ISSN - 0975-4032

Volume III

Issue I

Jan - June, 2011

Sameer S. Pingle Occupational Health and Safety at Mahindra and Mahindra Ltd:

Vrinda Sood An Empirical Study

L. S. Sridhar Price Discovery in Commodity Market –

M. Sathish An Empirical Study on the Indian Gold Market

Ramesh Kumar Miryala An Empirical Study of Gap Analysis of Service Quality in

Select Private Sector

Salabh Mehrotra Islamic Banking in India: An Innovative Way of Doing Banking

Pankaj Mohanty Business Statistics as Viewed by B-School Students

Chandra Sekhar S F

Prateek Gupta Affordable housing: The Need of the Hour

Amit Kumar Arora (A study of Ghaziabad, U.P.)

Bhavannarayana Kandala Insights into Network Marketing: An International Perspective

Manohar Kapse Case Study: Human Resource Perspective: Delay in Solution

Jayant Sonwalkar

Book Reviews:

R.M. Naidu From Third World to First

Vidya Bhandarker In Search of Change Maestros

Chief Patron Mrs. Aarathy SampathyPresident and CEOSiva Sivani Group of Institutions, Secunderabad.

Patron Mr. Sailesh SampathyVice President and Deputy CEOSiva Sivani Group of Institutions, Secunderabad.

Editor Dr. V. G. ChariDirector - AcademicSiva Sivani Institute of Management.

Assistant Editor Dr. Shahaida PAssoc. Professor, Marketing AreaSiva Sivani Institute of Management.

Editorial Advisory and Review Panel

Dr. Ashish Sadh, Professor, Marketing area, IIM Indore

Dr. B. Brahmaiah, Vice President, Industrial Relations, Sujana Group of Industries. Hyderabad

Dr. Cullen Habel, Lecturer in Marketing, The University of Adelaide Business School,

South Australia

Dr. D. Dhanapal, CEO, KPR Educational Institutions, CoimbatoreDr. C. Gopalkrishnan, Director In charge & Professor of Strategic Management, Institute

of Management, Nirma University of Science & Technology, Ahmedabad

Dr. H.K. Jayavelu, Professor- HR, IIM K

Dr. S. Hanuman Kennedy, Professor - HR, PESIT, Bangalore

Dr. Prashanth N Bharadwaj, Dean’s Associate and Professor, Indiana University of Pennsylvania,USA

Dr. B. S. R. Rao, International Institute of Insurance and Finance, Hyderabad

Dr. Jayasimha K.R, Asst. Professor, Marketing Area, IIM Indore

Dr. B. Rajashekar, Reader, School of Management Studies, University of Hyderabad,

Dr. Rajendra Nargundkar, Director, IMT Nagpur, Nagpur

Dr. Srinivas Murthy, Professor - Finance, IPE, Hyderabad

Dr. G.B. Reddy, Associate Professor, Department of law, Osmania University, Hyderabad

Dr. Nilanjan Sen Gupta, Professor, SDM-IMD, Mysore

Dr. S.M. Vijaykumar, Professor - OB & HRM, Chairperson - Research & Ph.D. IMT Nagpur

Dr. Yerram Raju. B, Regional Director, PRMIA, Hyderabad

Prof. V. Venkaiah, Professor and Head, Department of Business Management, Dr. B. R. AmbedkarOpen University

Prof. M. Kamalakar, Operations and IT Area, SSIM

Dr. V. G. Chari, Director- Academics, SSIM,1st shift

Dr. P.V. S. Sai, Director, Training and Consultancy, SSIM

Dr. S. F. Chandrashekar, Head-HR, SSIM

Dr. Anil Ramesh, Director-Academics SSIM, 2nd Shift, SSIM

ContentsTitle Page #

Occupational Health and Safety at Mahindra and Mahindra Ltd:An Empirical Study

Sameer S. Pingle and Vrinda Sood 5

Price Discovery in Commodity Market – An Empirical Study on theIndian Gold Market

L. S. Sridhar and M. Sathish 19

An Empirical Study of Gap Analysis of Service Quality in Select Private SectorRamesh Kumar Miryala 30

Islamic Banking in India: An Innovative Way of Doing BankingSalabh Mehrotra 39

Business Statistics as Viewed by B-School StudentsPankaj Mohanty and Chandra Sekhar S F 55

Affordable housing: The Need of the Hour (A study of Ghaziabad, U.P.)Prateek Gupta and Amit Kumar Arora 67

Insights into Network Marketing: An International PerspectiveBhavannarayana Kandala 80

Case Study: Human Resource Perspective: Delay in SolutionManohar Kapse and Jayant Sonwalkar 89

Book Reviews:

From Third World to FirstR.M. Naidu 93

In Search of Change Maestros

Vidya Bhandarker 95

Copyright: Siva Sivani Institute of Management, Secunderabad, India.SuGyaan is a bi-annual publication of the Siva Sivani Institute of Management,NH-7, Kompally, Secunderabad- 500 014.

All efforts are made to ensure correctness of the published information. However, SivaSivani Institute of management is not responsible for any errors caused due to oversightor otherwise. The views expressed in this publication are purely personal judgments ofthe authors and do not reflect the views of Siva Sivani Institute of Management. All effortsare made to ensure that published information is free from copyright violations. However,authors are personally responsible for any copyright violation.

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Editorial...

It is with great satisfaction that we present to you the first issue of SuGyaan in 2011.

In its third year of existence SuGyaan has received a tremendous response. Our

sincere gratitude to the authors and reviewers for their support.

The first paper titled Occupational Health and Safety at Mahindra and Mahindra Ltd:

An Empirical Study by Sameer S. Pingle and Vrinda Sood focuses on the various

issues related to safety in a manufacturing company.

The second paper, Price Discovery in Commodity Market – An Empirical Study on the

Indian Gold Market by L. S. Sridhar and M. Sathish explores very interesting trends in

the gold market

The third paper, An Empirical Study of Gap Analysis of Service Quality in Select

Private Sector

By Ramesh Kumar Miryala discusses the implications of service quality in the banking

sector.

The fourth research paper, Islamic Banking in India: An Innovative Way of Doing

Banking by Salabh Mehrotra explores a current topic of interest and its future in

India.

The fifth paper, Business Statistics as Viewed by B-School Students by Pankaj Mohanty

and Chandra Sekhar S F explores the attitudes of students towards the statistics course.

The sixth paper, Affordable housing-The Need of the Hour (A study of Ghaziabad,

U.P.) by Prateek Gupta and Amit Kumar Arora addresses an important need in urban

markets.

The seventh paper Insights into Network Marketing: An International Perspective by

Bhavannarayana Kandala explores the pros and cons of multilevel marketing in India

Next we have a Case Study in Human Resource Perspective: Delay in Solution by

Manohar Kapse and Jayant Sonwalkar.

Lastly, we have two reviews of the books, “Third World to First and In Search of

Change Maestros” by R.M. Naidu and Vidya Bhandarker

We hope you find this issue interesting and look forward to your feedback.

SuGyaan 5

Volume III, Issue I

Occupational Health and Safety at Mahindra and MahindraLtd: An Empirical Study

Sameer S. Pingle and Vrinda Sood

Abstract

Occupational health and safety promotes and maintains the social, mental and physical well-being of workers. Rapid industrialization is imperiling the life and health of workers. Each year,an estimated two million people die as a result of occupational accidents and work-related diseases,making occupational accidents and work-related diseases a growing area of scholarly attention.The tangible and intangible costs associated with occupational accidents have amplified theemphasis on pre-emptive and proactive undertakings at various organizations. Information onoccupational accidents is needed so that companies may understand its prominence thus, statisticaldata is crucial for accident prevention as it acts as a preliminary point for the safety at work. Thepresent study has been undertaken to analyse the occupational accidents and safety concerns atMahindra and Mahindra. The data was collected from primary (survey questionnaire) andsecondary (records maintained at M&M) data sources. Based on the conclusions from analysisrecommendations are cited to implement effective workplace health and safety programmes thatwould help to save the lives of workers by reducing threats and their consequences. Such initiativeswill result in affirmative effects on both worker’s morale and productivity.

Introduction

Rapid industrialization is threatening thelife and health of the workers. Each year,an estimated two million people die as aresult of occupational accidents andwork-related diseases and often havemany direct and indirect negativeconsequences for workers and theirfamilies. A single accident or illness canmean enormous financial as well as socialloss to both workers and employers.Effective workplace health and safetyprogrammes can help to save the lives ofworkers by reducing hazards and theirconsequences and can also have positiveeffects on both worker morale andproductivity.

Occupational health and safetyencompasses the social, mental andphysical well-being of workers. The mainobjectives are:

• Promotion and maintenance of thehighest degree of physical, mentaland social well-being of workers inall occupations

• Prevention among workers ofadverse effects on health caused bytheir working conditions

• Protection of workers in theiremployment from risks resultingfrom factors adverse to health

• Placing and maintenance ofworkers in an occupationalenvironment adapted to physicaland mental needs

• Adaptation of work to humans.

The Constitution of India containsspecific provisions for the occupationalsafety and health of workers in the formof three articles, that is, 24, 39 and 42.The Directorate General of Mines Safety

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(DGMS) and Directorate General ofFactory Advice Service and LabourInstitutes (DGFASLI) strive to achieveoccupational safety and health in mines,factories, and ports. The programsrelating to occupational safetyconcentrate on improvement of the workenvironment, employee–machineryinterface, control and prevention ofchemical hazards, development ofprotective gear and equipment, trainingin safety measures, and development ofsafety and health information systems.

About the Company and the Division

Mahindra & Mahindra is one of the fewgroups that are closely identified withIndia’s industrial progress. Mahindra &Mahindra Limited (M&M) engages inautomotive components, trade, retail andlogistics, financial services, informationtechnology, infrastructure development,and after-market sectors in India andinternationally. Its farm equipmentbusiness manufactures and sellsagricultural tractors; sells DG sets andengines; provides supply chain servicesto retail, export, and domestic markets forfruits and vegetables, and food processingindustries. Mahindra’s Farm EquipmentSector (FES) is the no. 1 tractor brand inIndia, since 1983. Mahindra & Mahindrahad acquired a majority stake in PunjabTractors Limited (PTL) in early 2007.Punjab Tractors, Ltd. manufactured,marketed, and serviced tractors primarilyfor the farming sector in India and alsoprovided harvester combines, ricetransplanters, forklifts, castings, andcomponents and spare parts, agriculturalimplements. The company was foundedin 1970 and post Mahindra – PTL merger,PTL is now a part of Mahindra FES and

is known as Swaraj Division.

Literature Review

Occupational health and Safety is anexceptionally broad topic (CCH, 1992;Glendon, McKenna & Clarke, 2006), asis protection of environment (Guha,1999). Occupational health hazardbroadly means any injury, impairment,or disease affecting a worker or employeeduring his course of employment. Itencompasses community health- relatedfactors too (Snell, Bohlander & Vohra,2010). Occupational illness is defined asany abnormal condition or disordercaused by exposure to environmentalfactors associated with employment(Dessler & Varkkey, 2009).

Employee safety reduces the possibilityof industrial accidents by installing thenecessary safety devices properly andeducating the employees about the safetyaspects. It reduces and then preventsdirect and indirect costs incurred by theorganization due to serious industrialaccidents. It promotes an occupationalenvironment that provides adequateemployee satisfaction and motivation. Itbrings cordiality and harmony in thelabour-management relations. Employeesafety complies with all the lawsgoverning safety and health of theemployees at the workplace. Properlyaddressing the employees’ concern forphysical, mental and psychological wellbeing has become an importantprerequisite for a successful humanresource management (Durai, 2010).

Occupational health and safety has beenreceiving attention from many years, butthe management research and textbookshave focused on stress management and

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legal issues, rather than workenvironment and job satisfaction research(Brief & George, 1991; Sjoberg & Drottz-Sjoberg, 1991). Makin and Winder(2008) have introduced a conceptualframework for Occupational Health andSafety Management. They have focusedupon three areas, which include:

• The facilities, infrastructure,hardware and operatingenvironment that people inorganizations use or convert inorder to produce goods and/orservices;

• The people to whom a duty of careis owed; and

• The management strategies,methodologies and systemsemployed to organize and direct thetransformation of resources intoorganizational outputs. They havealso suggested safe place, safeperson and safe systems approachesfor prevention and controlstrategies in organizations.

Objectives and Hypothesis

The objective of the current study is tounderstand and analyze the incidence ofoccupational accidents and injuries, thecauses of such accidents and theirdependence on various factors like age,department, educational qualification etc.This study also aims at identifying theepicentres of occupational accidents atMahindra and Mahindra’s SwarajDivision (Farm Equipment Sector).Keeping in view the objectives, it is thefollowing hypotheses are formulated:

Ho: Occupational Accidents/ Injuries atM&M are independent of age,

department, educational qualification,work load and lack of process training

H1: Occupational Accidents/ Injuries atM&M are not independent of age,department, educational qualification,stress and lack of process training

Utility of the Study

Health and safety are important aspectsof an organization’s smooth and effectivefunctioning. Good health and safetyperformance ensures an accident-freeindustrial environment. Awareness ofOccupational Health and Safety (OH&S)has improved in India considerably.Organizations have started attaching thesame importance to achieve high OH & Sperformance as they do to other keyaspects of their business activities. Thisdemands adoption of a structuredapproach for the identification of hazards,their evaluation and control of risks. Thepresent study will enable the company intaking effective measures in accidentprevention.

Methodology

Instrument

Two questionnaires were devised forcarrying out the data collection oninjuries and accidents. The availableliterature is used for designing thequestionnaires. The factors identified by(Leveson, 2007), Makin and Winder(2008), (Dessler & Varkkey, 2009) and(Durai, 2010) are used for designingquestionnaires. In addition to the factorsidentified from literature, additionalquestions were framed based on theinteraction with officers and executivesat M & M. The questionnaire was a mixof open ended and multiple choices

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questions and has 5 point Likert scaledquestionnaires. Questionnaires weretranslated into vernacular language(Punjabi) as majority of the workersunderstood only this language. Apartfrom this personal interviews were alsoconducted.

Sources of Data

The project work began with anexploratory research on occupationalhealth and safety. Various measurablefactors were identified. Based on thesevariables, primary and secondary sourceswere identified. Primary sources of dataincluded the feedback from employeesand workers of M&M. Secondary datasources included the official recordsmaintained at M&M (like the accidentand injuries reports) and books andinformation from the web.

Sampling

Sampling involves selecting units from apopulation of interest so that by studyingthe sample one can fairly generalize theresults back to the population from whichthey were chosen. The target populationwas M&M’s employees and workers.

Population: Employees of Mahindra andMahindra Ltd, India

Sampling Frame: Mahindra &Mahindra Ltd, FES Sector, SwarajDivision, Mohali, India

Sample Type: “Non Probabilistic”judgemental sampling was followed topursue people who had met withoccupational injuries/accidents.

Sample size: 42

Pilot Testing:

Each questionnaire was tested with thetotal of 20 respondents which was a small

sample of the total target population. Thedifficulties that were faced by therespondents were noted down andrelevant changes were made by revisingthe questionnaires.

Reliability

Cronbach’s alpha test determines theinternal consistency or averagecorrelation of items in a surveyinstrument to gauge its reliability. A“high” value of alpha is often an evidencethat the items measure an underlyingconstruct. The reliability tests for all thequestionnaires were carried out usingSPSS software. The results for thequestionnaires are as under:

Table 1

Reliability Statistics for OccupationalInjuries and Accidents

Cronbach’s Alpha N of Items

.845 37

The values of Cronbach’s Alpha aresignificantly high (above .70) whichindicate a high value of internal reliability.

Results and Discussion

Based on the interaction with employeesof M & M, the following results areobtained

(1) Frequency Distribution ofnumber of accidents and injuriessustained at M&M:

The analysis clearly indicated that around65% of the workers have sustainedoccupational injuries between 1 to 3times. Very few people have been injuredmore than 7 to 10 times, though aconsiderable percentage, 25%, hassustained injuries while working around

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4 to 6 times. In case of occupationalaccidents (higher degree of severitycompared to injures, consisting of bothreportable ad non reportable accidents),it showed that very few workers have metwith accidents and the number of times,a worker has met with an accident isbetween 1 to 3. This is indicative of thefact that there are very few accidents.

(2) Percentage of the body partsinjured while working:As shown in Figure 1 below surveyindicates that around 71% of times,injury was sustained in hand, followedwith injury of leg at 13 % and injuries offoot at 6%.

While comparing the survey results to the

Fig 1

(Survey Based)accident/injury records maintained atM&M, similar conclusions were drawni.e. the results from survey data and actualrecords were comparable which indicatesthe data of all the workers injured atM&M. This too clearly indicates thatmaximum times hand (79%), followed byfeet (9%) were injured while working.This finding is very crucial as thisindicates the appropriateness of thesurvey and correctness of the datacollected.

(3) Reason for the OccupationalInjury/Accident:

Fig 2 indicates the reasons behind theoccupational mishaps. As is evident fromthe chart, a majority of the accidents

occurred due to personal negligence. Thisnegligence could be lack of attentionwhile carrying out the activity, notwearing proper PPEs required whileworking etc. Task related error, i.e. usingincorrect method of carrying out the taskis also closely related to the aforesaidreason of negligence. By not following thestandard operating procedures, manyaccidents in the workshop have occurred.The other major reason for occupationalaccidents is faulty equipments like sharpedges, broken/cracked tools, breaking ofmachine parts while working etc.Environmental factors included slipperyfloors, oil spills etc. have been found tobe the reason for accidents at M&M.

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The reason for accidents based on actualrecords of M&M indicates a considerabledifference in the ‘Task Related’ errors insurveyed (18%) and actual data (30%)was because mostly respondentscategorized eye related injuries (falling ofchips etc) under faulty equipment whileanalysing the actual records this putunder task related errors. All the otherreasons as per survey data werecomparable to the results of the actualrecords i.e. personal negligence attributed39% of the reason followed by taskrelated errors at 30 % and faultyequipment at 18%.

(4) AGE versus Number of Times Metwith Accident/Injuries

Most of the surveyed respondents gotinjured 1 to 3 times, especially the agegroup above 51 years, i.e. older work forcehas met with more number of accidents/injuries due to their prolonged tenurewith the company.

(5) Highest Qualification vs. Numberof Times Met with Injury

The distribution of accidents/ injuries

with respect to Literacy levels indicatesthat majority of the workers (45%) arenot very well read (10th pass) and thus,might not understand the technicalitiestold in MSDS sheets and other safetyinstructions/ signage displayed on theshop floor.

(6) Sufficiency of Treatment given atOHC vs. Injuries/Accidents Met with

The analysis indicated that majority ofthe workers (60%) were satisfied ornearly content (21%) with the treatmentprovided by the health centre as first aidtowards accident treatment.

(7) Satisfaction with safety officer vs.Knowledge of Availability of SafetyOfficer

83% of the respondents were not verysatisfied with the safety officers’performance of his duties. Only 48% ofthe respondents are aware of the presenceof the safety officer.

(8) Task Training sufficiency vs.Occurrence of Accidents

The output signifies that 95% of the

Fig 2

(Survey Based)

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respondents felt that there is sufficienttraining provided to the employees on thecorrect usage of their machines. Theyhave been trained effectively and there isno lack of process knowledge even withthe workers who met with accidentswhile at work.

(9) Workers need additional trainingon safety vs. satisfied with earliertraining

It was evident from the data that previoustrainings have benefitted (44%) theworkers and they have shown great levelof satisfaction and interest in conductingsuch trainings in the future too. Thedemand and significance of such safetyrelated trainings is high.

(10) Trend Analysis for OccupationalAccidents/ Injuries based on Recordsfor the period 2007 to March 2010:

Figure 3

Trend Analysis for OccupationalAccidents/ Injuries (As per Recordsof M&M)

Figure 3 shows that there has been aconsiderable decrease in the number ofaccidents, both reportable and nonreportable. Later half of 2009 has seenalmost negligible number of accidents;this could be due to the newer policies onsafety and welfare implemented by M&Mmanagement at Swaraj Division. Even thereportable accidents (resulting in greaterthan 48 hours of man hour loss due toaccident) have shown a decreasing trend.

Table 2

Number of Injuries of various bodyparts across 2007 – 2010

Body 2007 2008 2009 2010* TotalPart

Arm 2 5 2 1 10Eye 9 9 13 5 36Foot 7 3 6 4 20Hand 20 18 14 7 59Head 1 5 3 2 11Leg 1 5 5 0 11Face 1 2 0 0 3Others 2 3 1 0 6

Total 43 50 44 19 156

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The Table 2 shows a decreasing trendin the number of hand injuries sustainedfrom year 2008 to 2010 in M&M‘s SwarajDivision. Similar trends have beenwitnessed in number of foot, leg, eye and

face injuries. There has been aconsiderable fall post 2009 primarily dueto M&M implementing strict safetynorms at Swaraj Division.

Figure 4

Figure 4 shows the distribution ofaccidents across the various departmentsof production at M&M. The highestnumber of accidents were recorded indepartment number ‘74’ i.e. LMS of LightMachine Shop where the percentage hasbeen 36%. This department is followedby department number ‘78’ or Assembly.The percentage of accidents reported herehas been 26%. All the other departmentshave shown a very low value of accidents.Thus, it is inferred that over 60% of theaccidents occur in Assembly and LightMachine shop alone. A further insight isrequired to understand what kind ofinjuries the workers are subjected toespecially in these two departments. Forthis the data for the last four years wasanalysed to see the part wise injuries inboth these departments i.e. in LMS andAssembly. The data for 2010 is till themonth of March and as stated in therecords of M&M.

Table 3

Distribution of injuries acrossVarious Departments at M&M From

2007 – 2010

LMS 2007 2008 2009 2010* Total74

Eye 5 4 6 2 17

Face 1 0 0 0 1

Hand 4 4 4 1 13

Head 1 2 1 4

Foot 1 2 3

Leg 2 2

Total 11 10 14 5

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Assembly2007 2008 2009 2010*78Eye 3 2 5 10Face 0Hand 7 8 4 4 23Head 1 1Foot 4 1 2 2 9Leg 4 1 5

Arm 2 1 1 4

Other 1 1

Total 17 17 13 6 53

It is clear from the Table 3 that the partsthat received maximum injuries werehand, followed by eyes. The reason forhigher eye injuries sin LMS is due to thepresence of ‘Chips’ or scrap generated

from tools during their manufacturing.Though there are appropriate chipdisposal mechanisms provided, but attimes due to a gush of air, these chips tendto fall into the eyes of the workers. Thetrend of injuries in LMS department hasseen a significant drop in the injuriesreported. A similar trend was witnessedin Assembly department too. Theabsenteeism (number of man days lost)resulting due to the accidents, bothreportable (occupational accidents thatresulted in a man hour loss of more than48 hours) and non reportable ones (theoccupational injuries resulting in a manhour loss of less than 48 hours). Thoughthe reportable accidents show peaks ofhighest loss of man hours, there is noconsistent trend.

Figure 5

This increased loss was witnessed due tomajor accidents that resulted in morethan a month’s leave for the workers.Though the frequency of such accidentsis less, their magnitude is big.

Hypothesis Testing

Age, lack of training and work load hassignificance of 0.073, 0.742 and 0.602respectively which is more than 0.05(Table 5(a & b)). That is Alpha < p

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value which implies ‘Accept NullHypotheses: Ho’. The occurrences ofoccupational accidents independent ofage, qualification, lack of process trainingand work load i.e. there is no relationshipbetween them. But the significance ofDepartment is 0.04 and that of highestqualification is 0.029 which is less thanalpha’s value of 0.05 (Table 5(a & b)).

This means that Alpha > p valuewhich implies ‘Reject NullHypotheses: Ho’. The occurrence ofoccupational accidents is dependent onthe department in which the workerworks and on highest qualification .i.e.there is a significant relationship in thedepartment, highest qualification and thenumber of accidents reported.

These conclusions are based on analysisof the data collected from survey andfrom official records maintained atM&M’s Swaraj division.

• Majority of the workforce hassustained injuries around 1 to 3times and the most affected area hasbeen the hand .i.e. hand has beeninjured maximum number of times,followed by injuries of foot and eye.

• The reason for these accidents hasbeen personal negligence followedby task errors. Workers have been

careless at times while working orhave followed the incorrect methodof performing the task which hasled to accidents.

• Though the age of workers is notlinked to probability of gettinginjured, it was noticed that workersserving a longer period at M&Mhave sustained more injuries thanthe ones serving a shorter tenure

• A general dissatisfaction with theaccessibility and availability of thesafety officer was brought out in the

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analysis

• The number of injuries/ accidentsalso varied with departments. Fewdepartments reported highernumber of accidents compared tothe rest. Maximum accidents werereported in LMS and in Assemblydepartment

• It was brought out that trainingson safety and first aid wereconsidered helpful in accidentprevention

• The workers have been providedenough process trainings and areaware of the correct usage of themachines. Thus, no accidents/injuries were reported due to thisreason.

• The other factors that are notresponsible for accidents arequalification and age of workers.

