silicon Valley,Employee Relations, 22(6): 594-611

Tung, R. (1981). Selection and training of personnel for overseasassignments. Columbia Journal of World Business, 16, 68-78.

Zeira, Y., & Banai, M. (1985) . Selection of expatriate managersin multinational corporations: The host environment point ofview. International Studies of Management and Organization,15, 33-51.

Dr. Sheetal Sharma

14

Significance of Value Added Concept in Inter-firm Comparison ofBharat Petroleum Corporation Ltd. and Hindustan Petroleum

Corporation Ltd

Dr. Shilpi Jauhari*

ABSTRACT

The conventional financial system generates data relating to financial performance through Profitand Loss account and Income statement but it does not give any information regarding thedistribution of the wealth generated by the firm to its stakeholders. A modified financial reportingsystem called Value Added Statement has been introduced which is regarded as a part of thesocial responsibility accounting and reporting. The VAS can provide additional information tosatisfy all stakeholders of the enterprise. This paper recommends the preparation of VAS bycompanies over traditional financial reporting system. It also shows it as a better performanceindicator and can be use to judge the performance of different enterprises by doing inter firmcomparison of two petroleum companies .

Keywords: Profit and Loss account, Income statement, Value Added Statement, social responsibilityaccounting

* Assistant Professor, Institute of Engineering & Technology, Lucknow

Introduction

The concept of value addition basically comes fromthe very manufacturing process wherein the firm’s rawmaterials are converted into finished goods. Amanufacturing firm begins with a certain quantum ofraw materials, and then engages itself in a conversionprocess to yield a product with new utility and marketvalue which is different from the original cost ofmaterials. The excess of such market value over thecost of materials is defined as Value Added. Valueadded is a measure of the economic strength of acompany and indicates how the corporate result isachieved and for what it is used.

Value added refers to “extra” feature(s) of an item ofinterest (product, service, person etc.) that go beyondthe standard expectations and provide something“more” while adding little or nothing to its cost. Value-added features give competitive edges to companieswith otherwise more expensive products.

The term value added may be simply defined inEconomics as the difference between the value ofoutput produced by a firm in a period, and the valueof the inputs purchased from other firms in producingoutput. In equation form it can be stated as follows:

Value Added (VA) = Value of Output(VO) – Value of

Inputs (VI)

The Annual Survey of Industries (ASI, 1964) definesvalue added by manufacturer as follows:

Value Added (VA) = (Gross ex-factory value ofoutput)- (Gross value of Input)

Where Output = (aggregate value of products + workdone by for customers +sales value of goods sold inthe same condition as bought +

_ stock of semi-finished

goods)

Input = Gross value of materials, fuel, etc. work doneby other concerns for the firm, non-industrial servicebought, depreciation and purchase value of goodssold in the same condition as bought.

There are various techniques of measuring the valueadded. Value added may be classified into twocategories: Gross value added (GVA) and Net valueadded (NVA). The GVA is equal to sales plus incomefrom other services less bought-in-materials andservices purchased from outsiders. NVA is thedifference between GVA and depreciation. NVA isthe sum of the value added to employees, providersof capital, government and to shareholders. Net valueadded is the value of output less the values of bothintermediate consumption and consumption of fixedcapital.

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Value Added Statement (VAS)

For the purpose of calculating the amount of valueadded and its distribution, the value added statement(VAS) is prepared. The main concern of this statementlies in deriving a measure of wealth (i.e. value), theentity has contributed to the society through thecollective efforts of the various stakeholders. Thisstatement is prepared and published voluntarily withthe annual financial reports.

Value Added Statement (VAS) is actually aimed atsupplementing a new dimension to the existing systemof corporate financial accounting and reportingthrough the disclosure of additional informationregarding the amount of wealth created by anorganisation in an accounting period and the way thewealth has been distributed by the enterprise amongstall the stakeholders (i.e. employees, providers of loancapital , government and owners) who havecontributed to the ‘wealth created’. Since VASrepresents how the value or wealth created orgenerated by an entity is shared among differentstakeholders, it is significant from the national pointof view. Therefore, VAS represents a move in a newand different direction for financial reporting. Thisapproach can raise question of distributive justice andis directly linked with the concept of socialresponsibility of an enterprise.

Advantages of VAS

Following are the chief uses of value added Statement(VAS):

i. Value added shown in VAS can be used to measurethe business performance in a better way. Profit-basedreporting is likely to be more subjective; on the otherhand, product-based reports are more objective innature. Value added statement puts profit in a differentperspective and focuses on the success of a companyin creating wealth and generating national income.For the general public it can lead to a greaterawareness of the role of business in producing goodsand services and in generating income to the society.

ii. VAS is more useful to the employees of a companyrather than profit and loss statement. The employeeshave an interest in the wealth created by theircompany during the year, the share they receive inthe form of pay as well as the proportion reinvestedto strengthen overall financial health of the companyand enhance future job security. The income

statement, apart from being more complex than avalue added statement, is not of particular relevanceto the employees.

iii. The optimize added value is more meaningful thanthe optimize profit because added value determinesreward for employees as well as providers of loancapital. Therefore, VAS is very much useful for thecompany to introduce “productivity incentiveschemes based on added value”.

iv. VAS is used to construct VA-based ratios that areconsidered as the important diagnostic and predictivetools for making comparison of company’sperformance with other national and multinationalcompanies. The value added concept providesrelevance in determining market strategy byhighlighting the products and markets offering the bestvalue added ratios.

v. VAS, a supplementary report, is useful to providethe means for a company to reach out to an expandedaudience of users. Besides shareholders, financialanalysts academicians, professional managers,lenders, employees, auditors and the general publicwould feel interested in the outcome of thestakeholders’ contribution to the creation of wealthin the company.

From the above mentioned uses of VAS, it isworthwhile to note that an organization may survivewithout earning profit but cannot survive withoutadding value. An organization even if it is sick,especially non- profit making in nature, would remainuseful so long as it generates value.

Literature Review

Van Staden (2000) notes that, since 1954, more than150 articles, books and research reports have beenpublished on the topic of value added reporting.Evraert and Riahi- Belkaoui (1998) conclude in theirarticle that the “descriptive and empirical resultssummarized in this paper make a favourable case forthe adoption of value added reporting in the UnitedStates”.

In a study by Riahi-Belkaoui and Fekrat (1994) thevariability and persistency of derived accountingindicator numbers were tested. They found that thenumbers based on value added had lower variabilityand higher persistency than corresponding numbersbased on either earnings or cash flows. This, theyconcluded, was mainly due to the absence of the

Dr. Shilpi Jauhari

16

effects of accounting practice and smoothing of thetotal return earned by the firm as computed by thevalue added figure. Lower variability and higherpersistency made the value added informationpotentially more useful than data derived from theaccrual and cash flow sources.

Askren, Bannister and Pavlik (1994) used 34 treatmentfirms and 26 control firms to test the impact of theadoption of a performance plan on value added basedmeasures of productivity. They found that thetreatment and control firms do not differ significantlyon accounting return or productivity measures in thefive years immediately preceding and the five yearsfollowing the adoption of an accounting-basedperformance plan.

Deegan and Hallam (1991) explored corporatemanagement’s incentives to voluntarily disclose valueadded statements in the annual financial reports.Adopting a political cost perspective, a number ofhypotheses relating to value added disclosures weretested. The results suggest that, compared to arandomly selected control group, the companies thatvoluntarily presented value added statements arelarger (in terms of size and concentration), morecapital intensive, more heavily taxed and more likelyto come from the manufacturing or agriculturalindustries.

Riahi-Belkaoui did a study with Picur (1994) in whichthey concluded that value added information cansupply important explanatory power of securityvaluation beyond that provided by earnings. WithPavlik (1994) he examined the effect of ownershipstructure on a value added-based measure ofperformance. They concluded that when theconcentration of ownership is low, total returnmaximisation i.e. measured by value added is alsolow and vice versa.

Bao and Bao (1996) examined the time seriesproperties of value added as well as the predictionaccuracy of the value added series. They found thatthe random walk model , which indicates that theeffects of the factors that affect value added, and thedirection of the changes, are not predictable, best fittedthe value added measures and was consistent withthat of annual earnings and share prices.

Objectives of the Study

The main objectives of this study are:

1. To analyse the relevance of value added conceptof income in place of traditional concept of incomein Inter Financial Comparison.

2. To underline the position of the firm from differentperspectives.

3. To study highlights the additional informationbrought out by the Value Added Statements (VASs),which are never reflected by the traditional financialstatements.

4. To carry out comparative analysis of financialperformance of BPCL and HPCL on the basis of valueadded analysis.

Methodology

1. Data Collection: Secondary data has been collectedfor the research. The sources of data were internet,journals, etc. Accounting data has been collected fromthe company’s annual report of the year 2010.

2. Sampling Units: The sampling units used for thestudy are the two petroleum companies HindustanPetroleum Corporation Limited (HPCL) and BharatPetroleum Corporation Limited (BPCL).

Hindustan Petroleum Corporation Limited (HPCL)

HPCL is a Fortune 500 company, with an annualturnover of Rs. 1,08,599 Crores and sales/incomefrom operations of Rs 1,14,889 Crores (US$ 25,306Millions) during FY 2009-10, having about 20%Marketing share in India and a strong marketinfrastructure.

HPCL is one of the major integrated oil refining andmarketing companies in India. It is a Mega PublicSector Undertaking (PSU) with Navaratna status.Consistent excellent performance has been madepossible by highly motivated workforce of over11,360 employees working all over India at its variousrefining and marketing locations. HPCL continuallyinvests in innovative technologies to enhance theeffectiveness of employees and bring qualitativechanges in service.

Bharat Petroleum Corporation Limited (BPCL)

Bharat Petroleum Corporation Limited. is the firstrefinery to process newly found indigenous crudeBombay High, in the country. Today Bharat PetroleumCorporation Limited has got three refineries atMumbai, Kochi and Numaligarh.

Bharat Petroleum produces a diverse range of

Significance of Value Added Concept ...

17

products, from petrochemicals and solvents to aircraftfuel and specialty lubricants and markets them throughits wide network of Petrol Stations, Kerosene Dealers,LPG Distributors, Lube Shoppes {MAK Lubricants},besides supplying fuel directly to hundreds ofindustries, and several international and domesticairlines.

Research Instrument

For comparative analysis, the traditional ratios suchas ROCE, Net Profit Ratio, Gross Profit Ratio etc. wereused.

The accounting data based on IFC has beencomparatively analysed through computation of valueadded accounting ratios of BPCL and HPCL. Thedifferent ratios computed are as follows:

a) Value added to net worth ratio

i) GVA to Net worth

ii) NVA to Net worth

b) Value added to capital employed ratio

i) GVA to Capital employed

ii) NVA to Capital employed

c) Value added to sales ratio

i) GVA to Sales

ii) NVA to Sales

d) Net profit to value added ratio

i) Net profit to GVA

ii) Net profit to NVA

e) Value added to share capital ratio

i) GVA to Share capital

ii) NVA to Share capital

f) Value added to fixed asset ratio

i) GVA to Fixed asset

ii) NVA to Fixed asset

g) Value added to labour cost ratio

i) GVA to Labour cost

ii) NVA to Labour cost

h) Value added to material cost

i) GVA to Material cost

ii) NVA to Material cost

Analysis

Analysis is done by using value added statement ofboth the petroleum companies to calculate valueadded ratios and traditional ratios.

Value Added Statement

The value added statement of both HPCL and BPCLis given in Table I & Table II.

HPCL

How Value is Added?

Income:

Sales / Income from Operations 114,888.63

Add: Increase/ (decrease) in inventory 3,249.96

Total 118,138.59

Cost of Raw materials

Raw material consumption 37,722.89

Purchase for resale 62,677.82

Packages 136.39

Stores and spares 174.27

Utilities 473.71

Total 101,185.08

Duties applicable to products 7588.25

Total value added 9,365.26

How Value is Distributed

Particulars (in crores)

Operating and service cost 3,551.24

Employees benefits 1,617.32

Providers Of Capital

Interest on borrowings 903.75

Dividend 473.84

Income Tax/ Fringe benefit Tax 823.66

Redeployment in business

Retained 827.53

Depreciation 1,167.2

Total Value Distributed 9,365.26

Dr. Shilpi Jauhari

18

BPCL

How Value is Generated


Value of production (Refinery) 55,153

Less: Direct Material consumed (50,825)

Added value 4,328

Marketing operations 5,453

Value added by manufacturingand trading 9,781

Add: other income and priorperiod items 2,185

Total Value Generated 11,966

How Value is Distributed


Operations

Operating and Service costs 5,509

Employee Benefits

Salaries, Wages and Bonus 1,606

Other benefits 5,35

Providers of capital

Interest On borrowings 1,011

Dividend 579

Income Tax 828

Re-investment in business

Depreciation 1242

Deferred Tax (303)

Retained Profit 959

Total Value Distributed 11,966

Findings1 Comparative Analysis of HPCL & BPCL on the basisof Traditional Ratio Analysis

It is evident from the above that ratio of NP to ownedcapital of both HPCL and BPCL, for the year endingMarch 31, 2010 is 0.11. If this ratio is taken as anindex of efficiency of the managerial performance, itmay be stated that HPCL and BPCL have similarmanagerial efficiency. If the ratio of NP plus intereston loan capital to total capital employed (i.e. ownedcapital plus loan capital) is considered, the pictureappears to be more or less similar, i.e. there is slightdifference in the ratio. This ratio is 6% in case of HPCLand 7% in case of BPCL. It may be inferred from these

tests, made on the basis of accounting ratios, that themanagerial efficiency of HPCL and BPCL are quitesimilar.

But if instead of NP, NVA is treated as the criterionfor testing the efficient utilisation of capital, i.e., ratioof NVA to total capital employed or NVA to ownedcapital is considered as an index of efficiency ofmanagement then we may observe that the conclusionmade on the basis of value added (NVA) ratios wouldbe more transparent than that on the basis ofaccounting ratios. The ratio of NVA to owned capitalin the case of HPCL is 0.70, whereas it is 0.81 in thecase of BPCL. The ratio of NVA to capital employedin the case of HPCL is 0.24, whereas it is 0.30 in thecase of BPCL. From these two ratios of both the firms,it is evident that the efficiency of management of BPCLis sounder than that of HPCL.

The above difference in conclusion may possibly beanalysed by considering the following observations.

The ratio of GP to sales are same in both the case ofHPCL and BPCL, i.e., 0.03. But if instead of GP, GVAis treated as the criterion for testing the efficiency ofsales policy, i.e., ratio of GVA to Sales is consideredas an index of efficiency of sales policy then we mayobserve that the conclusion made on the basis of valueadded (NVA) ratios would be more transparent thanthat on the basis of accounting ratios. The ratio ofGVA to sale in case of HPCL is 0.08 whereas in thecase of BPCL the ratio is 0.09. This indicates that BPCLhas comparatively, though slightly, better sales policy.

The ratio of wages to sales in case of HPCL is 0.41whereas it is 0.16 in case of BPCL. This indicates thatHPCL has efficient labour productivity than BPCL. Ifwe consider value added to labour cost ratio, BPCLhas more efficient labour productivity than HPCL sincethe ratio of GVA to labour cost is 0.002 whereas incase of BPCL it is 0.5.

2 Comparative Analysis of HPCL & BPCL on the basisof Value Added Ratio Analysis

The table shows that the value added to net worthratio is greater in BPCL than HPCL. This indicates agood sign for the contributors of BPCL as regard thesafety of their funds in comparison to the contributorsof HPCL.

The value added to capital employed ratio is higherin BPCL, it can be said that managerial efficiency ofBPCL is better than HPCL. It indicates that in BPCLthere is comparatively efficient utilisation of capitalfor the generation of value added.


19

Value added to sales ratio of BPCL is higher thanHPCL. It reveals that BPCL has comparatively effectivesales promotion policy to enhance the performanceof the company than HPCL. Net profit to value addedratio of HPCL is more than BPCL. This shows thatBPCL has higher pool of owner’s share than HPCL.Value added to share capital ratio of BPCL iscomparatively more than HPCL. This indicates thatBPCL has larger contribution towards society at large.

Value added to fixed asset ratio points that BPCL isefficient in terms of capital productivity. The table

indicates that there is huge variance in the value addedto labour cost ratios of BPCL and HPCL. Value addedto labour cost ratio reveals that BPCL is highly efficientin terms of labour productivity.

The table also depicts that GVA to material ratio ofHPCL is higher than BPCL. Hence value added tomaterial cost ratio reveals that HPCL is slightly moreefficient in terms of utilisation of materials.

Implications of the Study

The following are the most important implications ofour study:

Comparative Study Between Traditional Accounting Ratios and Value Added Ratios

The different traditional accounting ratios and value added ratios are calculated.

Traditional Accounting Ratios

Sl. No. Ratios HPCL BPCL

1. NP/ owned capital 0.11 0.11

2. (NP + Interest on loan capital) / (Owned capital +loan Capital) 0.06 0.07

3. NP/ sales 0.011 0.012

4. GP/ sales 0.03 0.03

5. Wages/ sales 0.41 0.16

Value Added Ratios

HPCL

Sl. No. Particulars Set of ratios 2009-2010

1. Value added to net worth ratio GVA to net worth 0.81

NVA to net worth 0.70

2. Value added to capital employed ratio GVA to capital employed 0.28

NVA to capital employed 0.24

3. Value added to sales ratio GVA to sales 0.08

NVA to sales 0.07

4. Net profit to value added ratio Net profit to GVA 0.13

Net profit to NVA 0.15

5. Value added to labour cost ratio GVA to labour cost 0.002

NVA to labour cost 0.001

BPCL

Sl. No. Particulars Set of ratios 2009-2010

1. Value added to net worth ratio GVA to net worth 0.91

NVA to net worth 0.81

2. Value added to capital employed ratio GVA to capital employed 0.33

NVA to capital employed 0.30

3. Value added to sales ratio GVA to sales 0.09

NVA to sales 0.08

4. Net profit to value added ratio Net profit to GVA 0.12

Net profit to NVA 0.14

5. Value added to labour cost ratio GVA to labour cost 5.5

NVA to labour cost 5.0

Dr. Shilpi Jauhari

20

The performance analysis of the company on the basisof value added figure reveals the distributivejudgement in respect of all the participants of thecompany. This is not possible through theperformance analysis on the basis of Net figure only.

VAS of the company provides the means to satisfy allthe stakeholders and as a result, the analysis createswealth for the society at large, leading ultimately to astrong basis favouring social approval to carry on itsbusiness activities.

This analysis also gives an impression about the futurecontribution by the business unit towards differentstakeholders of the company and also targeted profitof the company in future.

Unlike traditional financial ratios, they are equallyimportant and useful to judge the efficiency andeffectiveness of the enterprise as regards salespromotion, utilisation fund, capital productivity,labour productivity, etc.

RecommendationsFrom the analysis it could be concluded that BPCL ismore efficient company than HPCL. HPCL should addmore value to its providers of capital in order toincrease their safety. The management of HPCL needsto optimally utilise its capital in order to increase itsefficiency. They needs to work on their salespromotion policy, i.e., it would be beneficial for thecompany to concentrate on increasing sales. Socialresponsibility is the duty of every company towardsthe society and therefore both HPCL and BPCL shouldincrease their contribution towards the society. Theprior most focus of the company should be to provideproper measures for increasing the productivity of thelabours.

ConclusionFrom the analysis so far it may be concluded thatthough VAS is very much useful to judge theperformance and productivity of an enterprise (Publicand Private) for managerial decision-making. Till nowit is at the infancy stage in the arena of financialmanagement. The main reason behind this fact is thatit is very difficult to unseat any age-old deeplyentrenched not only in practice but also in alliedusages and also in legal set up. That is why, in spiteof some obvious limitations of traditional financialstatement, VAS have failed to score enough in itsfavour either to replace or to supplement thetraditional one. Thus it is required to strengthen theconcept by promoting common practice and by

clearly defining the various technical terms used inVAS for calculating the amount of Value Added. (i.e.GVA and NVA). It is worthwhile to mention furtherthat the Academicians and Professional Bodies ofAccountants should come forward to focus thesignificance of value added statement with a view topopularize the statement amongst the users offinancial statements and to produce accountingstandard for standardized presentation of data in thisstatement. It would also facil itate inter-fi rmcomparison.

ReferencesAskren, B.J ., Bannister, J.W. & Pavlik, E.L. 1994. The Impact of

Performance Plan Adoption on Value Added and Earnings,Managerial Finance, Vol.20 No.9, pp.27-43.

Bannister, J.W. & Riahi-Belkaoui, A. 1991. Value Added andCorporate Control in the U.S., Journal of International FinancialManagement and Accounting, Vol.3 No.3, pp.241-257.

Bao, B. & Bao, D. 1996. The Time Series Behavior and Predictive-Ability Results of Annual Value Added Data. Journal of BusinessFinance & Accounting, April 1996, pp.449-460.

Braynt, J. 1989. Assessing Company Strength Using Added Value, Long Range Planning, June 1989, pp.34-44. 348 MeditariAccountancy Research Vol. 6 1998: 337-351

Deegan, C. & Hallam, A. 1991. The Voluntary Presentation ofValue Added Statements in Australia: A Political CostPerspective. Accounting and Finance, June 1991, pp.1-21.

Harris, G.J. 1982. Value Added Statements, The AustralianAccountant, May 1982, pp.261-264.

Karpik, P. & Belkaoui’, A. 1990. The Relative RelationshipBetween Systematic Risk and Value Added Variables, Journalof International Financial Management and Accounting, VoUNo .3 pp.259-276.

Morley, M. F, 1978. The Value Added Statement – A Review ofits use in Corporate Reports. The Institute of Chartered Accountsof Scotland, Gee and Co. Publishers Ltd. London.

Niranjan Mandal and Suvarun Goswami (2008), “Value AddedStatement (VAS) – A critical Analysis”, The ICFAI UniversityPress.

Pavlik, E. & Riahi Belkaoui, A. 1994. The Effects of Ownershipstructure on Value Added-Based Peiformance, ManagerialFinance, pp.16-26.

Riahi-Belkaoui, A. & Fekrat, M.A. 1994. The Magic in ValueAdded: Merits of Derived Accounting Indicator Numbers ,Managerial Finance, Vol.20 No.9, pp3-15.

Riahi-Belkaoui, A. & Picur, R.D. 1994. Explaining Market Returns:Earnings Versus Value Added Data, Managerial Finance, Vol.20No.9, pp.44-55.

Riahi-Belkaoui, A. 1993. The Information Content of ValueAdded, Earnings, and Cash Flow: US Evidence, InternationalJournal of Accountancy, Vol.28 , pp.140-146.

Stainbank, L. 1991 . The value added statement - its nature andpurpose, M Com Thesis, University of Natal, Durban.

Stewart, G.B . 1995. EVA works - but not if you make thesecommon mistakes, Fortune, May 1, 1995, pp.117-118 .

www.hpcl.co.in

www.bpcl.co.in


21

Entrepreneurship Development in Tea Industries

Prof. L. S. Yadav*

ABSTRACT

Since beginning, India has been leader in tea trade in world market. However, now tea industrieswere found facing challenges like low yield of leaf because of old uneconomical tea bushes,migration of experienced workers from colony of tea industries to cities due to haphazard laboriouswork of temporary nature, flood during May-September being high rainfall area and so on. Hence,a field study was carried out during 1990-2011 in tea industries located on north bank ofBrahmaputra to determine strategies to meet these challenges. The study revealed that yield oftea leaf of good quality could be enhanced by increasing area under plantation with superior HYVof tea. It was found feasible by increasing use of tractor, winch, subsoiler, post hole digger, leveleretc. instead of engaging labourers. Comparing yearly new planted area with farm equipment andlabourers, it was found that tea industries could replant 40-50 percent more area every year byuse of these equipment. In this paper the glimpses of tea industries, Indian tea industries in worldmarket, domestic consumption, importance, unique quality, and growth of farm equipment in teasector and potential of entrepreneurship development in these areas have been discussed. Therecommendations of this paper, if adopted, would provide sustainable growth to tea industries,while ensuring food and beverage security.

Key words: Critical field practices, control intensive operation, eco friendly mechanization,employment generating intervention, self supporting economic unit.

* Dean (Planning & Development), North Eastern Regional Institute of Science and Technology, Nirjuli,Arunachal Pradesh -791109.

Glimpses of Tea Industries

Tea as a beverage was discovered by a ChineseEmperor, when a few leaves, all of a sudden fell intoa pot having boiled water and smelt like a brew. Lateron, ceremonial status to this drink was given in Japan.It became popular as a beverage in Europe andAmerica in 1904. In India, tea plant was foundgrowing wild in jungles of Assam and during 1598 aDutch traveller, Jan Huyghan Van Linschoten wroteabout brew developed by boiling leaves of tea inwater. Then after 225 years later, Scottish adventurer,Major Robert Bruce discovered tea plants growingwild in forest of Assam in 1820. The first consignmentcarrying 12 chests of manually processed tea, madefrom indigenous Assam leaves was shipped to Londonin 1838, which was sold there on 10 January 1839 atLondon Auction Centre. There demand of tea washigh. Then Bengal Tea Association was constitutedin Calcutta for its development. After that, first jointtea company i.e. Assam company was established inLondon. In view of rapid growth of this Company,many other business organizations came forward tojoin tea sector including George Williamson and

Jorehaut Tea Company. Then tea production spilledover to other parts of India and a total of 78 teaindustries were setup at different sites, located inKumaon, Dehradun, garhwal, Simla, Kangra and Kulu,covering entire range of foot hills of Himalaya andother parts of country.

In year 1835, Darjeeling was transferred to East IndiaCompany for establishing tea industries. During 1840,some trials were conducted successfully on teacultivation and then industries were set up in 1850 inDarjeeling. By 1874, 113 tea industries covering18880 acres area were established. Their teaproduction was 3.9 million pounds. India TeaAssociation was formed in 1881 and United Planter’sAssociation of Southern India (UPASI) in 1895. Now,India is one of world’s largest producer of tea with1600 industries, having a workforce of more than 2million workers accounting for 80 per cent ofproduction and 150000 small growers, accountingfor remaining 20 percent of production of India. Afterindependence, many challenges like change inownership, flood, drought, etc. were faced by teaindustries. In spite of that, there has been an increasing

22

trend in production of tea in India. Table-1

Table - 1 Production of Tea in India, million kg

Year 1950 1960 1970 1980 1990 2000 2001 2002 2003 2004 2005 2006 2007 2008

Production 278 321 419 569 720 847 854 838 878 893 946 982 946 981

Source: The Assam Review & Tea News 98 (4): 12

and UK and these countries accounted for 65 per centof export. Ninety percent of Indian total export hasbeen to 20 selected nations. India has been facingsevere competition in all its main export markets. SriLanka and Kenya are two main competitors for Indiain export market.

Domestic Consumption and Import

In India domestic consumption has been rising dueto increase in population, living standard, change inlife style, urbanization, etc. In our country domesticconsumption has been strong enough for crushing,tearing & curling (CTC) tea unlike internationaldemand, which has been for orthodox tea and greentea. In India domestic consumption was found risingat rate of 3.00 to 5.00 per cent annually. India alsohas been importing tea from neighbouring countriesi.e. Nepal, Indonesia, Vietnam, Argentina, China, SriLanka, Malawi, Bangladesh and so on to meetdomestic requirement. During Jan-April 2009, Indiaimported 6.77 million kg of tea at an average price ofRs. 81.90 per kg against 4.87 million kg at an averageprice of Rs. 68.63 per kg in same period last year.

In our country people living in remote villages drink3-4 cups of tea per day instead of milk, which waspopular earlier. The people living in north easternstates prefer milk less red tea. While western statescitizens like Kesar colour. The tea prepared with salt,no sugar and milk, is served 2-3 times a day to workersengaged in field practices on tea gardens underscorching sunshine in Assam.

Importance of Tea Industries for India

By 2020, our population with present growth rate of1.8 per cent will increase by 30 per cent. We shallhave to produce 50 per cent additional tea to offerthem, which is possible by use of major inputs likefarm equipment, HYV seedlings of tea etc. On theother hand tea industries have been facing crisis suchas old trea bushes, flood, draught, shortage of toolsand implements, inadequate repair, power failure,erosion of natural resources, shortage of workers etc.Tea is a long term crop, hence it needs long term

Brahmaputra and Barak Valley of Assam, Darjeeling,Doars and Terai of West Bengal and Kangra ofHimachal Pradesh are main tea growing areas of northIndia. Whereas Nilgiris, Anamallais, Wayanad,Munnar and Travancore are major tea belt in thesouth. The area under tea has been increasing in northIndia, while it has been stagnating since 2006 in southIndia. Table-2.

Table: 2 Region wise area under tea, ha.

Year North India South India Total

2003 404,884 114,714 519,598

2004 406,190 115,213 521,403

2005 435,788 119,823 555,611

2006 447,371 119,649 567,020

2007 448,350 119,649 567,999

Indian Tea Industries in World Market

India was market leader in world tea trade until mid1980. The country enjoyed best time during 1990sdecade from 1991 to 1998. Now annual export hasgone to tune of 200 million kg. The export of tea fromIndia, its value and unit price during 2005-2008 arepresented in Table-3.

Table: 3

Year Quantity, Value, Unit price,million kg. Rs. crores Rs./Kg.

2005 199.05 1830.98 91.99

2006 218.73 2006.53 91.73

2008 196.03 2281.69 116.39

Source: The Assam Review & Tea News 98 (4): 13

The world export of tea from Sri Lanka was themaximum, 31,4831 thousand kg (19.94%) during2006, followed by that of Kanya, 313721 thousandkg (19.87%), China, 286463 thousand kg (18.15%),India 203857 thousand kg (12.91%) and so on (Yadav,2008) India has secured 4th position in tea exportthough there was an overall increase in export in allnations. The major export destinations were Iraq, UAE


23

planning towards its establishment and management.Tea is cultivated in specific agro-climatic condition,where otyher crops could not be grown economically.It was found in case studies that tea industries Providedemployment to all categories of people i.e.entrepreneur, unskilled worker, semi skilled worker,skilled worker and that too in remote areas.

Tea plantation fully covers soil surface and helps inpreventing natural disaster like flood, land slide,erosion, etc by conserving soil. Tea gardens provideshelter and fruit to large number of birds etc andsassists in maintaining biodiversity. The green coverof tea provide pleasant environment for all. Thesustainable growth of tea industries checks migrationof people due to enhance employment ininfrastructure development like roads, water supply,school, hospital, community centre, post office,market etc. and all these facilities were created bythe British to certain extent while establishing teaindustries in India in beginning. The railway line waspassed through tea industries by them the tea tradeearns foreign currencies through export; this businessis based on land, which helps in development ofvillages located away from cities.

Unique Quality of Indian Tea

There are two types of black tea (1st) orthodox teaand (2nd) crushing, tearing of curling (CTC) tea.Orthodox tea is preferred in world market, while CTCtea is consumed mainly in India. Orthodox accountsfor 44 percent of world market. Where as CTC teacaters to 39 percent of same the taste of tea producedin different regions with in a country differs due tovariation in soil, climate cultural practices etc. thequality is an integrated sensation of many attributeslike colour, brightness, strength, flavor, briskness andso on. The combined balance of all these attributes isrequired to define a good tea.

Assam tea has a balance of all these attributes. Thisbeverage is having bright golden yellow liquor, likedby Indians. The country people were found likingAssam CTC tea having a well made liquor, pleasingappearance and aroma. The total production of teaproduced by Assam has been half of Indian productionand this tea is well known brand in overseas market.Assam tea is robust, bright with a smooth maltpungency and perfect tea with liquor. Hence processfor granting Geographical Indication (GI) status hasbeen initiated. Fifty million kg of Assam tea will enjoy

(G.I) status soon.

Darjeeling tea was granted G.I. status with effect fromOctober 2004, which was first G.I. declaration in Indiafor tea. The registration of Darjeeling world and logois certification trade mark under trademark act in indiawas also obtained by Tea board. Logo consists ofworld Darjeeling and representation of an Indianwoman holding tea leaves, all arrange in a circle. Thename “Darjeeling Tea” could not be use by producersof same product located at different places. Darjeelingtea has been brought under preview of geographicindication of goods of goods registration andProtection of Darjeeling Tea and only 87 tea industriesof Darjeeling hills are enlisted by Tea Board to markettheir tea as Darjeeling tea.

The orthodox tea originating in the Nilgiris is knownfor their unique flavor and quality. Hence, Registrarof Geographical Indication, Chennai has registeredin under G.I. Act 1999, which is valid for 10 yearsand renewable there after. From this 41 tea industriesof Nilgiris will be benefited accounting for percent ofNilgiris production. Now 20 Million kg of The NilgirisOrthodox tea will have special status of origin.

Kangra Tea is similar in taste to Assam tea. However,its export is falling the fresh bushes have not beenplanted in Kangra valley for a long time and some ofthem are ag old as 100 years and there fore yield islow. Kangra is having 90 percent of tea area inHimachal Pradesh. The tea grown in regions likeOoty, Coonoor and Kotagiri could be easilydemarcated because of their distinctive taste andaroma.

Growth of Farm Equipments in Tea Sector

Tea production is a land based industry for whichraw material ie green leaf is grown on land. Now teahas become most popular international health drink,Good for heart. At time of establishment, it neededlarge amount of farm power for highly power intensivefield practices like forest clearing land reclamation,etc Those day tractor were not available. 150 yearsago tribes called munda, tanti, rajak, telenga, mohanti,pradhan, etc. were brought from Bengal, M.P, U.Pand Orissa the colonies for these tribes were set uparound the industries and all required infrastructuresand facilities were created. Those days horses wereavailable for supervision of various sections of tea-plantation. All labor intensive field practices like treefilling, uprooting, jungle cleaning, etc. were perform

Prof. L. S. Yadav

24

with hand tools fabricated by those tribes. Those daysheavy equipments such as bulldozer, etc. were notavailable and therefore workers were engaged ingroups for completing field operations.

Earlier, prior to independence some tractors and landreclamation equipment, imported from Europeannations were present in on tea-gardens own by theBritish. Ferguson make of tractors brought by theBritish tea-planters were engaged for carrying outsome power intensive operations. Afterindependence, manufacturing of indigenous farmequipment was started by Indian firms though manybig tea companies like Tata Tea Ltd., Brook Bond Ltd.Etc had started manufacturing of hand tools such asspade, etc.. prior to independence particularly forthere tea industries located in india during 1950-60,Ferguson, Massey Ferguson equipment imported fromUK were available in tea gardens the implement suchas disc harrow, disc plough, tea trailer, two wheeltrailer , etc including tea processing machineries weremanufactured by Calcutta based industries during1960-80, Massey Ferguson 1035, Massey Ferguson -245 International Harvester B275, all indigenousequipment falling in range of 35hp were owned bytea-planters for performing all field practices includingtransportation jobs.

During April September, majority of these tractorsattached with tea-trailer or trailer were engaged forcarrying tea leaf from various sections of plantationto factory for processing. While during off season oct-march, field practices were perform includingtransportation of inputs like fertilizer,etc. the powerintensive operation like sub soiling, etc were alsocarried out by laborers on contract. The uprooting ofshades trees and old uneconomical tea bushes wereperformed by Labourers.

The manually operated knapsack sprayers and powersprayers were available since beginning for chemicalapplication. The chemicals were applied after pruningtea bushes during winter months, Oct - Dec. Thechemicals application was considered controlintensive precise operation and therefore it wasperformed by skilled as well as experienced workersmanually. The aim was to apply chemical on pestaffected parts and check spread of diseases on teabushes. It was considered as critical field practice.The field sprayer operated by power take of shaft oftractor could not be adopted so far in absence of widelanes. Sprinklers were owned by large and medium

size gardens during 1980-90. For that assistance wasavailable from financial institution through nationalbanks for agriculture and rural development.

The large size tea industries started buying a fewnumber of 45 hp tractors, which, post hole digger,subsoiler etc during 1990, to cover more and morearea under replanting, including reclamation of floodaffected area of garden. The uprooting of olduneconomical tea bushes, sub soiling and pit diggingwere found highly power intensive and laborconsuming field practices to be completed in timeduring off season. Now medium size tea industriesalso have started buying this equipment in absenceof required number of laborers during off season. Thebasic aim of owning these equipment was to covermore and more area under replanting of superior teabushes, while replanting uneconomical sections ofplantation. There has been rapid growth in farmequipment sector and different sizes of tea industriesadopted them as per requirement, depending upontheir financial condition. However, large size teaindustries had owned farm equipment earlier thanother categories of tea industries; All tea industrieswere found in need of eco friendly mechanization,being high rainfall area vulnerable to soil erosion.

Potential for Entrepreneurship Development

Though there is good enough potential ofentrepreneurship development around tea industrythrough employment generating engineeringintervention, there are challenges too. Anon (2005),according to International Finance Corporation (IFC),asubsidiary body of world bank, India was foundhaving low curved facilities for entrepreneurship infloating a business. Which was due to proceduralways, rules , regulation, legal hurdles and formalities.The outlook of people in offering facilities toentrepreneurs was found too rigid. As a result, IFCplaced India in 116th position in there survey reportin respect of business feasibility. There are 155countries in their list. India was found down beloweven all South Asian Countries, except Afghanistanin respect of facilities that are provided to anentrepreneur. For example it look 71 days to start anew business in India, whereas it was only 50 days inSri Lanka, 21 days in Pakistan and 12 days in Maldives.

On other side, country needs economically profitable,environment friendly and sustainable technology.There is need to establish unit, which does not needhuge investment, but capable of yielding promising


25

returns having sustainable employment. Instead ofengaging workers in haphazard work of temporarynature, it will be better to keep them profitablyengaged to create permanent asset with self supportingunit. There is vast stretch of land of foot hills ofHimalaya for entrepreneurship development in farmequipment sector, which is environment friendlybusiness. In fact we have to create self supporting unitthrough employment generating engineeringintervention. Therefore, we have to develop strategyof utilization of available resources having all theseaspects. Earlier some studies were carried out in thisarea. Yadav (1994) found that use of tractors couldbe enhanced by associating more implements. Yadav(2004) found that small tea farms needed intensivemechanization. Yadav (2005) found that adoption ofmechanization technology pertaining to managementpractices enhanced yield of green leaf to tune of 11.50to 23.10 per cent. Yadav (2006) found that torrefiedbriquette was a clean fuel for tea factory, canteen,colny etv. Yadav (2008) found that tea plantaters couldrehabilitate 10-15 ha of land eroded by flood everyyear with effective use of farm machineries.