• There has been significantdecrease in the number ofaccidents, loss in man hours i.e.absenteeism across all departmentsfrom 2007 to 2010.

Recommendations for AccidentPrevention and Higher SafetyWorkplace

M&M’s management is committed to thesafety and wellbeing of its employees.This is evident from the plethora ofinitiatives undertaken in this regard. Asubstantial drop in the number ofreportable accidents at Swaraj has beendue to the new safety culture beinginfused amongst the workers. A fewmore measures if taken can well make ita Zero Accident workplace.

• As concluded, personalnegligence and incorrectmethodology are the mostcommon reasons for accidents/injuries, thus, workers need to beeducated about the importance ofsafety and their role in it.Employees’ involvement in thesafety and health initiatives areof utmost importance. This canbe brought about through theirparticipation in safety initiatives.

• Innovative initiatives in thisregard can be Safety Fairs, whichcan be entertaining as well asinformative. Having safety games(Forklift competitions, safetybingo, safety jackpot etc), guestlectures and safety poster makingcompetitions involving familiesand on the spot awards can be apart of such safety fairs. Safetyfairs can be clubbed with Safetyand Health Week where a weeklong activities involving talks onoccupational health hazards likeStress and fatigue, Hearing loss,Healthy eating, Smoking, Alcoholuse, Diabetes, Asthma, Cancer,Heart disease, Physical fitness,Reproductive health andWomen’s health issues can beundertaken. Having displays likecharts, posters, banners, andpersonalized badges can be doneduring work safe week. DuringWork Safe Week, M&M couldaward “spot prizes” foremployees who are seen to actsafely or with attention to health.

• Involving families in safety fairsand weeks, fostering team work,

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educating the workers about safetyand health issues with an elementof fun, introducing friendlycompetitions and providingrewards and recognition can resultin a positive atmosphere whereworkers feel connected to themanagement and thus, can workcongenially together towards a Zeroaccident workplace.

• A change in mindset needs to bebrought amongst the workers. Theworkers feel that

“I’ve been doing it this way a long timewithout getting hurt.”

“Getting hurt is just a part of the job.”

“I can’t do anything to prevent an injury.”This mind-set needs to be changed to

“I can work safely.”

“Injuries do not have to be a part of myjob.”

“I can address the hazard and not justassume the risk.” This change can bebrought through constant counsellingsessions, use of display charts and byproviding safety trainings

• It was found that workers havebenefited significantly from thefirst aid trainings undertaken anddemand more of them on a regularbasis. The knowledge of generalmedicines for daily ailments (painrelievers, fever etc) could also beincluded in such trainings.

• Workers adhering to safety normscan be rewarded and recognized.They can be given a range of itemsthat can be customised with the

company’s name and logo and aSafety message, such as pens,notepads, folders, badges, key rings,coffee mugs, fridge magnets,bottles, flags, beach umbrellas, teeshirts, caps, jackets, sun glasses,playing cards, paperweights,calendars and many more. Suchnames can be displayed at relevantplaces to infuse a sense of pride inthe worker and to motivate the rest.These names can be printed inSurbhi and also M&M’s newsletter.

• Some companies set formal targets,e.g. working 100,000 hours withouta lost-time injury (which is roughlyequivalent to 50 people workingfulltime for one year, or one personworking over a lifetime). Anotherapproach is to set targets in termsof reductions in accidents. If, forexample, there was a high rate ofmanual handling accidents and thetarget might be to reduce thoseinjuries by 50%. On achieving suchtargets, workers can beappropriately rewarded.

• Based on the general unhappinesswith the safety officer’ availability,the safety officer should visit theshop floor and interact morefrequently with the workers. Heshould also inspect machines,equipment, tools and PPEs andcheck for damages. A moreproactive rather than a reactive roleis expected of the safety officerwhich will help in identifying thesigns of potential accidents

• Also, the supervisor and the safety

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officer should be vested with morepowers and should be madeaccountable to incidence ofaccidents. Frequency of internaland third party audits should beincreased. This would keep thesupervisors and safety officers ontheir toes to implement and ensurea safe working area

• Frequent analysis of emerging risksshould be done so that correctiveaction can be taken before seriousdamage is done. This can be doneby visits of safety officer and themedical officer to gauge dangersfrom machines and any healthrelated risk.

• Oil spillage, slippery floors wasanother reason for accidents, thus,maintaining a clean work area ismust. Not only will it remove manyhazards from a work area bykeeping it clean, but will alsoprovide a more productive workenvironment for the workers. Thefrequency of cleaning can beincreased and the house keepingstaff could be asked to work moreeffectively.

Managerial Implications

Health at work and healthy workenvironment are amongst the mostvaluable assets of individuals,communities and countries. In the lightof rapid economic growth and industrialprogress in our country, it becomesimperative that safety and health at theworkplace be given its due importance.However, with stress being laid on quickprofits, safety aspects are generallyignored. It is only with the increase inthe number of people killed and injured

at work that the significance of theproblem has been realised. Instead ofinvestigating accidents after they haveoccurred, taking a high toll of human life,it is now felt that preventing theoccurrence of industrial disasters andoccupational diseases is a much betteridea. Reduction in occupational accidentswould not only save the pains and troublefor the employees, but it saves the crucialman hours, increases productivity andsaves the monetary and non-monetarycosts attached with the accident.Providing a safe and health workenvironment motivates the employees forhigher productivity. From managerialpoint of view, not only does a safe andhealth work environment helps inmaintaining higher levels of productionbut it also helps in keeping the employeeshappy and motivated to give in their best.

Scope for Future Research

The presents study is conducted at FarmEquipment Division (FES) at Mahindra& Mahindra Ltd., Mohali. The results cannot be generalized for other divisions.The smaller sample size and time was amajor constraint during the study. Thebiasness of respondents and theirwillingness to respond to the surveyinstrument also affected results of thestudy. The academic background andorientation of authors might have affectedthe outcomes of this research. There is alot of future scope in research in this area.Lately more methodical models have beenformulated to understand the trends inaccident analysis namely the FunctionalResonance Accident Model (FRAM)(Hollnagel, 2004) and the Systems-Theoretic Accident Model and Processes(STAMP) (Leveson, 2007). These modelswill augment in a more systematic and

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innovative mechanism to look forpremature pointers of potential safetythreat. Also apart from the accidentanalysis, research on various healthhazards at workplace can also beundertaken in similar capacity.Comparable studies can be undertaken atother manufacturing and automobileindustries and a relative analysis ofaccidents can be done based on location,type of industry, demographic and othervariables and their impact onoccupational accidents. A study like thiswill help them in better accidentprevention.

AcknowledgementThe guidance, support andencouragement given by Dr. RamandeepKaur, Medical Officer, Mr. Jagdish Singh,Assistant Manager, HR, and allemployees of Mahindra & Mahindra Ltd.,Swaraj Division, Mohali, India is dulyacknowledged.

ReferencesBrief, A.P. & George, J.M. (1991),Psychological Stress and the Workplace:A Brief Comment on the Lazarus,Outlook, Journal of Social Behaviour andPersonality, Vol.6, issue, 7, pp. 15-20.

CCH (1992), Managing OccupationalHealth and Safety, Sydney, NSW: CCHAustralia.

Dessler, Garry. Varkkey, Biju (2009),Human Resource Management (IndiaEdition), New Delhi: Pearson Education,pp. 635-639.

Durai, Pravin (2010), Human ResourceManagement, New Delhi: PearsonEducation, pp.377-380.

Glendon, A.I., McKenna, E.F., Clarke,S.G. (2006), Human Safety and Risk

Management, Boca Raton, FL: CRC Press.

Guha, R. (1999), Environmentalism: AGlobal History, Boston, MA: Addison-Wesley.

Makin, A.M.and Winder, C. (2006), DoSelf assessment Tools Assist theEffectiveness of Performance BasedLegislation? Journal of Occupationalhealth and Safety, Australia and NewZealand, Vol. 22, pp. 261-267

Sjoberg, L. & Drottz-Sjoberg, B. (1991),Knowledge and Risk Perception amongNuclear Power Plant Employees, RiskAnalysis, Vol.11, pp. 607-618.

Snell, Scott. Bohlander, George andVohra, Veena (2010), Human ResourcesManagement (India Edition), Delhi:Cengage Learning, pp. 471-491.

Hollnagel, E. (2004), Barrier andAccident Prevention. Hampshire,England: Ashgate.

Leveson, N. H. M.S. Owens, B. Ingham,M. & Weiss, K.A. (2007), Safety-DrivenModel-Based Systems EngineeringMethodology Part I, MIT Dept. ofAeronautics and Astronautics.

http:// www.planningcommission.nic.in,Accessed on April 29, 2010, 16:40

Authors

Sameer S. Pingle, Assistant Professor &Chairperson- OB & HR Area, Institute ofManagement, Nirma University, e mail:sameer@imnu.ac.in.

Vrinda Sood, Management Trainee(HR), Ranbaxy Laboratories Ltd.,Hyderabad, e mail: vrinda.sood@gmail.com

#MJSSIM 3 (I) 01, 2011

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Introduction

Price discovery in futures marketcommonly refers to the use of futuresprice to determine the expectations offuture cash market prices. Price discoveryand hedging are the major economic usesof futures contract. Many theoretical aswell as empirical attempts have beenmade by academicians, practitioners, andregulatory bodies. Many studies firstexamine this relationship on the basis ofprice or return. The returns on a varietyof futures contracts generally lead spotreturns.

Over the years, researchers have focusedon different issues in commodities marketwith particular emphasis on modeling inpricing. Hathway et al (1974) has foundthat there is a strong relationship betweenfood prices and inflation. Wiese & Lake(1978) studied that Price Discovery refersto the use of futures price for pricing cashmarket transactions. The significance oftheir contributions depends upon a closerelationship between the prices of futurescontract and cash commodities. Cornelland Reinganum (1981) and French

(1983) found empirically that thedifferences between futures and forwardprices for metals and foreign exchangewere small and were not explained bymodels of the daily vs. terminalsettlement features. In the equitiesmarket, Kawaller et al. (1987), and Stolland Whaley (1990) find that S&P500futures price lead spot price. Chan et al.(1991) and Pizzi et al. (1999) observe bi-directional causality between S&P 500futures and stock index, but the futuresmarket has a stronger lead effect.Likewise, commodities futures prices arefound to lead spot prices. Garbade andSilber (1983) followed by Engle andGranger (1987), since then most of theprice discovery process has identifiedthrough co integration test. This processis applicable to equity, debt and forexfutures and spot markets. Unlike anequity market, we cannot conclude orgeneralise the results for all commodityproducts since each commodity has itsown features and various on differentfactors.

The majority of empirical studies of price

Price Discovery in Commodity Market –An Empirical Study on the Indian Gold Market

L. S. Sridhar and M. Sathish

Abstract

This research examines whether precious metal futures serve as a price discovery vehicle for spotmarket movement. The co-integration test shows that gold futures and spot prices are cointegratedand silver futures and spot prices are cointegrated. The Error Correction model and GrangerCausality test show that gold futures serve as a price discovery for gold spot prices. There is anempirical evidence to show that spot prices appear to play a dominant and significant role in thefutures market. The Error Correction Estimates, in the case of Gold, shows that spot price (gold)does not cause by itself but it influences the future price (gold) in 2 lags. On the other hand, futureprice (gold) cause by itself in 2 and 4 lags. The spot price serves as a price discovery tool for Gold.

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discovery are confined to the analysis ofcash and futures market and in relationto equity index futures. Moreover, in theIndian context, though price discoveryhas been experimented with respect tostock futures and stock options not muchevidence on price discovery process.Hence, in this project an attempt is madeto examine the price discovery for goldprices in spot and futures market.

Commodity prices, many researchershave used notions of co-integration [Engleand Granger (1987)] to investigate pricediscovery in futures market. Thedevelopments in co-integration theoryhave provided a new framework toexamine the existing relationshipbetween cash and future commoditymarkets. Price discovery process has beendone on agricultural products for storableand non storable commodities in all otherinternational markets.

Schroeder and Goodwin (1991) used cointegration procedures to examine thatdaily cash and futures prices did not sharea long-run relationship. They found ashort-run relationship between cash andfutures prices based on Garbade-Silber(1983) model, but failed to find a long-run relationship using either Granger-causality or co integration procedures. Aslightly different approach was adoptedby Koontz et al (1990) to study the pricediscovery in the livestock market. Usingweekly US cash and futures prices from1973 through 1984, they investigatednature of the price discovery process.

In the recent years Praveen andSudhakara (2006) attempted to study acomparison of price discovery betweenstock market and the commodity future

market. They have taken Nifty futuretraded on National Stock Exchange(NSE) and gold future on MultiCommodity of India (MCX). The resultempirically showed that the one monthNifty future did not have any influenceon the spot Nifty, but influenced by futureNifty itself. The casual relationship testin the commodity market showed thatgold future price influenced the spot goldprice, but not the contrary. So this impliesthat information is first disseminated inthe future market and then later reflectedin the spot market

Fu and Qing (2006) examined the pricediscovery process and volatility spilloversin Chinese spot-futures markets throughJohansen cointegration, VECM andbivariate EGARCH model. The empiricalresults indicated that the models providedevidence to support the long-termequilibrium relationships and significantbidirectional information flows betweenspot and futures markets in China, withfutures being dominant.

Gupta and Belwinder (2006) examinedthe price discovery mechanism in theNSE spot and future market. The studyuses the daily closing values of indexfuture S&P CNX Nifty, from June 2002to February 2005. By using the techniqueslike Johansen and VECM, it wasempirically found that there was bilateralcausality between the Nifty index andfutures.

Objectives of the study

To examine the Price Discovery inCommodity Market with emphasis ongold

To examine the existing relationshipbetween spot and future price of gold

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Research Methodology

Data

The data for the study consist of 3 monthsfutures prices and spot prices: Gold - 10th

January, 2007 to 31st March, 2009comprising 581 observations. All thetimes series are obtained from NCDEX(National Commodities and DerivativesExchange) database. Most of the investorsprefer to invest in Bullion market not onlybecause it is a safe investment but also,because it hedges against inflation andpolitical uncertainties and it is easy toliquidate. In this study, only futures andspot price are considered and the logreturns are used.

The research design used here isdescriptive in nature, where the study isdone based on analyzing the Spot priceand future price. We have obtained 27months daily data series from January 10,2007 to 31st March 2009 for spot price andfuture prices. More than 24 months’ datawere taken for this research, the basicidea being future and spot prices canshare long run relationship. The studyperiod selected for spot price of goldduring the period April 2002 to June 2005showed that the Indian gold pricevolatility is relatively higher than globalmarket (Praveen and Sudhakara, 2006).

Methodology

Given the time series nature of data, thefirst step in the analysis is to determinethe descriptive statistics and the variablesare tested for normality using Jarrque-Bera test. Then, the price linkage betweenfutures market and spot market would beinitially investigated using AugmentedDickey Fuller Test and Phillips-Perron

Test. Cointegration analysis will be doneusing Johansen Cointegration Test thatmeasures the extent to which twomarkets have achieved long runequilibrium. The Causality will bechecked using Granger Causality Test.Error Correction dynamics characterizethe price discovery process, wherebymarkets attempt to find equilibrium.

Testing for Stationarity and Cointegration

The first step in the analysis is todetermine the descriptive statistics andthe variables are tested for normality.Then the stationarity of the time seriesis tested using the Augmented Dickey-Fuller test and Schmidt-Phillips test. Thenull hypothesis to be used is that there isa unit root in the series (i.e. series is non-stationarity) while the alternativehypothesis is that there is no unit root. Ifspot and futures prices are found to beintegrated of the same order, cointegration test using the Johansenprocedure are performed. One of the mostwidespread unit root test is theAugmented Dickey Fuller (ADF) test.The standard Dickey Fuller test estimatesfollowing equation:

The case which corresponds to therandom walk which is non-stationarity.The Dickey Fuller test tests whether thist-statistic does not converge to the normaldistribution but instead to thedistribution of a functional of Wienerprocess.

The Dickey Fuller test is only valid forAR (1) processes. If the time series iscorrelated at higher lags, the augmented

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Dickey Fuller test constructs a parametercorrection for higher order correlation, byadding lag differences of the time series:

The order of p could be chosen byminimising information criteria such asAkaike or Schwarz.

The basic idea is that futures and cashprices can share a long-run relationshipif they are found to be cointegrated, i.e. ifthere is a linear combination of themwhich is stationarity. There are severalmethods available for conducting the cointegration test, the most widely usedmethod include the residual based Engle-Granger (1987) test and Johansen-Juselius (1990) tests. Then Engle-Granger co integration test consists of atwo stop procedure. In the first step, theresidual error is tested for stationarity.Variables Y and X might individually benon-stationarity but if the estimate oftheir residual error is stationarity, Y andX are said to be cointegrated. It impliesthat Y and X form a long run relationshipand the regression is not spurious. Engleand Granger (1987) have shown that anycointegrated series has an error correctionrepresentation. In the second step, if theresidual error or the estimation in the firststep is stationarity, the error correctionmode is estimated, which represents theshort run dynamics of the model. If spotand futures prices are found to beintegrated of the same order, cointegration test using Johansen procedureis performed. The basic idea is thatfutures and cash priced can share a long-run relationship if they are found to be

cointegrated, i.e. if there is a linearcombination of them which isstationarity. In this study, Grangercausality test and Johansen test is appliedfor price discovery performance.

Testing for Stationarity

The following hypothesis is postulated

Null Hypothesis H0 – Futures price has aunit root in the series (Non- stationary)

Alternate Hypothesis H1 – Futures pricehas no unit root in the series (stationary)

Testing for Causality with Error-Correction Models

The application of Granger causality testsin economics and finance hasproliferated. On an intuitive level, thestandard Grange causality test examineswhether past changes in one variable ‘y’help to explain current changes inanother variable ‘x’. If not, then oneconcluded that ‘y’ does not Granger cause‘x’. In order to determine whethercausality runs in the direction from ‘x’ to‘y’, the experiment is repeated with ‘x’and ‘y’ interchanged. Four findings arepossible: (1) neither variable Grangercauses the other; (2) ‘y’ causes ‘x’, but notvice versa (3) ‘x’ causes ‘y’ but not viceversa, (4) ‘x’ and ‘y’ cause each other.

In more formal terms, the standardGranger causality test is based on thefollowing regression:

p p

“xt = á0 + “ âxi”xt-i + “ âyi”yt-i + å t (1)

i=1 i=1.

Where, “ is the first-difference operatorand “x and “y are stationary times series.The null hypothesis that ye does notGranger cause x is rejected if the

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coefficients, âyi in equation (1) are jointlysignificant based on a Standard F-test Thenull hypothesis that x does not Grangercause y is rejected if the âxi are jointlysignificant in equation (1) when “xreplaces “y as the left side dependentvariable.

Granger (1986) and Engle and Granger(1987) provide a more comprehensive testof causality, which specifically allows fora causal linkage between two variablesstemming from a common trend orequilibrium relationship. More,specifically, this alternative to thestandard test for Granger causalityconsiders the possibility that the laggedlevel of variable ‘y’ may help to explainthe current change in another variable ‘x’even if past changes in ‘y’ do not. Theintuition is that if ‘y’ and ‘x’ have acommon trend, then the current changesin ‘x’ partly is the result of ‘x’ moving intoalignment with the trend value of ‘y’. Suchcausality may not be detected by thestandard Granger causality test, whichonly explains whether past changes in avariable help to explain current changesin another variable. As long as ‘x’ and ‘y’have a common trend, however, causalitymust exist in at least one direction. Thefinding of no causality in either direction-one of the possibilities with the standardGranger causality test is ruled out whenthe variables share a common trend. Inmore formal terms, this alternative testfor Granger causality is based on error-correction models that incorporateinformation from the cointegratedproperties of time series variables. Two(or more) variables are cointegrated (havean equilibrium relationship) if they sharecommon trend(s). To test for causality

when variables are cointegrated, thefollowing error correction equation isused:

p p

“xt = á0 + “ âxi”xt-i + “ âyi”yt-i + á1 + µt-1

+ å t (2)

i=1 i=1

Where xt and yt have been identified asfirst differenced stationary, co integratedtimes series and µt-1 is lagged value of theerror term from the followingcointegration equation

xt = ãyt + µt (3)

The inclusion of µt-1, which must bestationary if the, first differentiatedstationary ‘x’ and ‘y’ series arecointegrate, differentiates the errorcorrection model form the standardGranger causality regression. Byincluding µt-1, the error correction modelintroduces an additional channel throughwhich Granger causality can emerge.Based on equation (2), the null hypothesisthat ‘y’ does not Granger cause ‘x’ isrejected not only if the âyi s are jointlysignificant, but also if the coefficient onµt-1 is significant. Thus in contrast to thestandard Granger causality test, the error-correction approach as discussed byGranger (1987) allows for the finding that‘y’ Granger causes ‘x’, even if thecoefficient on lagged changes in ‘y’ is notjointly significant.

If spot and futures prices are found to beintegrated of the same order,cointegration tests using Johansenprocedure are performed. Provided thespot and futures prices are cointegrated,they are expected to return to the long

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run-equilibrium after possible short rundeviations. Using cross correlogram, fivelags are identified or both futures and spotprice. The cointegrated variables can berepresented by an error correction mode,in which the “error” refers to thedisequilibrium responses. Since theresidual {et-1} from Ft-1 = á + â.St-1+ et-

1, represents an estimation of thedeviation from the long run equilibriumin period t-1, it can be used in the errorcorrection term in the model.

q q

“Ft= á + ð.e t-1 + “ âi”Ft-i + “ ãj”St-j + å t

(5)

i=1 i=1

q q

“St = á’ + ð’.e t-1 + “ â’i”Ft-i + “ ã’j”St-j +å t (6)

i=1 j=1

Where F and S stand for futures and spotprices, respectively and here q=5,specifying the lag structure for bothfutures and spot price has been identifiedby SBC. The null hypothesis of non-causality is given by

H0 = ð = ã1 = ã2 = ã3 = ...... = ãq = 0in equation (4) and

H0 = ð’ = â’1 = â’2 = â’3 = ...... = âq =0 in equation (5), and

the test statistic follows a chi squaredistribution with degrees of freedom tothe number of restrictions.

Results and Discussion

Descriptive statistics and StationarityTests

Table -1

Descriptive Statistics

Gold Future Gold SpotPrice Price

Mean 12261.33 12788.30

Median 12241.50 12794.18

Maximum 17988.00 17900.00

Minimum 8675.000 8581.250

Std. Dev. 2464.379 2591.420

Skewness 0.196542 -0.016599

Kurtosis 1.855529 1.899900

Jarque-Bera 35.38794 29.27360

Probability 0.000000 0.000000

Descriptive statistics, using theobservations 2007/01/10 - 2009/12/16for the variable ‘Gold Future price’ and‘Gold Spot Price’ (580 valid observations)

The Descriptive statistics shows that allthe variables are not normally distributed.The Skewness and Kurtosis are clearlyobserved in both the data series, which isa confirmation of the stylized fact, relatedto fat tails and extreme values with highfrequencies data. Skewness measuresasymmetry of a distribution. It is alsonoticed that the gold futures and spotmarket seems to be more volatile on theconsidered period regarding standarddeviation.

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The absolute value of ADF and PP teststatistic is more than the critical value at5% level. Therefore, both the series canbe taken as non-stationary. The nullhypothesis that the Futures price and theSpot Price having a unit root is not

Table -2.1

Augmented Dickey Fuller (ADF) Test - Future Price and Spot Price

Variable Coefficient Std. Error t-Statistic Prob.

Gold Future Price (-1) -0.001080 0.003406 0.317190 0.7512

Constant 27.60341 42.56247 0.648539 0.5169

Gold Spot Price (1) -0.002105 0.002958 -0.711694 0.4769

Constant 39.28758 38.57137 1.018568 0.3088

rejected. It is further found that the boththe gold futures and spot prices areintegrated of order 1. Therefore, thenecessary condition for testingcointegration is satisfied.

Table - 2.2

Philip Perron (PP) Test - Future Price and Spot Price

Variable Coefficient Std. Error t-Statistic Prob.

Gold Future Price (-1) -0.001080 0.003406 -0.317190 0.7512

Constant 27.60341 42.56247 0.648539 0.5169

Gold Spot Price (1) -0.002105 0.002958 -0.711694 0.4769

Constant 39.28758 38.57137 1.018568 0.3088

Table – 3

Johansen Co integration Test - Futures and Spot Price

No. of Cointegration Eigen value Statistic Critical Value Prob.**Equation(s)

None* 0.023268 18.81455 15.49471 0.0882

At most 1 0.000482 0.277240 3.841466 0.5985

Trace test indicates 1 co integrating eqn (s) at the 0.05 level

* denotes rejection of the hypothesis at the 0.05 level

**MacKinnon-Haug-Michelis (1999) p-values

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Table - 4

Test for Granger-Causality - Futures and Spot Price

Null Hypothesis F-Statistic P-Value

GSPOTPRICE does not Granger Cause GFUTUREPRICE 7.84021 0.00044

GFUTUREPRICE does not Granger Cause GSPOTPRICE 0.48108 0.61836

Co-integration and Granger CausalityTest Results:

In order to test for cointegration betweenspot and futures prices, the Johansen(1988) procedure is employed. By usingtrace statistics and maximum eigen valuestatistic, it was identified that there existson cointegration equation between thefutures gold and spot gold price and sothe ECM for these series was proceeded.

Error Correction Model

Then Granger causality test primarilyindicated that there is a causalrelationship between futures and spotclose prices. Granger causality test showsthat future price do not Granger cause thespot price but spot price does Grangercause the future price. Therefore, itappears that Granger causality runs one-way from spot price to future price andnot the other way in Gold

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Having found that co integration existsand since the level series are non-stationary, ECM is the appropriate modelto capture the relationship betweenfutures and spot prices. Initially, the rankof the co integration using the Johansen’smethodology is tested. The ErrorCorrection Estimates, in the case of Gold,shows that spot price does not cause byitself but it influences the future price in2 lags. Thus spot price influences thefutures price which is same as the resultobtained by the Granger Causality Test.

CONCLUSION

This study attempts to examine theevidence of price discovery in gold spotmarket movement. The co integration testshows that gold futures and spot prices

are cointegrated and there exists one cointegration equation. The Grangercausality test shows that there is no bi-causal relationship between gold futuresand spot prices. Spot price significantlyinfluences the Future price. The ErrorCorrection Estimates, in the case of Gold,shows that gold spot price does not causeby itself but it influences the gold futureprice in 2 lags. On the other hand, goldfuture price causes by itself in 2 and 4lags.

References

Besseler, D.A., Covey, T. (1991),“Cointegration: Some results on US CattlePrices” The Journal of Futures Market,Vol.11, No.4, pp 461-474.

Cornell, Bradford and Reinganum, Marc

Standard errors in () & t-Statistics in [ ].

t-statistics > 1.76 is significant at 0.10 level of significance

t-statistics > 1.96 is significant at 0.05 level of significance

t-statistics > 2.56 is significant at 0.01 level of significance

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R (1981), “Forward and Futures Prices:Evidence from the Foreign ExchangeMarkets” Journal of Finance, Vol No.36pp. 1035-1045.

Chan, K., etal. (1991), “A FurtherAnalysis of the Lead-lag Relationshipbetween the Cash Market and StockIndex Futures Market”, Review ofFinancial Studies 5, 123-152.

Cox John C, Ingersoll Jonathan and RossStephen A (1981), “The Relationbetween Forward Prices and FuturePrices”, Journal of Financial Economics,Vol. No.9 pp. 521-546.

Engle, R.F., & Granger, C.W.J. (1987),“Cointegration and Error Correction:Representation, estimation and testing”Econometrica, Vol. No. 55, pp.251-276.

Fu.L & Qing, Z.J (2006), “Price Discoveryand volatility spillovers”, Evidence fromChinese spot-futures market, Journal ofFinance, Vol.No:53,pp.211-219.

Franses, Philip Hans, “A ConciseIntroduction to Econometrics: AnIntuitive Guide”, (2nd Edition),Cambridge University Press : 2003.

Fortenbery, T.R. and Zapata H.O., (1993),“An Examination of cointegrationRelations between Futures and LocalGrain Markets” Journal of FuturesMarket, Vol. 1, pp. 921-932.

French Kenneth R (1983), “A comparisonof Futures and Forward Prices” Journalof Financial Economics, Vol.No.12pp.311-342.

Garbade, K.D. and Silber, W.L. (1983),“Price movements and price discovery infutures and cash markets”, Review ofEconomics and Statistics, 65, pp.289-297.

Geweke, J. (1982), “Measurement oflinear dependence and feedback betweenmultiple time series”, Journal of theAmerican Statistical Association 77, 304-313.

Granger, C.W.J. (1986), “Developmentsin the study of cointegrated economicvariables”, Oxford Bulletin of Economicsand Statistics, Vol.No.48, pp.213-228.

Gupta, Kapil., & Singh, Balwinder.(2006). Price Discovery & Causality inspot & Futures Markets in India. TheICFAI Journal of Derivatives Markets,3(1), 30-41

Harvey, A.C. (1981), The EconometricAnalysis of time Series, A Halsted PressBook.

Hull, J C, “Options, Futures, and otherDerivatives”, (7th Edition), PerasonPublishers: 2007

Johansen, S. (1988), “Statistical Analysisof Cointegrated Vectors”, Journal ofEconomic Dynamics and Control, 12,231-54.

Johansen, S. and K. Juselius.(1990),“Maximum Likelihood Estimation andInference and Inference on Cointegration– With Applications for the Demand forMoney”, Oxford Bulletin of Economicsand Statistics, 59, 2, 169-210.

Lutkepohl, H. and H. Reimers. (1992),“Impulse Response Analysis ofCointegrated Systems”, Journal ofEconomic Dynamics and Control, 16, 53-78.

Hathaway Dale E, Hendrik S.Houthakker and John A. Schnittker(1974), “Food Prices and Inflation”,Brookings Paperson Economic Activity,

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Vol. 1974, No.1, pp.63-116

Helmuth, John (1977), “Grain Pricing”Economic Bulletin No.1, Washington:Commodity Futures Trading Comm.

Jarrow, Robert A and Oldfield, George S(1981), “Forward Contracts and FuturesContract”, Journal of FinancialEconomics, Vol.9 pp. 373-382

Johansen, Soren (1988), “StatisticalAnalysis of Cointegration Vectors”,Journal of Economic Dynamics andControl, Vol No.12, pp.231-254.

Kamara, A (1982), “Issues in FuturesMarket: A Survey”, Journal of FuturesMarkets, Vol 2, pp. 169-210

Kawaller, I. G., Koch, P. D. and Koch, T.W. (1987): ‘The temporal pricerelationship between S&P500 futures andthe S&P500 index’, Journal of Finance,Vol.No:53, pp 12-19.

Koontz, S.R., Gracia P., and Hudson,M.A. (1990), “Dominant-satelliterelationships between live cattle cash andfutures markets”, The Journal of FuturesMarket, Vol No.10, pp. 123-136

Ollerman, C.M. and Brorsen, B.W.,Farrris, P.L. (1989), “Price discovery forfeeder cattle”, The Journal of FuturesMarket, 9, pp.113-121

Pizza, M.A. et al. (1998). An examinationof the relationship between Stock IndexCash and Futures Markets: ACointegration approach. The Journal ofFutures Markets, 18(3), 297-305.

Praveen, D.G., and sudhakara, A. (2006),‘Price discovery and causality in theIndian derivativemarket’, The ICFAIJournal of Derivative Market.

Schroeder, T.C., and Goodwin B.K.

(1991), “Price Discovery andCointegration for live hogs”, Journal ofFutures Market, Vol.11 No.4, pp.685-696

Stoll, H. R. and R. E. Whaley, (1990),“The dynamics of stock index and stockindex futures, Journal of Financial andQuantitative Analysis 25, 441-468.

Silber, William (1981), “Innovation,Competition and New Contract Design inFutures Market”, Journal of FuturesMarket, Vol.1 No.1 pp. 123-155

Wiese Virgil (1978), “Use of CommodityExchanges by Local Grain MarketingOrganisations” in A Peck (ed.) Viewsfrom the Trade, Board of Trade of the Cityof Chicago, Chicago

Yang J., Bessler D., and Leatham D.J.,(2001), “Asset sotrabality and pricediscovery in commodity futures markets: a new look”, Journal of Futures Market,Vol. No. 21, pp.279-300

Witherspoon, J.T. (1993), “How PriceDiscovery by Futures Impacts the CashMarket, Journal of Futures Markets”, 11,685-696.

Zapata, H.O. and T.R. Fortenbery (1996),“Stochastic Interest Rate and PriceDiscovery in Selected Markets”, Reviewof Agricultural Economics 18, 643-654.

Authors

L. S. Sridhar, Lecturer, PSG Institute ofManagement, PSG College of Technology,Coimbatore, e-mail-sonnappansridhar@yahoo.co.in

M. Sathish, Lecturer, PSG Institute ofManagement, PSG College of Technology,Coimbatore, e- mail-mahendran.sathish@gmail.com

#MJSSIM 3 (I) 02, 2011

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Introduction

Banking services worldwide can broadlybe classified into investment banking andcommercial banking and is primarilyconcerned with helping corporate bodiesraise funds at the best possible rates fromvarious markets. Commercial banking isconcerned with channeling savings toproductive uses. Banking is anintermediary function but one that is veryessential for sustained economic growth.In India, since the nationalization ofbanks in 1969, banking has beenprimarily in the Central Government’sdomain. As part of the Government’sliberalization policy which began in 1991,New Private Sector Banks (NPSBs) wereallowed to be set up. Today, India has nineNPSBs that provide commercial bankingservices. In a relatively short period, theNPSBs have managed to achieve about2% of the market share in terms ofbusiness, a disproportionate of 2% shareof the total income and almost 17% ofthe total net profit earned by the bankingsystem as a whole. This success can beattributed in large measure to the superiorquality of Services that these banks have

An Empirical Study of Gap Analysis of Service Quality inSelect Private Sector

Ramesh Kumar Miryala

Abstract

The present study evaluates the customer perceptions of service quality in select private sector banks.Data was collected from 200 customers of Private Sector Banks using structured questionnaire.Gap analysis and Multi regression were used for analysis of data. The result shows that thedimension of service quality such as Empathy and Accessibility has more gap, as the customerexpectations are high to their perceived service. The result also indicates that Empathy-Reliability-Assurance positively influences the service quality. The study implies that bank should reduce theservice gap to deliver superior quality of service to retain existing customers as well as to attractnew customers.

been able to provide.

Service quality is a concept that hasaroused considerable interest and debatein the research literature because of thedifficulties in both defining it andmeasuring it with no overall consensusemerging on either (Wisniewski, 2001).Nowadays, with the increasedcompetition, service quality has becomea popular area of academic investigationand has been recognized as a key factorin keeping competitive advantage andsustaining satisfying relationships withcustomers (Zeithmal et al, 2000). Servicequality can be defined as the differencebetween customer’s expectations forservice performance prior to the serviceencounter and their perceptions of theservice received (Asubonteng et al, 1996).Service quality can thus be defined as thedifference between customerexpectations of service and e perceivedservice. If expectations are greater thanperformance, then perceived quality isless than satisfactory and hence customerdissatisfaction occurs (Parasuraman et al.,1985; Lewis and Mitchell, 1990).

Objectives

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• To Evaluate the Quality of Servicein Select Banks in Nalgonda District

• To identify the gap betweencustomer expectation andperception

• To identify the areas that need toimprove by banks to deliversuperior quality of service.

Methodology

The data was collected for the study 200from customers of select Private SectorBanks in Nalgonda district in AndhraPradesh, based on convenience andadministered a modified SERVQUALquestionnaire containing two sections:customers’ expectations and customers’perception each consisting of 26questions of 6 dimensions. The studyfollows the SERVQUAL as a frameworkand one dimension (accessibility) wasadded to previous dimensions to fit intothe study (Al-Fazwan, 2005). Therespondents were asked to rate theirexpectations and perceptions of serviceoffered by the respective banks. A sevenpoint Likert scale was used.

Service Quality

Service quality can be defined as thedifference between customer’sexpectations for service performanceprior to the service encounter and theirperceptions of the service received(Asubonteng et al.,1996). Quality servicehas a positive effect on the bottom-lineperformance of a firm and thereby on thecompetitive advantages that could begained from an improvement in thequality of service offering, so that theperceived service exceeds the service leveldesired by customers (Caruana, 2002;

Chumpitaz.2004). Gefan (2002) definedservice quality as the subjectivecomparison that customers make betweenthe quality of the service that they wantto receive and what they actually get.Nowadays, with the increasedcompetition, service quality has becomea popular area of academic investigationand has been recognized as a key factorin keeping competitive advantage andsustaining satisfying relationships withcustomers (Zeithmal et al...2000).

Dimensions of Service Quality

The SERVQUAL scale is the principalinstrument widely utilized to assessservice quality for a variety of services.Parasuraman et al., (1988) haveconceptualized a five dimensional modelof service quality such as: reliability,responsiveness, empathy, assurance andtangibility. Their measurementinstrument is known as SERVQUAL,which has become almost the standardway of measuring service quality. Further,each item of SERVQUAL has been usedtwice: to measure expectations andperceptions of service quality. The centralidea in this model is that service qualityis a function of difference scores or gapbetween expectations and perceptions.The five dimensions of SERVQUALIncludes:

Tangibles: Physical facilities, equipmentand appearance of personnel.

Reliability: Ability to perform thepromised service dependably andaccurately.

Responsiveness: Willingness to helpcustomers and provide prompt service.

Assurance: Knowledge and courtesy of

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employees and their ability to inspire trustand confidence.

Empathy: Caring and individualizedattention that the firm provides to itscustomers.

Literature Review

Koushiki Choudhury (2007) in his studysuggests that customers distinguish fourdimensions of service quality in the caseof the retail banking industry in India,namely, attitude, competence, tangiblesand convenience. Identifying theunderlying dimensions of the servicequality construct in the Indian retailbanking industry is the first step in thedefinition and hence provision of qualityservice. The paper has drawn upon thefindings of the service quality dimensionsto contend the initiatives that bankmanagers can take to enhance theiremployees’ skills and attitudes and instilla customer-service culture. Sandip GoshHasra and BL Srivastava (2009) in theirstudy indicated that the bank should payattention to these dimension of servicequality and pay more attention todimension of assurance-empathy toincrease loyalty to a company, willingnessto pay, customer commitment andcustomer trust.

Sudesh (2007) revealed that poor servicequality in public sector banks is mainlybecause of deficiency in tangibility, lackof responsiveness and empathy. Privatesector banks, on the other hand, were

found to be more reformed in this regards.Above all, the foreign banks wererelatively close to the expectations of theircustomers with regard to variousdimensions of service quality. Further, thestudy revealed that there existed servicequality variation across demographicvariables and suggested that managementof banks should pay attention to potentialfailure points and should be responsiveto customer problems. Joshua andKoshi(2005) in their study on‘Expectation and perception of servicequality in old and new generation banks’,observed that the performance of the newgeneration banks across all the servicequality dimensions are better than thoseof old generation banks. Al-Fazwan(2005) in his study found that the bankshould concentrate on accessibilitydimension. He stated that the particularbank should take maximum efforts toraise the level of services to meet out thecustomer expectations. (Table 1&2)

Inference

The table 2 represents the gap scores forprivate sector banks. The differencebetween the customer’s expectation andperception of service is the gap scorewhich is then averaged for eachdimension.

The unweighted gap score was presentedin the table 2 Average gap score for sixdimensions as calculated in table 2 isaveraged to compute the unweighted gapscore.

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Table 1 : Gap Analysis Score

Statements Expectation Perception Service GAP (E-P)

TANGIBILITYModern looking equipment 6.6 6.1 0.5Physical facility 6.5 6.1 0.4Employee are well dressed 6.6 5.9 0.7Materials are visually appealing 6.7 6.1 0.6

Average gap score 0.55

RELIABILITYDelivers service at promised time 6.7 5.7 1Interest in solving problem 6.6 5.6 1Perform service right first time 6.6 5.7 0.9Follows the promised time 6.6 5.7 0.9Maintain error free records 6.9 6.4 0.5

Average gap score 0.86

RESPONSIVENESSTell you about performance of service 6.7 5.9 0.8Gives prompt service 6.4 5.6 0.8Willingness to help 6.5 5.6 0.9Not busy to respond queries 6.4 5.1 1.3

Average gap score 0.95

ASSURANCEInstills confidence 6.8 5.9 0.9Safe transactions 6.7 6.3 0.4Employees are consistently courteous 6.4 5.3 1.1Employee have enough knowledge 6.6 6.1 0.5

Average gap score 0.73

EMPATHYGives individual attention 6.4 4.8 1.6Convenient operating hours 6.6 5.7 0.9Gives personal attention 6.3 4.9 1.4Best interest in heart 6.6 5.7 0.9Understand customer’s specific needs 6.6 5.2 1.4

Average gap score 1.24

ACCESSIBILITYConvenient branch locations 6.7 5.7 1Extended working hours 6.4 4.9 1.5ATM network 6.8 5.7 1.1Safe net banking and mobile banking 6.3 5.8 0.5

Average gap score 1.03

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Table 2

Average Gap Score of Private Sector Banks (Un weighted)

No DIMENSIONS GAP SCORES

1. Average score for Tangibles 0.55

2. Average score for Reliability 0.86

3. Average score for Responsiveness 0.95

4. Average score for Assurance 0.73

5. Average score for Empathy 1.24

6. Average score for Accessibility 1.03

TOTAL 5.36

Average (total/6) Un-weighted score 0.893

Table 3

Highest Gap Scores of Private Sector Banks

NO ATTRIBUTES DIMENSIONS GAP SCORES

1. Banks will give customers individualattentions EMPATHY 1.6

2. Banks has Extended Working Hours tomeet customer needs ACCESSIBILITY 1.5

3. Banks has employees to give customer’spersonal attention EMPATHY 1.4

4. The employees of banks will understandthe specific needs of their customer EMPATH 1.4

5. Employees of banks will never be too busyto respond to customer’s request RESPONSIVENESS 1.3

Inference

The table 3 represents the attributeshaving the highest gap scores observedfrom the table 1. There exist highest gapbetween customer expectations andperceptions of bank services in theseattributes. This indicates that thecustomers are not satisfied with the

service in these attributes. Theseincludes: giving individual attentions(1.6) [empathy], extended working hoursto meet customer needs (1.5)[accessibility], employees give customerpersonal attention (1.4) [empathy],employees understand the specific needsof the customers (1.4)[empathy],employees are never too busy to respond

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to customer’s request(1.3)[responsiveness]. Hence it was observed

that the more gaps are identified inempathy dimension.

Table 4

Lowest Gap Scores of Private Sector Banks

NO ATTRIBUTES DIMENSIONS GAP SCORES

1. Customers of banks feel safe withtransaction ASSURANCE 0.4

2. Bank has modern looking equipment TANGIBLES 0.5

3. Material associated with service are visuallyappealing TANGIBLES 0.6

4. Employees in banks tell customers exactlywhen service will be performed RESPONSIVENESS 0.8

5. Employees in banks are always bewilling to help customers RESPONSIVENESS 0.9

Inference

The table 4 represents the attributeshaving the lowest gap scores observedfrom the table 1. These includes:customers feel safe transaction withbanks (0.4) [assurance], bank has modernlooking equipment (0.5) [tangibles],material associated with service arevisually appealing (0.6) [tangibles]

employees tell customers exactly whenservice will be performed (0.8)[responsiveness], employees in banks arealways willing to help customers(0.9)[responsiveness].There exists little gapbetween customer expectation andperception in tangibles and reliabilitydimensions.

Table 5Multi regression [stepwise method]

5A.Model Summary

Mode l R R Square Adjusted Std. ErrorR Square of the Estimate

1 .631(a) .398 .395 .692692 .681(b) .464 .458 .655273 .697(c) .486 .479 .64292

a Predictors: (Constant), empathyb Predictors: (Constant), empathy, reliabilityc Predictors: (Constant), empathy, reliability, assurance

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Coefficients (a)

S Model Unstandardized Standardized t Sig. No. Coefficients Coefficients

B Std. Error Beta

1 (Constant) 1.648 .359 4.596 .000

empathy .774 .068 .631 11.437 .000

2 (Constant) .394 .424 .928 .355

empathy .594 .074 .484 8.055 .000

reliability .378 .077 .296 4.926 .000

3 (Constant) -.442 .504 -.877 .381

empathy .416 .094 .339 4.416 .000

reliability .346 .076 .271 4.550 .000

assurance .329 .112 .219 2.939 .004

a Dependent Variable: service quality

Inference

The multi regression analysis (table 6)tells us that the overall model fits 48 %.The adjusted R square value .479 reflectsthe independent variables (empathy,reliability, and accessibility) predicts 39%variance in the dependent variable(service quality). The R square valuegives the proportion of variance independent variable accounted by the setof independent variables chosen for themodel. Here the R square value depictsthat independent variables (empathy,reliability, accessibility) account for48.6% of variance in service quality. Thebeta value in (coefficient table-4) gives ameasure of contribution of each variableto the model. A larger value indicates thata unit change in this predictor variablehas a large effect on criterion variable(service quality). The stepwise multiregression analysis shows that the

empathy (.339), reliability (.271),assurance (.219) together influences theservice quality to 82% whereas empathyalone by 63%. We can say that empathyis the major dimension influencing thequality of service.

Findings

The gap analysis shows that empathy ishaving more gap between customerexpectation and perception of servicequality. The bank has to reduce this gapgiving individual personal attention tounderstand the customer specific needs.Next to empathy more gap was observedin accessibility dimension. The customersof the banks expect to extend the workinghours in Saturday for their convenience.And also some of the customers aredissatisfied with ATM maintenance. Sothe bank management should concentrateon proper maintenance of ATM. In

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responsiveness dimension, there is moregap in attribute responding customerqueries in busy time. The employeeswillingly come forward to solve thecustomer problem. The Multi regressionanalysis shows that dimension (table 5B)Empathy-Reliability-Assurancepositively influences the banking servicequality.

Conclusion

Banks have to understand the changingneeds of customers, their aspirations andexpectations to create value. Banks shouldalso have a strong customer relationshipmanagement system that would indicatethe worth of the customer and be able tounderstand his needs while interactingwith him, so as to cross sell their products.To manage growth and continuity inbusiness, human resources play animportant role. The new generationprivate sector banks and foreign banksenjoy a lead in this regard when comparedto PSBs and old generation private sectorbanks. Skill sets of employees need upgradation so as to make them morecomfortable with the latest technologythat will increase their comfort levelwhile educating customers to use thesame in their day to day dealings. (Nair,The Hindu-Survey of Indian Industry2010, pp.60-61). Banks may follow afeedback system to know the customerexpectations for improving the level ofcustomer satisfaction to maximum level.Remarks on service reliability should becontinuously obtained from customers.This will enhance their service quality toa large extent.

References

Al-Fazwan (2005) “Assessing ServiceQuality in a Saudi Bank”, Journal of KingSaud University, vol 18, eng.sci (1),pp.101-115.

Asubonteng, P., McCleary, K.J. and Swan,J.E. (1996), “SERVQUAL Revisited: aCritical Review of Service Quality”,Journal of Services Marketing, Vol. 10,No. 6, pp. 62-81.

Caruana, Albert (2002), “Service Quality-The Effects of Service Quality and theMediating Role of CustomerSatisfaction”, European Journal ofMarketing,Vol.36 No.7/8,pp.811-828.

Chumpitaz, Ruben and Paparoidamis,Nicholas.G (2004), “Service Quality andMarketing Performance in B2B:Exploring the Mediating Role of ClientSatisfaction”, Managing Service Quality,Vol.14 No.2/3,pp.235-248.

Dr. Chandrakala.S, (2009), “EffectiveRole of CRM in Banking Sector”, BankingFinance, pp5-8.

Gefen.D (2000) “E-commerce: The Roleof Familiarity and Trust”, InternationalJournal of Management Science, Vol.28N0.6, pp725-37.

Joshua A J, V Moli, P. Koshi (2005),“Expectation and Perception of ServiceQuality in Old and New GenerationBanks”, Indian Journal of Marketing,vol.37(3), pp. 18.

Koushiki Choudhury(2007) , Journal ofAsia-Pacific Business, Volume 8, Issue 4December 2007 , pp 21 – 38.

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lewi S, B.R. & Mitchell, V.W., “Definingand Measuring the Quality of CustomerService”, Marketing Intelligence andPlanning, 1990, 8, pp. 11 - 17.

Nair M.V, “Banking - New Directions ofGrowth”, The Hindu-Survey of IndianIndustry 2010, pp.60-61.

Parasuraman,A.; Berry, Leonard L.;Zeithaml, Valarie A., “A ConceptualModel of Service Quality and ItsImplications for Future Research”,Journal of Marketing, 1985, 49, 4, 41-50.

Pa r a s u r a m a n , A . ; B e r r y, L e o n a r dL.;Zeithaml,Valarie A., “SERVQUAL: AMultiple-Item Scale For MeasuringConsumer Perceptions of ServiceQuality”, Journal of Retailing, 1988, 64,1, 12-40.

Sandip Ghosh Hazra and Kailash BLSrivastava (2009) “Impact of ServiceQuality on Customer Loyalty,Commitment and Trust in the Indian

Banking Sector” ICFAI Journal ofMarketing Management, vol .3 Nos3&4,pp. 75-95.

Sudesh (2007) “Service quality in banks-A study in Haryana and Chandigarh”,NICE Journal of Business, 2(1), pp.55-65.

Wisniewski M; , “Using Servqual toAssess Customer Satisfaction with PublicSector Services”, Managing ServiceQuality, 2001, vol. 11 no. 6 pp. 380-388

Zeithmal, V.A., (2000), “Service QualityDelivery Trough Websites: A CriticalReview of Extant Knowledge”, Journal ofthe Academy of Marketing Science, vol.30no.4,pp.362-75.