The case study was carried out during 1990-2011 in

tea growing area, located on north bank of

Bramhaputra and potential areas of entrepreneurship

were identified. The farm equipment hiring centre,

repair and over haul workshop and manufacturing

unit for implement, etc were found major areas,

related to farm equipment sector. While terrified

briquette manufacturing, bio composting and bamboo

plantation will be required due to increase in area

under tea, by use of equipment and therefore their

details are presented in this paper.

Farm Equipment Hiring Centre

The bright scope of hiring centres to benefit small

holders, small tea farmers, bought leaf factory owners,

etc. were found in Brahamputra Valley. These small

tea industry owners were not in a position to buy and

maintain costly farm equipment. They were found

completing their farm practices by hiring tractors from

contractors. After that they were found devoting their

valuable time in supervision of tea production. The

small tea industries, small holdings, and bought leaf

factories, etc. were found recent development in India

in tea sector. These units were found playing an

important role in development as they provided

employment to all categories of people, while utilizing

small tractors, power tillers, etc. Large number of

peasants was found engaged in small tea sector,

because their land was becoming sub divided as it

passed from one generation to next.

In year 1830, bought leaf factories were established

in Nilgiri district in South India. There local tribes had

switched over from ragi, maize, etc. to cultivation of

tea. Due to that economy of that area had improved.

Now there are 63,000 small growers cultivating

43,000 ha contributing 75 million kg of manufactured

tea per year. The number of BLFs and Cooperative

factories available during year 2000 are presented in

Table -4.

Table: 4Number of BLFs and Cooperative Factories

State Number Annual Production,m kg

Assam 110 50.03

West Bengal 49 22.50

Tripura 2 1.5

Himachal Pradesh 4 0.75

Arunachal Pradesh 3 0.02

Tamil Nadu 173 80.95

Kerala 13 1.73

Total 354 157.49

Source: International Journal of Tea Science 20021(4): 28

Tamil Nadu, Assam, West Bengal etc were foundhaving potential for establishing hiring centre. BLFsand Cooperative factories were found availing hiringservices of tractors etc. Good enough scope of higherhp tractors for uprooting old tea bushes, land levelling,sub soiling etc were found during off season i.e.October- March by all categories of plantations. Allof them were found searching for hiring services forreplanting more and more area during winter months.The annual use of tractor for land levelling wasmaximum (32.25%), followed by uprooting of old teabushes (27.60%), harrowing (21.26%), digging pits(10.94%) and sub soiling (07.95%), Table -5

Prof. L. S. Yadav

26

Table: 5 Operation wise use of tractors

Field Operations Hours

Uprooting Old tea bushes 351.00 (27.60)

Sub soiling 101.00 (07.95)

Land Levelling 410.00 (32.25)

Harrowing 270.00 (21.26)

Digging pits 139.00 (10.94)

Total 1271.00 (100.00)

N.B: Figures in parentheses indicate percentage oftotal hours

Source: Tea Journal of Bangladesh 37 (1&2): 25-28

The hiring centre was found more beneficial for smallholdings. Small and medium planters, who could notown higher hp. Tractors and land reclaimationequipment so far due to financial constraint etc. Thecostly and specialized equipment available at hiringcentre were found providing timely services to allcategories of plantations. This center was foundgenerating employment for two workers ( 1 driver +1helper) per tractor throughout year. The study alsorevealed that services of farm equipment hiring centrewere found timely available as compared to tractorand JCB Bull Dozer of contractors, which werereported uneconomical for all categories of teaindustries. The financial outlay amounting Rs. 10.00Lakh was found sufficient for setting up hiring centrein beginning two tractors ( one 45 hp & other one 35hp) and all required implements.

Repair and overhaul workshop

The success of repair & overhaul workshop was founddepending upon population of tractors and otherequipments, while area to be replanted governedsuccess of hiring centre. The small holders andgrowers were found having stationary engines andpower triller for lifting water and carrying inputsrequired for tea gardens. While all other tea planterswere found possessing 35 hp and 45 hp tractors forperforming field operations. The tractors falling inrange of 35 hp were utilized for transport activitieslike carrying manure, soil, coal, fertilizer, teaseedlings, saplings of shade trees, etc. these tractorswere also used for harrowing, inverting green manure,chopping grasses etc, all field operations. The higherhp tractors were used for uprooting old tea buses,land leveling, subsoiling , etc and population of such

tractors were found going up with increase in areaunder replanting and extension of area under tea. Thepopulation of tractors on tea gardens of different sizesis presented in Table-6.

Table: 6 Population of Tractors

Sizes Tractors

Small 45 to 300 ha 3 to 4

Medium 301 to 600 ha 5 to 7

Large 601 to 900 ha 8 to 10

Source: Two and a Bud, Journal of Tea ResearchAssociation 41 (1) : 50-57.

In addition to this equipment, tea Industries werefound having large number of hand tools, andprocessing equipment which needed repair,replacement of spares, reconditioning, etc from timeto time. The north bank of Brahamputra Valley wasfound having all sizes of tea industries, plantation arearanging from a few hectares to 1200 ha. The majorityof tea industries were located in remote areas far awayfrom towns and cities. While repair & overhaul workshops were found in cities. The tea planters had totravel a long distance for repair & overhaul ofequipment and due to that they were not in a positionto enhance area under replanting .Whereas everytractor needed minor overhaul after three years andmajor overhaul after 4-5 years .the failure andbreakdown of certain wearing components neededimmediate repair and replacement for timelycompletion of field operations in high rainfall area,where rain was found uncertain. Such workshop wasfound engaging 4-5 workers throughout year in minormajor repair. A small repair and overhaul unit couldbe set up with an amount of 3-4 lakhs by anentrepreneur having practical experience in that line.

Manufacturing unit

Highly labour intensive practices were involved intea production and therefore, requirement of workersper ha plantation area was 3-4, while agriculture sectoras a whole needed only 1.38 workers per ha. themajor operation of a tea industry were nursery raising,planting, replanting, maintenance of plantation andtea leaf processing. The hand tool and appliancessuch as khurpi, bucket, belcha, tray, waterer, mug,sleeves, knife, seceteur hand sprayer, rake, etc. wererequired for nursery rising throughout year. Whereasspade, hoe, long handle, fork, dao, scissors, choppers,


27

etc. were needed during off season, October-Marchfor maintenance of plantation, when leaf process wassuspended. A lot of items like bucket, container, tray,trolleys etc were required in factory during April-September for processing of tea leaf.

The tractor drawn implements and equipment weretwo wheels trailor, four wheel trailor, tea trailor, watertanker post hole digger, disc harrow, subsoiler, shrubmaster leveler, scraper, soil packer, etc which wererequired during April-September, for replanting of oldsections and extensions of area under planting. Thewithering troughs, hammer mill, rotor vane, rollingmachines, CTC bank, drier, sorting machines , etcwere needed in factory for processing tea leafs duringApril- September

In addition to all these a good number of items ofcleaning and washing were required for cleaningmachines and floor after completion of processing ofleaf tea. A large number of spares, fast wearing parts,accessories etc of implements, and machines wererequired throughout the year. At present these werepurchased from towns and cities in north easternregion. Thus there was good enough scope ofestablishing manufacturing unit of above tools,implements, equipments, accessories, spares, etc neartea industries, with a financial outlay of Rs. 4-5 lakhdepending upon items to be manufactured.

Entrepreneurship Development for workers

The involvement of workers living in colonies of teaindustries in this noble mission was found beneficial.The torrefied briquette manufacturing, vermiculture,vermiculture, vermicomposting and bamboo growingwere found within reach of workers in view of theirknowledge and economic condition and thereforedetails of these areas were collecting and presentedin this paper.

Torrefied briquette manufacturing

The data on availability of biomass from uprootingold tea bushes and shade trees with tractor & winchand labourers was collected. It was 111 to 310 metrictonnes and 55 to 156 metric tonnes uprooted bytractors & winch and a group of workers, respectively.The quantity of biomass available, when uprootedwith mechanical equipment was 50 percent on higherside. Also there was saving of time to time to tune of36.66 per cent in mechanical uprooting. Tractor andwinch enabled planters to replant 40-50 per cent more

area with superior quality HYV tea seedlings. Thebriquette could be manufactured from this biomassin two distinct ways.

The first method involved reciprocating ram/ pistonpress< while other one had screw press . the thermaltreatment of this densified fuel was done in nooxidizing environment, which improved thereburning quality . These briquettes were converted intomore stable product needed in high rainfall and humidarea. Its moisture absorbing capacity from atmospherewas reduced by torrefaction. This fuel was found anefficient source of energy for factory and clean,smokeless and health friendly fuel for colony workers.On the other hand, one manufacturing unit was foundcreating employment for 3-4 workers during off seasonand its financial outlay was found Rs 10000 only.

Sources for Quantity Averageuprooting metric tonnes days

Tractor and winch 111 to 310 19(50%) (36.66)

A group of workers 55 to 156 30

N.B. figures in parentheses indicate %

It was found during study that one active member ofevery family of colony was busy in gathering firewoodthroughout day, which was found causing a lot ofdrudgery to them, while roaming around tea industriesunder scorching sunshine. On the other hand, directburing of loose bio-mass was found creating severenegative affect on Woman. The torrefied briquette wasfound fuel saving and health friendly source for them.

Vermiculture and Vermicomposting

The requirement of manure per ha for increased areaunder replanting due to use of tractor and otherequipment was found 20- 25 trailers ( 3 tonnescapacity each) . this need could be met byvermiculture and vermicomposting by workersthemselves and there participation was beneficial fortea industries as well as workers. The raw materialfor this was locally available with them. The entirematerial like kitchen waste, paddy straw, dung, etc.their dung and droppings could be utilized for feedingearthworms.

The use of compost and earthworm cast prepared fromlocally available bio sources was found meetingrequirement of fertile soil. It also reduced cost ofproduction of tea, enhanced employment

Prof. L. S. Yadav

28

opportunities for workers living in colonies of teaindustries provided in sustainability to this economicunit. The financial outlay required for vermicultureand vermicomposting was found a few thousand only.It was almost like self supporting economic unit.

Bamboo Industry

Tea industries was found needing a large no. ofbamboos for making nursery shed, tea leaf baskets,fences , etc.their annual requirement was 100 bambooper ha area to be planted. Their demand for bambooseedlings was also high, for planting in eroded areas,because bamboo rhizomes were found keepings soilfirmly in place, completely intact and thereby checkedloss of soil to large extent. Bamboo industry wastelike bark, chips, cuttings, knots, toppings, etc. couldbe utilized for manufacturing torrefied briquettes.

This sector was found having huge potential forestablishing industry possessing nursery, plantationsand factory almost identical to tea industry. The scopeof this sector was found going up due to increase inarea under plantation with use of farm equipment. The financial outlay for starting this industry wasestimated at Rs. 10000 only within reach of colonyworkers of tea industries and for that market waslocally available.

Recommendations

Facilities for imparting training in entrepreneurshipdevelopment in farm equipment center may beprovided to academic institutions, which will ensurefood security mainly among workers of colony of teaindustries and beverage security of world.

References

Anon 2005 India ranks low in offering business environment.The Assam Review & Tea News 94(7) : 37.

Anon 2009 India tea: A cup for every mood. The Assam Review& Tea News 98(4) : 10-20.

Narayani, G.2002 The emerging segment of Indian tea scenario: The bought leaf factory . International journal of tea science1(4):27-28.

Yadav, L.S.1994 enhancing tractor utilization in tea plantation,two and a bud,journal of tea research association 41(1):50-51

Yadav, L.S. 2001 use pattern of tractors on flood effected teagarden in north Lakhimpur(Assam). Tea journal of Bangladesh37(1&2):25-28.

Yadav,L.S.2004 small tea farm mechanization forentrepreneurship development in north eastern region . Newagriculturist international journal, 15(1&2):67-73.

Yadav L.S.2005. impact of mechanization technology onproductivity of tea industy. Paper presented in internationalseminar on” India,hence-2005",organized by Invertis instituteof management during 26-27 november at Bareilly.

Yadav L.S. 2006. Tottefied briquette manufactured from biomass: a nonconventional source of energy in tea factories. Paperpresented in a international seminar on “challenges andstrategies for sustainable energy, efficiency and environment”organized by U.P Technical University during June 10-11 andpublished by new age international (P) Ltd, publishers (formelywiley eastern limited), New Delhi : 284-287.

Yadav, L.S. 2008 mechalnized tea farming in deteriorating theenvironment in north east India. Paper presented inInternational Symposium on “ plant biology and environment: changing scenario, organized by university of Allahabadduring 17-19 December at Allahabad.


29

Microfinance and Women Empowerment: A Case Study

Stanley Xavier Elango * U.Homiga **

ABSTRACT

This study makes an attempt to examine the empowerment of women through microfinance. To make theanalysis simpler and presentable, the author takes up the Coimbatore District, one of the leading Districtsof Tamilnadu for a case study. The objective of the study is to identify and analyze the trend and progressof women and their empowerment through microfinance mainly by SHG’s, to throw light on the problemsand to offer some meaningful suggestions for improving the efficiency and effectiveness. In this paper theauthors demonstrate that although microfinance does not address all the barriers to women’s empowerment,microfinance programs, when properly designed, can make an important contribution to women’sempowerment.

* Deputy Director, Institute of Co-operative Management, Hyderabad

** Lecturer, Regional Institute of Co-operative Management, Bangalore

Introduction

Microfinance programs have been increasinglypromoted in India for their positive economic impactand the belief that they empower women.Theyessentially cater to their credit needs of small means.Most microfinance programs target women with theexplicit goal of empowering them. However, theirunderlying premises are different. Microfinance allowsthem to protect, diversify, and increase theirhousehold income, the essential path out of povertyand hunger.

The ability to borrow a small amount of money totake advantage of a business opportunity, to pay forschool fees or to bridge a cash-flow gap, can be a firststep in breaking the cycle of poverty. Empowermentis a multi-dimensional social process that helps peoplegain control over their own lives, communities andin their society, by acting on issues that they defineas important. Empowerment occurs withinsociological, psychological and economic spheresand at various levels, such as individual, group andcommunity and challenges our assumptions aboutstatus quo, asymmetrical power relationship andsocial dynamics. Empowering women puts thespotlight on education and employment which aresome essential elements to sustainable development.

Women Empowerment

The concept of empowerment is defined as theprocess by which women take control and ownershipof their choices. The core elements of empowermenthave been defined as agency (the ability to define

one’s goals and act upon them), awareness ofgendered power structures, self-esteem, and self-confidence (Kabeer,2001). Empowerment can takeplace at a hierarchy of different levels – individual,household, community and societal – and is facilitatedby providing encouraging factors (e.g. exposure tonew activities, which can build capacities) andremoving inhibiting factors (e.g. lack of resources andskills).

Micro Finance and Women Empowerment

Micro-finance with Self Help Groups plays an effectiverole for promoting women empowerment. It is notonly an efficient tool to fight against poverty, but alsoas a means of promoting the empowerment of themost marginalized sections of the population,especially women.

According to Ellie Bosch it is just old wine in a newbottle (Bosch, 2002). It consists of a group of peopleof three to eight persons on the condition that eachof them would be assuming responsibility for thedevelopment of all. Micro Finance institution startedin India in 1980s through Self Help Groups (SHGs)model. It is the Grameen Banks replication model ofBangladesh. There are nearly 7,00,000 SHGs workingall over India. It is true that the concept ofmicrofinance is yet to spread its wings all over India,but at the rate in which it is expanding its branches,gives us the hope that very soon it would be reachingat the doorsteps of the majority of poors. The mostsuccessful region for microfinance is the Southern partof India; Andhra Pradesh has become the examplefor the other states in this case. The present study is

30

an attempt in this direction to analyse the impact ofSHGs on women empowerment in Coimbatoredistrict of Tamilnadu.


The broad objective of the study is to examine therole and performance of SHGs in promoting women’sempowerment in the study area. However, the studyhas some specific objectives. They are:

Primary objective: To analyze the level of impact ofthe microfinance on the lives of the womenrespondents.

Secondary Objectives:

1. To analyse the socio-economic benefits derivedby the target members after joining the SHGs.

2. To assess the level of satisfaction and involvementof the target respondents with regards to the SHGservices.

Sources of Primary and Secondary Data

In order to collect and gather primary data, fieldobservation and structured questionnaire surveymethods were employed. In addition, data were alsocollected through discussions and interviews withlocal NGOs and government’s grass roots levelworkers. Secondary data gathered from the recordsof SHGs and NGOs and government offices weresupplemented by the primary data collected from thegroup. Besides, different books, newspapers, articles,journals, magazines and web sites were also referredfor the purpose.

Profile of the study Area

For the study purpose, Coimbatore district wasselected. Coimbatore district consists of variousblocks, of which Thondamuthur andPeriyanaickenPalayam blocks, which are one of theleading areas in formation and functioning of Self-Help Groups, were selected on the grounds of easyaccessibility to data and time constraint.

Methodology

From the universe, twenty groups (10 from each block)that constitute 100 women respondents (5 membersfrom each group respectively) were selected for thestudy by following purposive sampling technique. Therequired information pertaining to the current studywas collected, by administering a structured interviewschedule.

Period of the study

The study was conducted during the period 2011-12at different interval of time.

Framework of Analysis

The data collected from each block regarding thestructure and profile of SHG members, savings andloans of SHGs, economic and social benefits derivedby SHG members, etc. has been processed separatelyand the analysis obtained from the blocks arecompiled and compared to draw the inferences aboutthe performance of the SHGs in the study area.

Table 1.1 shows that the average membership perSHG was 16. The study reveals that in theThondamuthur block, the average membership of theSelf-Help Group(17) is more than membership (15)inPeriyanaickanpalayam block. The frequency of groupmeeting by SHG indicated that fortnightly meetingswere the most common followed by monthly andweekly. Meetings are arranged regularly by NGO andGroups.

Table 1.2 shows that the average age of SHG memberswas 34.5 years, lowest being 32 years inThondamuthur block and highest being 37 years inPeriyanaickanpalayan block. Educational backgroundof the SHG members shows that most of them areliterates. So far as the occupation of the members areconcerned, around 30% are engaged in daily wageactivities. As regards to family income per SHG, itwas around Rs. 7,795.

Table 2.1 reveals that in Thondamuthur block,majority of 43 percent of the respondent’s familyincome before joining the group was below Rs.2000.But after joining the group, the respondent’s familyincome has certainly improved. About 40 percent ofthe respondent’s family income ranges from Rs.4001-6000 after joining the group. Similarly, inPeriyanaickenpalayam block, about 43 percent of therespondent’s family income ranges from Rs.2001-4000 before joining the group. But after joining thegroup, 42 percent of the respondents family incomehas shifted to the income range of Rs.4001-6000.

Table 2.2 reveals that the major change observed bythe respondents in Thondamuthur block was shift intheir food and educational expenditure before andafter joining the group (food and shelter in case ofPeriyanaickenpalayam block). Increase in foodexpenditure is nothing but improvement in quality of

Microfinance and Women Empowerment ...

31

food. Other expenses accounted for 32.89 percent inThondamuthur block and 8.3 percent inPeriyanaickenpalayam block. Total percentagechange over family expenditure inPeriyanaickenpalayam block was about 20.6 percent(35.15 percent in Thondamuthur block).

It is evident from Table 2.3 that, in Thondamuthurblock, 42 percent of the respondents (33 percent inPeriyanaickenpalayam block) were engaged in theproduction of washing powder, masala powder,muruku and pickle making. This was followed by theestablishments of shops (maligai, ration shops,

Table 1.1 Structure of SHGs in the Study Area

Particulars Thondamuthur Periyanaickanpalayam

Membership ave (No.) 17 15

Savings per SHG (Rs.) 14517 16125

Loan (Avg.) (in Rs.) 19752 17177

Frequency of group meeting (percentage):

Weekly: 25 15

Fortnightly 65 68

Monthly 10 17

Source: Compiled by the author.