Author

Dr. Ramesh Kumar Miryala, Professor,Swami Ramananda Tirtha Institute ofScience & Technology, Nalgonda, A. P. email: miryalaramesh@gmail.com

#MJSSIM 3 (I) 03, 2011

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Introduction

In the present scenario Islamic bankingalong with finance is one of the fastestgrowing industries in the world. Thesurveys made by various researchersreveal that Islamic banking is growingwith an exceptional rate of 20 percentworldwide. Although Islamic banking isfor all communities irrespective ofreligion, but particularly for Muslimsinterest is forbidden. But as far as Muslimpopulation is concerned, then Islam is theworld’s second largest religion afterChristianity with approximate 1.0-1.8billion disciples, that comprising 20-25%of the world population. India is thesecond largest country in the world afterChina as far as population is concerned.As per census 2001 Muslim populationhas been estimated to be 13.4 percent oftotal population in India.

Islamic banking can be simply defined asa banking operation that abides by sharia(Islamic law), under which a key point isthe prohibition of interest or riba.

Generally, Islamic banking is anothername of interest-free banking. Loans area central element of conventionalbanking, with banks borrowing fromdepositors and lending to people in needof finance. Conventional banks thus makemoney from the difference between thelower interest rate they pay on depositsand the higher interest rate they chargetheir customers. Islamic banks, on theother hand, are prohibited from payingor receiving interest. Sharia-compliantbanks do not give out loans; instead, theyuse other modes– sale-, lease- andpartnership-based instruments – to makeprofit.

Besides being prohibited from earningriba, Islamic banks cannot engage inharam activities prohibited under sharia,such as those involving pork, alcohol,pornography and gambling. They cannotbuy stocks of wine and sell them to aclient. Nor can they lease a gambling slotmachine to a gaming company.

Islamic Banking in India:An Innovative Way of Banking

Salabh Mehrotra

Abstract

In the complex world of Indian banking, Islamic banking is a distant dream. Nonetheless, countlessadvocates of Islamic banking have been trying to propagate the concept for long India has a 14percent Muslims population which is more than the Muslim population of Bangladesh, Turkey,Egypt, Iran, Nigeria, Afghanistan, Sudan, Iraq, Saudi Arabia etc, but there is no full fledged Islamicbank currently working in this country. Reserve Bank of India and other legal institutions of Indiaare not issuing license to banks on principles of Islamic banking. Necessary measures are, beingtaken by the India Government. The present study is taken to explain how Islamic banking is betterfor India taking the SWOT analysis and Michael Porter’s five forces model. It explains how Islamicbanks can commence in India by suggesting necessary measures for the same.

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Evolution of Islamic banking

Islamic economists and jurists initiated acritique on the interest-based operationof conventional banks in Muslimcountries in the 1900s, and a number ofsavings institutions were established inthe 1960s. Dubai Islamic Bankcommenced its operations in 1975 andevolved as the first Islamic commercialbank. In 1980s there was a proliferationof Islamic banks around the globe and itreaches more than 300 Islamic financialinstitutions across over 50 countries inyear 2008. The Middle East and Asia aretwo main markets where Islamic bankshave flourished because of the Muslimpopulation. Bahrain, Kuwait, Qatar,Saudi Arabia and the United ArabEmirates are active players in the MiddleEast. Egypt, Lebanon, Oman and theSyrian Arab Republic are catching up. InAsia, Malaysia has a fully developedIslamic financial system (consisting ofbanking, Takaful, or insurance, capitalmarket and money market components).Other developing players include BruneiDarussalam, Indonesia, Pakistan, thePhilippines and Thailand.

Foundation of Islamic banking

Prohibition of interest means moneycannot be simply traded for money.Although, money can be used to buygoods that can subsequently be sold orleased. Money can also be pooled into abusiness venture, with the partnerssharing the profit generated from theeffort and use of their skills. Thefinancing instruments available fromIslamic banks are described below.

Sale-based instruments

Murabahah

This is a sale contract where the cost andthe profit margin are disclosed to thebuyer. Murabahah is like normal salewhere only end selling price is statedwhich is known as Musawamah. In thistype of sale, the bank discloses to theclient only the sale price. Islamic banksuse Murabahah in two ways. First,Murabahah is utilized in assetacquisitions where the client wants toown a tangible asset, such as a piece ofmachinery, a building or inventory. Thiscan be called true-trade Murabahah.Second is commodity Murabahah (alsoknown as Tawarruq or reverseMurabahah), Islamic banks buy certaincommodities (for example, metals andcrude palm oil) from a commodity broker,then sell them at cost plus profit on adeferred basis. Since this is a credit sale,the client does not have to payimmediately.

Salam

This is a forward sale contract used forcommodities. Salam is exclusion to thegeneral rule of sale because the vendor isallowed to sell on a forward basis. Thisallows farmers to sell their uncultivatedagricultural produce on a forward basis,with the buyer paying the full price onday one and the parties agreeing on thequantity and time of delivery. Hencefarmers could use the money paid ascapital to start cultivation. On maturity,the farmer delivered the agreed quantityof the produce to the buyer. In the presentbanking scenario, Islamic banks can usethis instrument to fund small farmers.

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Istisna

Istisna is an extension of the Salamconcept. Salam is limited to generic goodsand requires full payment up front.Istisna, on the other hand, is used forthe construction or manufacturing ofexclusive goods (which require certainspecifications). It is similar to Salambecause it is used to finance goods not yetin existence; however, it does not requirefull payment up front which means thatthe payment is flexible.

Lease-based instruments

Islamic banks can also use leasing as analternative to sale-based instruments.Both sale and lease transactions involvean exchange. In a sale transactionownership is transferred to the client,with money exchanged at time of sale. Ina lease transaction, ownership does nottransfer to the client; money is exchangedwith the right to use an asset.

Ijarah:

It simply refers to a lease transaction. Inan operation similar to Murabahah, theIslamic bank first buys the asset from acontractor then leases it to the customer.Although in Murabahah undertaking, thebank continues to own the asset. Uponthe expiry of the lease, the client returnsthe asset to the bank in the Islamic space.All leases are treated as operating leasesin Islam Normally; there will be either asale or gift at maturity with the end ofthe lease followed by ownership transfer.This is known as Ijarah Muntahiyah BiTamleek (lease ending with ownership).Some markets refer to it as IjarahThumma Bai (lease then sale) or Ijarahwa Iqtina (lease and acquisition).

Partnership-based instruments

Unlike sale and lease transactions thatinvolve exchange, the third category ofinstruments calls for the pooling assets.These are partnership-based contracts inwhich the Islamic bank invests capital tobecome partners with the client. Thereturn to the bank depends on the actualbusiness performance of the client. Thereare two basic instruments in this category.

Musharakah

Under this mode of financing, bothbank and client contribute capital andagree to a profit-sharing ratio. “Capital”does not necessarily refer to cash; it canalso be capital in kind. Thus, an Islamicbank could provide cash capital while theclient could use its tangible asset as capitalin the partnership. The bank as one ofthe partners has the right to makestrategic decisions and manage thebusiness. Based on the performance ofthe business, both partners would sharethe profit and losses.

Mudarabah

In a Mudarabah financing, only the bank(Rab al maal or capital provider) providescapital while the client (Mudarib orentrepreneur) manages the business.Bank does not interfere in the day-to-dayrunning of the business. Any profit isshared, with the bank (as the sole Rab almaal) having to absorb losses (i.e.,economic losses). The client is not paida salary, and if he or she does notmake a profit, the client loses all the timeand effort expended on the venture.

Concluding observations about thevarious Islamic Banking instruments

The exchange-based instruments (sale

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and lease) result in predetermined returnsto Islamic banks, which are not exposedto the business risk of the client. On theother hand, these banks are exposed tosuch risk via the partnership-basedinstruments (Musharakah andMudarabah). Therefore, in practice,Islamic banks prefer to finance theirclient using sale and lease instruments.This way, they can limit their risks to thedefault risk of the client. Partnership-based instruments are usually reservedfor clients that have demonstrated goodbusiness performance and repaymentability

Islamic Banking in India

Banking in India is totally based oninterest and in this country 88 scheduledcommercial banks (SCBs) - 27 publicsector banks (that is with theGovernment of India holding a stake), 31private banks (these do not have foreignbanks). They have a combined networkof over 53,000 branches and 17,000ATMs. According to a report by ICRALimited, the public sector banks hold over75 percent of total assets of the bankingindustry, with the private and foreignbanks holding 18.2% and 6.5%respectively. But unfortunately there isnot a single Islamic bank presentlyworking in this country. Although somebanks/institutions are working on theIslamic banking principles, but they aretreated as Non Banking FinancialCompanies (NBFCs). Bagsiraj in hisstudy on Islamic Financial Institutions inIndia, has classified the Muslim Non-Banking Financial Institution into fourforms -

Muslim financial Societies – these arecharitable trusts like Deoband MuslimFund, Najibabad Muslim Fund etc. Thesesocieties are un-operable because they arebased on charity and non-self sustainableinstitutions. There is a problem ofmanaging the workforce and there isabsence of standard system of operations.

Muslim Financial Associations bypersons – these are the associations madeby individuals in various parts of thecountries. Some of the famousassociations are Barkat Association,Belgaum; Shantapuram Islamic FinanceCorporation, Pattikadu; Interest-freeSociety, Pune; Millat Welfare Society,Faizabad; Mutual Benefit Group,Bhatkal. Financial Associations ofPersons (FAPs) are unregistered,privately operated, smaller functionalgroups operating in mosques, educationalinstitutions or markets, throughout thecountry, in mosques or Anjumans. Theyhave taken the form of smaller Bait-ul-Maals wherein Zakah funds aremobilized along with membership feesand donations, and interest-free Qard-e-Hassan loans are also extended. In theeducational institutions they have takenthe form of interest-free Chit Fundswherein groups of 25 to 30 staff memberscontribute a monthly fixed sum.

Islamic Co-operative Credit societies- These societies are formed with 10-15persons. These societies are providingassistance to the group members. Theproblems with these societies are differentregulations in the different statesprevailing, so a standard system could notbe formed. Some of the societies are- ThePatni Co-operative Credit Society Ltd.,Surat. Bait-un-Nas’r Urban Co-operative

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Credit Society Ltd., Mumbai; Bait-ul-MaalUrban Co-operative Credit Society Ltd.,Mumbai; Nehru College Staff Co-operative Credit Society Ltd., Hubli; andAl-Ansar Co-operative Credit SocietyLtd., Hyderabad.

Islamic investment and FinancialCompanies of India (Islamic NBFCs)- Generally most of the income is earnedby IIFCs of India from Ijara i.e. LeasingInvestments. Hire Purchase andMurabahah i.e. mark up pricing or Costplus finance which involves a contract inwhich a client wishing to purchaseequipment or goods requests theCompany to purchase these items andresell them to him at Cost plus areasonable profit payable on the termsagreed to between the parties, is anotherimportant source of IIFCs of India’searnings. Musharakah i.e. Trust or jointproject financing, Mudarabah or JointVenture financing on profit and losssharing basis are also employed as sourceof earnings, though on a lesser scale.Investments in Equity Shares of the bluechip Companies and in real estate orhousing finance are other income earningavenues of IIFCs of India. Some of thefamous companies are - Barkat Leasingand Financial Service Ltd., Mumbai; Al-Barr / Al-Baraka Finance House Ltd.,Mumbai; Al-Ameen Islamic Finance andInvestment Corporation Ltd., Bangalore;Seyad Shariat Finance Ltd. Tirunelveli;Al-Najeeb Milli Mutual Benefits Ltd.Najibabad.

In the recent developments there are someconventional financial institutions andbanks that introduced Shariah windowto target the Muslims as their market inIndia. Some consultancies like TASIS and

Taurus are working for investmentguidance in Shariah compliant companiesand Financial Products. The ShariahIndex established in BSE, responsible forscreening Shariah compliant companies.

NBFCs are doing functions akin to thatof banks; however there are a fewdifferences:

(i) A NBFC cannot accept demanddeposits (demand deposits arefunds deposited at a depositoryinstitution that are payable ondemand — immediately or withina very short period — like yourcurrent or savings accounts.)

(ii) It is not a part of the payment andsettlement system and as suchcannot issue cheques to itscustomers.

(iii) Deposit insurance facility ofDICGC is not available for NBFCdepositors unlike in case of banks.

On the basis of above differences intoconsideration, Islamic banks/institutionsare not becoming popular in India andthat is why maximum population isunaware about the working of Islamicbanks. Also these institutions/banks havenot showed good performance comparedto conventional banks may be due toGovernment and public support.

Reasons for having Interest freeBanking in India

• Interest Free or Ethical Finance

Islamic finance (Interest-freefinance: used interchangeably) isultimately governed by ethics andpassion for human welfare.Morality is imbedded in the rules,

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through the prohibition ofproduction and exchange of goodsharmful to life and environment.Speculation and gambling; which isthe feature of current economicsystem, are prohibited in any form.The Islamic banking seems to besynonymous with ethical banking.This covers all aspects of economylike stock exchanges, financialservices and different sectors ofeconomy.

• Increased Flow of Funds

Interest free banking and financehas potential of attracting hugeinflow of foreign direct Investmentand Foreign Institutional Investors(FIIs) from Gulf nations which arereluctant to invest on credit terms.It has the potential of attractingtrillion Dollar equity finance fromGulf Cooperation Council (GCC)countries. Significant investmentsare also expected from countriesinvolved in interest free bankingand finance like UK, China,Singapore, Malaysia and Japan.

• Stability to financial Markets

There are at least four reasons whyan interest-free system may beexpected to promote economicstability.

i. Investment: Many economistsbelieve that debt financing is amajor factor destabilizinginvestment in modern dayeconomies. There argument is thata system of short-term financing oflong term capital assets hasinherent limitations. That is, cashflows expected from such assets

extended longer than the terms ofdebt contracted to acquire them.Under such a system of financing,debt is repaid when due by issuanceof new debt, i.e. refinancing is anon-going process. Whenexpectations about future cash-flows and interest rates are fulfilled,refinancing is easily achieved, andcontractual interest obligations areeasily met from cash flowsgenerated by the assets. But ifexpectations take a wrong turn(either interest rates go up orcurrent cash flows go down)refinancing becomes difficult.Attempts then to acquire cash byselling assets bring asset values toa level below their past prices, oreven below their current cost ofreproduction. This bringsinvestment to a halt, and bringsdown income and employment.

ii. Speculation: The speculativedemand for money, which is onesource of instability in theKeynesian system, would besignificantly reduced in an interestfree economy because the abolitionof interest would drive out thespeculation on interest-bearingassets. This is quite significant, asspeculators would be confined totheir own funds - no funds wouldbe coming to them on profit sharingbasis, unless the suppliers of suchfunds themselves wanted tospeculate.

iii. Corporate Finance: it advises thatan increase in debt financing (asopposed to equity-financing) of afirm increases its risk of insolvency

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and magnifies the relativefluctuations in its earnings (net ofinterest) Firms that have higherdebt-equity ratio are more likely toface financial collapse duringcyclical down-turns because theirfixed interest payments must stillbe met in the short run.

iv. International Finance: After theGlobal crisis and bankruptcy offinancial giants in 2008, there is aquest for alternate model ofeconomic system. The strictobligations of Interest freeinstitutions prevent the financialand economic enterprises frombankruptcy.

• Interest Free Micro Finance

Micro finance is today’s buzzword.But like every evolving industry itis facing challenges and problems.High interest rates, coercivecollection methods and corrupt andunethical practices are among themost cited problems this industryis facing. The reasons of existenceof this industry are quoted as toprovide low income population, anaccess to credit and thereby aid inpoverty alleviation. Can this socialobjective be achieved throughasocial means? To realize the highend social objectives of microfinance a holistic approach must betaken. Apart from earning by doingwell the ethical and moral practicesmust be the integral part of microfinance.

Micro finance can act as the growthvehicle for India as ‘Real India lives

in villages’. It can foster thedevelopment of entrepreneurshipin rural and suburban areas, reducethe migration to urban areascausing over populated cities. Thisalso goes in line with the PURAmodel of A. P.J. Abdul Kalam.Investment in social causes (socialfinance) needs a holistic approach.So why not an interest free modelof micro finance beimplemented and practiced, whichother than having its roots inscriptures has many advantages likeresponsible behaviour of both theMicrofinance Institutions (MFI)and borrowers and ethicalpractices. As the interest free modelof micro finance is based on profitand loss sharing (PLS) basis.

• Entrepreneurship Development

Interest free banking and financegoes a long way in developing andpromoting entrepreneurship in theeconomy. Those entrepreneurswho don’t have the sufficientcollateral can get the help onInterest free finance, as Islamicbanking does not allow giving loanson interest. The investors haveeither the option of giving QardheHasana (interest free loans) orforming any type of partnership (Madharaba, Musharaka). Thecontract must be free of Riba(interest), Gharar( excessive risk),and Mysir(Gambling). Islamicbanking promotes innovation in thefinancing forms and types ofproducts.

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• Riding on the Growth

India has no reasons to avoid thefast growth of Islamic bankingworldwide. The growth in thissector is more than the growth ofnormal banking system. Whyshould it not promote Islamicbanking if it’s promisingsustainable development withmany other advantages.

• Financial Inclusion of Muslims

The 2001 census of India concludesthat Muslim constitute 13.4% ofthe total population of the nation,which makes it the one of thelargest Muslim country. Economicmarginalization of Muslimcommunity in India can be dealtwith through the promotion ofinterest free banking and financewhich may be welcomed by theMuslim community in a largeextent. Access to bank credit toMuslims is only 4.3% which is verylow as compared to their share ofpopulation.

• Opponents of Islamic Finance

Those who oppose Islamic bankingand Finance argue that it targetsonly one section of society. This isneither right theoretically norpractically. Studies in UK, Malaysiaand other countries indicate thepopularity of Islamic bankingamong non-Muslims due to itsethical or reliability dimensions.The religious dimension is not animportant factor in determining theusage of services of Islamic banks.Even the marketers don’t position

themselves as a niche market meantonly for Muslims. Those who arguethat an economic system based onreligion can’t be propagated in asecular nation are at the risk ofmissing the advantages of joiningthe elite first movers.

SWOT Analysis of Islamic Banking inIndia: When SWOT analysis of Islamicbanking is done as far as India isconcerned, it shows a good that Islamicbanking has high Strengths Indiacompared to Weaknesses.

• Strengths

– Population of Muslims is more inIndia than in Pakistan, Bangladesh,Saudi Arabia, Turkey, Egypt, IranNigeria Afghanistan, Sudan, andNigeria.

– Help in reducing the incomeinequality.

– Demands for goods are increasingin India.

• Weaknesses

– Unawareness about Islamicbanking.

– Lack of experts.

– Modification in Indian banking actregulation needed.

• Opportunities

– Indian economy would benefitfrom the flow of funds from theMuslim countries.

– Add to the real estate boom

– Address the issue of financialinclusion

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– A large of Muslims that areconsidered unworthily of credit bycommercial bank or who avoidbanks due to Sharia law wouldwelcome this

• Threats

– Expected to become a powerfulpolitical weapon.

– Goes against the secular nature ofthe country.

– May cause financial separatism, soregulatory authority may oppose.

– Micro finance is a good competitor.

The following is briefly a summary of thesame.

RBI and Islamic Banking

In the present world of Indian banking,something as Islamic banking is a remotedream. Nonetheless, countless advocatesof Islamic banking have been trying theirbest over the years to propagate theconcept. In advancement of thisextension the Reserve Bank of India(RBI) constituted a committee in 2007under Mr Anand Sinha to examine theissue but viewed that Islamic bankingcannot be offered by banks in India aswell as the overseas branches of localbanks under the present legal framework.Except a basic offering like currentaccount, almost no other banking productin India can be modified to meet theconditions of Islamic banking. As a genreof financial services, Islamic bankingshuns the very idea of interest rates, andrests on profit-sharing principles. Basedon the Shariah law, it abhors the businessof making money out of money,upholding the belief that wealth is

generated through actual trade andinvestment.

Although RBI has not made the reportthe public but from the newspaper reportsit can be collected that the members hadpointed out how Indian banking lawscome in the way of various Islamicbanking principles. These are as follows:

Indian banking laws do not explicitlyprohibit Islamic banking but there areprovisions that make Islamic bankingalmost an unviable option. The financialinstitutions in India comprises of Banksand Non Banking Financial Institutions.Banks in India are governed throughBanking Regulation Act 1949, ReserveBank of India Act 1934, NegotiableInstruments Act 1881, and Co-operativeSocieties Act 1961. Certain provisionsregarding this are mentioned below

• Section 5 (b) and 5 (c) of theBanking Regulation Act, 1949prohibit the banks to invest onProfit Loss Sharing basis -the verybasis of Islamic banking.

• Section 8 of the BankingRegulations Act (BR Act, 1949)reads, “No banking company shalldirectly or indirectly deal in buyingor selling or bartering of goods…”

• Section 9 of the BankingRegulations Act prohibits bank touse any sort of immovable propertyapart from private use –this isagainst Ijarah for home finance

• Section 21 of the BankingRegulations Act requires paymentof Interest which is against Sharia

As regards to partnership by Islamic

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banks in a firm, the bank has to make surethat the manager does not avoid hisresponsibilities or obtain othernonperformance benefits at the expenseof non-participating partners and ensurethe truthfulness of the profit statements.Monitoring of data about firms in whichIslamic bank invests would involveexorbitant cost. However, Islamic banksneed to set up monitoring cell to keepthem informed of the internal functionof their joint venture. The implication isthat banks and entrepreneur have tofunction very closely.

Islamic banking needs to introducecorporate governance with transparentaccounting standards. It needs to performa detailed evaluation before embarkingProfit Loss Sharing Scheme, whichdemand a pool of highly trainedprofessionals. The imparting ofprofessional training is costly. Detailedprinciples are still to be laid down andtechniques and procedures evolved tocarry them out. It is only after thesatisfactory achievement of these thatproper training can begin. It is observedthat inability to evaluate a projects’profitability has tended to act againstinvestment financing. Some borrowersfrustrate the banks appraisal efforts asthey are reluctant to provide fulldisclosures of their business. Theseexercises are not limited to relatively fewlarge loans but need to be carried out onnearly all the advances made by the bank.Moreover, the borrowers do not observebusiness ethics which make it difficult toestablish close bank-clientele relationship- a condition for successful Islamicbanking.

Among the other disincentives from the

borrower’s point of view, is the need todisclose his accounts to the bank if hewere to borrow on the Profit Loss Sharingbasis. However, many small-timebusinessmen do not keep any accounts,leave alone proper accounts. Thewidespread lack of business ethics amongcertain business community will beanother major hurdle in the path ofIslamic banking in India.

The practices in use by the Islamic bankshave evoked questions of morality. Somecritics view Sukuk (Islamic Bond) asunIslamic in nature. Others criticize thatfinancing through the purchase of client’sproperty with a buy-back agreement andsale of goods to clients on a mark-up,involved the least risk and are closest tothe old interest-based operations. Bai’mu’ajjal (sale with deferred payment) andMurabaha (cost-plus financing) arepermitted in the Sharia under certainconditions. What is being done in manycountries are fictitious deals whichensure a predetermined profit to the bankwithout actually dealing in goods orsharing any real risk. This is against theletter and spirit of Sharia.

The Banking regulation (BR) Act evendisallows an Indian bank from floating asubsidiary abroad to launch suchproducts, or offering these through aspecial window. Thus, the consequenceof the findings is that such bankingexperiment is impossible without a newlaw or multiple amendments to the BRAct.

Another important consideration is thetax procedures. While interest is a passiveincome, profit is defiantly an earnedincome which is treated differently. If the

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principles of Islamic banking areincorporated then how does it complywith the tax procedure is the mootquestion. Further RBI cannot act as thelender to such banks because suchaccommodation by the monetaryauthority is also interest based. Islamicbanks cannot interact with conventionalbanks based on principles of interest.

Michael Porter’s Five Forces Analysis

The five forces model of Porter is anoutside-in business unit strategy tool thatis used to make an analysis of theattractiveness (value) of an industrystructure. The competitive forces analysisis made by the identification of 5fundamental forces:

1. Bargaining power of customers.How easy or difficult is it for newentrants to start competing, whichbarriers do exist.

2. Bargaining power of suppliers.How strong is the position ofsellers? Do many potentialsuppliers exist or only few potentialsuppliers, monopoly?

3. Competitive rivalry among theexisting players. Does a strongcompetition between the existingplayers exist? Is one player varydominant or are all equal instrength and size.

4. Threat of substitute products. Howeasy can a product or service besubstituted, especially madecheaper.

5. Threat of new entrants. How easyor difficult it is for new entrants tostart competing, which barriers doexist.

When applying Michal Porter’s fiveforces model to Islamic banking, itshows the results like this: (fig)

Present Status

There are several Baitul Mals working incities as well as in villages. Only 10 to 15Islamic banks with deposits of about Rs75 crore are operating all over the countryin various states. They are actually non-banking finance companies (NBFCs)which work on profits/loss basis. Islamicbanks by and large cater to the needs oflocal area except a few of them operatingacross districts or states. Their sourcesof funds are and as a result these bankshave to operate on small scale missing theeconomies of scale. Islamic banks in Indiaprovide housing loan, on the basis of co-ownership, venture finance onmudarabah basis as well as on musharakabasis and consumers loans. Some banksfinance transports also on the mark upbasis via hire purchase. Education financeand skill development finance is alsoprovided by them. Investments are madein government securities, small savingsschemes or units of mutual funds.Investment in shares of companies is alsomade by some Islamic banks. Hirepurchase and lease finance are othersource of investments Islamic banks inIndia do not function under bankingregulations. They are licensed under NonBanking Finance Companies ReserveBank Directives 1997 RBI (Amendment)Act 1997, and operate on profit and lossbased on Islamic principles.

RBI has introduced compulsoryregistration system. In the Monetary andCredit Policy for the year 1999-2000, itwas proposed that in respect of new

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NBFCs, which seek registration with theRBI and commence the business on orafter April 21, 1999, the requirement ofminimum level of net owned funds(NOF) will be Rs 2 crore.

However recent Judgment of Kerala Highcourt on 3rd Feb 2011 has removed thehurdle for setting up of an Islamic Bank,dismissing the petition filed by JanataParty leader SubramaniyamSwamy challenging the stategovernment’s decision to start thecountry’s first Islamic bank. Now heintends to move to Supreme Court.

Conclusion

Islamic banking is at an early stage. Theexisting legal framework does not permit

Islamic Banking. Only selective activitieslike equity investment is possible, whiletrade finance aspects like taking title togoods is not possible. A lot ofamendments need to be carried out in theprevalent legal set up. Appropriate modelsneed to be selected and implemented tosuit society’s diverse financial needs.Islamic Bank of Britain, Islamic banks ofThailand, Singapore and USA may beglaring models for Indian bankers. Thereputed domestic and international banksalong with the collaboration of RBIshould be involved in the process ofdetermining and implementing IslamicBanking products.

The importance and relevance of Islamicbanking in India in the context of

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“Financial Tsunami” that has taken placein recent times further enhances the needof Sharia banking. Also the politicalparties need economic rationality toconvince majority of voters that Islamicbanking is being introduced not to pleaseMuslim voters but to genuinely boostfaster and inclusive growth for the Indianeconomy. Objectionable politics in thename of religion must be avoided. Wepersonally refer ‘Islamic Banking’ as‘Interest Free Banking’ so that it could belooked through the broad economickaleidoscope and not a narrow religiousprism.

Islamic banking could be a huge politicalissue. Certain parties might execrate theuse of the word “Islamic” and could termit as anti-Indian. They might argue thatthe very concept of Sharia banking wouldgo against the secular fabric of ourcountry. We are already facing problemspertaining to Muslim Personnel Law andtrying to implement Uniform Civil Code.Therefore, at this juncture, if weintroduce Islamic banking in India, it willcreate more problems than solving theissue. Moreover, it may bring financialsegregation in the economy. Thecompartmentalization of Shariacompliant and Non Sharia Compliantbanking might be used by certain vestedinterest to communalize the financesector in India. Such a questionably sanebut unquestionably dangerous trend mustbe prevented with full might With onlyminor changes in their practices, Islamicbanks can get rid of all their cumbersomeand sometimes doubtful forms offinancing and offer a clean and efficientinterest-free banking. Participatoryfinancing is a unique feature of Islamic

banking, and can offer responsiblefinancing to socially and economicallyrelevant development projects. This is anadditional service that Islamic banks offerover and above the traditional servicesprovided by conventional commercialbanks. Such a system will offer aneffective banking system for Muslims inIndia.

Suggestions

India is eyeing a stake in the boomingIslamic banking industry with itsproposed implementation being assessedwith great interest by the Indianpolicymakers. But they have tosubstantially modify the legal frameworkwhich governs the Indian banking systemprior to offering Islamic banking financialservices in the country.

• Under the current Indian bankinglaws, it is very difficult for Islamicbanking to be carried out in Indiadue to the mandatory requirementfor interest payments on deposits.The concept of profit-loss sharingor partnership is stranger to theconventional banking frameworkof India and thus not allowed underthe law. The tax treatment ofIslamic finance products, unlessreviewed, would be the biggesthindrance to the implementation ofIslamic banking in India.

• India is ready to make waves inIslamic banking but not withouttheir Government’s permission tothe conduct of Islamic banking inthe country. With large Muslimpopulations, India stood to gainadvantage to pool around onetrillion dollars Islamic investment

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funds from Gulf countriescompared with its other non-Muslim counterparts. This willhelp the national current accountand fiscal deficit in check.Regulators are still in doubts aboutthe scope of Islamic banking,having understood that from a merereligious perspective. A committeeto analyze the impact of Islamicbanking to the Indian communitiesnot withstanding their religiousfaith was never established. Thus,the potentials of Islamic banking toresolve India’s real economicproblems were not realized.

• The prejudices about Islamicbanking still remain as there is notyet report on economic viability ofIslamic banking and its impact oninclusive growth.

• There was also a fear that Muslimsmay dominate the Islamic bankingindustry in India. Islamic bankingrequires a professional expertisebeyond one’s religious beliefbecause it deals with commercialprojects than mere monetary creditand debit transactions. WhileIndian Muslims may have an edgein terms of Islamic ethics requiredfor Islamic banking but they lackprofessional exposures to managemodern commercial banking onIslamic ethics.

• There would be feasibleopportunities to energize theIndian economy with theparticipation of Muslims in Shariahcompliant banking who werepreviously excluded and the

availability of funds fordevelopments in India. It wouldhelp the poor and vulnerable as itallows the manufacturing and retailenterprise of unorganized sectorand agriculture to obtain equityfinance.

• The equity financing would alsohelp India to fund irrigation, dams,roads, electricity, andcommunication projects along withother public infrastructure. Theseare areas where public finance isinsufficient and debt finance maybe a cause of deficit to thegovernment.

• Islamic banking has one of itsobjectives as ‘equal distribution ofincome’, which in other wordsmean complete eradication ofpoverty. But it can be achieved onlyif Islamic banking is fullyimplemented in India.

References

Bagsiraj M.I. (2000) “Islamic FinancialInstitutions of India, Their Nature,Problems and Prospects; A CriticalEvaluation of selected representativeunits”, A paper presented at 4thInternational conference, atLoughborough University, UK.

Bahauddin Khwaja “Arab-wa-DayareHind” (Urdu) Naqshe Nawayath, Bhatkaland Baig Tahir “PLS Banking; Past,Present, and Future with specialreference to India”. Seminar presentation2001.

Francis, J. Clark Etal eds.(1980).”Readings in Investments”McGraw Hill Inc. New York.

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Gulaid Mahmoud A. (1995). “FinancingAgriculture through Islamic modes andInstruments practical scenarios andApplicability” Research Paper No.34,IRTI.

Hassan Kabir M (2000) “Micro-FinancialServices and poverty alleviation inBangladesh; A Comparative analysis ofsecular and Islamic NGOs” paperpresented at 4th International Conferenceat Loughborough University, UK.

Iqbal Munawar “Islamic andConventional Banking in the 90s; Acomparative study” A paper presented at4th International Conference atLoughborough University, UK

Ahsanul Haq (2009). “Islamic finance inIndia” retrieved from http://www.iosworld.org/islamic_finance_ in_india.htm on May 14.

Iqbal Munawar, Ausaf Ahmed andTariqullah Khan (1998). “ChallengesFacing, Islamic Banking” OccasionalPaper No. 1, IRTI, IDB, Jeddah. “IslamicFinancial Societies of India, NatureProblems and Prospects” (2001). A paperpresented at the UGC National Seminar,at Islamiah College, Vaniyambadi.

Khatkhate M H (1997). “IslamicInvestment Activities in India” Paperpresented at Second Conference onIslamic Banking and Finance. Toronto,Canada, June.

Mahmud Ahmed (1995). “IslamicBanking Modes for House BuildingFinance” Seminar Proceeding SeriesNo.28, IRTI, Jeddah.

Mannan M A (1993) “UnderstandingIslamic Finance; A Study of the Securities

Market in an Islamic Framework” IRTI,Jeddah.

Siddiqi M.N (1983). “Issues in IslamicBanking”, The Islamic Foundation,Leicester, UK.

______ “Thirty Years of Muslim Fund”Deoband, (Urdu) Muslim Fund Trust,Deoband 1991

Sumik Majumdar (2009). “Islamicbanking in India-what is the futurepotential?” Management DevelopmentInstitute Gurgaon retrieved from http://www.crisil.com/crisil-youngthought-leader- 2008/dissertations on April.

Sirageldin Ismail (2000) “Elimination ofpoverty; challenges and IslamicStrategies” Keynote Address presented at4th International Conference atLoughborough University.

Wilson Rodney (2000). “The Interfacebetween Islamic and ConventionalBanking” A paper presented at 4thInternational Conference at Loughborough University, UK.

M.Y. Khan “Banking Regulations andIslamic Banks in India: status and issues”.International Journal of Islamic FinancialServices Vol. 2 No.4

G Sampath (2009) “why not Islamicbanking for India too” retrieved fromh t t p : / / w w w . d n a i n d i a . c o m /report.asp?newsid=1204695 on 22 May.

A Growth Model for IslamicBanking: Mckinsey Quarterly October2005

Bagsiraj M I, (2002). “Islamic FinancialInstitutions of India Progress, Problems

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and Prospects” ,Scientific PublishingCentre King Abdul Aziz University.

Issues in International financial Crisis:From an Islamic Perspective. (2009)Islamic Economic Research Centre, KingAbdul Aziz University.

Monzer Kahf (1999) Islamic Banks at theThreshold of Third Millennium,Thunderbird International BusinessReview Volume 41, Issue 4-5, 445–460.

Uzair, Mohammad (1978) Interest FreeBanking, Karachi, Royal Book Company.

Key words such as Murabaha,Mudarabah,Musharaka, Muqarada,Ijarah- http://

www.islamic world.net/economics/instrument_bank_finance.htm-

Sale-based instruments and Lease-basedinstruments- www.intracen.org/eshop.

Banking in India .what else isneeded.http://www.ibtra.com/pdf/journal/v5_n3_article5.pdf

Author

Dr. Salabh Mehrotra, Asst. Professor,Vidya international school of business,Meerut. smehrotra13@gmail.com

#MJSSIM 3 (I) 04, 2011

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Business Statistics as Viewed by B-School Students

Pankaj Mohanty and Chandra Sekhar SF

Abstract

Management is science and art. As part of science, it deals with the subject of statistics for testingand validating concepts and theories for effective practice. The concepts and the models employedin almost all the natural and social sciences also employ statistics for decision making. Similarly,the utility and the dependability of statistics has also made inroads into business managementeducation, since its inception, aiding managers to make critical decisions for business effectiveness.However statistics as a subject is not everybody’s cup of tea, especially for all those students who arenot from mathematics background. For some, experiencing statistics is a nightmare and for others,extra laboring for understanding the subject. Such premise is addressed in this study utilizing thedata collected from 295 students pursuing various post graduate diploma program in managementfrom a premier B-school in the twin cities of Hyderabad and Secunderabad. A standardquestionnaire, which included attitude towards statistics scale, along with questions relating todemographic background of the students was administered and the results were of mixed reactions.A majority of the students were moderate in their attitude, followed by nearly one fourth of themhaving less positive attitude towards statistics. Further demographics did not have any influenceon the attitudes. Implications are drawn for further research and practice.

Introduction

Teaching statistics in the context ofbusiness management and includingexamples of typical managerial work maybetter prepare students for their career.However there is one major situation thatneeds to be addressed in the problem ofstudents in learning statistics. Everyfaculty member in statistics, when askeda question regarding what ails in theteaching of statistics to the student ofbusiness management, would answer “Iwish I had all students with interest inlearning statistics”. This situation ischaracterized by the general attitudestudents have towards statistics and ofcourse the faculty members.

As a matter of fact, the teachers makeimprovements to their teachingmethodologies in order to ensure that allthe students develop conducive attitudestowards the subject and consequently

learn the same. Thus, there is animmediate need for diagnosing thestudents attitudes towards statistics as asubject through organized research andexplore better ways of improving suchattitudes, in case needed, for effectivenessof teaching and learning effectiveness onthe part of students.

Attitudes are evaluative statements,favorable or unfavorable related toperson, object or event. They reflect howone feels about something. To that effect,here it is the subject of statistics and thestudent’s likes and dislikes about thesubject are the case in point. (Krosnickand Smith, 1994). Although previousresearch has suggested that the studentattitude towards statistics has beennegative (Mills 2004), effect from facultymember and the like have been moreintensive towards statistics improvingsuch attitude of the students. Owing to

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such state of affairs, many b-schools haveevolved their statistics curricula eitherdownwards or upwards while scaling thequantum of inputs in their 1st year and2nd year of the program.

Some Research Studies

Research on students’ learning has beena very prominent issue in social scienceslike psychology, sociology etc. However,such studies in business management arevery scarce. There are several earlierresearch studies which have highlightedthe importance of students attitudestowards statistics owing to theprominence of such attitude ininfluencing the scientific temper in thestudents. Some significant studies arepresented in the following sections.

Gal and Ginsburg (1994), critiquescurrent instruments for assessingattitudes and beliefs of students, andexplores assessment methods teacherscan use to measure students’ dispositionsregarding statistics. assessing attitudestowards statistics are ill-suited for thetasks identified, due to: (1) exclusive useof Likert-type scales, (2) the inclusion ofitems that are not appropriate for studentswho have not had extended experiencewith statistics, or who are not at a veryadvanced stage of their careerdevelopment, (3) the tendency not to seekexplanations from subjects for theiranswers, (4) the practice of using totalscores which aggregate responses todifferent item types, and (5) inattentionto the links between attitudes towardsstatistics and other constructs. Gal andGinsburg (1994, p. 4) further suggest thata similar process likely occurs in statisticseducation and that “. . . it is important

that statistics educators have access toassessment instruments that enable aninitial diagnosis of their students’attitudes and beliefs and also enablemonitoring of the status of such attitudesand beliefs during a course.”

Further, Vanhoof et al., (2006) revealedthat this important relationship betweenattitudes toward statistics and statisticsperformance was content-specific. Therelationship between attitudes towardstatistics and total exam results was notstatistically significant.

In view of such need, Tsao (2006)indicated that, the constructivist-basedlearning approach technique encouragedstudents to become more positiveattitudes toward statistics with the coursecontent through active–learningenvironment. Williams (2010) Resultsindicated that instructor immediacy issignificantly related to six factors ofstatistics anxiety, with immediacyexplaining between 6% and 20% of thevariance in students anxiety levels.Instructors should attempt to increasetheir use of immediacy behaviors in orderto decrease anxiety. Carnell L, J. (2008)suggests that inclusion of a project maynot significantly impact students’attitudes toward statistics. Evans, B.(2007) shows Significant correlationswere found between student attitudes andachievement, both at the beginning andend of the course. A low, but significant,correlation was found between positiveattitudes toward statistics and accurateconceptions about statistics in the post-test but not in the pre-test.

Similarly, Vanhoof, et al. (2006) studyshows a positive relationship is found

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between students’ attitudes toward theuse of statistics in their field of study andthe dissertation grade. Dempster and McCorry (2009) the present research hasclarified further the nature of theserelationships. Using a longitudinal design,the present research has shown thatstatistics assessment outcome iscorrelated more highly with specificattitudes held at the time of theassessment rather than attitudes aboutstatistics which are held by students atthe beginning of their statistics course.Furthermore, an attitude about cognitivecompetence is more strongly related toassessment outcomes than previousexperience with maths, statistics orcomputing.

Schield and Schield (2003) presents theresults of Schau’s longitudinal surveyshowed a statistically significant increasein students’ feeling of cognitivecompetence and a statistically significantincrease in the difficulty of the course.While 61% of Augsburg students saw anincrease in their value or appreciation ofstatistics, this difference was notstatistically significant.

Roberts and Saxe (1982) found that SASscores were found to be significantlyrelated to such cognitive variables as basicmathematics skills, statistics preknowledge, and course grades.Unsurprisingly, statistics examperformance among psychology studentsis positively related to previousexperience of statistics (Schutz et al 1998)and of maths (Lalonde and Gardner 1993;Schutz et al 1998).

From these studies, it is quite evident thatthe studies focusing on the attitude

towards statistics is examined frommultiple directions in the lives of studentsand the institutions where they studiedas well. Besides, there are some uniformpatterns focusing on the type of course,gender, environment in which thestudent learns the subject, competencelevels of the students, examinationperformance and quite other factors thatinfluence such attitudes.

The Present Study

In response to the change in thecurriculum, the learning style of thestudents and the teaching style of thefaculty addressing the attitude of studentstowards statistics is of greater interest toall the concerned in the managementeducation. Such attitudes are importantbecause they encourage the learningprocess of the students. Besides they alsohelp in improving belief about statisticsand useful statistical thinking skills (Gal,et.al 1997) however negative attitudetowards statistics may inhabit learning ofstatistics on the part of students(Fullernton and Umphrey, 2001).

Previous research findings revealed thatstudents in general have anxiety,cynicism, fear and contempt. Further,there are also instances wherein thestudent employs defense mechanisms ofblaming the faculty members for notproperly teaching the subject. Facultymembers on the other hand counter suchcomplaints. However, understandingabout such reasons is beyond the confinesof this research.

The present study addresses the students’attitude towards statistics is assessed andthen further cross tabulated with thedemographic variables to understand

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whether such attitude depends ondemographic variables. Firstly, it attemptsto assess the attitudes of students towardsthe subject of statistics using standardizedinstrument. This way, the levels ofattitudes of the students can be assessed.Secondly, the level of attitude towardsstatistics needs to be analyzed in relationto the demographic factors in order toknown whether such factors have anyinfluence on the attitudes.

The maturity of understanding by astudent may improve according to the ageof the students. Therefore, youngerpeople may have the curiosity to learnmore effectively than the older people.Similarly, such trend may be applicableto their progressive attitude towardsstatistics. Further, males and females alsohave their attitudes varying towards thesubject of statistics accordingly. In otherwords, females tend to spend more timereading and writing as such they mayhave better attitude towards statisticsthan males who generally are diverse intheir activities and roles and as a resultmay not develop better attitude towardssuch subject. Besides, medium ofinstruction also may have its impact onthe learning of the subject of statistics.Those who are from English mediummight have better attitude than those whoare from non-english backgrounds.Intermediate and graduate education, ifinvolving mathematics and statistics, allthe more, will improve their attitudestowards statistics and lastly, thespecialization course chosen by thestudents may also influence theirattitudes towards statistics. Thus thisstudy has two fold purposes; firstly itassesses the attitude towards statistics ofthe students. Secondly it expresses the

association between demographic profileand the attitudes towards statistics.

Objectives and Hypothesis

In the light of the problems stated and thepurpose of the study, the followingobjectives are formulated highlighting thebroader purpose of the research.

I. To assess the students attitudetowards statistics

II. To analyze the attitude towardsstatistics in relation to thedemographic variables of thestudents.

Next, while keeping the objectives inmind, it is hypothesized that “there is anassociation between students’ attitudetowards statistics and their demographicvariables like age, gender, medium of theirinstruction, intermediate, graduation,specialization and the course”.

The Method

The present study is undertaken in oneof the largest B-Schools in South India,which admits 420 students per annum,across six Post Graduate Diploma inManagement Programs which is rated inthe top 30 among the Indian B-schools.The school is 20 years old supported bythe society which is celebrating its goldenjubilee year. 295 students out of 420 haveresponded to the structured questionnairewhich included standardized scale formeasuring attitude towards statisticsdeveloped by “Schau, et al.” (1995). The40-items scale employed seven point likerttype responses (where strongly agree=7and strongly disagree=1). The co-efficient of alpha of the overall scale whencomputed yield a value of 0.89 indicatesthat the scale is highly reliable. In order

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to present the results, cross-tabulation aremade treating attitude towards statisticsas dependent variable and demographicas independents variables. Thehypothesis has been tested using chi-square on the entire cross tabulation ofstudent’s attitude towards statistics anddemographic variables.

Results and Discussion

The results are presented in two sections.Firstly, the levels of attitude towardsstatistics have been obtained usingquartile values from the actual scoredistribution of attitude scale. Secondly,the hypothesis testing has been done

using cross-tabulations and chi-squaretests.

Attitude towards Statistics

In order to find out the levels of attitudetowards statistics, the actual scoresobtained by the respondents on the 40-item scale scores computed by adding upall the score points. Details in this regardare presented in table 1. The level ofattitude towards statistics needs to begenerated while grouping the scoreranges. This was done with the help ofquartile values. Results in this regard arepresented in table no-1.

It is clear from the table that the scores

lesser than first quartile (Q1) value of 102are labeled as less positive attitude. Valuesabove fourth quartile (Q4) of 122 arelabeled as more positive attitude. Andlastly the score between the second andthird quartile are labeled as moderateattitude towards statistics.

As regards the status of the attitudetowards statistics presented in the table,it is evident that clearly one fourth of thestudents held less positive attitudetowards statistics (24.2%), followed by amajority of them (52.2) held moderateattitude towards statistics. The remaining

Table 1

Levels of Attitude towards Statistics

Sno Level of Attitude Quartile Values Score range FrequencyPercentage

1 Less Positive Q1=102 66-102 72 24.2

2 Moderately Positive Q2=103 103-121 153 52.2Q3=121

3 More Positive Q4=122 122-189 69 23.5

Total 293 100.0

of them are having more positive attitudetowards statistics (23.5%).

Demographics and Attitude towardsStatistics

It was hypothesized that “there is anassociation between students’ attitudetowards statistics and their demographicvariables like age, gender, medium of theirinstruction, intermediate, graduation,specialization and the course”. Resultsregarding testing of this hypothesis arepresented in table 2.

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Age group and Attitude: From the abovetable it is evident that there are morepeople in the older age group (29.9%)held more positive attitude towardsstatistics than those who had less positiveattitude in younger age group (26.4%).Surprisingly the calculated Chi- Square(X2 value is found lesser than thetabulated value, indicating that suchassociation between age and attitudetowards statistics is statisticallyinsignificant.

Gender and Attitude: As regardsgender, there are more people in malecategory (23.7%) held more positiveattitude towards statistics than those whohad less positive attitude in femalecategory (26.9%). Nevertheless, thecalculated Chi- Square (X2) value is foundlesser than the tabulated value. Therefore,

such association between gender andattitude is statistically insignificant,indicating that gender does not influenceattitude towards statistics. Surprisingly,Bilgin and Crowe (2008) showed thatthere were no significant differences inthe approaches to learning of local andinternational; and male and femalestudents; however, the study found asignificant difference betweenundergraduate and postgraduatestudents, with postgraduates more likelyto adopt deep strategies to learning.

Medium of Instruction and Attitude:As evident from the table, that equalnumber of people from English mediumare either having highly (23.7%) or lesspositive (23.7%) attitude towardsstatistics, a little over one forth of thosewith Hindi medium back ground (27%)

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held more positive attitude towardsstatistics than those who are from Telugumedium (54.5%) who held less positiveattitude towards statistics. Surprisinglythe calculated Chi- Square (X2) value isfound lesser than the tabulated value.Therefore the association betweenMedium of Instruction and attitude isstatistically insignificant. In other words,medium of instruction does not influenceattitude towards statistics.

Intermediate background andAttitude: The above table also suggeststhat nearly one fourth of the people withcommerce back ground held more positiveattitude towards statistics (22.5%) thanthose who had less positive attitude in thesame group (17.5%). similarly, in case ofthose who are with Art background, alarge number of them are eithermoderately positive (42.9%) or morepositive (42.9%. in case of those who arewith science background, a little over onefourth (27.8%) are having less positiveattitude than others. The calculated Chi-Square (X2) value is found lesser than thetabulated value. Therefore suchassociation between age and attitude isstatistically insignificant. Surprisingly,the student’s attitude does not depend onthe type of intermediate course chosen bythem.

Graduation and Attitude: It is evidentfrom the above table that amonggraduates with BA, a little over one third(38.9%), are having more positiveattitude than others. Similarly, nearly onethird of those who are with B.Sc (32.1%)are having more positive attitude thanothers.

As regards B.com graduates nearly one

fourth of them (22.7%) are more positiveattitude towards statistics than others. Onthe contrary, among B-tech graduates, alittle over one third of them (34.1%) andamong BCA graduates (37.5%) are havingless positive attitude than others. Thecalculated value of Chi- Square (X2) isfound greater than the tabulated value.Therefore such association betweengraduation background and attitude isstatistically significant. Thus, attitudetowards statistics is influenced by the typeof course chosen during graduation.

As regards the progression of studies fromintermediate and graduation, Aksu andBikos (2002) results are quite similar tothat of Dauphinee, Sehau, and Stevens(1997), where Math/Sciences studentshave the most positive feelings aboutlearning statistics Math/Sciences. Tsao(2006) indicated that, the constructivist-based learning approach techniqueencouraged students to become morepositive attitudes toward statistics withthe course content through active–learning environment.