Table 1.2 Profile of SHG Members

Demographic & Economic Profile Thondamuthur Periyanaickanpalayam

Age (years) 32 37

Percentage of SCs & STs 67 58

Percentage of Other Castes 33 42

Literacy (%) a) Illiterates b) Primary level c) High School & above

28 42 30

30 45 25

Occupation – a)Daily wage (%) Others

27 73

31 69

Family Income (Average) 7367 8223

Savings (%) 23 31

Indebt ness (%) from money lenders from banks from others

83 13 4

9

69.2 21.8

Source: Compiled by the author.

Table 1.3 Purpose-wise Credit Demanded by SHG Members

Purpose wise Credit Demand Thondamuthur Periyanaickanpalayam

Domestic consumption 57.66 12.91

Health 3.22 6.87

Festivals 6.11 9.78

Repayment of old debts 25.67 15.66

Investment 5.89 7.57

Others 6.45 47.21

Note: Figures in the table indicate percentages, Source: Compiled by the author.

Stanley Xavier Elango, U.Homiga

32

2. Comparative Economic Performance of the Respondents Before and After Joining the Group: 2.1 Changes in income

Income(Rs.)

Thondamuthur block Periyanaickenpalayam block

Number of respondents Number of respondents

Before After Before After

Below 2000 43 (43.0) 5 (5.0) 9 (9.0) 4 (4.0)

2001-4000 46 (46.0) 29 (29.0) 43 (43.0) 23 (23.0)

4001-6000 7 (7.0) 40 (40.0) 28 (28.0) 42 (42.0)

Above 6000 4 (4.0) 26 (26.0) 20 (20.0) 31 (31.0)


2.2 Expenditure pattern of the selected respondents

Item of Expenditure

Thondamuthur Periyanaickenpalayam

Average value (in Rs.) Average value (in Rs.)

Before After % Before After %

Food 732 1036 41.53 970 1325 36.6

Clothing 236 309 30.93 280 310 10.7

Shelter 297 410 38.05 317.5 423 33.2

Education 412 578 40.29 705 816 15.7

Transport 253 316 24.9 505 596 18.0

Savings 332 415 25.0 455.65 487.5 7.0

Others 301 400 32.89 480 520 8.3

Total 2563 3464 35.15 3713.15 4477.5 20.6


2.3 Income generating activities undertaken by the SHGs

Income generating activities Thondamuthur Periyanaickenpalayam


Agriculture\allied 9(9.0) 6 (6.0)

Manufacture 42 (42.0) 33 (33.0)

Shops 18 (18.0) 15 (15.0)

Tailor 15 (15.0) 12 (12.0)

Weaving - 9 (9.0)

Saree sales 9 (9.0) 8 (8.0)

Others 7 (7.0) 17 (17.0)

Total 100 (100.0) 100 (100.0)


2.4 Level of income earned by the respondents in undertaking the activities

Income (Rs.) Thondamuthur Block Periyanaickanpalayam Block


Below 750 11 (11.0) 9 (9.0)

751-1500 23 (23.0) 60 (60.0)

1501-2250 46 (46.0) 12 (12.0)

2251-3000 9 (9.0) 10 (10.0)

Above 3000 11 (11.0) 9 (9.0)

Total 100 (100.0) 100 (100.0)



33

Fig 2.1.1 Fig 2.1.2

Fig 2.2 Fig 2.3

Fig 2.4.1 Fig 2.4.2

Change in income (Thondamuthur Block)

0

10

20

30

40

50

Below

2000

2001-

4000

4001-

6000

Above

6000

Income Range

No

. o

f re

sp

on

den

ts(%

)

Before Joining SHG

After Joining SHG

Change in income

(Periyanaickenpalayam Block)

0

10

20

30

40

50

Below

2000

2001-

4000

4001-

6000

Above

6000

Income Range

No

. o

f re

sp

on

den

ts(%

)

Before Joining SHG

After Joining SHG

Change in Expenditure pattern after joining SHG

0

10

20

30

40

50

Food

C lo th in

g

S hel t

e r

Educ

a tio n

Tra n

spo rt

Sav in

g s

O t hers

Items of Expenses

% C

ha

ng

e in

v

alu

e

(Thondamuthur Block) Change in Average value of

expenditure (%)

(Periyanaickenpalayam

Block) Change in Average

value of expenditure (%)

05

1015202530354045

No

. o

f

resp

on

den

ts

A gric u ltu re\a llied

M anu fac ture

Shops

T ailor W e aving

Sare e sa les

O the r s

Income generating activities

Income generating activities undertaken by SHG members

Thondamuthur Block

Periyanaickenpalayam Block

Level of Income earned by the respondents in

undertaking the activities (Thondamuthur Block)

11%

23%

46%

9%

11%

Below 750

751-1500

1501-2250

2251-3000

Above 3000

Level of income earned by the respondents in

undertaking the activites (Periyanaickanpalayam

Block)

9%

60%

12%

10%

9%

Below 750

751-1500

1501-2250

2251-3000

Above 3000


34

canteens, etc.) accounting for 18 percent and 15percent of the respondents in both the blocks. ShantiAshram of Kovaipudhur and Swami VivekanandaGurukulam provided training from 7 days to the groupmembers in Thondamuthur andPeriyanaickenpalayam block respectively with astipend of Rs.40 per day. Training was provided inthe production of toys, baskets, pickles, washingpowder etc. Others included vegetable and flowervendors, flour grinders etc.

Table 2.4 shows that in Periyanaickenpalayam block,out of 100 respondents, 60 percent of therespondent’s income in undertaking the activity rangesfrom Rs.751-1500 (23 percent in Thondamuthurblock). 46 percent of the respondent’s incomeThondamuthur block ranges between Rs.1501-2250(12 percent in Periyanaickenpalayam block).

Findings of the Study

1. Educational composition of the respondents: Thesocial profile of SHG members indicates that majorityof members are literates. Majority of the respondentshas completed their primary level of education.

2. Changes in family income: It is found that themajority of the respondent’s family income beforejoining the group was below Rs.2000 and has shiftedto the range of Rs.4001-6000 after joining the SHG.They also have reported that their income earned fromthe activities undertaken in SHG to be as mainincome.

3. Expenditure pattern: The major change observedby the respondents in Thondamuthur block was shiftin their food and educational expenditure before andafter joining the group, whereas food and shelter incase of Periyanaickenpalayam block.

4. Income generating activities undertaken by theSHGs: In Thondamuthur block, 42 percent of therespondents (33 percent in Periyanaickenpalayamblock) were engaged in the production of washingpowder, masala powder, muruku and pickle making.Shanti Ashram of Kovaipudhur and SwamiVivekananda Gurukulam provided training for thegroup members in Thondamuthur andPeriyanaickenpalayam block respectively.

5. Level of income obtained by the respondents inundertaking the activities: In Periyanaickenpalayamblock, out of 100 respondents, 60 percent of therespondent’s income in undertaking the activity ranges

from Rs.751-1500 (23 percent in Thondamuthurblock).

6. Self-confidence and decision making power: It isalso observed that the self-confidence and decisionmaking power of the respondents after joining theSHGs has a drastic change. After joining the groups,the majority of the respondents have reported that,their decision making power has highly improved aswell their confidence level.

The study also reveals that SHGs have infuseddynamism among its members to climb up socio-economic ladder in the development process. Thus,SHGs have served the cause of womenempowerment, social solidarity and socio-economicbetterment of the poor for their consolidation.

Conclusion and suggestions

Considering the findings of the study, the followingsuggestions were prescribed.

• We must encourage the beneficiaries into formingprimary local units/provision units that canmobilize resources to acquire ownership of small-scale infrastructure over time and assume fullresponsibility of its operation and maintenance.

• The women should think of occupation mobilityto improve their incomes with twin objectives:crossing the poverty line as well as developing asustainable group.

• Women must be given education and trainedproperly to reap the benefit from the multiplemicro-credit schemes.

• Women must be empowered through training invarious areas such as rights and gender awarenessand consumerism.

• The members of the SHG should be more active,enthusiastic and dynamic to mobilise their savingsby group actions. In this process NGOs shouldact as a facilitator and motivator.

• Marketing facilities for the sale of products of SHGmay be created.

• Periodical exhibitions at block-level may beorganised where the products of SHG can bedisplayed.

In a nutshell, it can be concluded that the microfinance models, despite a few weaknesses,demonstrated a number of strong positive attributes


35

in terms of operational simplici ties, betteraccessibilities, wider outreaches, availability of a widerange of credit and non-credit services and therebyemphasis on women empowerment.

References

Bosch, Ellie (2002), Micro-finance: New Wine in a New Bottle,A Supplementing Role for Cordaid and IICO, March.

Censuses of India, C series, RGI, New Delhi, 2001.

Cheston, Susy and Lisa Kuhn (2002), “Empowering WomenThrough Microfinance”, Unpublished Background Paper forthe Micro-credit Summit 15, New York, 10-13 November(www.microcreditsummit.org).

Dasgupta, Rajaram (2005). “Microfinance in India: Empirical

Evidence, Alternative Models and Policy Imperatives”,Economic and Political Weekly, 19 March.

Kabeer, N. (2001), “Resources Agency Achievements: Reflectionson the Measurement of Women’s Empowerment – Theory andPractice”, SIDA Studies, No. 3.

Kapoor, Pramilla (2001), Empowering the Indian Women,Publications Division, Ministry of Information andBroadcasting, Government of India.

Malhotra, Meenakshi (2004), Empowerment of Women, IshaBooks, Delhi.

Women Empowerment Through Micro Finance – A Boon ForDevelopment – Tiyas Biswas.

Empowering Women Through Micro Finance – Susy Cheston &Lisa Kuhn.


36

Buying Behaviour of Consumers in respect of the ‘Aavin’ Milk andMilk Products of Cooperative Milk Producers’ Unions: A study

Dr.S.Velanganni* Dr.B.Tamilmani**

* Assistant Professor, PG Department of Co-operation, SRMV College of Arts and Science, Coimbatore, Tamilnadu.** Professor and Head, Department of Co-operation, Gandhigram Rural University, Dindigul, Tamilnadu.

Introduction

Consumers are the fulcrum for the success of anybusiness organization that deals with marketing ofproducts and services. Marketing performance of anybusiness organization is highly influenced by theconsumers who form the core of business transactions(Mathur B.S. 2000). Consumers’ attitudes andperceptions play a significant role in their behaviortowards their organization and the performance ofsuch organizations. In Tamil Nadu, dairy cooperativesplay a predominant role in respect of production,processing and marketing of milk and milk products.Further, the market share being held by dairycooperatives is highly remarkable and significantamidst stiff competition (Deepak Shah and Alok Shah.1996). A majority of urban population is believed tobe the regular customers of ‘Aavin’ branded dairyproducts in Tamil Nadu owing to their quality, priceand standards of products (Eswara Prasad. 1992).Keeping this in view, an in depth analysis ofconsumers perception towards the dairy products of‘Aavin’ brand has been made in this study. For thepurpose of analysis, demographic, social andeconomic profile of households has been taken intoaccount. Besides, the pre and post purchase behaviorof consumers has also been gauged (Ranjit Kumarand A.K. Sharma. 1989).

Methodology

As for the selection of consumers, a convenientsampling method was adopted. One hundredconsumers from each union were identified andinterviewed at the time of their purchase from thesales centre with the help of a structured interviewschedule. Thus, 600 consumers formed the samplingsize of the study, for assessment of the buyingbehaviour of consumers with respect to milk.

A separate structured interview schedule was framed,pretested and finalized to collect the data from theconsumers of milk and milk products. The data

collected were tabulated and analyzed with the helpof appropriate statistical tools. SPSS (Statistical Packagefor Social Sciences) was used for data analysis. Simplepercentages, statistical tests such as, chi-square test,correlation, The purpose of using the statistical toolsis to make the analysis more comprehensive and todraw meaningful inferences. A summary of keyfindings was made, based on inferences.

Results and Discussion: Demographicprofile of the respondents

Age: Age and gender are important demographicfactors that influence both the socio-economic andthe cultural behavior of an individual. Age is animportant factor used by all for role assignments(Ghosh A.K.1987). It is an important symbol of self.People make use of age as a symbol of appearance,degree of autonomy, activities engaged in, impressionof identity and belongingness (Lundberg et al., 1958).In cooperatives, members under young and middleage categories have exhibited a high level ofparticipation in cooperative management (GhuryeG.S. 1950) and the young and middle aged borrowershave recorded the highest percentage of promptrepayment (Rao V.M. 1996).

Education: Cooperative education has beenconsidered a basic input and ingredient for sound andsustainable cooperative development. Right from thetime of the Rochdale Pioneers (1844), down to theICA Manchester Congress in September 1995,cooperative education has been emphasized as oneof the essential principles of cooperation. AllCommissions and Committees have also emphasizedthe need for enlightened members in cooperatives.To quote a few, as early as 1915, the MaclaganCommittee on cooperation observed, “Most of thedefects which we find in cooperative societies couldbe traced to lack of teaching both before and afterthe registration of societies”. Member education incooperatives is essential to impart basic awarenessabout the cooperative movement, the cooperative

37

principles and the working of their cooperative society(Jaya Arunachalam. 1999.). Education is a process bymeans of which individuals develop abilities andattitudes which are necessary for social life.Cooperatives are democratic institutions providing forboth economic and social development of humanbeings and thereby they impart education which isessential for the social transformation of people(Mrutyunjai Sarangi and M.Raman. 2000). Memberswho participate in cooperatives may have a high levelof knowledge on the economic and social values andthe members need to understand their rights andresponsibilities to participate in the affairs of thecooperatives (Joshi P. 1985 and Subburaj B. 1992).

Table 1 shows that out of 600 respondents, 21 percentwere under young age category, 42 percent werefound to be middle aged and the rest 27 percentage

fall under old age category. Moreover, the analysisreveals that the majority (35%) of the respondents fallunder upper poverty category whose annual incomeis below Rs.0.60 lakh; 42 percent of the respondentsunder the old age category have annual incomeranging between Rs.1.00 lakh to 1.50 lakh (middleupper category) and only 10 per cent of therespondents have an annual income of above Rs.2lakh (high upper income group). However, thecorrelation analysis indicates that there is nosignificant relationship between age and annualincome of the respondents as the calculatedcorrelation value 0.426 is not significant at 0.01 level.Therefore, it may be stated that there is no significantrelationship between income and age of therespondents.

* Figures in parenthesis are percentages to column total* Figures in parenthesis are percentages to row total Correlation between age and annual income of the respondents 0.426 which is not significant at 0.01 levelChi-square value between education and annual income of the respondents 36.106 which is not significantat 0. 01 levelLegend: below 0.60 lakh – upper poverty, 0.60 – 1.00 middle income, 1.00 to 1.50 middle upper, 1.50 to2.00 high income and above 2.00 high upper income

Table : 1 Demographic profile of the respondents (Numbers)

Details Annual income ( in lakh)

Below 0.60

0.60- 1.00 1.00- 1.50 1.50-2.00 Above 2.00

Total

Age

< 35 yrs (Young)

41 (19.5)

30 (23.62)

22 (19.13)

16 (19.20)

17 (26.16)

126 (21.0)

36-50 yrs (middle )

86 (40.95)

55 (43.30)

44 (38.26)

38 (45.78)

32 (49.23)

255 (42.0)

>50 yrs (old)

83 (39.50)

42 (33.08)

49 (42.01)

29 (34.95)

16 (24.61)

219 (27.0)

Total 210 (35.0)*

127 (21.2)

115 (19.2)

83 (13.8)

65 (10.8)

600 (100)

Education

Illiterate 24 (11.42)

20 (15.74)

7 (6.00)

2 (2.40)

7 (10.78)

60 (10.0)

Primary 42 (20.00)

2 (1.57)

12 (12.43)

4 (4.81)

13 (20.00)

73 (12.0)

SSLC 40 (4.76)

32 (25.19)

6 (5.23)

7 (8.43)

3 (4.61)

58 (10.0)

SHC 55 (26.85)

44 (34.64)

40 (34.78)

23 (27.71)

17 (26.18)

179 (29.0)

Diploma 27 (12.85)

29 (22.86)

13 (11.30)

8 (1.20)

15 (23.6)

92 (15.0)

Graduate 52 (24.78)

0 37

(32.17) 39

(46.98) 10

(15.38 138

(24.0) Total 210

127

115

83

65

600

Dr.S.Velanganni, Dr.B.Tamilmani

38

Education: Educational status of the respondentsshows that only 10 per cent are illiterate. Of the totaleducated respondents, 29 percent respondentspossessed higher secondary education, 24 percent aregraduates and 15 percent are diploma holders.Though there are differences in the education andannual income level among the respondents, the chi-square value analysis indicated that there is nosignificant association between annual income andeducation level of the respondents since the calculatedchi-square value was 36.106, which is not significantat 0.01 level (Table -1) .

Social profile

Family size: The family is the school of civic virtues.A child learns the first lessons of citizenship in thefamily. The virtues of love, cooperation, tolerance,sacrifice, obedience and discipline are first learnt bythe child in the family. These qualities enable him togrow into a good citizen. The family imparts theknowledge of social customs, mores etc.(Madan G.R.1989) to the coming generation. It exercises socialcontrol over its members, which helps in themaintenance of a well organized society (SubburajB. and Karunakaran R. 2002). The influence of thefamily upon the individual is deeper and more visible.Family being a primary group, its members areimbibed with a feeling of ‘oneness’ which accountsfor transmission of the family values and sentiments.(Krishnaswami O.R.1976). The size of family isalso an important factor which decides theparticipation of the family members in socialinstitutions. It affects the role perception and roleperformance of an individual. The type and the sizeof the family determine the income level, the patternof expenditure and the standard of living. Studies byEswara Prasad (1992), Sunitha Kaushik (1993),witnessed that the type and the size of the family exerthigh influence on the purchasing behavior ofconsumers.

Social Participation

Social participation of an individual refers to holdingmembership and other position in various formal andinformal social organizations such as cooperatives,panchayat bodies, traditional panchayat, politicalparty, NGOs, religious organizations, casteorganization, youth clubs, farmers association, selfhelp groups, educational institutions, governmentbodies etc. The nature and extent of social

participation may influence the buying behaviour ofconsumers (Laitha N. 1996). The level of socialparticipation has been measured by consideringparticipation in different organizations. Based on thesocial participation index score, respondents weregrouped into three categories viz., low level, mediumlevel and high level of social participation (KulkaraniK.R. 1962).

Family size: The survey result shows that the majority(67.66%) of the respondents fall under medium sizefamily category and seem to be spread proportionallyin all income categories. Only 9.5 per cent of therespondents were found to be in big size familycategory. Further the results of correlation analysisshow that there is no significant relationship betweenfamily size and income of the respondents since thecalculated correlation value 0.122 is not significantat 0.01 level(Table -2).

Family type: The study found that out of 600respondents, the majority (59%) of the respondentsbelong to nuclear family and only 41 percent belongto joint family. However, the study reveals thatalthough there is a marked difference between theannual income and family type of respondents, thechi square test reveals that there is no significantassociation between family type and income level ofthe respondents as the calculated chi-square value16.211, is not significant at 0.01 level(Table -2).