Specialization and Attitude: The tableclearly indicates that, majority of thestudents with Marketing (53.6%), HRM(46.7%) and Finance (52.1%)specializations held a moderate attitudeand very less percentage of people have apositive attitude towards statistics thanthose who either had less positive or morepositive attitude. Surprisingly thecalculated Chi- Square (X2) value is foundlesser than the tabulated value. Thereforesuch association between Specializationof students and attitude is statisticallyinsignificant. Further, this could meanthat such attitude does not depend on thetype of specialization chosen by thestudents.

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Course and Attitude: The above tableclearly shows that there are more peoplein PGDM-Marketing Course hold morepositive attitude towards statistics(33.7%) than those who had less positiveattitude among students of PGDM-HRM(26.3%), TPS (25.6%) and BIFAAS(34.4%). The calculated Chi- Square (X2)value is found lesser than the tabulatedvalue. Therefore such associationbetween types of course of students andattitude towards statistics is statisticallyinsignificant. Further, it means that thestudent’s attitude towards statistics doesnot depend on the type of course chosenby them. On the contrary, Pierce et al.(2008) suggests that students’ attitudestoward statistics for the most partdeclined over the course of the semester.Their study provides further evidence forthe need to adjust statistics teachingmethods such that student attitudes aremore positive toward statistics.

As it was hypothesized that “there is noassociation between students’ attitudetowards statistics and their demographicvariables like age, gender, medium of theirinstruction, intermediate, graduation,specialization and the type course”, sevencross-tabulations were made with chi-square computations. Surprisingly, onlyone chi-square test yielded significantassociation. This indicates the hypothesisis rejected and null hypothesis is accepted.

Implications and Conclusion

This study reveals that students havemore positive attitudes (though in varyingdegrees) about statistics than negative, afinding that coincides with some previousresearch (Kennedy & McCallister, 2001;Perney & Ravid, 1990; Waters et al.,

1988).

Though more students are having lesspositive attitudes in this study, it couldbe attributed to various reasons includingthe background of the students in variousnon-quantitative ones. Besides, theteaching of statistics also would haveaffected every level of education. Whenstatistics concepts are introduced as earlyas the elementary level, students are lesslikely to dislike and not understandstatistics. This issue needs to be addressedby all the apex bodies of regulatingeducational standards in our country.Second, though few teachers use thecomputer as a tool to supplement theirinstruction in an effort to assist studentsin their statistics learning. Thecombination of technology with teachingstatistics has offered students theopportunity to concentrate more onlearning concepts instead of calculatingcomplex formulas and losing focus of thepractical meaning of results. As a result,the practical application of statistics as ascience is realized. Therefore, statisticscourses in the elementary and secondarylevel as well as an improvement in theinstruction and research related tostatistics education is almost certainlyimpacting student attitudes aboutstatistics. Providing examples morerelevant to the lives of the students andsupplemented with the examplesgradually scaling to the context ofbusiness management need to be used bythe faculty members. Besides, thosestudents who are scholastically poor needto be given special attention whileproviding additional inputs and byidentifying exactly the problem areas thatneed improvement. Besides, team based

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assignments need to be given to thestudents. Here two kinds of students needto be grouped including those who aregood and those who are not good instatistics. Let the team members help eachother in the project and learn about thesubject of statistics. This way, theattitudes could be improved.

Cross tabulation of demographic variablesand attitude towards statistics revealedinteresting results, however chi-squarevalues could not produce significantassociation between the study variablesexcept in case of courses chosen duringgraduation. Thus, the null hypothesis isaccepted. In other words, student’sattitude towards statistics does notdepend upon the demographics.Therefore it is imperative to have a newresearch design that reflects onpsychographics and their influence on theattitude towards statistics. Implicationsare drawn for improving statistics whilesuggesting how faculty members canimprove the interest students have in thesubject. Besides how students can alsofocus on their personal weakness andstart working over them.

References

Aksu Meral and Bikos Lynette Heim(2002). Measuring and predictinggraduate students’ attitudes towardstatistics, Hacettepe Universitesi EgitimFakultesi Dergisi 23, 22-31

Bilgin, A., and Crowe, S. (2008).Approaches to Learning in Statistics.Asian Social Sciences, Vol. 4, No.3, 1-16.

Carnell L, J. (2008) the Effect of aStudent-Designed Data Collection Projecton Attitudes Toward Statistics, Journal of

Statistics Education Volume 16, Number1

Dempster, M., and Mc Corry, K. N.(2009). The Role of Previous Experienceand Attitudes Toward Statistics inStatistics Assessment Outcomes amongUndergraduate Psychology Students.Journal of Statistics Education Volume 17,Number 2.

Evans, B. (2007) Student Attitudes,Conceptions, and Achievement inIntroductory Undergraduate CollegeStatistics, The Mathematics Educator,Vol. 17, No. 2, 24–30.

Fullerton, J. A., & Umphrey, D. (2001,August). An analysis of attitudes towardstatistics: Gender differences amongadvertising majors. Paper presented at theAnnual Meeting of the Association forEducation in Journalism and MassCommunication, Washington, DC.

Gal, I., Ginsburg, L., & Schau, C. (1997).Monitoring attitudes and beliefsinstatistics education. In I. Gal & J. B.Garfield (Eds.), The assessment challengein statistics education (pp. 37-51).Amsterdam, The Netherlands: 10s press.

Gal, I., and Ginsburg, L. (1994). The roleof beliefs and attitudes in learningstatistics: Towards an assessmentframework. Journal of StatisticalEducation, 2(2), 1-16.

Krosnick, J.A., & Smith, W.A. (1994).Attitude Strength. In V.s. Ramachandran(Ed), Encyclopedia of Human Behavior,San Diego, CA : Academic Press.

Kennedy, R. L., & McCallister, C. J.(2001). Attitudes toward advanced andmultivariate statistics when using

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computers. (ERIC DocumentReproduction Service No. ED 464 097).

Lalonde, R. N., and Gardner, R. C. (1993),“Statistics as a 2nd language - a model forpredicting performance in psychologystudents,” Canadian Journal ofBehavioural Science, 25, 108-125.

Perney, J., & Ravid, R. (1990). Therelationship between attitudes towardstatistics, math self-concept, test anxietyand graduate students’ achievement in anintroductory course. (ERIC DocumentReproduction Service No. ED 318 607).

Meletiou-Mavrotheris, M. (2003).Technological tools in the introductorystatistics classroom: Effects on studentunderstanding of inferential statistics.International Journal of Computers forMathematical Learning, 8, 265-297.

Mills, J. D. (2004). Students’ attitudestoward statistics: Implications for thefuture. Student Journal, 38, 349-361.Nasser, F. M. (2004). Retrieved July 8,2006, from http://oberler.isu.edu:3014/citation.asp

Pierce L. Rebecca and Jameson, Molly M.(2008)Students’ Attitudes towardStatistics: Are there differences amongvarious majors? , JSM

Roberts, D.M., and Saxe, J.E. (1982),“Validity of a statistics attitude survey –a follow-up study,” Educational andPsychological Measurement, 42, 907-912.

Schau, C. (1999). Survey of AttitudesToward Statistics (SATS). Availableonline5 and 6

Schau, C. (2003). Student’s attitudes: The“other” Important outcome in statistics

education. 2003 ASA Proceedings:Paperspresented at the American StatisticalAssociation Joints Statistical Meetings.Alexandria, VA: American StatisticalAssociation, Section on StatisticalEducation, pp. 3673 - 3681.

Schau, C., Stevens, J., Dauphinee, T., andDel Vecchio, A. (1995). The developmentand validation of the Survey of AttitudesToward Statistics. Educational andPsychological Measurement, 55 (5), 868-876.

Schield, M., and Schield, C. StudentAttitudes toward Statistics at Augsburg,2003-2004

Schutz, P.A., Drogosz, L.M., White, V.E.,and Distefano, C. (1998), “Priorknowledge, attitude, and strategy use inan introduction to statistics course,”Learning and Individual Differences, 10(4), 291-308.

Schutz, P.A., Drogosz, L.M., White, V.E.,and Distefano, C. (1998), “Priorknowledge, attitude, and strategy use inan introduction to statistics course,”Learning and Individual Differences, 10(4), 291-308.

Tsao, Y. L (2006) Teaching Statistics withConstructivist-Based Learning Method toDescribe Student Attitudes towardStatistics, Journal of College Teaching andLearning – April 2006 Volume 3, Number4.

Unsurprisingly, statistics examperformance among psychology studentsis positively related to previousexperience of statistics (Schutz et al 1998)and of maths (Lalonde and Gardner 1993;Schutz et al 1998).

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Vanhoof, Castro Sotos, Onghena andVerschaffel (2006) Attitudes towardStatistics and Their Relationship withShort and Long-Term Exam Results,ICOTS-7.

Vanhoof, S. (2006), Attitudes TowardStatistics and Their Relationship withShort- and Long-Term Exam Results ,Journal of Statistics Education Volume 14,Number 3, www.amstat.org/publications/jse/v14n3/vanhoof.html.

Waters, L. K., Martelli, T. A., Zakrajsek,T., & Popovich, P. M. (1988). Attitudestoward statistics: An evaluation ofmultiple measures. Educational and

Psychological Measurement, 48, 513-516.

Williams A. S. (2010), Statistics Anxietyand Instructor Immediacy, Journal ofStatistics Education, Volume 18, Journalof Statistics Education Volume 18,Number 2 (2010), www.amstat.org/publications/jse/v18n2/williams.pdf.

Authors

Pankaj Mohanty, Research Associate,SSIM, pankajmohanty@rediffmail.com

Dr. Chandra Sekhar SF, Professor andHead, Department of HRM, SSIM,sfchyd@gmail.com

#MJSSIM 3 (I) 05, 2011

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India is the world’s second most populouscountry after China with a population of1.21 billion. A critical problem facingIndia’s economy is the sharp and growingregional variations among India’sdifferent states and territories in termsof poverty, availability of infrastructureand socio-economic development.Ghaziabad is popularly known as theGateway of Uttar Pradesh, the highlypopulated state of India. Ghaziabad hasan approximate population of 40,00,000.Ghaziabad is said to have 69% averagerate of literacy. The main reasons for thishigh population rate in Ghaziabad are thelow cost of residential flats andapartments, quality of educationalinstitutions, good infrastructure andhigher employment rates and of course itis near to Noida and Delhi. Real Estatein Ghaziabad has been witnessing atremendous growth in the past fewdecades with the emergence of industries

and various multi-national companies inthe area. The commercial real estatemarket in Ghaziabad has undergone ahuge growth as a result of its developingcommercial centers like Raj NagarDistrict Centre, upcoming retail hubs andconnectivity via metro rail. Thedevelopment of commercial properties inGhaziabad is influencing the real estatemarket of nearby residential areas likeKavi Nagar, Raj Nagar etc.

Need for affordable housing

As per the latest NSSO survey reportsthere are over 80 million poor peopleliving in the cities and towns of India. TheSlum population is also increasing and asper TCPO estimates 2001, over 61.80million people were living in slums. Thesenumbers are expected to touch 200million by 2020. If the current trendcontinues, the number of urban dwellerswill reach almost 5 billion by 2030. Poor

Affordable Housing: The Need of the Hour(A study of Ghaziabad, U.P)

Prateek Gupta, Amit Kumar Arora, and Shely Gupta

Abstract

Increasing Population, High land prices and conservative government regulation do not let thepeople having income from Rs. 5000 to Rs. 15000 per month afford the house which may be deemedaffordable for them. Housing sector has become the most valuable sector and the big players like toinvest their amount in the same. The prices of land are rapidly increasing which cause the worstconditions of poor people as they have to choose slums or unauthorized houses. This problem may beseen in almost all major cities of the India. But despite being the most important area due to majorpolitical activities, the National Capital Region (NCR) is unable to deal with such problem in asignificant manner. Ghaziabad, a major city of Uttar Pradesh (part of NCR) provides the housingfacility to numerous persons of all segments but due to the reasons said above, unable to makeavailable housing to everybody especially to those having low income. Keeping this burning issue inviews, this paper aims to focus over the approach of such persons living in Ghaziabad and near byareas having low income towards affordable housing and the scope of availability of such affordablehouses for them.

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people live in slums which areovercrowded, often polluted and lackbasic civic amenities like clean drinkingwater, sanitation and health facilities. Asper the 2001 census, the total urbanhomeless population is 7, 78,599 people.

In India, the urban population is expectedto reach 576 million in 2030 from thecurrent 328 million. With this rapidurbanization, one of the biggestchallenges will be providing affordablehousing to city dwellers, especially thepoor. Hence the need of affordablehousing arises. Affordability can bedefined as the consumers’ ability topurchase but it is a relative term thatcould acquire different meaningsunder varying circumstances.

With rapid urbanization, one of thebiggest challenges is to provide affordablehousing to city dwellers, especially thepoor. The Government of India adopteda new Housing and Habitat Policy in 1998after much debate. It advocates thatGovernment create a facilitatingenvironment for housing development.Housing activities at present are largelyin private sector in both rural and urbanareas. Affordable housing policy hasrecognized the need of owning a houseand thus has formulated this policy.According to this policy, all the buildersshould cater to all the needs of acommunity. There is an enormous unmetdemand for low-income housing finance.The segment earning between Rs 5,000-Rs 15,000 has never been consideredsignificant for home loan offerings.

Factors Influencing AffordableHousing

There are numerous factors affecting the

applicability of affordable housing inIndia especially in Ghaziabad which areas follows:

• High and increasing land prices.

• Excess demand for land for new orexisting uses is also partlyresponsible for increase in prices.

• Public sector/state projects areprovided land at much-belowmarket (subsidized) prices leadingto wasteful use of land thusdrawing away excessive land fromthe market and reducing supply.

• The cost of building materials,construction labour, outdatedtechnologies, high capital cost dueto long-drawn construction processincreases the cost of constructions.

• Various fees and taxes payable bythe developer during productionprocess increase the cost stillfurther.

• The cost of construction itself ishiked by taxes and duties levied onconstruction materials and servicesrendered by various professionalsin the project.

• Sale taxes, excise duty, VAT arelevied on building materials likesteel, cement, paint. Varnishes etc.

• Payments made to consultants likearchitects, structural engineerscontractors, real estate consultantsand agents are subject to servicetax.

• Transaction cost including searchcost, brokerage, and stamp duty andregistration fee. These escalate thecost to the owner still further.

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Price of land is the single most expensivecomponent in the cost of housing inurban areas. High price of land is aconsequence of the inability of landmarket to respond quickly to increaseddemand for land with growth ofurbanization.

Affordable Housing Projects in India

The following affordable housing projectsare giving low-income households thechance to live in 200-700 ft² apartmentsat an average monthly payment of Rs.4000 (approximately).

1) Tanaji Mulusare City (TMC),located in the suburb of Karjatin Mumbai, provides 15,000affordable apartments over a 100acre plot. The units range from 156ft²to 397 ft², and are approximatelypriced between Rs. 2,00,000 to7,50,000.

2) Shubh Griha is Tata Housing’sflagship plan in Mumbai offersunits range from 283ft²to 489 ft²,and are priced between Rs.4,00,000 to Rs. 7,00,000.

3) Janadhaar Shubha, JanadhaarConstructions, Bangaloredeveloped on an 11.5 acre plot inthe outskirts of Bengaluru cityconsists of 1140 apartments thatrange from 400ft²to 615 ft², withone-bedroom houses priced underRs. 5,50,000

4) Navjivan, Atmiya DevelopersPvt Ltd, Ahmadabad consists of400 affordable homes being built inVatva, Ahmedabad which rangefrom studio to two-bedroomapartments, starting at Rs.3,00,000.

5) Ashray Homes, Value RealtorsPvt Ltd is an affordable housingproject spread over 8.5 acres inLodhana, Rewari, Haryana offers achoice between 280 ft² and 450 ft²approximately priced at Rs.3,00,000 to Rs. 5,00,000,respectively.

Comparative Study of ProjectsWorking in NCR:

Some of the selected projects currentlyrunning in NCR are as under: (Table)

Role model projects (for the presentstudy)

The projects which were considered asrole model projects are as follows:

Rajiv Awas Yojna (RAY), 2011:

To address the concerns of housing forthe urban poor, the government plans tolaunch a scheme in January 2011. TheRajiv Awas Yojana seeks to provideproperty rights to slum dwellers, in amarked departure from previous schemes.With around 93.06 million peopleprojected to live in slums across India by2011. The ministry had sought overRs.6,000 crore (Rs. 60 billion) from theEFC for the remaining period of the 11thPlan.

Jawaharlal Nehru National UrbanRenewal Mission (JNNURM):

The Jawaharlal Nehru National UrbanRenewal Mission (JNNURM), launchedon December 3rd 2005 is the largestnational urban initiative to encouragereforms and fast track planneddevelopment of 63 identified cities. Focusis to be on efficiency in urbaninfrastructure and service delivery

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mechanisms, community participationand accountability of ULB’s/ Parastatalagencies towards citizens. It consists oftwo submissions– “Urban Infrastructure& Governance”, and “Basic Services tothe Urban Poor”. The primary objectiveof the JNNURM is to create economicallyproductive, efficient, equitable andresponsive cities. It is one of the massivecity modernization scheme launched byGovernment of India. It envisages a totalinvestment of over $20 billion over sevenyears. It has two sub-missions:

• The Sub-Mission for UrbanInfrastructure and Governanceadministered by the Ministry ofUrban Development, with a focuson water supply and sanitation,solid waste management, roadnetwork, urban transport andredevelopment of old city areas.

• The Sub-Mission for Basic Servicesto the Urban Poor administered bythe Ministry of Housing and UrbanPoverty Alleviation with a focus onintegrated development of slums.

Kashiram Sehri Garib Awas Yojna:

The Kashiram Sehri Garib Awas Yojnawas announced in 2008 with an aim toprovide 1.01 lakh free houses to urbanpoor every year. In the first phase (2008-09) of scheme, over one lakh houses wereconstructed. The houses wereconstructed by development agencies likeUP Housing and Development Board(UPHDB) and the developmentauthorities. The state government hadrelaxed the eligibility norms of the schemefor the second phase and set the target toconstruct about 91,000 houses. UPHDBwas assigned the work of constructingover 45,000 flats in 46 districts and the

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development authorities of constructingthe remaining flats in 25 districts.

Objectives of the study

The prime objectives of the presentstudies are as follows:

• To Identify Consumers PerspectiveRegarding Affordable (Low Cost)Housing.

• To Check The Suitability Of ThisConcept (By Testing).

• To Set Useful RecommendationsAgainst The Hypothesis Of ThisResearch.

Scope of Such Projects

With the country facing a dearth of 22million home units, as per a survey by theHousing and Urban Property AlleviationMinistry, low-cost projects are the needof the hour. Real estate companies focusis on the development of low-cost homesby targeting lower-middle and lowerincome groups. The real estate major, tolda newspaper that real-estate wasexpecting some measures by governmentthat are to be announced for them. Thehousing sector witnessed very toughtimes during the entire economicslowdown and still is in a dilemma. Fromresidential and commercial developers tothe built-to-operate-transfer projectsdevelopers are facing this difficulty infund raising in 2009. But the sectorwitnessed price corrections between 10%- 30% depending on the location.Developers found out the huge demandfor these projects in the year 2010.Developers are optimistic and lookforward to 2010-11 as a great deal of scopewhere developing and offering affordablehomes will be realistic due to interest

rates and inflation coming down.

Globally, housing is considered affordableif a basic housing unit that provides aminimum amount of personal space andbasic amenities is accessible at 20 to 40percent of gross monthly householdincome for either rent or mortgage. Thegovernment has defined basic housingunits as being between 250 and 275 sq ft.In 2008, the task force set up by thegovernment suggested that affordablehousing for low income groups - thesegment with an annual income of lessthan Rs 90,000 - should be 300 to 600 sqft in area and be accessible at 30 percentof gross monthly household income.

The budget proposals for 2011/12 heldout hope for real estate firms focused onaffordable housing, boosting sectorstocks, but analysts were unsure if thesewould translate into gains for the broadersector.

In his Budget speech, the financeminister proposed raising the limit onhousing loans eligible for a 1 percentsubsidy in interest rates, and widenedthe scope for housing under “priority-sector lending” for banks, making interestrates cheaper on these.

Shares in Housing DevelopmentInfrastructure Ltd, Godrej Properties, DBRealty and Parsvnanth Developers closed2-5 percent higher on hopes of higherdemand in the affordable segment. Thesectoral index rose 1.3 percent.

Property prices in major Indian citieslike Mumbai and Delhi have more thandoubled over the past 18 months,spurred by rising incomes and a firmstock market, but sales volumes aredown by a third from a year ago as high

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prices and rising borrowing costs deterbuyers.

The Reserve Bank of India (RBI) hasraised interest rates seven times sinceMarch 2010 to curb stubbornly highinflation, further hurting demand.

The Budget proposed raising 1 percentinterest subvention for housing loansof 1.5 million rupees from 1 millionrupees now, for homes valued at 2.5million rupees from 2 million rupeesnow. It also raised priority loan limitto 2.5 million rupees from 2 millionrupees.

The preference regarding unit sizes wasfound to be positively correlated withincome, with higher income householdsdesiring larger houses. Amongst theRs.3-10 lakh income group, the unitsize preferences among all the cities rangefrom 550-1200 sq ft built up area(Knight Frank Research). Given theapartment size preference across incomegroups, most of the prime residentiallocations in the cities covered areunaffordable for the Rs.3-10 lakhincome group. However, if consumers inthis income group are willing tocompromise on their preferred unit sizes,their options in terms of housinglocations increase. Overall, our researchrevealed that Mumbai, NCR andBengaluru are the most unaffordablelocations, while Kolkata and Pune offerthe maximum number of affordablelocations to middle income consumers.

The housing requirement for the Rs.3-10 lakh income group across the 7cities (Mumbai, Pune, NCR,Bengluru, Chennai, Hyderabad,Kolkatta) is approximately 2.06 million

housing units by 2011, which assumingan average household size of 800 sq fttranslates to a requirement of 1,650million sq ft of residential space.Assuming a price of Rs.2,000/sq ft,which is par for the demand being cateredto, this total space requirement translatesto a market size of approximatelyRs.3,300 billion, or USD 66 billion.Of this total, the market size constitutedby the Rs.3-5 lakh income group isexpected to be Rs.2,675 billion (USD53 billion), while the market sizecontributed by the Rs.5-10 lakh incomegroup is expected to be Rs.625 billion(USD 13 billion). The NCR accountsfor 26%, the largest share, of thisrequirement. It is evident that the extentto which the total housing requirementas of 2011 is catered to will depend largelyon the extent to which the requirementsand specifications of the Rs.3-5 lakhincome group are satiated.

Problems identified

In the present study, the followingproblems have been identified:

• People having low income also dareto dream of a self owned house.

• Urban poor people are not able toget a good environment neither forthemselves nor for their children.

• People are paying huge percentageof their income as rent but it is notgoing to provide a self owned houseto them.

• Even after paying rent as per thedemand of owner still they areexploited by them.

• The complicated procedures andnorms for the housing loans by

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commercial banks has made itdifficult for the urban poor toobtain loans.

• The major problem identified withthe people earning avg. monthlyincome ranging Rs. 5000-15,000are:

• Not submit ITRs

• Not capable of Repaying EMIs.

• Not interested in repayinginterest as they do not getbenefit of interest exemptionfrom Tax.

• Unable to get sanctioned loan

Setting up of Hypothesis

On the basis of the problems identified,the following hypotheses are set:

H01 : The persons earning Rs. 5000 –15,000 per month may not be providedsuch houses or Loan.

H02 : H1b : The persons earning Rs.5000 – 15,000 per month pay more than20% of their Monthly Income and maybe provided Such Houses on Lease ( withSame Rent)

H03 : The persons earning Rs. 5000 –15,000 per month may be allotted Housesof area 300 sq ft. (Approx)

H04: The persons earning Rs. 5000 –15,000 per month may be allotted Housesworth Rs. 3,00,000 – 4,00,000.

H05: The persons earning Rs. 5000 –15,000 per month may pay downpayment up to Rs. 20,000.

Research Methodology

The research methodology used in thepresent study is divided in the followingsub-parts:

Sampling:

Sampling is an effective step in collectionof primary and secondary data and has agreat influence on the quality of theresults.

• Sample Size : 500 (Persons earningRs.5000–15,000 per month)

• Sampling Method : JudgmentalSampling

• Data collection:-

o Primary : Structured questionnairewas used

o Secondary : Books, Journals,Magazines & Internet

• Mode of Survey:Personal interview

• Tools: Tabulation, graphicalpresentation as Pie chart, Bargraph & Line graph etc, Statisticaltools as correlation tests (throughSPSS software version 19.0)

• Places of Survey :Ghaziabad, Muradnagar,Vasundhara, Sahibabad, Noida

Analysis of Feedback throughQuestionnaire

Question: Are you interested in shiftingfrom your current residence? If yes, thenhow far away from your current location?

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surveyed people pay around Rs. 1500which is a big amount according to theirstandard and monthly income. Thisjustifies the hypothesis H02 of the presentstudy.

Question: Approximately how manysquare feet of living space is required (atleast) for you?

We can see in the above graph that thefrom surveyed 500 persons 43.8% feelthat they should be having a house witharea of 300-400 sq. feet whereas 39.4%think that 200-300 sq. feet are is goodenough for them and their family. On anaverage 300 sq. feet are the generalrequirements of such persons. Thisjustifies the hypothesis H03 of the presentstudy.

Question: What is the Price Range ofhouse you would like to stay within?

The above graph presents the feedbackof 500 persons about the price range ofsuch affordable houses what they feel andready to pay. 44.2% feel that they shouldbe having such house for Rs. 3,00,000-4,00,000 whereas 32.2% went for Rs.

We can see in the above graph that thesurveyed 500 persons showed their 100%interest towards shifting their house fromthe current position but 68% of themwant to be shifted with in the range of 10kms. It shows that they require theaffordable house but as they are attachedto some specific job, that they are unableto go too far.

Question: Are you a rent payee, if yeswhat rent are you presently paying?

The above graph presents that all thesurveyed 500 persons are rent payees andmaking a payment of 20% of theirmonthly income as rent on an average.Out of them 35% pay in between Rs. 800to 1500 and 29% pay Rs.1500 to 2000.This shows that more than 60% of

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2,00,000-3,00,000 based on their capacity.On an average Rs. 300000 may be paidfor such. This justifies the hypothesis H04

of the present study.

Question: Any Down payment youwould like to make:

The above graph presents the feedbackof 500 surveyed persons about the DownPayment they ready to pay against thePrice range set earlier of such affordablehouses. The data revealed that 31.2% feelthat they may pay Rs. 1000 to 5000whereas 29.4% are ready to pay Rs.

10000 to 20000 based on their capacity.On an average they may pay in betweenRs. 5000 to 15000. This justifies thehypothesis H05 of the present study.

Question: Do you own a vehicle, if yesthen which one?

Another important information wascollected through this particular questionas out of 500 respondents nobody has afour wheeler. Most of them ownMotorcycle, Scooter, Moped, bicycle etc.,which helps in saving cost of constructionand land space as there would be no needof specific space for Parking of fourwheelers.

Overall Analysis of Feedback

The questionnaire helped in the researchto get feedback from the 500 urban poorfrom the target segment. The followingtable is showing the average, minimumand maximum values in some relevantaspects:

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• The above table shows that thequestioned persons had monthlyincome range from 3500 to 15000but average salary was near to Rs.8778 (justifying our hypothesis).

• They are paying monthly rent onan average of Rs. 1625 with therange of 800 to 2000.

• The area required for living (flatsize) varied from 200 to 450 sq.ft.with the average area of 300 sq. ft.(justifying our hypothesis).

• The price range of a flat (as theyare wiling to pay at most) variedfrom Rs. 200000 to 500000 with anaverage of 378000. As we areoffering approximately in the samerange (again justifying ourhypothesis).

• They are also ready to pay downpayment with a range of Rs. 5000to 30000 with an average of Rs.13500 (justifying our hypothesis).

Rest analysis is judged with the help ofstatistical tools (correlation) as follows:

Interpretation

• The study found that there is amoderate positive correlation of0.463 between the monthly income& the monthly rent paid which

represents that as persons monthlyincome increases their rent payingcapacity increases.

• the above results clearly show thatthere is a moderate low positivecorrelation of 0.350 between themonthly income & the price rangewhich represents that as per thehuman tendency people want moreas compared to their expensesmade.

• The above results clearly show thatthere is a low positive correlationof 0.252 between the monthlyincome & area square feet neededwhich represents that as per thehuman nature persons want morespace or area and also want toincrease their savings.

• The above results clearly show thatthere is a high positive correlationof 0.854 between the area in squarefeet needed & price range of thehouse which represents that peopleknow the price of houses in theseareas and when they are getting anaffordable housing as per theirprices they are willing to pay thatprice for the house.

• The above results clearly show thatthere is a low positive correlation

Monthly Time at How for Rent Area Price DownIncome Current Away Monthly (Sq. ft.) Range Payment

Address (Km) (Rs) (Rs) (Rs)

Average 8778 6.5 14.2 1625 300 378000 13460

Max 15000 40 50 2000 450 500000 30000

Min 3500 0.5 10 800 200 200000 5000

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of 0.276 between the area in squarefeet needed & monthly rent paidcurrently which represents that theemi of the house would be a bithigher than the rent paid by themcurrently.

• The above results clearly show thatthere is a low positive correlationof 0.298 between the price range ofthe house & monthly rent paidcurrently which represents that theemi of the house would be a bithigher than the rent paid by themcurrently.

• The above results clearly show thatthere is a moderate positivecorrelation of 0.438 between themonthly income & the readiness tomake down payment whichrepresents that people in incomegroups 5000-15000 are ready tomake 13000 rs. down payment onan average for a house.

observations during the study

on the basis of above study, thefollowing points are observed:

• The environment in which peopleare living is not healthy for themand their children too, even thefacility of water, light, security isnot proper. no green space (park/garden) is available for people, ifavailable then in very badcondition.

• Private employees want to havetheir own home but due to lack offinance facility or available at veryhigh rate, such houses are notaffordable.

• Government has taken initiative inthis direction but the studyidentified that in proportion to theoverall population such steps arejust not good enough.

• As the big developers are in themarket for making their profit, theyhave purchased already most of theland and have started constructionfor big users which reduce thechances of availability of affordablehouses.

Recommendations

The following recommendations are setas:

• Private developers have to think outof the box as they will have toconcentrate over societaldevelopment rather huge profitmaking. The developer shouldfocus on CSR (corporate socialresponsibility).

• The persons from weaker sectiondo not require huge space thusshould be allotted house with areaof 300 – 400 sq. feet.

• As the urban poor are not capableto make huge payment, affordablehouse should not cost more than 3-4 lakhs.

• Such houses should be in a societycarrying commercial shops toowhich would help in generatingprofit and compensation against thelow cost residential places. Thedeveloper may earn regular incomeby the means of rent of the shopsor such shops may be sold withhuge amount.

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• The survey revealed that most ofthe urban poor of this income groupeither do not carry any vehicle orcarry only two-wheelers. Thedeveloper does not require toconstruct much wider parkingspace which may save theconstruction cost.

• Developers should go by carpetarea, and charge, if required,additionally on sq. ft rates for thesuper plinths area which providedcommon services. This would makeit very simple for the customer tounderstand what area he stands tohave in the flat he is about topurchase.

• As the target customers are urbanpoor and they generally do not fileITR hence sometime unable to getsanctioned loan, the developers arerequired to facilitate such personsby helping them in getting loansanctioned.

• Another option may be chosen asthe developer may take loan on selfbehalf and provide the house to theurban poor on lease base (rent maybe charged as EMIs).

• The developer may also follow thesecuritization process to recover theamount either through bank ordirectly concerning to SPVs fromwhere they fetch their wholeamount and SPV convert these loanpapers as securities and do tradingwith them and the owner of the flatis answerable to SPV agent.

• It was also found through surveythat all the persons lying in theincome group Rs. 5,000-10,000 are

paying rent approximately Rs. 1000to 2000. It was also identified bythe questionnaire that they areready to pay more amount if theyare going to get own house. Thisrent amount may be treated as anEMI. The study done over loansand interest says the EMI for Rs.3,00,000 with interest @ 13% for20 years will be approximately Rs,3,500 (may vary according to thebanks and government’s norms)which is affordable for such urbanpoor.

• The developers should not focusover CLP and flexi plans. Thewhole process should be based oninstallment plan.

• The formalities and the paper workshould be least and transparent asmost of the urban poor are lesseducated.

• The developer may also seek helpfrom the Government related tosome public facilities as Schools,hospitals, Road facilities etc.

• The Government should takenecessary actions like subsidizingthe facilities to be used in suchproject.

References

Books:Birdie G & Ahuja T. D., BuildingMaterials & construction, Shanpat RaiPublishing HouseKumar S, Building Construction,Standard PublicationDutta B. N., Estimating & CostingVerma B.P., Civil Engineering Drawing &

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Joshi P. & Mehrotra R. (2008), TheMission of Humane Architecture andHabitat, Urban Design Research InstituteDelhi Schedule of Rates, 2007 (Reprint2010)11th Five Year Plan 2007 -2013, UrbanInfrastructure, Housing, Basic Servicesand Poverty Alleviation, Government ofIndia, 200710th Five Year Plan, 2002-2007, VolumeII, Sectoral Policies and Programmes,Government of India, 2002www.realestateindia.comwww.indianrealitynews.comwww.magicbricks.comwww.articlebase.comwww.makaan.comwww.99acres.comwww.gdaghaziabad.comhttp://cpwd.gov.inhttp://nbo.nic.inwww.propertynice.comwww.pbd.inAuthorsDr. Prateek Gupta, Associate Professor,Department of Management Studies,Krishna Institute of Engineering &Technology (K.I.E.T., Ghaziabad)Amit Kumar Arora, Lecturer,Department of Management Studies,Krishna Institute of Engineering &Technology (K.I.E.T., Ghaziabad)Dr. Shely Gupta, Ex-Faculty member,Mody Institute of Engineering &Technology, Lakshmangarh, Rajasthan

#MJSSIM 3 (I) 06, 2011

House Planning, Knanna PublicationMurty S. T., Computer Aided Engg.Drawing, I.K. International Pub. HouseChandra Prasanna, Project: Preparation,Appraisal, Budgeting andImplementation, Tata McGraw Hill,Delhi, 5th Ed.Mohsin M., Project Planning and Control,Vikas Publishing House, DelhiGoyal BB, Project Management: ADevelopment Perspective, Deep & DeepPublication, DelhiChaudhary, S, Project Management, TataMc Graw Hill, DelhiYoung TL, The Hand Book of ProjectManagement, Kogan PagePatel B, Project management, VikasPublishing House, DelhiCooper and Schindler, Business ResearchMethods, Tata Mc Graw Hill, 9th EditionSaunders (2007), Research Methods forBusiness Students, Pearson Education,2nd EditionPanneer Selvam (2008), ResearchMethodology Prentice Hall of India, NewEditionGravetter, Research Method forBehavourial Sciences, Engage LearningBeri G.C, Marketing Research, Tata McGraw Hill, 4th EditionKothari C.R. (2004), ResearchMethodology Methods & Techniques,New Age International Publishers, 2nd

EditionSchreibmayer P. & Grabner J., Learningfrom Slums, Minimal space-Minimalhousing, the Technische UniversitiesGraz, Austria

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INTRODUCTION

According to the World Federation ofDirect Selling Association (WFDSA)network marketing is defined as “Adynamic, vibrant, rapidly expandingchannel of distribution for the marketing ofproducts and services directly to consumers.In other words, direct selling involves themarketing of products and servicesdirectly to consumers in a face-to-facemanner, away from permanent retaillocations.

Network marketing in India is practicedand participated by Organized andUnorganized sectors. The Organizedsectors consist of members of ‘IndianDirect Selling Association’ (IDSA)

Network marketing is in vogue for over100 years and now in 150 countriesworldwide. The global turnover was $110USD during 2008-09. As per the latest

Insights into Network Marketing:An International Perspective

Bhavannarayana Kandala

Abstract

The purpose of this paper is to describe network marketing and the benefits that it brings to thecustomers to the Network Marketing Companies (who are authorized as distribution of products todown line and public). This is to explore attributes of Network marketing business and influencefreelance sales’ consultants known as distributors. To ascertain the fact about those three countries,which will emerge as top performers by achieving maximum sales turnover as well as the highestsales productivity per distributors. The evaluation and choice becomes an area of concern todistributors, while selecting a Network Marketing Companies (NMC) depending upon one’s choice.NMCs as well as distributors are currently in a dilemma with no clarity in the absence of properlegislation in India, fly-by-night operators/outfits, and high attrition rate and so on. Hence, there isa pressing need to evaluate the macro scenario worldwide, while drastic changes taking place in thebuying behavior driven by purchasing power, shift in lifestyles and demographic factors of Indianconsumers. Of late many conventional companies also diversify into direct selling and multilevelmarketing concept.

survey conducted by IDSA and Ernst &Young, the gross Indian turnover of IDSAmember companies during 2008-2009was INR.3,333 Crores.

The share of organized sector wasINR.3,027 Crores (90.9%). The thirtyfive member companies of Non-IDSA2

contributed a turnover of INR.1,183Croes. The rest of unorganized sectorcontributed INR.303 Crores (9.1%). Theannual growth rate is 17% during 2008–09.

‘South India’ emerged as top ranker insales turnover followed by ‘North India’.The direct and indirect taxes paid by theIDSA member companies was at INR.370Crores in 2008-2009, accounting for11.10% of the turnover, an increase of18% over the last year tax payment ofINR.313.56 Crores during 2007-2008.The projected turnover of NetworkMarketing Companies in India is

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estimated at INR.7,100 Crores by 2012-13.

Need for the Study

A strong need is felt to examine thepurpose, scope, objectives, current issues,based on the research gaps identified, andfuture directions of NMCs.

Statement of the Problem

Generally, churning per cent has beenvery high among network marketingdistributors in India (percentage differsfrom company to company), due toentering business as an obligation,Negative Image because of fraudulentpractices by existing and fly by nightoutfits, lack of motivation, and highproduct pricing, which leads to lack ofsatisfaction hence many drop outs. Someof the issues include distributor switching/ churn, defection, lack of legislation, lackof ethics, pyramid schemes, and imitationproducts.

Objectives

Based on the background of studymentioned following are the researchobjectives.

• To understand the concept ofinternational network marketing.

• To study the performance of topthree countries in networkmarketing business.

• To evaluate top three countriesdistributors in sales productivity.

Scope

Conceptual Scope: The scope of thestudy is confined and focuses on NetworkMarketing with respect to ‘OrganizationType’ i.e. Amway India Enterprises and

Hindustan Unilever Network.

‘Organization Type’ (which includesAmway India Enterprises and HindustanUnilever Network)

Geographical Scope : The scope isrestricted to the following:

Greater Hyderabad Only.

Distributors of ‘Organization Type’belongs to 15 Mandals of GreaterHyderabad.

The study offers a lot of scope for furtherresearch in the areas of ‘NetworkMarketing’, ‘sales education andtraining’, ‘sponsoring new down lines’,and ‘impact of business attributes ofNetwork marketing’. The study hasimplications to three groups viz. ‘IBOs’,‘Network Marketing Organizations’ and‘Researchers of direct selling’ inenhancing their effectiveness in the areasof assessment, training and behavioralresearch.

Direct Marketing V/s Direct Selling

Direct Marketing has many forms suchas Catalog marketing, Mail-order, Tele-marketing, Kiosk Marketing, DirectResponse Television, Online Marketing,and Direct Selling. Direct Selling is alsoknown as personal selling, one-to-one(121) selling, Face-to-face, Door-to-doormarketing and so on. It uses powerful‘word of mouth’ promotion. Theextension of direct selling is NetworkMarketing, ‘A number of salespeopleselling a little bit each’.

Turnover of Organized Indian DirectSelling Association member companiesduring 2009 Organized but not membercompanies of IDSA, list is Not Available,

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(To name few, Tiens, and Amega Globaletc)

The fifteen member companies of IndianDirect Selling Association (IDSA)contributed sales turnovers of INR.1,884Crores accounting for 62.24% to theoverall Organized Direct Selling sectorand 56.53% to total turnover during2008-09. ‘Non-IDSA’ member companiescontributed sales turnovers of INR.1,143Crores (37.76%) to the organized sectorand 34.29% to total turnover.

Turnover and Compounded AnnualGrowth Rate (CAGR) of OrganizedIDSA Member Companies

The revenues of an organized DirectSelling sector over eight preceding years,V(t) in the formula, have been given:

Year 2000-1 2001-02 2002-03 2003-4 2004-05 2005-6 2006-7 2007-8 2008-09

RevenuesCroresINR 1,401 1,7237 2,311 1,332 1,663.82 2,315 2,522 2,851 3,330

SimpleGrowthRate (%) 23.03 34.07 -42.36 24.91 39.14 8.94 13.05 16.8

(tn =2009 and t0=2001) = 8 years

V(t)= tn-t0=2009-2001

CARG = 100to

to-tn ×=

Cumulative CAGR 1001,401

1,401-3,330 ×=

1001,401

1,929 ×= 7.137100377.1 =×= %

Average CAGR in 8 years

Graph 1

Table 1

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Global Scenario

The below table indicates the Indiandirect selling association companies

among 56 national associations ofWFDSA and their rank-wiseperformance in sales turnover as well assalespersons annual productivity.

From the diagram below, it may beinferred that USA topped as first rankerwith $32.18 Bn, Japan was the secondtopper with $20.39 Bn, and Korea rankedin the third position with $8.75 Bn.

The below direct sales figures represent“Billion Dollar Plus”1 countries during2001-2009. (Table)

The top three winner countries by maximum sales turnover: USA, Japan andKorea

It may be observed from the belowdiagram that Germany won the first rankwith $11,628 Bn sales productivity persalesperson, Italy ranked the second with

$10,626 Bn6 sales productivity persalesperson, and France ranked the thirdposition with $9,475 Bn salesproductivity per salesperson.

Graph 2

Graph 3

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Top rankers (Distributors) by Sales Productivity: Germany, Italy and France

Graph 4

Table 4

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Table 5

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Copyright WFDSA 2009

Sales figures exclude VAT

* Figures are from the German DSA andthe Arbeitsgemeinschaft Home Servicehttp://www.ageg.de/

** Other includes 2003 or prior figuresfrom Austria, Costa Rica and Israel

***Retail sales include both DSA andnon-member companies

Global Scenario: Fifteen top rankeddirect selling countries by sales turnoverwith more than $ 1 billion.

Period of the study in Indian Market

The study is based on nine year (between2008-10) span of sales trends of IDSA i.e.consisting of fifteen Indian and foreignorigin Network Marketing companies.

Research Methodology

This is descriptive research,questionnaire surveyed through personalstructured interview. Sample plan –sample unit, the data was collectedthrough personal interaction from 600Independent Business Owners(distributors). The sample demographicprofile consists of women, men, students,

housewives, business persons andemployees, belonging to HindustanUnilever Network and Amway IndiaEnterprises.

Hypotheses

Null (H--0): The prospects of additionalsource of income are significant factorsof IBOs for entering into Networkbusiness.

Sampling Design

Population: The population frame wouldbe the distributors of Network MarketingCompanies in the state of AndhraPradesh, (India).

Sampling frame / Sampling source:The sampling frame for the presentresearch would comprise of 302 IBOs ofHindustan Unilever Network and 206Amway India Enterprises productcategories in the twin cities of Hyderabadand Secunderabad.

Sampling Unit: The sample subjects forthe present research are the IBOsbelonging to different Socio-economicclassification, who are above 18 years ofage and no upper ceiling.

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Sampling Technique – Cross sectional– snowball sampling

Sample Size: (n) (Hindustan UnileverNetwork 302 and Amway IndiaEnterprises 306) = 608 total, usablequestionnaires were 600.

Data Collection Procedure

The primary data was collected throughthe field survey using structuredquestionnaires.

Data was collected from 302 HindustanUnilever Network consultants and 306Indian Amway distributors randomlyselected from point of sale (productdelivery point) and at different venues ofBusiness seminars and C&F agencies andbusiness building seminars located atKhairthabad, Begumpet, Barkatpur, andother places in Hyderabad andSecunderabad, Chennai, Bangalore, NewDelhi, Gurgoan and Mumbai etc. Alsoadministered questionnaires at homemeeting in the IBOs of Amway &Hindustan Unilever Networkconsultants.

Research Design

Cross sectional descriptive researchdesign was undertaken. Research designincludes sampling design, data collectionprocedure, survey instrument,measurement of key variables; and thepilot study etc, finishes with data analysisand testing the relationships among theconstructs. Greater Hyderabad consists ofsixteen Mandals offices (i.e. RevenueBlocks). The respondents were chosenfrom fifteen revenue blocks only (as thereis no proper response from he last 16hmandal) at the rate of forty distributorsboth belong to Hindustan Unilever

Network (HUN), and Amway IndiaEnterprise (AIE) per each mandal, a wellstructured questionnaire wasadministrated for collecting the data. Thedata thus collected is properly organizedin suitable tabular forms.

Findings

Findings of the study supportedsignificantly that self-potential influencesbusiness propensity. The remaining twoattributes namely ‘concept and productknowledge’, ‘down to earth’, were foundto be insignificant with respect to theircontribution to Network Marketingsuccess. Findings of the study supportedsignificantly that ‘patience for success’,and ‘impact of direct selling on NetworkMarketing’ contributes to businesssuccess to moderate, marginal andmaximum levels.

In terms of different regions contributionto the overall direct selling industry, SouthIndia remains a key hub of activity fordirect selling companies closely followedby North India. The presence of a strongbase of sales consultants, combined withhigh awareness levels of the direct sellingconcept have contributed to the growthof direct selling in south India.Commercially key states like Delhi andMaharashtra have now started showinga high affinity towards the direct sellingconcept. Nearly 1.82 Million individualshave been involved in organized directselling activity as sales consultants in2008-09, with women as main sales forcewith 68% of the entire network. In thecase of IDSA member companies (notincluding insurance), as much as 1.2Million individuals are employed as salesconsultants

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Conclusion

During the year 2008-09, the overallIndian direct selling grew by 17% fromINR.2,851 Crores in 2007-2008 to touchINR. 333.3 Crores in 2008-2009. Asmuch as 95% of the respondentcompanies posted a revenue growth in thecurrent year. This growth was mainlyattributed to increase in distributionreach and penetration and growingcoverage of products being sold under thedirect selling activity. The taxcontribution to Indian government byIDSA member companies through directselling industry was at INR. 370 Croresin 2008-2009, an increase of 18% overcompare to previous year. The tax paidas a share of revenue was at 20% of theoverall revenues. The indirect taxes paidby the IDSA member companies rosesharply by 41.5% primarily on accountof increased complexity in the indirecttaxation structure for the direct sellingindustry. Health products category hasemerged as a leading major contributingcategory, with over 42% of therespondents offering these products andcontributing to 32% of the overallrevenues of the organized direct sellingindustry. The traditional product

categories of personal care and cosmeticsoccupy a combined share of 18% of thetotal market, and have been covered by51% of the companies surveyed.

References:

(1) Charles, W. King, James W.Robinson (2000), “The NewProfessionals” The Rise ofNetwork Marketing As the NewProfession, Three Rivers PressNew York, Pp.104-108.

(2) w w w. w f d s a . o r g / s t a t i s t i c s /index.cfm?fa=display_stats&number

(3) http://www.ageg.de/ German DSAIDSA - Ernest & Young AnnualSurvey Findings 2008-09www.indiandsa.co.on

Author

Bhavannarayana Kandala, ResearchScholar, School of Management Studies,Jawaharlal Nehru TechnologicalUniversity Hyderabad, Hyderabad.

#MJSSIM 3 (I) 07, 20112

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Introduction

Bharti Air Filters India limited1 is one ofthe leading firm of air filters for all typesof vehicles in India established in the year1971 in Delhi where most of theautomobiles companies whereestablished, after that there was nolooking back for the company thecompany started with air filters now it ismanufacturing most of the accessoriesrequired by the automobiles for Indianand foreign markets. The company hasin its bucket companies like TATAMotors, Eicher Motors, Mahindra andMahindra, Bajaj, TVS etc for whom it isproducing accessories such as air filters,oil filters, side guard, tail lamps and manymore. In 1990 it changed its name toBharti Automobiles Limited (BAL).Depending on the raw material and therequirements of different locations of thedifferent companies BAL started itsexpansions in different locations to cutits cost of transportation and inventories.

Development

In 2001 BAL established its new plant inPithampur2, district Dhar in MadhyaPradesh, where air filters whereproduced. The company has 40 manager

Case Study

Human Resource Perspective: Delay in solution

Manohar Kapse and Jayant Sonwalkar

Abstract

This is a case of leaderships and decision making, the time period of this case was the starting ofrecession. This is the case of one of the leading companies of automobile accessories production;Bharti Automobile limited (BAL). Here the workers had a problem related to ESI, which was notsolved in time by the manager and the top officials. The HR manager Mr. Nitesh Mahajan took theinitiatives to solve the problem and also found the other reasons for it.

level staff, 140 operators, and 20supporting staff in the plant whichoperates in 3 shifts. The company hasvery well defined attractive HR policesfor all its employees. The companyprovides all the safety equipments to theemployees such as goggles, masks, shoes,aprons and two pair of dresses every year.For all the employees’ wearing uniformis compulsory on the job at all the levels.This is made mandatory through the HRpolicy for developing a sense ofuniformity among the employees.

Human Resource Manager and hisInitiatives

Mr. Nitesh Mahajan, a young, energeticand dynamic HR manager was appointedin the company to take care of the HRpolices. He was an MBA and havingexperience of 7 years in the differentindustries. After his appointment in thiscompany, he thoroughly revised the HRpolicies and made changes in the HRpolicies where ever required. For therecreation of the employees he startedcompulsory picnic for the employees withtheir family members every year. Everyfestival was celebrated in the company.Birthday and anniversary cards were sentto all employees and department wise

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celebration was done. Mr. Mahajan triedto create a family type of atmosphere inthe company aiming at creating a senseof belonging in the employees.