Community: The study found that 58 per cent of therespondents belong to BC communities followed bySC/ST (20.5 per cent) and the FC community (16.0per cent). The chi-square analysis indicates that thereis no significant relationship between annual incomeand community of the respondents since thecalculated chi-square value 31.241 is not significantat 0.01 level(Table -2).

Social participation: The study reveals that as muchas 52 per cent of the respondents have low level ofsocial participation, while as much as 38 per centhave medium level of social participation and 9.34per cent respondents have high level of participationin social activities. Moreover, the correlation testshows that there is a significant relationship betweensocial participation and annual income of therespondents since the calculated correlation value0.78 is significant at 0.01 level. Therefore, it may bestated that income level of the respondentssignificantly influences the level of social participationof consumers.

Buying Behaviour of Consumers ...

39

Economic profile: The variables such as total numberof earning members in a family, total assets and totalexpenditure were considered for the purpose of

analysis assuming that these variables may have theirown influence in the perception of consumers towardsmilk and milk products.

Table: 2 Social profiles of the respondents


Below 0.60

0.60- 1.00 1.00- 1.50 1.50-2.00 Above 2.00

Total

Family size Below 4 56

(26.66) 36(28.34) 22(19.13) 14(16.86) 9(13.84) 137(22.83)

5-6 130(61.90)

86(67.71) 85(73.91) 57(68.69) 48(73.8

4) 406(67.66)

Above 7 24(11.44) 5(3.95) 8(6.95) 12(14.45) 8(12.32) 57(9.5) Total 210 127 115 83 65 600

Family type Joint 90

(42.86) 60(47.25) 41(35.66) 27(32.54)

29(44.62)

427(41.17)

Nuclear 120(57.14)

67(52.75) 74(64.34) 56(67.46) 36(55.3

8) 353(58.83)

Total 210(100) 127(100) 115(100) 83(100) 65(100) 600(100) Community

SC/ST 45(21.42) 27(21.25) 20(17.39) 24(28.91) 7(10.76) 123(20.5) BC

20(9.52) 72(56.69) 73(63.47) 51(61.44) 27(41.5

3) 349(58.16)

MBC 15(7.14) 5(3.93) 2(1.75) 4(4.81) 6(9.23) 32(5.35) FC

30(14.28) 23(18.11) 20(17.31) 8(9.63) 15(23.0

7) 96(16.00)

Total 210(100) 127(100) 115(100) 83(100) 65(100) 600(100) Social participation

Up to 1 low 116(55.23)

63(49.60) 71(61.74) 39(46.98) 25(38.4

8) 314(52.33)

2-3 medium 87(41.42) 54(42.51) 34(29.56) 30(36.14)

25(29.48)

230(38.33)

Above 3 high

7(3.35) 10(7.87) 10(8.70) 14(16.85) 15(23.0

7) 56(9.34)

Total 210(100) 127(100) 115(100) 83(100) 65(100) 600(100)

Figures in parenthesis are percentages to column total

Correlation value between family size and annual income of the respondents is 0.122 which is not significant at 0.01 level

Chi-square value between type of family and annual income of the respondents is 16.211 which is not significant at 0.05 level

Chi-square value between community and annual income of the respondents is is 31.241 which is not significant at 0.05 level

Correlation value between social participation and annual income of the respondents is 0.78 which is significant at 0.01 level


40

Earning Members: The study reveals that 57 per centof the respondents’ families have one earningmember, 35 per cent of the respondents’ families havetwo earning members and 9 per cent of the

respondents have above three earning members.Moreover, the correlation test shows that there is asignificant relationship between earning members andannual income of the respondents since the calculated

Table: 3 Economic profile of the respondents


Below 0.60

0.60- 1.00 1.00- 1.50 1.50-2.00 Above 2.00

Total

Earning members Only 1 162

(77.14) 72

(56.70) 59

(50.30) 30

(36.14) 17

(26.15) 340

(56.66) 2 40

(19.04) 47

(37.00) 46

(40.0) 42

(50.60) 36

(55.38) 211

(35.16) > 3 8

(3.82) 8

(6.30) 10

(8.70) 11

(13.26) 12

(18.47) 49

(8.18)

Total 210 (100)

127 (100)

115 (100)

83 (100)

65 (100)

600 (100)

Expenditure Below Rs.50000

195 (92.85)

77 (60.60)

7 (6.08)

15 (18.07)

12 (18.46)

306 (51.00)

Rs.50000-1.00 lakh

15 (7.25)

50 (39.38)

34 (29.56)

18 (21.68)

29 (44.61)

146 (24.33)

Rs.1.00 – 1.50 lakh

- - 62 (53.91)

37 (44.50)

16 (24.61)

115 (19.16)

Above Rs.1.50 lakh

- - 12 (10.46)

13 (15.66)

8 (12.30)

33 (5.50)

Total 210 (100)

127 (100)

115 (100)

83 (100)

65 (100)

600 (100)

Assets Below Rs.2.00 lakh

28 (13.34)

10 (9.99)

8 (6.95)

10 (12.04)

9 (13.84)

65 (10.83)

Rs.2.00 – 4.00 lakh

117 (55.71)

46 (36.22)

38 (33.05)

45 (54.21)

34 (52.30)

280 (46.66)

Above Rs.4. lakh

65 (30.95)

71 (55.90)

69 (60.0)

28 (33.75)

22 (33.84)

255 (42.51)

Total 210 (100)

127 (100)

115 (100)

83 (100)

65 (100)

600 (100)

Figures in parenthesis are percentages to column total Correlation value between earning members and annual income of the respondents is 0.126 which is significant at 0.01 level Correlation value between expenditure and annual income of the respondents is 0.86 which is significant at 0.01 level Correlation value between assets and annual income of the respondents is 0.672 which is significant at 0.01 level


41

Table: 4 Quantity and sources of purchase of milk by the respondents

Sources of buying Daily qty ( liters)

Booth Agent Retailers

stores Parlours Total

Below 0.50 27 (25.23)

48 (21.91)

29 (21.64)

26 (18.57)

130 (21.66)

0.50 – 1.00 32 (29.90)

73 (33.34)

42 (31.34)

38 (27.14)

185 (30.83)

1.00 – 1.50 25 (23.36)

32 (14.61)

30 (22.38)

40 (28.57)

127 (21.16)

1.50 – 2.00 15 (14.02)

46 (21.00)

24 (17.91)

24 (17.14)

109 (18.16)

Above 2.00 8 (7.47)

20 (9.14)

9 (6.72)

12 (8.57)

49 (8.15)

Total 107 (100)

219 (100)

134 (100)

140 (100)

600 (100)

Figures in brackets indicates percentages to column total

Table: 5 Reasons for preferring Aavin brand milk

S. No

Particulars Total

No= 600 Percentages Rank

1 Reasonable price 567 95 III

2 Correct weighment 580 96 II

3. Convenient Sales point 576 93 IV

4. Adequate quantity 492 82 VI

5. Good quality 582 97 I

6. Convenient packing 572 95 III

7. Maintenance of quality 236 39 XI

8. Available in required packing 441 73 VII

9. Good taste 540 90 V

10. Schemes relating to purchase 76 12 VIII

11. Freshness 406 67 VII

12. Advertisement 160 26 XI

13. Printing of expiry date/ manufacturing date 222 37 X

14. Good for health 102 17 XII

15. Doctor advise 67 11 XIV


42

correlation value 0.126 is significant at 0.01 level.Therefore, it is stated that there is a significantrelationship between income and earningmembers((Table -3).

Expenditure: The survey result shows that as highas 51 per cent of the respondents’ expenditureamounted to below Rs.50, 000 followed by 24.33per cent ranging between Rs.50000 – 1.00 lakh and19.16 per cent ranging between Rs.1.00 lakh andRs.1.50 lakh. The result of the correlation test showsthat there is a significant relationship between incomeand expenditure since the calculated correlation value0.86 is significant at 0.01 level((Table -3).

Assets: The survey reveals that as high as 47 per centof the respondents possess assets worth between Rs.2lakh and 4 lakh and about an equal per cent ofrespondents (43) possess assets worth Rs. 4 lakh andabove. However, the study reveals that there is asignificant relationship between the annual incomeand assets of the respondents since the calculatedcorrelation value 0.672, is significant at 0.01 level.Therefore, it may be inferred that the increase inincome leads to increase in assets(Table-3).

Buying behaviour of consumers towards milk andmilk products

A detailed analysis has been made to assess the buyingbehaviour of consumers towards milk and milkproducts being marketed by the selected unions

(Lundberg G.A. Schrag C.C and Maciver R.M. 1960).For the purpose of analysis, variables such as quantityand sources of purchase of milk and milk products,reasons for preferring Aavin branded milk and milkproducts, tenure of purchase, and consumptionpattern of milk and milk products were considered.Further, analysis has also been made through fieldsurvey to assess the level of satisfaction of consumerstowards milk and milk products. Finally, the problemsfaced by the consumers at the time of purchase andalso use of milk and milk products and suggestions toovercome the problems.

Quantity and sources of purchase of milk: Thetable(Table 6.4) reveals the sources of buying of milkby the consumers. The survey shows that as much as37 per cent of the respondents are buying throughagents, 23 per cent of the respondents buy fromretailers and an equal per cent buy from parlours.Further, as high as 73 per cent of the respondentspurchase milk to the tune of 0.5 litres – 1.5 litres perday. It is therefore inferred that sale throughcommission agents is high(Table -4).

Reasons for preferring Aavin brand milk: The reasonsfor preferring Aavin brand milk was analysed. Amidstvarious reasons, a majority of the respondentspreferred Aavin brand milk due to its good quality(97%), correct weighment (96%), reasonable price(95%), convenient packing (95%), convenient salespoint ( 93%) and good taste (90%).

Table: 6 Tenure of purchase of Aavin milk

Income Tenures

Below 0.60

0.60- 1.00

1.00- 1.50

1.50-2.00

Above 2.00 Total

Below 5 years

58 (27.61)

26 (20.47)

35 (30.43)

19 (22.89)

5 (7.69)

143 (23.83)

5-10 86 (40.95)

66 (51.96)

44 (38.26)

33 (39.75)

30 (46.15)

259 (43.16)

10-15 years 46 (21.90)

27 (21.25)

21 (18.26)

17 (20.48)

20 (30.76)

131 (21.83)

Above 15 years

20 (9.52)

8 (6.29)

15 (13.04)

14 (16.86)

10 (15.38)

67 (11.18)

Total 210 (100)

127 (100)

115 (100)

83 (100)

65 (100)

600 (100)


Chi-square value between income and tenure of purchase of Aavin milk of the respondents is 3.251 which is not significant at 0.01 level


43

Tenure of purchase of Aavin milk: It is understoodfrom table 5.6 that 44 per cent of the respondentspurchase milk for 10-15 years followed by 24 per centof the respondents who purchased milk for more than5 years and 12 per cent above 15 years. The chi-square

analysis indicates that there is no significantassociation between annual income and tenure ofpurchase of the respondents since the calculated chi-square value 3.251 is not significant at 0.01 level.Therefore, it is concluded that income is not

Table: 7 Socio-economic profile and daily milk consumption by the respondents

(Daily)

Milk Category

Below 0.50 litres

0.50 – 1.00 litres

1.00 – 1.50 litres

1.50-2.00 litres

Above 2.00 litres

Total

Family size

Below 4 69(53.07) 47(25.40) 14(11.02) 7(6.42) - 137(22.84)

5-6 46(35.38) 121(65.40) 103(81.10) 96(88.07) 40(81.63) 406(67.66)

Above 7 15(11.55) 17(9.60) 10(7.88) 6(5.50) 9(18.37) 57(9.5)

Total 130(21.0) 185(30.0) 127(21.0) 109(18.0) 49(8.0) 600(100)

Income

0.60 lakh 16(12.30) 68(36.75) 72(56.69) 34(31.19) 20(40.81) 210(35.0)

0.60 -1.00 38(29.23) 41(22.16) 30(23.62) 10(9.17) 8(16.32) 127(28.0)

1.00-1.50 42(32.36) 46(24.86) 9(7.08) 12(11.00) 6(12.84) 115(19.10)

1.50-2.00 26(20.0) 13(9.20) 10(7.87) 29(24.60) 5(10.20) 83(13.83)

Above 2.00 8(6.15) 17(9.20) 6(4.72) 24(22.01) 10(20.40) 65(10.87)

Total 130(21.0) 185(30.0) 127(21.0) 109(18.0) 49(8.1) 600(100)

Occupation

Govt. 1(0.76) 4(2.16) 7(5.51) 8(7.33) 10(20.40) 30(5.0)

Private 72(55.38) 96(51.89) 76(59.84) 72(66.05) 12(24.48) 328(54.66)

Professional 21(16.15) 46(24.86) 22(17.32) 20(18.34) 17(34.69) 126(21.00)

Self employment

36(27.69) 39(21.08) 22(17.22) 9(8.25) 10(20.40) 116(19.34)

Total 130(21.0) 185(30.0) 127(21.0) 109(18.0) 49(8.1) 600(100)

Education

Illiterate 3(2.30) 18(9.72) 12(9.44) 19(17.43) 8(16.32) 60(10.00)

Primary 5(3.84) 20(10.81) 19(14.96) 22(20.18) 7(14.28) 73(12.16)

SSLC 18(13.84) 12(6.48) 10(7.87) 12(11.00) 6(12.24) 58(9.66)

HSC 65(50.0) 47(25.40) 48(37.79) 10(9.17) 9(18.36) 179(29.83)

Diploma 16(12.30) 40(21.62) 10(7.87) 20(19.34) 6(12.24) 92(15.33)

Graduate 23(17.69) 48(25.94) 28(22.04) 26(23.85) 13(26.53) 138(23.00)

Total 130(21.0) 185(30.0) 127(21.0) 109(18.0) 49(8.1) 600(100)

Figures in brackets indicate percentages to column total Chi-square value between family size and daily consumption of Aavin milk of the respondents is-17.382 which is not significant at 0.01 level Chi-square value between Income and daily consumption of Aavin milk of the respondents is 19.852 which is not significant at 0.01 level Correlation value between Occupation and daily consumption of Aavin milk of the respondents is 0.690 which is not significant at 0.01 level Correlation value between Education and daily consumption of Aavin milk of the respondents is 0.168 which is not significant at 0.01 level


44

influenced greatly on the tenure of purchase of Aavinmilk((Table -6).

Daily milk consumption and family size: It is revealedfrom the table that 31 per cent respondents ofconsume 0.50 – 1.00 litre, followed by 21 per cent(1.00 –1.50 litres) and an equal per cent consumeupto 0.50 litres. However, the chi-square test indicatesthat there is no significant association between familysize and daily milk consumption of the respondentssince the calculated chi-square value 17.382 is notsignificant at 0.01 level. Hence, it may be concludedthat the family size does not influence the daily milkconsumption of the respondents (Table -7).

Daily milk consumption and income: Therespondents under upper poverty income category(57 per cent) consume milk daily to the tune of 1.00to 1.50 litres. Only 13 per cent of respondents underhigh upper income category consume milk to the levelof 1.50 litres to 2.00 litres daily. Further, 22 per centof the respondents under upper income categoryconsume milk to the level of 1.50 litres -2 litres.However, the chi-square test indicates that there isno significant association between income and dailymilk consumption of the respondents as the calculatedchi-square value 19.852 is not significant at 0.01 level.Therefore, it may be concluded that the level ofincome does not influence the daily milk consumptionof the respondents (Table -7).

Daily milk consumption and occupation: The

majority (54.66 per cent) of the respondents areemployed in private organisaitons, 21 per cent ofrespondents are professionals, 18.34 per cent ofrespondents are self employed and only 5 per cent ofrespondents are Government employees. It is noticedthat the majority of the respondents consume milk tothe level of 1-2 litres a day. However, the correlationtest shows that there is no significant relationshipbetween occupation and daily milk consumption ofthe respondents since the calculated correlation value0.690 is not significant at 0.01 level. So, it is inferredthat the occupation level of the respondents does notinfluence the daily milk consumption. Also, milkbeing essential commodity, is consumed by therespondents irrespective of their occupation(Table -7).

Daily milk consumption and education: Almost allthe respondents irrespective of their educational statusconsume milk daily. Respondents possessing HSCqualification form the highest percentage (29.83%)in consuming milk daily followed by graduates (23%)and diploma holders (15.33%). However, thecorrelation test shows that there is no significantrelationship between education and daily milkconsumption of the respondents since the calculatedcorrelation value 0.168 is not significant at 0.01level(Table -7).

Preference of Colour bag and sources of buying milk:The above table reveals that the preference of colourbag of milk was analysed. The survey shows that as

Table: 8 Preference of Colour by the respondents

Colour of bag Sources of buying

Maroon Orange Blue Total

Booth 17

( 13.38) 21

(15.78) 69

(20.29) 107

(17.83)

Agent 42

(33.07) 49

(36.84) 128

(37.64) 219

(36.51)

Retailers 24

(18.89) 36

(27.08) 74

(21.76) 134

(22.34)

Parlours 44

(34.64) 27

(20.30) 69

(20.29) 140

(23.31)

Total 127

(21.16) 133

(22.16) 340

(56.66) 600 (100)



45

much as 56.66 per cent for respondents are preferringaavin brand colour bag of blue, 22.16 per cent ofrespondents are preferring orange colour, 21.16 per

Chart 1

cent are preferring maroon colour brand bag. Further,as high as 36 per cent of the respondents arepurchasing milk through agents.

Table: 9 Reasons for preferring Colour of bag

S. No

Particulars Total

No= 600 Percentage Rank

1 Reasonable price 540 90 VIII

2 Correct weighment 595 99 I

3. Convenient Sales point 530 89 IX

4. Adequate quantity 519 91 VII

5. Good quality 598 98 II

6. Convenient packing 590 98 II

7. Maintenance of quality 584 97 III

8. Available in required packing 556 82 X

9. Good taste 583 97 III

10. Schemes relating to purchase 564 94 VI

11. Freshness 591 95 V

12. Advertisement 430 71 XI

13. Printing of expiry date/ manufacturing date 596 99 I

14. Good for health 580 96 IV

15. Fat contents 592 98 II


46

Reasons for preferring Aavin brand colour of bag:The reasons for preferring Aavin brand colour milkwas analysed. Amidst various reasons, a high majorityof the respondents preferred Aavin brand colour milkdue to its good quality (99%), correct weighment(99%), reasonable price (90%), convenient packing(98%), convenient sales point ( 89%) and good taste(97%).

Major Findings and Suggestion

1. Age of the respondents: 21 percent were underyoung age category, 42 percent were found to bemiddle aged and the rest 27 percentage fall underold age category. Moreover, the analysis reveals thatthe majority (35%) of the respondents fall under upperpoverty category whose annual income is belowRs.0.60 lakh; 42 percent of the respondents underthe old age category have annual income rangingbetween Rs.1.00 lakh to 1.50 lakh (middle uppercategory) and only 10 per cent of the respondentshave an annual income of above Rs.2 lakh (high upperincome group).

2. Education: Only10 percent are illiterate. 29 percentrespondents possessed higher secondary education,24 percent are graduates and 15 percent are diplomaholders.

3. Family size: 67.66 of the respondents fall undermedium size family category and seem to be spreadproportionally in all income categories. Only 9.5 percent of the respondents were found to be in big sizefamily category.

4. Family type: The majority (59%) of the respondentsbelongs to nuclear family and only 41 percent belongto joint family.

5. Community: The study found that 58 per cent ofthe respondents belong to BC communities followedby SC/ST (20.5 per cent) and the FC community (16.0per cent).

6. Economic Earning Members: 57 per cent of therespondents’ families have one earning member, 35per cent of the respondents’ families have two earningmembers and 9 per cent of the respondents haveabove three earning members.

7. Expenditure: 51 per cent of the respondents’expenditure amounted to below Rs.50, 000 followedby 24.33 per cent ranging between Rs.50000 – 1.00lakh and 19.16 per cent ranging between Rs.1.00 lakhand Rs.1.50 lakh..

8. Assets: 47 per cent of the respondents possess assetsworth between Rs.2 lakh and 4 lakh and about anequal per cent of respondents (43) possess assets worthRs. 4 lakh and above.

9. Quantity and sources of purchase of milk: 37 percent of the respondents are buying through agents,23 per cent of the respondents buy from retailers andan equal per cent buy from parlours. Further, as highas 73 per cent of the respondents purchase milk tothe tune of 0.5 litres – 1.5 litres per day. It is thereforeinferred that sale through commission agents is high.

10. Reasons for preferring Aavin brand milk: Thereasons for preferring Aavin brand milk was analysed.Amidst various reasons, a majority of the respondentspreferred Aavin brand milk due to its good quality(97%), correct weighment (96%), and reasonableprice (95%),

11. Tenure of purchase of Aavin milk: 44 per cent ofthe respondents purchase milk for 10-15 yearsfollowed by 24 per cent of the respondents whopurchased milk for more than 5 years and 12 per centabove 15 years.

12. Daily milk consumption and family size: 31 percent respondents of consume 0.50 – 1.00 litre,followed by 21 per cent (1.00 –1.50 litres) and anequal per cent consume upto 0.50 litres.

13. Daily milk consumption and income: Therespondents under upper poverty income category(57 per cent) consume milk daily to the tune of 1.00to 1.50 litres. Only 13 per cent of respondents underhigh upper income category consume milk to the levelof 1.50 litres to 2.00 litres daily. Further, 22 per centof the respondents under upper income categoryconsume milk to the level of 1.50 litres -2 litres.

14. Daily milk consumption and occupation: Themajority (54.66 per cent) of the respondents isemployed in private organizations, 21 per cent ofrespondents are professionals, 18.34 per cent ofrespondents are self employed and only 5 per cent ofrespondents are Government employees. It is noticedthat the majority of the respondents consume milk tothe level of 1-2 litres a day.

15. Daily milk consumption and education: Almostall the respondents irrespective of their educationalstatus consume milk daily. Respondents possessingHSC qualification form the highest percentage(29.83%) in consuming milk daily followed by


47

graduates (23%) and diploma holders (15.33%).

16. Preference of Colour bag and sources of buyingmilk: the preference of colour bag of milk wasanalysed. The survey shows that as much as 56.66per cent for respondents prefer aavin brand colourbag of blue, 22.16 per cent of respondents preferorange colour, 21.16 per cent are preferring marooncolour brand bag. Further, as high as 36 per cent ofthe respondents are purchasing milk through agents.

17. Reasons for preferring Aavin brand colour of bag:The reasons for preferring Aavin brand colour milkdue to its good quality (99%), correct weighment(99%), reasonable price (90%), convenient packing(98%), convenient sales point ( 89%) and good taste(97%).

Suggestions

A good number of suggestions were given by theconsumer respondents. They are listed in the abovetable. Among them,

• to arrange for complaint and suggestion box

• to conduct effective training for producers,employees, salesmen

• to arrange for parking for children

• to arrange shelter for milk booth

• to arrange credit facilities

• to arrange for milk supply in the town all the timeand to arrange marketing net work (97%) are themajor suggestions given by the respondents tomaximize the services of milk producercooperative unions.

Summing up

To sum up this part of analysis, the majority of therespondents belong to middle and old age category.Only a few respondents are found to be illiterate. Asto social profile, the majority of the respondentsbelonged to medium size family and nuclear typefamily. The majority of the respondents belong to BCcommunity. The level of social participation of therespondents was found to be high among upperpoverty and middle upper income categories. As toeconomic profile, the majority of the respondents haveat least one earning member in their family whoseexpenditure was found to be below Rs. 50, 000 perannum.

Further as high as 47 per cent of the respondentspossess assets ranging between Rs. 2 - 4 lakh.Moreover, the analysis of the buying behaviour ofconsumers towards milk and milk products revealsthat the majority of the respondents made theirpurchases through the agents of the unions andpreferred milk brand of blue colour. Reasonable price,good quality, adequate quantity, convenient packingand correct weighment are found to be the prominentreasons for preferring ‘Aavin’ branded milk and milkproducts. Income as a variable does not exert greatinfluence on the consumption pattern of milk and milkproducts of consumers. Although there are differencesin the buying behaviour among consumers in termsof quantity, milk and milk products as a nutritionalfood item were consumed commonly amongconsumers irrespective of their demographic, socialand economic profile.

Selected References

1. Bogardus E. 1946. History of Cooperation, Chicago:Cooperative League of the USA.

2. Deepak shah and Alok Shah. 1996. Impact of DairyCooperatives on Marketing pattern of Milk – A CaseStudy, Indian Cooperative Review, 33 (3): 245-249.

3. Eswara Prasad. 1992. Credit Screening: Application ofDiscriminant Analysis to Identify Potential Defaulters ofIRDP Assistance in Anatapur District, A.P. IndianCooperative Review, October 30 ( 2): 110-117.

4. Ghosh A.K.1987. Socio – Economic Impact of Fishermen’sCooperatives in West Bengal, The Cooperator, April 24(19):577-578.

5. Ghurye G.S. 1950. Caste and Class in India, Bombay:Popular Book Depot: 96.

6. Green Arnold W. 1956. Sociology, New York: Mc.GrawHill Book Co.Inc: 20.

7. International Cooperative Alliance. 1995. XXXI ICACongress Manchester Agenda & Reports, Review ofInternational Cooperation: 88(3): 25.

8. Jithendra Kumar D.S. and H.G.Sankara(1992) “ Impact ofDairy Cooperatives on Income and employment in ChittoorDistrict, Andhra Pradesh – An Economic Analysis”, IndianCooperative Review, Vol.XXXIX, No.3.1992, pp.382-387

9. Krishnan C.(1997),”Dairying for rural development: Astudy” Journal of Rural development. Vol.16.No.3pp.387-400.

10. Kulandaiswamy V.and B.Piraburam (1986) “Milkprocurement by Dairy Cooperatives in Tamil Nadu – ATrend Analysis” Journal of Rural development. Vol.78,No.86, 1986.pp.376-381.

11. Lalwani N.R. and V.K.Choudhary (2003), “Production,


48

Consumption and marked surplus of milk under membersand non members of dairy cooperatives in Raipur Districtof Chattisgar” Cooperative Perspective, Vol.38.No.2. 2003.pp.39-41.

12. Maitry S.K.et. Al. (2003) “Marketing Efficiency - A case studyof Kakrol” Agricultural marketing, Vol. XXXI No.3. 2003.pp. 28-30.

13. Mishra 1984. Marketing and Social Responsibilities, IndianJournal of Marketing, Vol.146(6) pp.30.

14. Mishra A.K., D.P.Rai. amd R.Bhaiya (2000), “Labour usepattern in Animal Husbandry practices” AgricultureExtension Review. .Vol.12.No.6pp.18-21

15. Mondal P.K. and U.K. Pandey(1993)”Price Spread inMarketing of Milch Buffaloes in Haryana” Agriculturalmarketing , Vol. XXXVI No.3. 1993. pp. 26-29.

16. Mrutyunjai Sarangi and M.Raman. 2000. DiscriminantAnalysis of members’ and Non members’ Perceptiontowards Consumer Cooperatives in Tamilnadu, Cooperative

Perspective, 35(3):14-29.


49

Women Entrepreneurship: Challenges and Opportunities(A Case Study on Women Entrepreneurs in Andhra Pradesh)

Dr. Y.V.S. Subrahmanya Sarma * Dr. A.Kondaiah Swamy **

* Head and Associate Professor,Department of Commerce, P.G. Courses & Research, Centre, D.N.R.College, Bhimavaram, Andhra Pradesh.

** Lecturer in CCP, Government Polytechnic for Women, Nandigama, Krishna District, Andhra Pradesh

Women Entrepreneur

In recent years for a developing country,entrepreneurship has been a new impetus foreconomic development and growth. Entrepreneurshippromotion and development have been identified asone of the key components of the nation’s economicdevelopment strategy. Entrepreneurial resource hasbeen considered a crucial input in the process of thiseconomic development. Micro-entrepreneurialventures are considered the most critical factor thatwould lay the foundation in an economicallystruggling third world developing country. Theseentrepreneurial ventures will help both the urban andrural population through creation of jobs, a rescuefor unemployed and poor and thereby influence upondeveloping skills, self-esteem and self-sufficiency. Inthis way, it will certainly contribute to the overalldevelopment of the economy. Entrepreneurshipamong women is a recent phenomenon. In adeveloping country like India, a favorable socio-economic environment could help in exploiting thelatent entrepreneurial talents among women1. Thereare certain unfavorable conditions that often hinderthe emergence of such entrepreneurial talents.However, despite of these situational constraints,more and more women are today entering the fieldof entrepreneurship in India.

An individual women or a group of women, whoinitiates a project with motive to earn profit, executethe plans successfully and operate the business in asystematic way- are treated are women entrepreneurs.

Need for Women Entrepreneurship

The emergence of women entrepreneurs in a societydepends largely on the economic, religious, cultural,social, psychological and other factors. In developingcountries like India, the presence of entrepreneurs,that too women entrepreneurs is of vital necessity, toachieve a rapid, all round and regionally and sociallybalanced economic growth through industrialization.

It also helps in tapping the inherent talent prevailingamong them and acts as a panacea for many problemsfaced by them, such as dowry death, low recognitionin the society, poverty, unemployment and excessivedependence on male members2.

Women suffer the most in our country. The womenare given importance in very low work requirementactivities. Further the women employment is more inunorganized sector and their participation is limitedto normal jobs which do not require any skill or talent.There is greater dynamism in the rate of growth offemale employment. However, in rural areas, perhapsthe agriculture has provided much more employmentfor women. Due to the low literacy of women, thefinancial status of them is very low and they are born,live, grow and die in that vicious circle of low socialand economic status. At this specific juncture, thatthe emergence of women socio-economicemancipation of women3.

In recent times, the women in India have beenneglected a lot. The status of women in India is anillustration of a paradox. At the micro level, she hasequal, if not greater, position in the family asardhangini and she is the pivot of the socio-economicfabric of the family as a mother. The women is treatedas goddess in the mythology of India. Later the womenstatus in the society is downtrodden with so manytraditional, cultural, sociological bondages in theIndian society. Nevertheless, at present they havenot been actively involved in the mainstream ofdevelopment even though they represent a bulk ofthe population and labour force. Women play a vitalrole for the success of Indian family system and she isthe first guru of the children in the life. Even then, herservices are un recognized and undervalued.

Ideologically as well as in practice women areconsidered inferior to males, thus, the inequalitiesinherent in out traditional social structure, based oncaste, community and class, have a significantinfluence on the low status of women in different

50

spheres. Thus, the main issue, which is still beingdebated, is the kind of strategy to be evolved for raisingtheir status and participation in the process ofdevelopment. Hence, the emergence of women asentrepreneurs in India should be seen as a resurgenceof the rightfully respectable socio-economic status ofwomen. However, a society constrained by thesuppressive socio-economic factors cannot generatethe much needed women entrepreneurs on its own.

Rationale for the Study

The development of entrepreneurship among womenis a major step to increase women participation ineconomic development. It will enhance economicgrowth and provide employment opportunities forwomen entrepreneurs. Providing economicopportunities for women can also improve the social,educational and health status of women and theirfamilies. Nevertheless, there is no proper womenentrepreneurial culture in India. There is moreorientation towards becoming an employee ratherthan being an entrepreneur. In view of the vital rolebeing played by the entrepreneurial sector especiallywomen entrepreneurs, in generating employment,developing rural economy, reducing regionalimbalances, reducing income disparities and inearning more foreign exchange, the entrepreneursoperating these units are selected for the study.

The 1991 industrial policy of liberalization andglobalization has opened a large number of potentialbusiness opportunities due to technology upgradation, automation, mergers etc., has madeentrepreneurship a better al ternative. Acomprehensive study on women entrepreneurship inWest Godavari District of Andhra Pradesh state hasnot been conducted previously, though there are afew minor regional studies restricted to limited firmsonly.

The researcher selected the women entrepreneurs inWest Godavari district of Andhra Pradesh, which areowned, organized and controlled by womenentrepreneurs.


The following are the specific objectives of the study.

1. To examine the social origins of womenentrepreneurs in the study area.

2. To study the social development of women

entrepreneurs in the study area.

Methodology and Sampling

Data is collected from both Primary and SecondarySources.

Primary Sources

The study is experimental in nature and it is based onthe data personally collected with the help of anelaborate schedule. The researcher personally visitedall the sample units and collected data fromentrepreneurs of West Godavari District. This reallyhelped the researcher in exploring the required datafrom the respondents. All attempts have been madeto extract the correct information through informaldiscussion with the entrepreneurs.

Sampling Plan

A sample of 81 Units was selected to give a specialfocus to the entrepreneurs’ performance. In theselection of the sample, 81 out of 195 units establishedin Bhimavaram were selected from the universe forintensive study.

Secondary Source

For literature, the Researcher has to go through variousbooks, journals, research reports, magazines, manualsand newsletters on Small Scale Industry andEntrepreneurship available in various libraries ofvarious educational institutions.

A) General Information

1. Place of residence of the entrepreneurs: Place ofresidence of the entrepreneur influences theperformance as an entrepreneur. On the basis of theresidential area, the entrepreneurs got some benefitsand those benefits help them in discharging theirentrepreneurial responsibilities. Hence, the researcherattempted to know the place of residence of theentrepreneurs and presented in table 1.

As per table 1, nearly 44.5 per cent of entrepreneurs

Table 1. Place of residence of entrepreneurs

Place No. of

entrepreneurs Percentage

Rural 25 (30.86)

Urban 36 (44.44)

Semi-Urban 20 (24.69)

Total 81 (100.00)

Source: Survey

Women Entrepreneurship ...

51

are residing in urban areas whereas nearly 31 per centi.e. 25 entrepreneurs are residing in rural areas. Themean average of place of residence is 27 people andthe urban residents are over the average and ruralresidents and semi – urban residents were below thetotal average.

2. Marital status of the entrepreneurs: In the aspectof women entrepreneurs, marriage is sometimesobstacle for their entrepreneurial attempts and forsome others marriage is helpful and encouraging fortheir entrepreneurial developments. Therefore, theresearcher attempted to identify the marital status ofthe entrepreneurs and presented in table 2.

It is evident from the table 2, that 62 per cent of totalentrepreneurs are married and others are unmarried.

3. Line of Business activity of the entrepreneurs: Thesuccess of an enterprise not only depends on theabilities, talents etc., of the entrepreneur but alsodepend on the line of business activity chosen by theentrepreneurs. The researcher collected data inrelation with the line of business activity andexplained in the following table 3.

It is evident from the table 3, that only 10 per cent ofwomen entrepreneurs in West Godavari have beenselected manufacturing sector. 37 per cent of theentrepreneurs i.e. 30 of 81 entrepreneurs optedtrading as their line of business activity whereas 31per cent i.e. 25 out of 81 women entrepreneursselected service sector as their line of business activity.Others include assembling of units and ancillary units.

B) Social Development of Women Entrepreneurs

Earnings of women’ gives economic status to women.Economic status paves the way to social status. Goneare the days when a man could boast of being capableof feeding the whole family. Women constitute almosthalf of the Indian population. In the rural sector, 56per cent of the males and 33 per cent of the femaleswere in the labour force4. A high percentage of thefemale population in the rural sector is idle andunutilized. This is mainly due to existing socialcustoms. Young girls and women are not allowed towork independently. Now the scenario is changingfast with modernization, urbanization anddevelopment of education and business. Women arenow seeking gainful employment in several fields inincreasing number with the spread of education andawareness.

In the same sphere, the women entrepreneurs arespreading their wings to the engineering, electronicsand energy. Women are putt ing up units tomanufacture solar cookers as in Gujarat, smallfoundries in Maharashtra, T.V. capacitors in theindustrially backward area of Orissa and women inKerala are skilled in traditional and self acquired craftslike embroidery, lace, toys, mat weaving etc5.Moreover, women have become integral part ofindustrialized society. The woman must supplementthe income of the family through whatever skills shehas acquired. The present inflationary pressurewarrants women to join the male members of thefamily for securing substantial livelihood. Educatedwomen need not wait for employment in theorganized sector. Women are expected to come outfrom tradition by taking up self-employment ventures.

At this juncture, beyond the efforts of the women as asuccessful entrepreneur, the women are treated assecond-generation population in the society. Hence,the researcher attempted to evaluate the socialdevelopment of the women entrepreneurs in the studyarea and analyzed the situation in the following lines.

1. Satisfaction in the profession:

The women or women entrepreneurs, in general, maynot get sat isfaction in what they are doing.Entrepreneurship has no exception from this. Eventhough, the women entrepreneurs with theircapabilities and initiation, they are women in nature.The data in relation with the satisfaction level of thewomen entrepreneurs is collected.

Table 2. Marital Status of the entrepreneurs

Status No. of


Married 50 (61.73)

Unmarried 31 (38.27)

Total 81 (100.00)

Source: Survey

Table 3. Line of business activity of the entrepreneurs

Activity No. of


Manufacturing 8 (09.88)

Processing 12 (14.81)

Trading 30 (37.04)

Services 25 (30.86)

Any other 6 (07.41)

Total 81 (100.00)

Source: Survey

Dr. Y.V.S. Subrahmanya Sarma, Dr. A.Kondaiah Swamy

52

The table 4 reveals the information regarding thesatisfaction level of the women entrepreneurs on theirperformance and their activities. More than 59 percent of the respondent women entrepreneursexpressed that they are getting high satisfaction andonly 22.22 per cent of them are enjoying the highestsatisfaction. As a common notation nearly four percent of respondent women entrepreneurs expressedthat, their satisfaction is very low due to their financialproblems in the family and in the business.

2. Pride in being an entrepreneur

The entrepreneurs who are proud about theirprofession will perform in a successful manner.Moreover, at the same time, self-confidence of theentrepreneurs will improve which paves way for self-sufficiency6. The researcher think it is need to collectthe opinion of the women entrepreneur and presentedin the following table.

As per the table 5, it is evident that nearly 60 per centof the respondents (i.e. 48 of 81) felt proud to be theentrepreneur as they are able to do the business withtheir own ability and talent and they are able toprovide employment opportunities to educated oruneducated youth. 24 out of 81 respondentsexpressed the highest satisfaction in being anentrepreneur whereas only three respondents do nothave any pride to be an entrepreneur.

3. Recognition in the family

Earning member, whether male of female, of thefamily will get recognition and receive respect from

all the family members. The recognition in the familyas an earner will have some privileges as othermembers may depend on him.

In this aspect, the study reveals that more than 93 percent of the respondent women entrepreneursachieved the recognition in the family while rests arenegatively affected.

4. Other male members’ cooperation

In the family of a women entrepreneur, the womenmember requires the cooperation of the other familymembers from both male and female. The cooperationof the male members in the family of an entrepreneuris remarkable and helps a lot for the successfulcompletion of the activi ties of the womenentrepreneurs. The women entrepreneurs under studyare very lucky and more than one third of therespondents are getting very good cooperation fromthe other male members in the family and it is evidentfrom the table 7.