In order to boost the morale of theemployees, he started monthly bestslogan, best poster, best suggestion fromany point of view whether it is HR, safety,nature, production any thing related tothe company and humanism. In the firstweek of every month a formal programmewas organized and prizes where given tothe winners. Prizes were also given to thebest implemented suggestions. 50%concession on meals was also provided tothe employees. The company has alsoestablished a school where the employees’wards were given 50 % concession infees. All the rules and regulation of thegovernments were implementedProvident fund is deducted from the firstday of the employees job, ESI (EmployeesState Insurance Corporation)3 is alsoapplied to all the employees where theyget all the medical facilities for theirdependent parents, spouse and children.Leaves according to the company’s rulesare given 7 days casual and 7 days medicalleave was available to employees everyyear. The company used to give 20 %bonus every year.

Short comings

All the employees were satisfied with thecompany’s policies and the structure. Butthere was one of major problems was theabsence of formal hierarchical system.There was little difference in the paystructure of employees. How ever theformal hierarchy was well defined formanagerial level.

Recession

Unfortunately, then came the recessionwhich hit the automobiles companies themost. The production came down to 50%,few of the contracts were cancelled. Thelong term contract which has to berenewed was not renewed with theoperators instead the company plannedto give layoff to few of its operators. HereMr. Mahajan decided not to give layoff tothe operators and wait for one month atleast. He then decided to take other costcutting methods such as instead of 3 shiftsthey started one shift. Transportationfacility for the operators and managerswas reformulated car pool was started;instead of flights managers wereencouraged to take trains/bus as far aspossible. The managers willingly offered15 % salary cut down the same was theattitudes of the operators. After waitingof one month, the company decided, notgive layoff to its operators but to continuetheir services.

The problem

Work was going on normally but one daythe union leader came to Mr. Mahajanand informed him about one of theirproblem regarding the ESI officials,according to him the ESI officials are notproviding proper medical facility to themand their family, medicines are not madeavailable to them. He asked Mr. Mahajanto solve the problem as soon as possibleelse their medical should not be deducted.Mr. Mahajan told him that it iscompulsory for every one to deduct themedical it is the norms of the government4

and regarding the ESI he will solve theproblem within 10 days. After that Mr.Mahajan met the ESI officials and tried

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to get some favor for his employees. Buthis meeting with the officials was notarranged with in the 10 days due to someor the other reason, it was in process.

10 days were over and on the 12th day,one of the union leaders asked all theoperators to gather in the canteen at teabreak and asked the HR manager to talkto them on the ESI issue and solve itimmediately in the canteen.

After a wait of 15 minutes Mr. Mahajandecided to go to the canteen and addressthem but the management asked him notto go to the canteen, but he went and toldthe operators that he solve the problemwithin week and will arrange a meetingof the ESI officials. All the operators weresatisfied and moved back to their work.

Mr. Mahajan then asked the managementto take action against the union leaderswho motivated the employees for thismeeting. The management found twoculprits for this issue and they suspendedthem, but on request of other unionleaders, a written apology was prefferedand the union leaders were forgiven.

After few days the same Union leadercame to Mr. Mahajan and asked him tohelp him to get concession for his niecein the school. But Mr. Mahajan told himthat it was not possible since theconcession is to be given to only thechildren of the employees. The unionleader told him that the responsibility ofthe niece is his since that child is anorphan and he is the only one who has totake care of him. But Mr. Mahajan wasstrict and he refused.

A few days later Mr. Mahajan visited theschool and he came to know that the nieceof the union leader was studying in the

same school and he is very brilliant. Healso came to know about his parents whohad an ill fated accident in which both ofthem died. Mr. Mahajan took this thingvery seriously and had a discussion withthe senior officials. But they told that ifthe policies cannot be changed only tobenefit this child. Then instead ofchanging the rules Mr. Mahajan gave anew proposal. Scholarship is to given toall the toppers of each class, which willbe equal to the tuition fees. This proposalwas accepted by the Managementimmediately.

Conclusion

After that, on the ninth day of thisepisode the ESI officials came to theemployees and addressed them. All thequeries of the operators were solved andthere was no problem regarding the ESI.Later Mr. Mahajan also madearrangements that every now and thensomeone from the HR department shouldhave a talk with the ESI officials to havea good working relationship with them.In spite of being assured by the ESIofficials no significant change was foundin the working pattern of the ESI.

Questions:

1. What was the cause whichmotivated employees to have ameeting in the canteen?

2. Were the efforts of Mr. Mahajan tocreate Belongingness amongst theemployees successful?

3. Mr. Mahajan was stopped by themanagement not to go to thecanteen, though he went there,comment on both the approach, ofthe management and Mr. Mahajan.

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4. What was the major problem; TheESI or the Hierarchy or the PayStructure or something else.Explain with reasons.

References:

1. http://esicdelhi.org.in/esiact.php

2. http://esic.nic.in/

3. http://esic.nic.in/contribution.htm

4. http://esic.nic.in/benefits.htm

Authors

Manohar Kapse, Reader, M Sc, M Phil(statistics), Pursuing PhD inManagement, Shri Vaishnav Institute ofManagement Indore. mk10oct@gmail.com

Dr. Jayant Sonwalkar, Ph.D., MBA,MA (SW), MA (History), Professor ofMarketing and Academic Director,Institute of Management Studies, DAVV(University of Indore) Indore.

#MJSSIM 3 (I) 08, 2011

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In today’s world, changes are happeningfaster than ever and this book teaches youeight steps to produce needed change inany group. By using a fable, the authormakes it very easy to read andunderstand.

Our Iceberg Is Melting presents aframework for an effective corporatechange initiative through the tale of acolony of Antarctic penguins facing thedanger of global warming. This colony ofpenguins will remind you of your typicalbusiness organization as they take on thepersonality traits and demonstrate theleadership skills of many of the characterswe work with on a regular basis.

The central character is a particularlyastute middle management EmperorPenguin named Fred who has identifieda major challenge in the reality that theiceberg they call home is melting. His firstobstacle is to convince everyone that thereis a problem which must be dealt with.

Fred experiences frustration in having todeal with No-No, the penguin who resistschange, actively and passively. No-No, ofcourse, represents those many people inany organization who are basic blockersto change. Other recognizablepersonalities include: the naysayers andnitpickers, the innovators and agitators,

Book Review

Our Iceberg is MeltingReviewer: R. M. Naidu

Authors: John Kotter and Holger Rathgeber

Publisher: Macmillan

the leaders and followers. The idea is thateveryone in a group must play a role innavigating change. Fred must convincehis colony’s Leadership Council that hisresearch has discovered that if they don’tmove to another iceberg soon they willsuffer disaster beyond theircomprehension.

They must implement a thoughtful planfor leading their fellow penguins in thecolony through a time of necessary butgut-wrenching change. They quicklydiscover that the central issue is neverstrategy, structure, culture, or systems.Although each of these elements areimportant. The core of the matter isalways about changing behaviors of thoseinvolved.

This is where we are introduced to the“The Eight Step Process of SuccessfulChange.” The following chapters explainthe critical flow of a successful changeeffort as we witness the colony discoverthat change is a never-ending processrather than an ultimate destination.

We, too, must realize that we continue toface many changes such as sales,technology, global competition, profits,ROI, retention, customer service, marketshare, etc. Desirable change is an on-going, never-ending process which

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demands one requirement above allothers: adapt or perish.

This book is a must read for everyonewho manages people at any level andrecognizes the challenges involved withthat responsibility. The eight-step changeprocess is profound and can be applied toany organizational change effort.

One of the things very good about thisbook is that it shows why it is importantto get all team members buy in beforemaking a change. If everyone is for thechange, it will be so much easier to makebecause you won’t have anyone draggingtheir feet. If there is one person on yourteam who doesn’t agree with the change,they will make it very hard for everyoneelse to move forward. One person reallycan drag the whole team down and canhave such a huge effect on theteam. Always let everyone have their sayand offer suggestions to come up with a

solution that everyone is behind. One ofthe thing about this book is that it showedwhy it is important to get all teammembers buy in before making achange. One person really can drag thewhole team down and can have such ahuge effect on the team. Always leteveryone have their say and offersuggestions to come up with a solutionthat everyone is behind.

This particular fable comes to us from twogentlemen who know of what they speak.John Kotter is a leadership and changeguru at Harvard Business School who hasauthored 11 business bestsellers, andHolger Rathgeber is a highly respectedmodern global manager.

Reviewer: Dr. R. M. Naidu, Assoc.Prof, Siva Sivani Institute ofManagement, rmnaidu@yahoo.com

#MJSSIM 2 (II) 09, 2010

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Lee Kwan Yew was Singapore’s PrimeMinister from the 50s to the early 90s. Inthis book, he recounts the city-state’sjourney from Third World to First Worldstatus after its expulsion from Malaysia.He presided over the transformation ofSingapore from a fractious and squalidcolonial backwater into one of the shiningjewels of Asia. In less than half a century,through complex and ingenious economicand social engineering, Singapore hasmelded a multi-ethnic, multi-racialpopulation into a thriving, safe andincredibly productive society that boaststhe world’s #1 airline, the busiestmaritime port, nearly nonexistentunemployment, and a lower infantmortality rate than the United States.

Few gave tiny Singapore much chance ofsurvival when it was grantedindependence in 1965. How is it, then,that today the former British colonialtrading post is a thriving Asianmetropolis? The story of thattransformation is told here by Singapore’scharismatic, controversial foundingfather, Lee Kuan Yew. Rising from alegacy of divisive colonialism, thedevastation of the Second World War andgeneral poverty and disorder followingthe withdrawal of foreign forces,Singapore now is hailed as a city of thefuture. This miraculous history is

Book Review

From Third World to FirstReviewer: R.M. Naidu

Author: Lee Kuan Yew

Publisher: Harper Collins Publishers, USA.

dramatically recounted by the man whonot only lived through it all but whofearlessly forged ahead and brought aboutmost of these changes. Mr. Lee is one ofthe most respected political figures in theworld today (“Time” and “Newsweek”regularly profile his socio-economicstrategies and his regime), andrecognition of his name among academic,political, historical and sociological circlesis guaranteed. This volume also featuresa foreword from Dr. Henry Kissinger.

Lee Kuan Yew has been one of the mostintriguing and exasperating leaders of thepost-World War II era. It is not just thathe was among the most brilliant andfrank, or that he shaped an entire countryto his own fancy. Nor is it simply that thenation he forged, Singapore, started offas a poor colony of Britain and ended upsubstantially wealthier per capita,becoming a model variously studied byChinese Communists and Westerncapitalists. No, what is most tantalizingis that Lee, who ruled Singapore from1959 until he retired, sort of, in 1990, isa Western-educated philosopher-kingwith a reputation for challenging theaccepted wisdom of the West. Pro-Western democrats are a dime a dozen,but Lee Kuan Yew is the most eloquentautocrat in the world today.

The first part of the book deals with the

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various projects he initiated or oversawthat changed Singapore. Lee Kuan Yewgives an overview of what he did to dealwith those problems facing everydeveloping nation - crime, education,housing, investment etc...

Reading his memoirs, one cannot help butadmire this man’s moral character andsense of purpose, other leaders ofdeveloping nations would do well to learnfrom this man.

The second part of the book gives Mr.Yew’s views on nearly every countrySingapore has had significant dealingswith. His views are, as he himself sayson many occasions, not meant to bepolitically correct. This means that thosefluent in ‘diplomatese’ may find hislanguage crude and some of his viewsupsetting.

Not surprisingly the last part of the book,which deals with his family and hispersonal life is very brief. Given theformal tone throughout, it would not bein keeping to speak at length about hisown personal life, although no doubt thatwould be interesting reading.

In this illuminating account, Lee writesfrankly about his trenchant approach topolitical opponents and his oftenunorthodox views on human rights,democracy, and inherited intelligence,aiming always “to be correct, notpolitically correct.” Nothing in Singaporeescaped his watchful eye: whetherchoosing shrubs for the greening of thecountry, restoring the romance of thehistoric Raffles Hotel, or openly,unabashedly persuading young men tomarry women as well educated asthemselves. To take a single example:

Singapore had a per-capita GDP of just$400 when he became prime minister in1959. When he left office in 1990, it was$12,200 and rising. (At the time of thisbook’s writing, it was $22,000.) Much ofthis was accomplished through a uniquemix of economic freedom and socialcontrol. Lee encouragedentrepreneurship, but also cracked downon liberties that most people in the Westtake for granted—chewing gum, forinstance. It’s banned in Singapore becauseof “the problems caused by spent chewinggum inserted into keyholes and mailboxesand on elevator buttons.” If Americanpoliticians were to propose such a thing,they’d undoubtedly be run out of office.Lee, however, defends this and similarmoves, such as strong antismoking lawsand anti spitting campaigns: “We wouldhave been a grosser, ruder, cruder societyhad we not made these efforts to persuadepeople to change their ways.... It has madeSingapore a more pleasant place to livein. Today’s safe, tidy Singapore bearsLee’s unmistakable stamp, for which heis unapologetic, “if this is a ‘nanny state,’I am proud to have fostered one.”

Though Lee’s domestic canvas inSingapore was small, his vigor and talentassured him a larger place in worldaffairs. With inimitable style, he bringshistory to life with cogent analyses ofsome of the greatest strategic issues ofrecent times and reveals how, over theyears, he navigated the shifting tides ofrelations among America, China, andTaiwan, acting as confidant, soundingboard, and messenger for them. He alsoincludes candid, sometimes acerbic penportraits of his political peers, includingthe indomitable Margaret Thatcher and

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Ronald Reagan, the poetry–spoutingJiang Zemin, and ideologues George Bushand Deng Xiaoping.

The book is organized thematically, notchronologically. The effect is initiallydisconcerting for those unfamiliar withSingapore’s history. However, the formatallows Lee to explain his motivationsmore clearly. The reader follows Lee’sgovernment as it attacks each problemover three decades: building up an armedforces, wooing foreign investors, cleaningup the city, and managing internationalrelations against the backdrop of the ColdWar. It takes a hard look at the burgeoningeconomic and political might of Chinaand its portents for the future.

The narrative is conspicuously one-sided.While generous with praise, particularlyfor his Old Guard colleagues, Lee is alsohappy to take credit where he can find it,almost to the point of boastfulness(though his achievements are realenough.) Some personalities, particularlyhis political enemies, receive histrademark scathing criticism. Lee also

glosses over his more dubious actions inoffice, such as the ruthless treatment ofmany opposition politicians. Delving deepinto his own meticulous notes, as well aspreviously unpublished governmentpapers and official records, Lee details theextraordinary efforts it took for an islandcity–state in Southeast Asia to survive atthat time.

Despite these faults, the book is saved byits gripping subject matter. It is difficultnot to marvel at Lee’s tale of clean andeffective government, a rarity in Asia.The second half of the book is devoted tohis dealings with various internationalleaders, and likely of particular interestto non-Singaporean readers.

This is a good read, particularly for thoseinterested in Singapore, Southeast Asia,and the Cold War in Asia.

Reviewer:

Lt. Col. R. M. Naidu, Ph D, AssociateProfessor, SSIM. naidurm @yahoo.com

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This book is a significant contribution toknowledge horizons on Indian CorporateIcons. Authors Dr. Pritam Singh and Dr.Asha Bhandarker have identified a hugegap in leadership studies in this country.For long we have looked towards westernbusiness models for inspiration. Withthis book that problem is solved. Basedon the foundations of solid researchconstituting in-depth interviews andanthropological analyses, seven “driversof change,” are identified. KumarMangalam Birla of the Aditya BirlaGroup, Meleveetil Damodaran of UTIand IDBI, Sajjan Jindal of Jindal SteelWorks(JSW), Kundapur Vaman Kamathof ICICI, Sunil Bharati Mittal of BharatiAirtel, Anil Manibhai Naik of Larsen andToubro and Kiran Mazumdar Shaw ofBiocon India.

Each of those profiled are worthy rolemodels for those who are on a quest forexcellence - management students,budding entrepreneurs and for those whowant to learn to move their currentbusiness in the right direction. Thetopography of Indian business model ischanging, but these 7 leaders are aheadof the curve and have embraced theparadigm shift with panache.

The review of literature is broad and thecase studies are punctuated withinspirational quotes. Most importantly

Book Review

In Search of Change MaestrosReviewer: Vidya Bhandarker

Author: Dr. Pritam Singh and Dr. Asha Bhandarker

Publisher: Sage Publications 2011

as India grows internationally this bookwill give those around the world awindow into India’s Outliers. Each casestudy is based on in-depth interviews andquestionnaires trying to gauge leadershiptraits responsible for globalbenchmarking of India Inc.

The study is structured around seventhemes

1. Contextual Sensitivity

2. Compelling vision and purpose

3. Winning streak

4. People connect and engagement

5. Meaningful contribution withspeed

6. Creative destruction fortransformation

7. Evolving self

8. Culture architecture.

The case studies are placed around thefollowing gestalt: Profile of the Business;Action Architecture and CultureLandscape; Profile and Persona of eachleader.

Kumar Mangalam Birla of the AdityaBirla Group took over the reins of a familybusiness in 1993. K. M. Birla, a graduateof the London School of Business (LSB)took the company with a presence in 5

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countries to 20 more countries. Thefinancial profile of the Aditya Birla Groupgrew from 10.63 billion to Rs. 50.39billion from 2003-2009. A strong beliefin “means are as important as the ends,”is the moral radar of this organization.CSR is reflected in partnerships with thegovernment at the village level in 3, 700villages to work on polio eradication,education and water.

M. Damodaran, was given a day’s noticeto stem the sinking of UTI in 2003.Investors had lost trust in the Unit Trustof India and were withdrawing theirmonies. Amidst fears UTI will shrinkfrom a 60,000 crore company to a 13,000crore company M. Damodaran, a civilservant was brought in. M. Damodaranwas received with distrust by theemployees and had the dual task ofgaining their confidence as well as thatof the investors. He did so at warp speedrequiring tough and quick decisions, andopening internal and external avenues ofcommunication. He succeeded instemming a national calamity andtransformed India’s financial sector in theprocess.

Sajjan Jindal of Jindal Steel Works (JSW)joined the family business in 1993 a freshgraduate. Under his leadership JSW grewfrom a Rs. 93 crore company – to a Rs.12, 700 crore in 2008 and the goal is Rs50, 000 crores by 2012. His lives by,“What we take from society we shouldreturn in double measure.”

Kundapur Vaman Kamath of ICICI tookover in 1996 and by 2003 he hadtransformed it into a financial institutionlisted on the NYSE. From 2003-2009revenue and profits grew by 219 percent

and 212 percent – a truly phenomenalachievement. Apart from transformingthe Indian financial landscape he hascontributed significantly to youthemployment. He built bridges withcolleges and universities with the missionof improving curricula, shared cases,assisted in faculty development programsand in the process created a talentecosystem. Today graduates of theuniversities are ready to join ICICI withskills to hit the ground running.

Sunil Bharati Mittal of Bharati Airtelcharted a path to success by going “againstthe grain,” in telecom. Bharati Airtel wascreated in 1995 today it has the attentionof the world for its innovative businessmodel. Its growth trajectory is such thatbetween1999 - 2010 its customer basegrew from 0.1 million -121.8 million.Bharati Airtel is one of the 5 largestmobile phone operators in the world.

Anil Manibhai Naik of Larsen andToubro (L&T) became CEO in 1996. Hejoined L&T as a junior engineer grew intoa CEO. He knew the culture and L&T wasin a comfortable space in 1996. A.M.Naik believes, “excellence is a journey nota destination,” he did not allow forcomplacency. Unlike American Expresshe sensed the impending internationalcompetition will break the company ifthey were not ahead of the curve. He tookL&T on a growth trajectory and itsfinancial performance grew from Rs 3.8billion to 30.07 billion in 2009.

Kiran Mazumdar Shaw of Biocon Indiastarted with Rs. 10,000 seed money in agarage. The company started fromfermentation –based enzymes producerto a bio-pharma company. Today Biocon

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India is Asia’s largest biotech company.Concerned with brain drain of scientistsin India she set up an R&D basedbusiness. She is hailed as the “Mother ofInvention” by the New York Times andIndia’s “Biotech Queen” by theEconomist. Biocon India is ranked 20th

amongst global biotech companies today.

In essence this book has revealed sometraits are common in all seven leadersprofiled. They were ahead of the curve,their mission was excellence, their visionfuturistic, they are strategic planners, ,they empower employees, they believe inethical governance, always have lines ofcommunication open, adopt customer/

people/employee- centric strategies. Theyare all approachable, accessible, humble,courteous, listeners, and respectful.They are tougher on themselves but arenot micromanagers. In this time in Indiawith corruption scams erupting allaround, this book reminds us that thereare those amongst us who follow the rulesof the game and succeed in phenomenalways. They are truly India’s brandambassadors.

Reviewer:

Vidya Bhandarker, Asst. Professor, SSIM.vidya@ssim.ac.in

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Rates of Annual Subscription

For Instituions (Two Issues) Rs. 500/-All Correspondences relating to Subscription may be addressed toAsst. EditorSiva Sivani Institute of ManagementNH-7, Kompally, Via-Hakimpet,Secunderabad-500014Phones: 040-65457236, 65457237, 040-27165450-54Fax No.040-27165452www.ssim.ac.in

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Siva Sivani Institute of Management

S.P Sampathy’s Siva Sivani Institute of Management is promoted by the Siva SivaniGroup of Educational Institutions, which has been running the prestigious andinternationally renowned Siva Sivani Public Schools for more than four decades.Approved by the All India Council for Technical Education, Ministry of HumanResource Development, Government of India, New Delhi, Siva Sivani Institute ofManagement started functioning as an autonomous institute in 1992.

Located in Secunderabad, far from the maddening crowd, about 6 Km. fromBowenpally along the National Highway No.7, Siva Sivani Institute of Managementhas an enviable environment - serene, spacious and stupendous. It offers an idealenvironment for imparting value- based management education. The Institute designsand updates courses at any given point of time, even if it is in the middle of anacademic year or a term for that matter.

Stalwarts from both the industry and the academia constantly provide inputs forfine tuning the course curriculum to meet the needs of the industry. SSIM isconsistently ranked amongst the top Business Schools in the country. Currently, SSIMis ranked 35th in the country amongst the B-Schools of Excellence as per BusinessBarons Survey March 2009. The other Group Institutions are: Siva Sivani GlobalCentre for HR Excellence, Siva Sivani Institute of Global Studies, Siva Sivani ManManagement Private Limited and Siva Sivani Degree College.

Siva Sivani Institute of Management offers Seven PGDM Programmes:

The PGDM (Triple Specialization)

This program prepares a student towards building multifaceted functionality. PGDM(TPS) is designed in such a way that has evolved from the needs of the industry,which is continually looking for managers with cross functional skills embedded andsupported by IT savvy acumen.

A student of PGDM (TPS) has a major specialization one of Finance/Marketing/HR/System along with one of the specialization art of Finance, Marketing, HR,System, Operations as minor specialization and also elective courses like Finance,Human Resources and Marketing, ERP, electives such as Retail Management, Banking,Event Management, BPO Management, Insurance Management etc.

PGDM (Marketing)

This is a highly specialized two year management programme in Marketing. Thisprogramme is completely tailor made to the requirements of industry with respect tomarketing.

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PGDM (HR) with IT

This is highly specialized programme in HR along with IT focus. The latest andglobal concepts in the area of HR that includes compensation management,Psychometrics HR audit, Negotiating skills, Managing diversity etc.

PGDM (Banking, Insurance, Finance and Allied Services)

This programme encompasses all the finance related areas and we have includedBanking and Insurance sectors as specializations in addition to core Finance. All thelatest topics in Bankingand insurance have been included and to name the few areRisk management in Banks,Technology management in Banks, Claims managementin insurance, Actuarial science etc.

Siva Sivani Institute of Management has started non residential PGDM programmesin the second shift. There are three programmes in the second shift they are:

PGDM (Global Business)

Siva Sivani offers a highly specialized program – PGDM in Global business. Theworld is fast becoming a global village and there is a huge demand for students whoare multi skilled and who can transfer their skills and expertise seamlessly acrosscountries and continents. This well thought out and executed course with a throughexposure to global thoughts and latest global practices will equip the students to becometruly global managers.

PGDM (Banking, Insurance, Finance and allied services)

It is the first of its kind to be introduced in the Country. This program covers sectorslike banking, insurance and also focuses on finance and financial services; itencompasses all the facets of finance and its applications. These students are equippedto take up any job in financial sector.

PGDM (Triple Specialization)

This program prepares a student towards building multifaceted functionality. PGDM(TPS) is designed in such a way that has evolved from the needs of the industry,which is constantly looking for Managers with cross functional skills and equippedwith IT acumen. A student of PGDM (TPS) has option of choosing one major andone minor specialization among Finance/Marketing/HR/System, ERP, along withone elective from Retail Management, Banking, Event Management, BPOManagement, and Insurance Management etc.

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ISSN - 0975-4032