With the cooperation of the male members, thewomen can achieve some things, if the other femalemembers of the family extend their cooperation; thesuccess of women entrepreneurs will be very grand.If any women entrepreneur is able to request orachieve the cooperation of other female members inthe family, the business will flourish with in no timeand growth of that enterprise reaches heights.

5. Other female members’ cooperation

The researcher focused his study into the cooperationof the other female members in the family.

Table 4. Satisfaction in the profession

Level of Satisfaction No. of


Highest Satisfaction 18 (22.22)

High Satisfaction 48 (59.26)

Moderate Satisfaction 12 (14.81)

Low Satisfaction 3 (03.70)

Total 81 (100.00)

Source: Survey

Table 5. Pride in being an entrepreneurs







Total 81 (100.00)

Source: Survey

Table 6. Opinion on Recognition in the family







Total 81 (100.00)

Source: Survey

Table 7. Opinion on Other male members’

cooperation

Opinion No. of


Yes 62 (76.54)

No 19 (23.46)

Total 81 (100.00)

Source: Survey


53

There is a notable issue, that the cooperation of theother female members is available to only fifty percent of the respondents. Due to various reasons likethe family clashes, jealousy nature of other femalemembers, fear of domination of earning member etc.the female partners of the family can not extend theircooperation to the women earner. The womenentrepreneurs who are able to get the cooperation ofthe other male members in the family are unable toreceive cooperation from co female members. It isevident from table 7 and 8.

6. Decision making in the family

Decision making in the family matters is veryimportant. If the women entrepreneurs are involvedin the decision-making process in the family meanstheir role and their hard work is recognized in thefamily. In this aspect the decision, making role of thewomen entrepreneurs is studied.

31 respondents out of 81 are taking decisionindividually in the family matters and it indicates their

Table 8. Opinion on Other female members’

cooperation

Opinion No. of


Yes 44 (54.32)

No 37 (45.68)

Total 81 (100.00)

Source: Survey

achievement in the business and their role inimproving the standard of living of the family. Morethan fifty per cent of respondents, even though theyare earners, they will take the decisions in familymatters in consultation with other family members.Nearly ten per cent of them are ignored even if theyare earning through their initiation as an entrepreneur.

7. Social Development of women entrepreneurs: Aprobable scoring of perceived Satisfaction

In total social development in women entrepreneursis explained with the help of probable scoring method.The scores are given as follows:

1) One point to ‘highest satisfaction’,

2) 0.75 probable score to ‘high satisfaction,

3) 0.50 points to ‘moderate satisfaction’ and

4) 0.25 points to ‘low satisfaction’.

Table 9. Opinion on Decision making in the family

Opinion No. of


Self 31 (38.27)

With consultation with others

42 (51.85)

ignored 8 (09.88)

Total 81 (100.00)

Source: Survey

Table 10. Social Development of women entrepreneurs: A perceived Satisfaction

Table 11. Social Development of women entrepreneurs: A perceived Satisfaction - A probable scoring.

Level of Satisfaction Highest

Satisfaction High

Satisfaction Moderate

Satisfaction Low

Satisfaction Total

Probable score 1.00 0.75 0.50 0.25

Satisfaction in the profession 18 48 12 3 81

Pride in being an entrepreneurs 24 48 6 3 81

Recognition in the family 12 29 35 5 81

Source: Survey

Level of Satisfaction Highest

Satisfaction High

Satisfaction Moderate

Satisfaction Low

Satisfaction

Total Probable

Score

Satisfaction in the profession 18 36 6 0.75 60.75

Pride in being an entrepreneur 24 36 3 0.75 63.75

Recognition in the family 12.00 21.75 17.50 1.25 52.50

Source: Survey

Dr. Y.V.S. Subrahmanya Sarma, Dr. A.Kondaiah Swamy

54

With the help of these scores, tables 10 and 11 explainabout the satisfaction level of the womenentrepreneurs. It is evident from those tables that allthe women entrepreneurs are getting high satisfactionin the profession as it got 60.75 total probable scoresand in ‘pride in being an entrepreneur’ therespondents have lighest satisfaction with 63.75probable scores. In the aspect of ‘recognition in thefamily’, they are moderately satisfied as it got only52.50 probable scores. It evident from the aboveanalysis, that women entrepreneurs are unable to gettheir satisfaction at the highest level in the study.

Conclusions

The mean average of place of residence is 27 peopleand the urban residents are over the average and ruralresidents and semi – urban residents were below thetotal average. Only 22.22 per cent of them areenjoying the highest satisfaction. As a commonnotation nearly four per cent of respondent womenentrepreneurs expressed that, their satisfaction is verylow. More than ten percent of women entrepreneursare not proud to be an entrepreneur. Hence, necessarysteps to be taken to improve their confidence levelsto improve their ability to compete in the economy.

It is surprised to see that women entrepreneurs areable to get more cooperation from the male membersin the family than other female members. Further,women entrepreneurs are unable to get the supportfrom the other female members of the family. Thepsychological aspects of women need to be changed

to assist or help the upcoming entrepreneurs in theircommunity especially in their same gender.

In decision making matters majority of the womenentrepreneurs are deciding the things withconsultation of others. Women entrepreneurs areearners and they are sacrificing their lives for thedevelopment of the organization. They feel free totake decisions of major importance in the family.Women entrepreneurs are unable to get theirsatisfaction at the highest level in the study. In thisscenario, the women entrepreneurs are performingultimately their role as an entrepreneur and memberin the family.

References1 B.N. Neelima and T. Shyam Swaroop (2000), “Training Women

for Entrepreneurship” Social Welfare, Vol. 4.

2 Madhu Rathore & Dr. Suman Singh (2008), “Women Enterprise:A Step towards Success”, Kurukshetra, Vol. 56, No. 3.

3 Valsamma Antony (2007), “Women Entrepreneurs on theUpbeat- A Study”, Southern Economist, Vol. 45, No. 21.

4 W. Kalyani & K. Chandrasekhar (2002), “Association betweenSocio-economic Demographic Profile and Involvement ofWomen Entrepreneurs in their Enterprise Management”, TheJournal of Entrepreneurship, Vol. 11, No. 2.

5Prasad and Venkateswara Rao (1997), Socio- EconomicBackground of Women Entrepreneurs; A Case Study of AndhraPradesh, The Indian Journal of Commerce, Vol.L., No. 193,Part IV.

6 C. Beena & B. Sushma (2003), “Women Entrepreneurs ManagingPetty Business: A Study from Motivational Perspective”,Southern Economist, Vol. 42, No. 2.


55

Health Care Sector in India: An Analytical Review

Dr. Ram Milan*, Dr. Shishir Srivastava**

ABSTRACT

The healthcare services sector appears good for optimistic growth, particularly in the growingprominent private sector. Healthcare sector representing growth of about 15 percent per year (IndianInvestment Commission 2006). By one estimate, the public healthcare system will be able to meet just onetenth of the demand for additional hospital beds over the coming three or four years. Moreover, the IndianHealthcare Federation estimates that domestic investors will be in a position to meet only about one-halfof the required investment in the sector over the next 8-10 years, pointing to significant opportunities forforeign investors (IBEF 2004).

Changing demographics, increasing disposable incomes and changing lifestyles are driving thebudding demand for healthcare. The percentage of the population 55 years and above is increasing by 12per cent. The percentage of the working age population will also grow over the coming years. Increasingper capita incomes and a larger number of two-income families are spurring demand for healthcare servicesamong the middle- and higher-income groups. The share of healthcare in private final consumptionexpenditure increased from 3.5 to 5.3 per cent over the 1993-04 to 2001-02 period. As more and moreIndians adopt Western lifestyles, the incidence of diabetes and cardio-vascular diseases is increasing. Witha greater awareness of health issues and greater financial means, Indian consumers are increasingly seekingout preventive healthcare services. Health insurance cover is beginning to take off (IBEF 2004).

The number of private sector companies owning and managing hospitals has grown rapidly inrecent years. A number of hospitals and other healthcare operators have formed alliances with foreign

companies with a view to tapping their capabilities and expertise in the provision of healthcare services.

* Associate Professor, Dept. of Commerce, University of Lucknow, Lucknow.** Associate Professor, Goel Institute of Higher Studies, Lucknow.

Introduction

Public institutions played a leading role in the IndianHealthcare sector in the past, in the urban as well as inthe rural areas. However, the public healthcare has beenon a serious decline during the last two or threedecades because of non-availability of medical andparamedical staff, diagnostic services and medicines.Consequently there has been a pronounced decline inthe percentage of cases of hospitalized treatment inGovernment hospitals and a corresponding increasein the percentage treated in private hospitals, despitehigher costs in the private sector. Following are the majorcomponents of the Indian Healthcare Sector:

Ø Medical Tourism

Ø Medical Equipments

Ø Diagnosis

Ø Telemedicine

Ø Diagnostics

Ø Hospitals

Ø Health Insurance

Ø Clinical Trials and Research

Methodology

This study is an attempt to explore the role,development, future prospects and need of thehealthcare sector, further it also explored the issueswhich must be addressed in order to achieve the highgrowth in this very important sector related with publicwelfare. In conduction of this study we usedexploratory research design which provides flexibilitywhile including the issues. Some part of the researchis applied in nature also. Study is entirely based onsecondary data, for this we looked at various sourcesto find the relevant data which possess the basiccharacteristics like- reliability of data and source,suitability and adequacy. Some main data sources weused are as follows-

Ø Publications of central and state governmentsand government institutions.

Ø Books magazines and news papers

56

Ø Reports and publications of variousassociations connected with business andindustry.

Ø Various official websites.

1. Health Care System in India : Two Tier System

(i) Public Sector System

Public institutions played a dominant role in the IndianHealthcare sector in the past, in the urban as wellas in the rural areas. The vast network of publichealth institutions in the country comprises 3910Community Health Centres (CHCs), 22,669 PrimaryHealth Centres (PHCs), and 144,988 Sub Centres(SCs), in the rural areas and 7663 GovernmentHospitals, mainly in the urban areas. However, thepublic healthcare has been on a serious declineduring the last two or three decades because ofnon-availability of medical and paramedical staff,diagnostic services and medicines.

The situation in availability of specialist manpower inCHCs is particularly bad as against the sanctioned postsabout 59.4 % surgeons, 45% obstetricians andgynaecologists, 61 % physicians and 53 %paediatricians were not in position (in March2006). Equally distressing is the fact that essentialtherapeutic drugs are not supplied in most publichealth institutions with the exception of someStates. Consequently there has been a pronounceddecline in the percentage of cases of hospitalizedtreatment in Government hospitals and acorresponding increase in the percentage treatedin private hospitals.

Significant feature of India’s healthcare is that publichealthcare accounts for only 25 per cent of the totalhealthcare expenditure in the country, and out-of-pocketexpenditure, private health insurance, employers etcaccount for the remaining share. This contrastedwith the situation in the developed economies.1

(ii) Private / Corporate Sector System

Recent decades have seen a tremendous growth inprivate sector investment in healthcare. As noted inthe XI Plan document, ‘There is diversity in thecomposition of the private sector, which ranges fromvoluntary, not-for-profit, for-profit, corporate, trusts,stand-alone specialist services, diagnostic services to

pharmacy shops and a range of highly qualified tounqualified providers, each addressing a different marketsegment’. According to the NSSO data, by 2004 theprivate healthcare providers were already accountingfor 60 % of the cases of hospitalized treatment inthe country and this proportion is likely to have goneup since then.

Although 100% FDI has been permitted in the countryunder the automatic route since 2000, FDI activity hasbeen limited. Of the 90 projects approved for FDI duringthe period 2000-2006 (up to July), 21 were forhospital and the remaining for diagnostic centres.While FDI flows are likely to pick up in future it is notexpected that very large corporate hospital chains wouldmove into the country in the near future. However, therehas been considerable corporate investment alreadyin hospitals in the country with the help of FIIs andforeign equity and this is likely to continue. Some of thebig names are Apollo Hospitals, Fortis Healthcare,Max Healthcare and Wockhardt.

Apollo is the world’s third largest health providerand has 7,000 beds in 38 hospitals, 46 primary clinicsand over 135 pharmacies operating in more than 20cities in India, besides the hospitals in the MiddleEast and Sri Lanka (Burrill India Life SciencesQuarterly-January 2007). Fortis is the second largestprivate health provider in India, with 1580 beds in12 hospitals in North India at present but it hasambitious plans to run 40 hospitals nationwide by2010 (Bruce Stokes, Bedside India, National Journal May,2007). Wockhardt has earned a name for excellencein cardiac care and has an international alliance withHarvard Medical International. Max Healthcare isanother large player, which has set up a number ofhospitals and primary health centres in North India.

Some of the major proposed and newly establishedhospital projects are: Dr Naresh Trehan’s Medicity,Gurgaon (Rs. 1,200 crore- 1,600 beds); Apollo HealthCity, Hyderabad (Rs 1,000 crore- 500 beds); FortisMedicity, Gurgaon (Rs 1,200 crore- 600to 800 beds);Fortis Medicity, Lucknow (Rs 500 crore to Rs 800 crore-800 beds); Health City, Bangalore (Rs 2000 crore -5000 beds); and Bengal Health City project spreadover 800 acres about 20 Kms from Kolkata.

There are a number of prospective FDI players who arecontemplating investment in the country. Gleneagles,

1. Yuen, Compendium of Health Statistics 2005-06, Radcliffe Publishers, 2005, cited in Rupa Chanda, India-EU Relationsin Health Services: Issues and Concerns in an India-EU Trade and Investment Agreement, ICRIER, 2008.

Health Care Sector in India ...

57

which has earlier entered into a joint venture withApollo, is reported to be interested in entering on itsown. EMAAR Group from Dubai has plans to set upmore than 100 hospitals in India and the PacificGroup, which already begun operations in a smallway at Hyderabad, is another prospective player.

With no regulatory impediments on the expansionof private healthcare the expectation is for sizableinvestment by private players in the sector in the nextfew years. A FICCI- Ernst & Young study projects thatout the 1 million beds that are likely to be added inthe country up to 2012 as many as 896,000 will beadded by the private sector.

2. Progress of Healthcare Sector in India

The growth of the Indian economy, with India’schanging demographic profile, rise of middle class,shift in the disease patterns and growing awarenessof health and fitness are the main factors driving thegrowing demand for healthcare services in India. Thedemand for healthcare services in the country hasgrown from Rs 25,000 crores in 1991 to Rs 175,000crores in 2006, indicating a compounded annualgrowth rate (CAGR) of more than 16 per cent. Inaddition to in-patient and out-patient services inhospitals, this growth has been propelled by ancillarysectors such as retail pharmaceutical, medical anddiagnostic equipment and supplies.

While the demand for healthcare in India has beengrowing rapidly, there is a serious and conspicuousmismatch between demand for and supply ofhealthcare infrastructure and services, with demandfar outstripping the supply and this mismatch is onlylikely to get worse, unless concrete actions are takenby Government and fully supported by private sector.

The contribution of high standards of health anduniversal access to quality healthcare infrastructureto the economic growth of a country is significantand yet India falls woefully short on various key healthindicators. For example, India’s life expectancy is stilllow at 68.6 years. India’s hospital beds per 1000population stands at a little over 0.7 as against Russia’s9.7, Brazil’s 2.6, China’s 2.2 and the world averageof 3.96. India is currently estimated to have about600,000 doctors and 1.6 million nurses. Accordingto WHO norms for developing countries, this

translates into a resource gap of 1.4 million doctorsand 2.8 million nurses. Government spending onhealthcare is estimated at only about 0.87 per cent ofGDP as compared with US, UK, etc who spend asmuch as seven percent of GDP on healthcare.

The rural healthcare sector is also on an upsurge. TheRural Health Survey Report 2009, released by theMinistry of Health, stated that during the last five yearsrural health sector has been added with around15,000 health sub-centres and 28,000 nurses andmidwives. The report further stated that the numberof primary health centres have increased by 84 percent, taking the number to 20,1072.

A recent phenomenon in the Indian Healthcare sectorhas been the growing use of telemedicine. In 2001,the Indian Space Research Organization (ISRO)launched a pilot project that connects 78 hospitals inremote areas to super specialty hospitals in the cities.The Manipal Education and Medical Group andthe Apollo Group of Hospitals have establishedtelemedicine centres in India as well as abroad.

Telemedicine can be real time (synchronous) or at alater point in time (asynchronous). Synchronoustelemedicine requires the presence of two sets of medicalprofessionals one at either end present at the same timewith a ‘tele’ link between them that allows a real-timeinteraction to take place. There are also devices, suchas teleopthalmoscope or tele-stethoscope, which can beattached to computers or the video-conferencingequipment, which can aid in interactive examination.Asynchronous tele-medicine does not requiremedical professionals at the two ends at the sametime. It involves acquiring and storing medical datasuch as x-rays, pathology slides or ECG, which canbe viewed by the specialists at the other end offline at atime convenient to the latter. Telemedicine has openedup possibilities of professionals providing experthealthcare service in remote rural areas from theirlocations in cities.3

Clinical Research has emerged as a very promising areain the country during the last few years. Accordingto the data furnished by the Indian PharmaceuticalAlliance these global companies are currentlyoutsourcing 139 trials to India, while they are gettingonly 98 trials in China. Glaxo Smith Kline leads thelist with 22 trials, followed by Johnson &Johnson 22,

2. www.ibef.org/industry/healthcare.aspx3. Report of the High Level Group on Services Sector, Government of India, Planning commission, New Delhi 2008.

Dr. Ram Milan, Dr. Shishir Srivastava

58

Eli Lily and BMS 17 each, Pfizer 16, Sanofi Aventis 15,Astra Zeneac10, Novartis 9, Merck 8 and Roche 5.

The increased clinical trial flow to India is the resultof several fundamental strengths. Factors such as adiverse genetic pool, large patient pool with diseasessuch as heart disease, diabetes and psychiatricdisorders, which are prevalent in industrializedcountries, drug-naïve population, competent medicalprofessionals, good hospitals where trials can beundertaken, potential cost and time savings have playeda role in stimulating the increased flow of clinicalresearch to India.

3. Critical Issues in Health Care Sector

Ø Despite higher costs in the private sector, thisshift from public to private system shows thepeople’s growing lack of trust in the public system.Critical shortage of health personnel, inadequateincentives, poor working conditions, lack oftransparency in posting of doctors in rural areas,absenteeism, long wait, inconvenient clinichours, poor outreach, time of service, insensitivityto local needs, inadequate planning,management, and monitoring of service/facilities appear to be the main reasons for lowutilization.

Ø Limited Coverage of Health Insurance While themiddle class has benefited from the entry ofthe private health insurance companies thereal challenge is to enhance access to healthcarefor the poorer sections of the population throughhealth insurance. The healthcare insurancecompanies in the public or in the private sectorcannot take up this challenge because thepoorer sections (30 crore of BPL population)does not have the capacity to pay the premiumat rates required to run the programme on acommercial basis. A health insuranceprogramme, which covers the BPL categories, willalso give the choice to the population in thesecategories to turn to the healthcare providers inthe private sector. In order to make theimplementation of such a programme feasibleit would be necessary to introduce a smart cardsystem for the beneficiaries. Such a scheme willnot only benefit the poorer sections but alsoprivate healthcare service providers, whosebusiness will expand.

Ø There is a shortage of about 600,000 doctors,

1 million nurses, about 200,000 dentalsurgeons and large numbers of paramedicalstaff. Against this the annual turnover of medicalcolleges is about 30,000 of Dental Collegesabout 20,000 and of Nursing Colleges (BScNurses) about 45,000 and of Nursing Schools(General Nursing Midwives and Auxiliary NurseMidwives) about 60,000. The number ofpostgraduate degrees/diplomas being awardedannually in the country is only 3181/1316. Theturnout of personnel with postgraduate is verylow considering the number of teaching staffneeded in the country as well as the requirementfor filling up the openings now available in thecountry for Research & Development includingBiotechnology. Additional demand has beencreated by the requirement of healthcarepersonnel from India in foreign countries,particularly in the US and the UK, and also theincreasing opportunities in the country formedical value travel.

Ø India can become important servicesoutsourcing center providing both know-howand export of trained personnel (Refer Fourtypes of services classification in GATS)Healthcare is one of important sector, whichIndia can tap both offshore and by way ofexporting skilled Medicare personnel. In USAalone the 8% of GDP on health care will rise to18% or so due to rising population of seniorcitizens and the same is also true in Japan.

Ø In blind temptation for profits and dollarsrevenue Indian domestic health sector maysuffer badly with medical care out of reach ofcommon man being costly and the publicinfrastructure poorly developed. I think alreadythe cost of medicines and health care serviceshave rapidly escalated in past few years time.This is of serious concern. The insurancecompanies are not providing properly designedand customer oriented products but are alsounwilling to issue even Individual’sHospital ization policies due to allegedaccumulated losses. This aspect of balancedgrowth between Domestic and Export markets,Agriculture vs. Tourism and Manufacturing vs.Services needs to be paid attention to.

Ø With Indian healthcare infrastructure still at itsnascent stage, the sector will continue to seek


59

investment both from the debt market as wellas from equity (particularly private equity).Private equity funding is expected to play acrucial role in the expansion of the healthcareindustry in 2011, hospital sector, especially thesuper- specialty services, will continue to bethe main area of interest to private equityinvestors.

Ø The public sector however is likely to contributeonly around 15-20 per cent of the required US$86 billion investment. So there is a thrust forprivate sector to participate in the sector.

4. Suggestive Measures for Indian Health Care Sector

The above facts underline the urgent need for Indiato gear up investments and resources towardsimproving the healthcare infrastructure that will leadto improvement in the health levels and productivityof our masses. As an illustration, if India has to increasethe number of beds per 1,000 population to only 1.7(compared to the current level of 0.7), it needs tocreate capacity of over a million new beds. WhilstIndia’s overall expenditure on health is comparableto most developing countries, its per capita healthexpenditure in absolute terms is considerably lowerin comparison to countries such as China, Brazil,Malaysia, Russia, UK and the US. The share of the

private sector in healthcare spending is as high as 78per cent in India, most of which is out-of-pocket whichbrings untold misery to poor families.

As per a recent report produced by TechnopakAdvisors, India needs additional beds of 1.1 millionimmediately, 3.1 million in 2018 and 2 million in2028. Similarly, our beds/1000 population ratio needsto improve from 0.7 to 1.7 immediately and then tofour and five in 2018 and 2028 respectively. Clearly,the Indian Government neither has the financialstrength (with rising fiscal deficits) nor the appetitefor such large scale investment in the Healthcaresector alone. With the Government expected to pitchin with only 15-20 per cent of additional investmentrequired in healthcare, the majority of the requiredinvestment will need to come from the private sector.As per the available statistics, several major Indianhealthcare players have planned expansions that willentail investments of over Rs 25 billion over the nextthree to four years. Foreign players such as SingaporeGeneral Hospital, Pacific Healthcare Holdings,Singapore and Parkway Group Healthcare PTE Ltd,Singapore are also expected to set up base in India tocapitalize on the vast opportunity in this sector.

Despite these known investments, there still remainsa huge gap in the private sector investment in Indian

Indian Healthcare Services Industry to Reach USD 77 Billion by 2012 (Fig. 1)

Source: Healthcare Services in India 2012: the path ahead. ASSOCHAM.


60

Healthcare. However, to attract private players in thissector, as enumerated below, the government needsto come out with a clear policy framework for privatesector participation and to incentivize the privatesector to invest in Healthcare with a view to buildinginfrastructure and creating the much neededcapacities.

As per the fig.1 it is observed that the medicalequipment business will developed in India intremendous face and will increasing the share in totalhealthcare business and reach to approx 9% in year2012 from 0.8% in year 2006 followed by medicalinsurance. As the overall this sector will growingdynamically and will achieve the business of USD77bn. In the year 2012 which is threefold growth insix years.

Much the same as the physical infrastructure, India’stechnical infrastructure in terms of medical manpoweris also a major concern. India is currently known tohave approximately 600,000 doctors and 1.6 millionnurses. This translates into one doctor for every 1,800people. The recommended WHO guidelines suggestthat there should be 1 doctor for every 600 people.This translates into a resource gap of approximately1.4 million doctors and 2.8 million nurses. In orderto reach 1 doctor per 1,000 people by year 2012,India will need 450,000 additional doctors. Further,in order to maintain the doctor/nurse ratio of 1:2,500,000 additional nurses will have to be trained by2012. In order to bridge this gap, the governmentshould seriously consider providing tax incentives toencourage private sector investment in healthcarecapacity building, education and training.

All the above benefits / concessions, meant largelyfor new PPP or private ventures, are cash neutral forthe government with no impact on the country’sbudget deficit and yet they are very effective inaddressing the fundamental issue of capacity building.

In order to promote Medical Value Travel in India,what is significant is that the hospitals establishedby the private corporate players of Government areof world class. They have not only the latest medicaltechnological facilities but also the services of Indiandoctors and nurses with a high degree of proficiency.Corporate hospitals are completely equipped, up marketand proficient and can measure up, or even outshine,any hospital in the west. India’s value proposition is itbeing able to offer highly cost competitive medical

treatment with the most up-to-date technologicaladvances (Burrill India Life Sciences Quarterly-January 2007). The quality of their service coupledwith the highly competitiveness charged by them forcommon surgeries has made India an attractivedestination for medical value travel. It is estimatedthat in 2002 as many as 150,000 medical touriststravelled to India bringing in earnings of US $300million. The CII-McKinsey Report of that year projectedthat this figure would go up to US $ 2 billion by 2012.

Conclusion

In summary, healthcare is poised to be a new driverof growth for the economy. Given the geographicalaccess required for delivering care and the fact thatinfrastructure has to be spatially distributed, it has thepotential to create pan India job opportunities acrossa number of towns and villages. Unless there is asustained effort from the government in terms ofreforms and fiscal benefi ts for tackling theinfrastructure problems in healthcare the gap will onlyincrease.

The PPP model in healthcare is the most ideal solutionto resolve many of the woes faced by the healthcareindustry today. Simply put, the PPP model will requirethe Government and private parties to enter into aPPP agreement under a well defined framework.Typically, the government contribution would comein the form of land at concessional rates and assistancein obtaining regulatory clearances from a multiple ofministries and departments. The private players willinvest in the infrastructure on a build, own and operate(BOO) basis. The government will not interfere in thepricing mechanism which will be determined by theprivate players based on market forces of supply anddemand. However, the government would insist onbuying back some capacity to service identifiedbeneficiaries, typically below-the-poverty line (BPL)population, at a transparent and fixed pre-agreedprice. Government will also regulate the operationsof such PPP hospitals such that the minimum definedhealthcare delivery standards are maintained,particularly for the treatment of BPL patients.

This model can be a ‘win-win’ solution for thegovernment, private sector players and beneficiaries.Government can demonstrate achievement throughthe spread of universal and affordable healthcareacross the country, private players can achieveeconomies of scale and earn reasonably attractive


61

returns and beneficiaries can avail quality healthcareat affordable prices. The government is therefore welladvised to put in place a model PPP framework inhealthcare on a top priority basis.

This should be followed by one or two quick pilotprojects within a period of 12 months to demonstratesuccess and do ability. Designed and implementedcollaboratively and judiciously between thegovernment and private sectors, the PPP model(s) hasthe potential to radically change the healthcarelandscape in India.

References

Kothari CR, Research Methodology Methods and Techniques,New Age International Publishers.

Report published by Central Statistical Organisation.

Rashmi Banga , Critical Issues In India’s Service-Led Growth,Working Paper No. S171, October 2005.

Prof. R.K. Gupta, Creating Service Excellence (Indian ServicesSector).

Barry Eichengreen, Poonam Gupta, The Service Sector as India’sRoad to Economic Growth’s, Working Paper No. 249,April 2010.

Report of the High Level Group on Services Sector, Governmentof India, Planning commission, New Delhi 2008.

India’s Service Sector- Unlocking Opportunity, Australia. Dept.of Foreign Affairs and Trade. Economic Analytical Unit, 2007

Pradip Kanakia , Growing demand for healthcare services in India,Thursday, September 10, 2009 08:00 IST.

www.rbi.gov.in.

www.nseindia.com

http://dipp.nic.in/fdi_statistics/india_fdi_index.htm.

www.infrastructure.gov.in

http://economictimes.indiatimes.com/news/news-by-industry/healthcare

www.ibef.org/industry/healthcare.aspx

www.mohfw.nic.in


62

Book Review

Business Communication for ManagersPayal Mehra

Dorling Kindersley (India) Pvt Ltd-Pearson Education., 2012, pp.370, Rs. 350.00

‘Good communication is as stimulating as blackcoffee, and just as hard to sleep after’ says AnneMorrow Lindbergh. Good communication skill oftenmakes the difference between being hired and firedand hence its importance to a management studentneed not be overemphasized.

There are plenty of books on this topic in the market,but this book of Payal Mehra is an exception. Unlikeothers, it is more practical. The book propounds thatbusiness communication skill is not just a managerialability; it is also an extra ordinary trait to be learnt.This book, in 14 chapters covers all major topicsnecessary for learning and to practice the businesscommunication skills which are crucial to excel inbusiness correspondence, group discussions andinterviews. Written in a clear, lucid and a readerfriendly style, with case studies and activities at everylearning post, it facilitates better understanding andusability of each aspect of communication in aninteresting way.

After giving a general introduction on businesscommunication, types and barriers in chapter 1, theauthor introduces the readers certain interestingtheories of interpersonal and organizationalcommunication in the next chapter. In chapter 3 sheanalyses the role of interpersonal semantics with thehelp of a Johari Window and the way she interpretsthe managerial implications of the Johari Window isreally interesting. In this chapter she makes it a pointto emphasise the role of emotional intelligence incommunication. She is of the opinion that familieswith high levels of communication, sharing, healthyexchange of ideas and joint decision making createwell adjusted children who develop high emotionalcompetence in the later stage of life.

In other chapters she discusses the need to understandego states and cross cultural differences in businesscommunication. The examples she uses to supporther view and concepts are fresh and interesting. Forexample, while discussing the cross cultural diversityin communication she has used an example howMcDonalds, a global fast food chain prominently

advertises its vegetarian fare in India considering itssizeable vegetarian population at the same time, howthe same McDonald promotes its non vegetarian farewhich uses 100 percent halal meat in an Islamiccountry like the United Arab Emirates.

While reading the book, we could see the labour putforth by the author in shaping each chapter so that itachieves the leaning objectives in full. The chapter 9on ‘Presentations’ for example, captures the differencebetween presentations, student lectures and talks. Itoffers tips and suggestions about presenting withconfidence and chutzpah. With the help of numerousexamples and illustrations this chapter emphasizespreparation, delivery and style as key to an effectivepresentation. Similarly the chapter 14 on ‘EmploymentCommunication’ is also highly useful to the learnersand prospective applicants. It describes employmentcommunication strategies and ways to influencerecruiters and prepares the student in all the importantareas of employment communication from writing acovering letter to facing interviews.

In addition to the above features, the CommunicationBytes provide additional information regarding thetopic being discussed in the text. The author hasshown the source of such additional communicationalong with the date of accessing the web site wherethe communication piece was referred from. Thereare 17 Communication Bytes in all. It justifies thatthe children in families that discourage conflict, selfexpression and assertiveness may not develop theessential skills of expressiveness and receptiveness,the two key ingredients of successful communication.Another communication byte speaks about the 2300year old Aristotelian theory on the ‘art of rhetoric’which is relevant even today. It informs the readersthe need for juxtaposing the rational view of our leftbrain with the emotional view of the right brain toobtain more satisfying results with persuasion. Anotheremployment related communication byte guides theprospective employees about the line of argumentwhere they should focus when drafting a coveringletter to be sent with a job application. It asks them to

63

focus on the ‘experience’ if the applicant is wellqualified with significant work experience, to focuson the ‘skills and expertise’ if the applicant is wellqualified but with limited work experience, to focuson the ‘intense desire to work’ if the applicant hasneither educational qualification nor the sufficientwork experience.

The Information Bytes provide additional andsometimes anecdotal information about a specifictopic in order to make it more interesting for students.There are 21 Information Bytes in all. One of theinformation byte informs the readers about ‘Why don’tyou, yes but…’ a favourite participatory game in thecorporate sector where a leader calls a meeting andinvites suggestions from the attendees. As soon as theparticipant gives a suggestion, the leader wouldrespond with ‘that’s a good idea, but it won’t workbecause..’ and continue the process until they reachthe best decision which no one can refute. Theintroductory page portrays the author as a person wholoves reading and travelling a lot and who believesthat travel affords an education that no book can offer.This becomes evident when she quotes multi culturalinformation bytes such as ‘for the people living inMiddle East the week end comprises Friday andSaturday, where Sunday is the first working day ofthe week’, ‘Unlike certain American organizations,which frown upon exchanging gifts, a traditionalJapanese meeting is highly welcoming gifts, howeveropening the gift before the presenter is a bad manners’etc.

The Point / Counterpoint lists the pros and cons of aspecific debate. This helps the students to understandboth sides of an argument. For example, when a pointinsists that ‘communication is contextual and hencetheories have no place in teaching businesscommunication’ its counterpoint emphasizes that‘theories establish a basis for action and predict thedirection of communication’. While arguing about theinternal communications in a crisis the points say‘management of crisis should be spontaneous innature as they come suddenly and managementshould focus in media communication so that it maynot affect company image’ and the counterpointsdefends it saying ‘Though crisis come suddenly, oneshould always anticipate this and be prepared for anyeventuality, an ad hoc approach is not advisable.Similarly the primary focus should be in motivatingthe employees so that everybody understands the real

threat and company really is trying to mitigate it’. Thefirst hand experiences gathered in the areas ofindustrial communication and training has helped thisKamala Award winner to shape her arguments in amore practical and logical manner and encouragesthe student to understand every issues from both thesides of an argument.

Every chapter starts with certain well declared learningobjectives and ends up with a summary which ensuresall major areas indicated in the learning objectiveshave been duly discussed by the author. In addition,it is followed by a list of questions to readers for selfassessing their learning from each chapter.

The author has intelligently added ‘use yourknowledge’ portion in the book which is an interestingand novel attempt which many writers don’t. Theyconsist communication related cases written on reallife situations and the readers are asked to answercertain questions after reading the information givenin them. When a chapter discusses about a particulartopic the caselets are also given related to that topic.For example after discussing the three ego statesbehind each transaction the case on transactionalanalysis asks the reader to identify the suitable optionfrom free child, critical parent, nurturing parent andadult for various instances mentioned in the case.Similarly, after discussing the concepts related to thepreparation and delivery of a presentation the ‘uyk’asks to the readers to comment on the presentationstyles of Adolf Hitler, Mukesh Ambani, Shiv Khera,Azim Premji and Laloo Prasad Yadav and also asksthem to justify why or why not they are effectivepresenters. These exercises make the book very usefuland give the reader an opportunity to go beyond thetheoretical learning. They would also be more usefulto the teachers of business communication to maketheir classes more interactive and live.

The complete teaching and learning package isavailable at www.pearsoned.co.in/payalmehra whichincludes Power Point slides and an extensiveinstructor’s manual as a handy teaching tool. Theinstructor’s manual provides a chapter overview aswell as hints to the relevant chapter end problemsand the role plays which are part of Appendix 7. ThePower point slides provide an overview of the variousimportant concepts discussed in each chapter. Theauthor has used the role plays which have beencontributed by her own students at IIM, Lucknow inthe form of an assignment on an experience in

Book Review

64

miscommunication and has converted those selectexperiences into themes for role plays. Thephotographs used in the book are also noteworthy.Each of them carries a well defined story orinformation related to business communication andadds beauty and support to the contents discussedthereupon.

The Web Based Exercises is another value additionin the book which contains analytical as well ascomprehensive questions that students have to answerwith the help of information collected from variousweb sites and online resources on businesscommunication. For example the web based exercisesportion in chapter 3 guides the readers to refer to http://www.americanchronicle.com/articles/view/34565and asks them to answer what three aspects the authorsuggest to communicate with co workers effectively,the exercise in chapter 4 guides the readers to referto http://www.businessballs.com/transactionanalysis.htmand asks them to identify under what conditions ofcommunication the contamination of ego occurs, theexercise in chapter 10 asks them to go through http://www.act.org/workkeys/assess/bus_writ/errors.html tounderstand the f ive types of common errorscommitted in business writing and motivates thereaders to think about more types of errors on thebasis of the illustration given in the website, etc.

Given the fact that the younger generation is gettingincreasingly tech savvy and cyber surfing this becomesmore relevant to encourage the students to search therelated information online which can feed theircuriosity, rather depending the single view of theauthor given in the text book. It is also good that theauthor has given the detailed online addresses whereone can search the related information along with thequestions telling what they should look for in thoseonline sources which would otherwise have becomedifficult to students with poor online interest andexposure.

The Appendices again is a useful item in this book.The Appendix I gives many interesting informationabout the different gestures and ways of living that

prevalent in different countries. It is interesting to learncertain unknown information such as shaking handsis highly uncomfortable for Chinese and they use palmnot index finger to point something, in Japan ‘meishi’(business cards) should be given only after a bow,Germans do not appreciate humour in a businesscontext and they maintain personal space 6 inchesmore than North Americans do, the ‘Thumps up’gesture is offensive in Saudi and Arab countries andthey do not appreciate discussing the women subjectnot even to inquire about the health of a wife ordaughter, one gesture to avoid in Britain is ‘V’ forvictory, done with the palm facing the person makingthe sign which is a very offensive gesture, number 13is bad luck for the French whereas Italy people belivenumber 17 is a bad luck. Also we could learn somemore interesting facts such as the French love flowerand wine more, one cannot expect quick decisionsin Italy as their bureaucracy and legal systems arerather slow, doing business in Russia without the helpfrom a local is extremely difficult, Germans arrivealways on time who never arrive too early or late andapologize whereas social events in Russia is morerelaxed where a late by 15 to 30 minutes can beaccepted.

Other Appendices give the samples of minutes of ameeting, a proposal, a long report, a short report andthe routine reports. Particularly the Appendix on RolePlays has been written very interestingly. The chaptersthat the students need to go through before dealingwith each situation have also been mentioned afterevery role play. Using these role plays in class roomswould definitely make a communication class roommore live and interactive.

The author has done a commendable job of puttingtogether these highly useful set of ideas and makingthe book rich and interesting in content. This book isworth reading and should be found useful for rangeof readers including business executives, teachers ofbusiness communication and the managementstudents for teaching, training and self developmentequally and comfortably.

K. AnbumaniAssociate Professor, ICCMRT, Lucknow-226016,

email: [email protected]

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